IS "OPEN" ALWAYS BETTER? A MULTI-STAGE EXPLORATION OF ORGANIZATIONAL OPEN INNOVATION

Abstract

The advance in information technologies (IT) has made organizational boundaries so porous that knowledge can be easily transferred between firms. There is an increasing trend towards leveraging on external knowledge for innovation, which is termed open innovation. Despite the growing popularity of open innovation, firms have been encountering challenges and the managerial strategies that firms can apply to conduct open innovation have not been clearly examined.

To meet this research void, this study uncovers the effective managerial strategies and technological mechanisms for managing open innovation. It focuses on the impacts of search openness on the performance tradeoff between product effectiveness and process efficiency. A multi-method research approach combing qualitative multiple case studies and quantitative field survey was adopted as research method. In the first stage, we conducted multiple case studies to explore the concept of search openness and identify the IT tools that are critical during open innovation project. Drawing on the absorptive capacity theory, three IT-enabled capabilities in open innovation context was developed. In the second stage, using the inter-firm distance literature as theoretical foundation and case study findings, a research model was proposed. Then we collected field survey data from 258 firms to test the research model. Our findings suggested both positive and negative impacts of search openness with the underlying mechanisms of inter-firm distance between collaborative firms. This study contributes to the existing literature by uncovering the two-sided effects of openness and building an IT-enabled absorptive capacity theory in the open innovation context. Practically, it offers managers strategies to successfully implement open innovation projects.