The modern network-based theory of firm emphasizes the external embeddedness of firms in the local market. Firm’s external embeddedness is particularly relevant in the context of product innovation given the need of domestic firms to tap into externally dispersed knowledge pools. This paper investigates the organizational conditions under which external embeddedness allows domestic firms to generate product innovations. Using survey data on 273 Vietnamese firms, we show how the level of firms’ export intensity serves as a boundary condition in the network-based theory of the firm. We find that externally embedded firms with moderately high levels of firms’ export intensity generate more product innovations than similarly externally embedded firms that have low levels of export intensity. We extend the network theory of the firm attributing a central role to firms’ external embeddedness by showing how intra-organizational aspects, specifically the level of export intensity shapes the ability of firms to generate product innovations.