Efficiency and effectiveness between open and closed innovation: empirical evidence in South Korean manufacturers

Abstract

This study addresses two main questions. First, what is the best measurement of innovation performance? Second, is there a significant difference in the performance between open and closed innovation firms? We discuss new measures (‘efficiency’ and ‘effectiveness’) and investigate any differences between open innovation and closed innovation firms by using indicators. The impact of open innovation on firm performance has been examined in existing studies. Most papers, however, employ simple indicators such as patents and financial data. This paper verifies the relationship between open innovation and performance in the Korean manufacturing industry using a new approach. The results show that both efficiency and effectiveness were statistically higher among open innovation firms than among their closed counterparts. It may thus be concluded that the acquisition of outside technology or knowledge has a positive impact on firm performance.

Keywords:

• open innovation
• efficiency
• effectiveness
• data envelopment analysis
• fuzzy set theory
• Korea Innovation Survey

Notes

The Oslo Manual is the guidelines for collecting and interpreting innovation data and the publication of OECD and Eurostat. Community Innovation Survey (CIS) projects were conducted in Europe. In Korea, the Korea Innovation Survey is conducted every three years.

Respondents of those surveyed are 30 experts in R&D planning, R&D management and technology management. The questionnaire was comprised of eight sub-indicators by product and process innovation, which also evaluated the degree of importance and confirmation.