Disruptive innovation has created a significant impact on management practices and academia. This study investigated the impact of existing knowledge assets on disruptive innovation by analyzing the role of knowledge embeddedness and specificity. We conducted a hierarchical regression analysis by using survey data from 173 Chinese industrial firms to test the direct and indirect effects of knowledge embeddedness and specificity on disruptive innovation, which can be divided into outward-oriented and internal-oriented disruptive innovation. The results indicated that knowledge embeddedness not only played a positive role in knowledge specificity, but also had a positive effect on outward-oriented disruptive innovation. Furthermore, knowledge specificity exhibited opposite functions in outward-oriented and internal-oriented disruptive innovation. In addition, knowledge specificity mediated the relationship between knowledge embeddedness and outward-oriented (internal-oriented) disruptive innovation.
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