Beyond absorptive capacity in open innovation process: the relationships between openness, capacities and firm performance

ABSTRACT

The literature has shown that open innovation (OI) can be a winning strategy in improving firm performance. However, in order to adopt and implement it, managers need to resolve practical problems, such as understanding the role played by OI capacities and openness on firm performance. In response to these needs, this study aims to investigate the hierarchical relationships between openness, OI capacities and performance using a structural equation model approach. This paper also attempts to compare the levels of openness between firms in different industries to discover similarities and differences in OI phenomena. The analysis of data obtained from a survey of Korean firms shows significant interrelations between openness, OI capacities and firm performance. Our results go further in developing understanding of the building blocks on which successful OI is built and particularly suggest that desorptive capacity which underpins the out-bound OI process, is in turn strongly supported by knowledge management capacity. It is hoped that the results of this study can enrich our understanding of the OI mechanism and provide managerial and policy implications.

KEYWORDS:

• Open Innovation (OI)
• firm performance
• structural equation model
• capacity

Acknowledgement

The authors convey their thanks to the editor-in-chief, Prof. James Fleck and anonymous reviewers for their invaluable comments.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributors

Joon Mo Ahn is an Assistant Professor at Graduate School of MOT (Management of Technology), Sogang University, Korea. Prior to joining Sogang University he worked for Korean government agencies, such as the Small Medium Business Administration and the Ministry of Education, Science and Technology, and the Ministry of Science, ICT and Future Planning where he engaged in the development of innovation policies. He has a BSc in Chemical Engineering from Seoul National University, Korea and a PhD from the University of Cambridge, UK. His current research is focused on open innovation in small firms, innovation management, R&D policy and entrepreneurship.

Yonghan Ju is a researcher at SK Hynix. He received his Ph.D. in industrial engineering from Yonsei University. He participated in this research as a Ph.D student at Yonsei.

Tae Hee Moon is a researcher at LG Telecom. He received his Ph.D. in industrial engineering from Yonsei University. He participated in this work as post doc.

Tim Minshall is a Reader at the University of Cambridge, Centre for Technology Management. He researches, teaches, writes, and consults on the topics of open innovation, technology enterprise, the financing of innovation, and university-industry knowledge exchange. He is a non-executive director of St. John’s Innovation Centre Ltd, Cambridge and a Visiting Professor at Doshisha University Institute for Technology, Enterprise and Competitiveness in Japan. He has a BEng from Aston University, and a Ph.D. from Cambridge University Engineering Department. His current research is focused on innovation collaborations, the emergence of additive manufacturing / 3D printing, and the development of engineering skills.

David Probert is Reader in Technology Management, founding member and Head of the Centre for Technology Management within the Institute for Manufacturing, at the University of Cambridge Engineering Department. This is a team of around 40 research and academic staff, with an active consortium of collaborating companies. Current research interests include technology and innovation strategy, technology management processes, technology intelligence, open innovation, industry and technology evolution, product-service systems and industrial sustainability.

Letizia Mortara is a Senior Research Associate at the University of Cambridge IfM’s Centre for Technology Management. Her expertise and key research interests concern the understanding of how companies implement Open Innovation and Technology Intelligence systems. Letizia’s research currently concentrates on understanding how Digital Fabrication technologies could have an impact on innovation and manufacturing. She has authored several papers and reports in these areas. She is also an Associate Editor for the R&D Management journal. Prior to joining the University of Cambridge in 2005, Letizia gained a first degree in Industrial Chemistry from the University of Bologna in Italy. After spending three years working as a process/product manager in the chemical industry, she moved to the UK where she obtained her PhD in processing and scale-up of advanced ceramic materials at Cranfield University.

So Young Sohn is a Professor of Industrial Engineering at Yonsei University in Korea. Her research areas include technology management, marketing, quality and reliability engineering. Detailed information about her teaching and research areas can be found at http://isl.yonsei.ac.kr.

ORCID

Joon Mo Ahn http://orcid.org/0000-0003-4154-3995

Tim Minshall http://orcid.org/0000-0003-4409-9826

Letizia Mortara http://orcid.org/0000-0003-0461-5339

Notes

1. We suggest that an absorptive capacity is a high order capacity encompassing search and integrative capacity.