The Effect of Open Innovation on Manufacturing Firms’ Performance in China: The Moderating Role of Social Capital

Abstract

Open innovation (OI) has great significance in innovation management. OI builds a bridge between firms and other organizations, which can help firms to quickly integrate into value chain innovation and discover the value stored in external resources, and thus can improve the performance of firms. The Chinese economy is accelerating its high-quality development. In this process, the importance of social capital is emphasized. However, less evidence is provided to discuss whether and how social capital from the resource perspective affects OI and firm performance. Therefore, we constructed a moderating model to deeply examine the mechanisms of the two models of the effects of inbound OI and outbound OI on firm performance and the impact of multidimensional social capital within it from the resource perspective. Our sample comprises 6899 observations of 1850 A-share listed manufacturing firms in China from 2016 to 2020. Considering the lag of resources into firm profitability, we decided to lag the firm performance by one year behind other indicators, so the sample data cover the period of 2016–2021. Then, we used Excel 2019 to complete the calculations of indicators and used multiple regression analysis of STATA17 to test the hypotheses. It is found that inbound and outbound OI have an inverted U-shaped relationship with firm performance. Institutional and technological social capital positively moderates the relationship between inbound and outbound OI and firm performance. Compared with the other two types of social capital, market social capital is the most widely owned among the sample firms, but its moderating effect is insignificant. The findings enrich and expand theoretical research on OI and firm performance and guide firms to implement OI, promoting their sustainable development.

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