Abstract
PurposeThis study aims to explore the relationship between organisational knowledge (OK) and innovation failures, as well as their connection to future innovation capability, while testing the moderating effect of knowledge spillovers (KS) on these two previous relationships.Design/methodology/approachThe data set used in this study comes from the Community Innovation Survey (CIS), which has been widely used in innovation research. The CIS is a harmonised questionnaire based on the Oslo Manual, with methodological recommendations specified by Eurostat, and includes questions on a range of topics related to innovation activities. This study used the CIS2018, which covers 2016-2018 and includes 100,115 companies with more than 10 employees from 14 european union (EU) countries (Bulgaria, the Czech Republic, Germany, Estonia, Greece, Spain, Croatia, Hungary, Lithuania, Latvia, Malta, Portugal, Romania and Slovakia).FindingsUsing logistic and linear regression models, the authors find that OK can effectively decrease innovation failures. However, after a failure, firms are more likely to pursue new, innovative projects only if KS is considered a moderator in the relationship between innovation failures and innovative capacity. The authors did not observe statistical significance in the KS moderation effect between OK and innovation failure. In other words, a company does not attempt to learn solely from a failure but should seek new knowledge to analyse what went wrong. Therefore, knowledge transfer that promotes discussion and learning from unexpected outcomes is vital for a firm to continue innovating successfully.Originality/valueThis research contributes to the understanding of the impact of failure on innovation from a knowledge-based perspective, examining how different failure mechanisms can diminish future innovation, despite growing interest in how failure can promote it.