Rapid technological advances and increased knowledge specialization mean that sourcing knowledge from outside a firm’s boundaries is now more crucial for innovation than ever. This dissertation examines the effect of a firm’s context on its knowledge sourcing strategy for innovation and makes key contributions to the literatures on open innovation, markets for technology and knowledge spillovers. To do so, I have undertaken three studies that examine the strategies of firms operating in a number of countries and industries. In all cases, I find that knowledge sourcing for firm innovation is context dependent. In addition to firm characteristics, the firm’s institutional, geographic and industrial context affects the firm’s knowledge sourcing strategy choice, the probability that a firm will benefit from external knowledge sourcing, as well as the type of benefits the firm will obtain.