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This paper investigates the heterogeneity of the sources of external knowledge and their differentiated effects on process and product innovations respectively. The results of the empirical investigations show that the upstream vertical sources of external knowledge from suppliers exert a strong and positive role on the introduction of process innovations, whereas horizontal and downstream vertical sources stemming respectively from competitors and customers have stronger effects on the introduction of product innovations. These results support the hypothesis that the matching between sources of external knowledge and types of innovation is necessary to implement successful innovation strategies. The study suggests that the strategic decisions of R&D managers in innovation practices should take in greater consideration the availability of the differentiated sources of external knowledge in the system in which …