Goal Multiplicity and Innovation: How Social and Economic Goals Affect Open Innovation and Innovation Performance

Integrating insights from the strategic goal literature and the knowledge‐based view of the firm, this article proposes that the pursuit of social and economic strategic goals by commercial firms affects their innovation performance through different knowledge sourcing activities. The strategic goals, knowledge sourcing practices, and innovation performance of 1257 Belgian firms are investigated. Results show that both social and economic strategic goals are associated with the use of external information sources, but only the pursuit of social goals inspires firms to engage in external collaboration. No evidence is found of an inherent conflict between social and economic strategic goals. Instead, the two types of goals are independent of each other, that is, an emphasis on social goals does not preclude an emphasis on economic goals and vice versa. Moreover, firms’ external knowledge sourcing and innovation performance benefit most when strongly held social goals align with strongly held economic goals. These findings offer new insight into the nature and the effects of goal multiplicity among commercial firms. They open up a new perspective on the potential positive effects of the joint pursuit of social and economic strategic goals instead of seeing them as inherently conflicting, as past research has typically done. We illustrate how social strategic goals can deliver unique benefits to a firm, independently of and in addition to economic strategic goals. Our findings also contribute to the open innovation literature by revealing strategic goals as a driver of firms’ knowledge sourcing practices. Our findings suggest that solely emphasizing economic goals may be one reason why firms struggle to implement open innovation practices and do not reap their full benefits. The practical implications of our research are discussed.     

The many shades of ‘openness’: an application of item response theory to open innovation research

This study addresses one of the most basic research questions investigated in the Open Innovation (OI) literature: how open are firms? This question has remained partially unanswered given the challenges encountered by empirical research in assessing the relevance of specific OI practices within the OI model, as well as the types of activities perceived by managers as OI benefits or concerns. To provide an answer to this question, we suggest a framework using Item Response Theory to improve over current measures of firms' openness and test it on a sample of 383 technology‐based SMEs. Our theoretical model conceives openness as an instance of how firms make decisions regarding the adoption of different OI practices based on their evaluation of OI benefits and concerns. Focusing on the relationship between firm‐level differences in terms of openness and the types of OI practices adopted by these firms, we show that significantly different levels of ‘OI maturity’ are required to broaden the scope of external partnerships and to shift from non‐pecuniary OI modes (relation‐based approaches) toward pecuniary (transaction‐based) practices. Our results have relevant implications for the OI literature and provide new managerial insight into OI adoption.     

A new perspective on open innovation: established and new technology firms in UK bio‐pharmaceuticals

The aim of this paper is to explore open innovation (OI) implementation and its impact on firm innovation performance in sectors experiencing technological discontinuities. The paper employs the framework of inbound, outbound and coupled OI to identify processes reflecting sourcing, externalising and exchanging knowledge across organisational boundaries on upstream and downstream innovation activities and explores their impact on the innovation performance of new and established technology firms. The empirical setting is the UK bio‐pharmaceuticals sector during 1991 and 2001, a paradigmatic era of discontinous change and intensified OI implementation. First, our findings show that new technology firms (NTFs) and established technology firms (ETFs) differ in their extent and patterns of inbound, outbound and coupled OI, reflecting that they implement OI to manage their competences in light of technological change. Second, we identify a complex and multifaceted relationship between OI and patenting performance, with NTFs experiencing enhanced performance from some OI processes while ETFs experiencing challenges. The paper suggests that delineating OI into inbound, outbound and coupled, along upstream and downstream activities, offers a deeper understanding of the role of OI in innovation, guiding selective implementation in pursuing enhanced innovation performance during periods of discontinuous technological change.     

The (Unknown) Providers to Other Firms' New Product Development: What's in It for Them?

