Strategic flexibility is a vital capability for new ventures to update their strategies in a timely manner. However, the role of external knowledge sources in new ventures’ endeavours to develop strategic flexibility are unclear. Drawing on the knowledge‐based and relational views, we explore the effect of two sources of external knowledge: new product development (NPD) alliances, representing tightly coupled sources, and loosely coupled sources such as industry associations. Our field study of 148 high‐tech ventures found that the extent to which firms utilize knowledge from NPD alliances has a curvilinear relationship with strategic flexibility, whereas the extent to which firms utilize loosely coupled sources has a positive linear relationship with strategic flexibility. We also found that in new ventures, decentralization of decision‐making and institutional support enhance knowledge integration, positively moderating these relationships.