Social software serves in particular the communication, cooperation and information sharing between individuals and includes applications like blogs, wikis or online communities. Common to all of these applications is that they are web-based and self-organising. Social software interlinks users and their knowledge and pursues the open content principle. Thereby, it has different potentials of use, e.g. in the knowledge management. Due to its application in the knowledge management where it creates knowledge transparency and new knowledge and, moreover, supports knowledge exchange via faster access to information, more efficient communication and appropriate tagging and linking, social software has the potential for supporting the innovative capability of firms. As a theoretical framework, this study employs a knowledge production function, explaining the production of new knowledge by the use of specific input factors. In this knowledge production function, often referred to as innovation production function, the application of social software constitutes the knowledge sourcing activity. Furthermore, this study tries to identify whether there is a difference between the impact of knowledge sourcing activity focusing on external knowledge and focusing on internal knowledge. Using data from 505 German Information- and Communication Technology (ICT) and knowledge-intensive service firms, this paper finds that firms which use social software are more likely to innovate. Taking into account former innovative activities of the firm and its previous propensity to adopt new technologies and to change processes, the analysis suggests a causality between social software use and innovation that runs from social software to service innovation. The analysis reveals no robust results on the impact of knowledge sourcing activity focusing on external knowledge and on internal knowledge and thus allows no statement on different impacts of social software use according to its application purpose.