When Is Open Innovation Beneficial? The Role of Strategic Orientation

Abstract

Various scholars have accomplished a great deal to better understand open innovation effectiveness. Case studies have detailed its performance effects, while other studies showed the effectiveness of an aspect of open innovation, such as collaboration with third parties, external technology commercialization, and cocreation. Though most studies report a positive relation between open innovation and innovation performance, some studies indicate possible negative effects. This has resulted in a call for research on what kind of organizational context suits open innovation best. This study therefore addresses two questions: (1) does performing open innovation activities lead to increased innovation performance, and to which aspects of innovation performance is open innovation most strongly related? (2) what is the moderating impact of various kinds of strategic orientation on the relation between open innovation and innovation performance? In this study, we investigate three types of strategic orientations: entrepreneurial orientation, market orientation, and resource orientation. In a survey among 223 Asian service firms, we first develop and test a comprehensive measurement scale for open innovation that captures the entire range of open innovation activities, including outside‐in activities, inside‐out activities, and coupled activities. The final scale comprises of 10 items and indicates to what extent a firm has implemented open innovation activities. Next, we study the relation between open innovation and innovation performance. The results indicate that performing open innovation activities is significantly and positively related to all four dimensions of innovation performance: new product/service innovativeness, new product/service success, customer performance, and financial performance. The impact of open innovation is not limited to a particular aspect of innovation performance; it positively affects a broad range of innovation performance indicators. Though open innovation is positively related to all four dimensions of innovation performance, the effect sizes are not equal. The impact on new service innovativeness and financial performance is relatively stronger. Regarding the influence of a firm's strategic orientation, we find that all significant moderation effects are positive. This suggests that, in general, having a more explicit strategic orientation enhances the effectiveness of open innovation. When comparing the three strategic orientations, entrepreneurial orientation strengthens the positive performance effects of open innovation significantly more than market orientation and resource orientation do. In turn, market orientation has a significantly stronger moderation effect than resource orientation. These findings provide empirical evidence of the context dependency of open innovation. Especially an entrepreneurial orientation, which is associated with proactive and entrepreneurial processes, seems to create a fertile setting for open innovation.

Network Analysis of Open Innovation

“…There are two directions of open innovation, namely, inside-out open innovation, (cases in which patents made within a firm are licensed out to create larger markets and profits) and outside-in open innovation (cases in which a firm license in external patents to create larger markets and profits) [7,29] , and open innovation in consumer electronics-joint patent applications are yet to be studied [30][31][32]. All three open innovation process archetypes-outside-in, inside-out, and coupled-focus on firms' activities performed within company boundaries [33][34][35][36].…”

The Open Innovation Research Landscape: Established Perspectives and Emerging Themes across Different Levels of Analysis

“…Given such variance in the effectiveness of OI, there has been increasing interest in its context dependency (di Benedetto 2010;Huizingh 2011). So far, only few studies investigate contingencies of the openness-performance relationship, including the strategic orientation of firms (Cheng and Huizingh 2014), individual-level characteristics (e.g., Salter et al 2015), or new product development (NPD) project characteristics (e.g., Salge et al 2013), or the integration of key individuals . Given this need for a contingency perspective and a multi-level understanding of OI, it seems relevant to explore how factors residing at one level of analysis constitute contingencies for applications of OI at higher or lower levels of analysis.…”

“…Empirical studies demonstrate variance in the extent to which OI contributes to innovation performance (e.g., Laursen and Salter 2006;Sofka and Grimpe 2010;Parida, Westerberg, and Frishammar 2012;Pullen et al 2012;Cheng and Huizingh 2014), R&D project performance (e.g., Du, Leten, and Vanhaverbeke 2014), new product creativity and success (e.g., , or community-level outcomes (e.g., Balka, Raasch, and Herstatt 2014). Given such variance in the effectiveness of OI, there has been increasing interest in its context dependency (di Benedetto 2010;Huizingh 2011).…”

The Impact of Strategic Alliances and Internal Knowledge Sources on the Manufacturing Firms Innovation and on Their Financial Performance: A Comparison Between Brazil and Europe

“…Chesbrough's (2003) concept open innovation, that was mentioned in Section 2.2.2 proposes that it is possible to innovate using internal and external ideas and resources, or a mix of both. The aggregation of external possibilities collaborates with the performance, as many subsequent studies illustrated (CHENG;HUIZINGH, 2014;DU et al, 2014;MARTINEZ et al, 2014;RANDHAWA;WILDEN;HOHBERGER, 2016). The complementarity of internal and external sources of knowledge in the innovation process is represented in Figure 8, which shows that research projects inside the firm's boundaries and knowledge outside them (both represented by circles) combine to advance the development innovation and to pave their paths to market.…”

“…Many authors studied empirically the effects of innovation on the company's financial performance (CHENG;HUIZINGH, 2014;DECAROLIS;DEEDS, 1999;FAEMS el at., 2005) and attested its importance as a strategy that helps to improve the firm's performance as well as to increase the chances of survival in today's uncertainty (TEECE, 2007) of various industries and business environments.…”