For every inbound activity by a firm in open innovation, a reciprocal outbound activity by another firm must be generated. The reciprocal outbound activities range from transferring of knowledge and ideas to solutions delivered to other firms' new product development projects. This paper names the firms that produce the reciprocal outbound activity for “providers,” and is the first to empirically investigate such providers of ideas, solutions, and technologies for other firms' open innovation activities. The literature review shows a surprising shortage of research on who the providers are, how they engage with other firms, and not least what potential benefits can be achieved from supporting other firms' innovation activities. The paper uses a quantitative survey on Danish small and medium‐sized enterprises (SMEs) carried out in 2010 to identify the providers, the role they take on, and the main benefits the providers gain. This paper finds that firms that are providers are indeed an under‐researched and important phenomenon for firms' innovation activities. Compared to receivers of knowledge, the providers are younger, have a higher R&D intensity, adopt more open innovation practices, have higher absorptive capacity, and fewer barriers toward knowledge sharing as demonstrated by the NIH and NSH syndromes. Finally, although only tentatively, the paper finds that the provider firms are more product innovative compared to nonproviders. The paper further finds that more projects, more embedded relationships, and mutual rather than one‐way exchange relationships significantly raise the probability that a firm experiences a substantial benefit from providing to other firms' new product development projects. The overall ambition of the paper at this point is to inspire other researchers to pursue the agenda on the provider perspective for future research. To support such research, the paper suggests a broadening of the research perspectives from the receiver of knowledge, in the literature on interorganizational relationships and open innovation, to include the provider, and even suggests some preliminary ideas for such research. Hence, the contribution of this paper lies not only in opening a new research topic but also in identifying some first characteristics of the phenomenon adding a substantial perspective to the literature on open innovation and interorganizational relationships. The paper formulates three indicative recommendations for managers that consider becoming a provider to other firms' NPD.     

Determinants and archetype users of open innovation

Extant research on open innovation (OI) offers no systematic insight of how and why firms differ regarding the extent to which they conduct OI activities. Whereas past theoretical contributions have focused on explaining the externalisation of R&D activities as a result of firm-external factors, we focus on explaining this externalisation as a result of firm-internal weaknesses, specifically, impediments to innovation. Using the exploration–exploitation dichotomy as our theoretical framework, we develop hypotheses on how impediments to innovation influence the breadth and depth of OI. We then test these hypotheses by using an exceptionally large and detailed data set to estimate population-averaged panel models. Our results provide support for most of the hypothesised relationships. Further, they allow to identify four 'archetypes' of firms that differ significantly regarding the breadth and depth of OI and the importance of impediments. Finally, we discuss the significance of these findings for both academics and managers.     

A network perspective on idea and innovation crowdsourcing in industrial firms

Crowdsourcing has been attracting the attention of both academics and practitioners over recent years. The aim of this article is to contribute to the current body of knowledge on innovation in networked contexts by systematically analyzing various crowdsourcing configurations available to industrial firms. We first develop a categorization of crowdsourcing in industrial firms comprising four distinct configurations: internal crowdsourcing; community crowdsourcing; open crowdsourcing; and crowdsourcing via a broker. We then proceed to draw from the literature on industry networks to further deepen our understanding of how these four distinct configurations can contribute to business and innovation activities of a focal industrial firm. Specifically, we focus on the structural properties, nature of collaboration, and governance of crowdsourcing networks. This novel combination of crowdsourcing and network research delivers new insights that enrich current understanding on various options available to industrial firms operating in networked contexts to facilitate their innovation processes.     

Where to search for process innovations? The mediating role of absorptive capacity and its impact on process innovation

While the potential of open innovation to develop product-related improvements through the use of external knowledge sources is undeniable, our understanding of how firms become process innovators remains limited. Distinguishing between product and process innovation is important, as insights gleaned from investigating product innovation may not relate directly to the study of process innovation. This study provides new insight into open innovation and absorptive capacity by proposing the mediating role of absorptive capacity – potential and realized – on the relationship between knowledge search from external sources and process-related innovation activities. We test our model using a sample of 171 auto component suppliers in Iran, and find evidence that the learning effects of external scanning increase when a firm learns how to better manage external searches in terms of external absorptive capacity routines. Our results indicate that, while knowledge search from value chain partners is related to process innovation, knowledge search from universities and other research organizations is not, and that potential absorptive capacity mediates the relationship between external knowledge search and process innovation. These findings shed further light on the relationship between a firm’s openness and its process innovation.     

Crowdsourcing without profit: the role of the seeker in open social innovation

Crowdsourcing has increasingly been studied as an open innovation (OI) mechanism by which organizations (seekers) engage with an external crowd of potential solvers. Previous crowdsourcing research has focused on solvers and their individual motivations, providing few insights as to why and how seekers use crowdsourcing, and how these choices affect the value that might be realized from these efforts. Prior research has also emphasized profit‐seeking firms, despite the use of OI practices by public sector organizations to achieve societal benefits. This paper examines the organizational and project‐level choices of government agencies that crowdsource from citizens to drive open social innovation, and thus develop new ways to address societal problems, a process sometimes termed ‘citizensourcing.’ Using rich data from 18 local government seekers that use the same intermediary, we develop a model of seeker crowdsourcing implementation that links a previously unstudied variance in seeker intent and engagement strategies to differences in project team motivation and capabilities, in turn leading to varying online engagement behaviors and ultimately project outcomes. Our study compares and contrasts governmental and corporate crowdsourcing to reveal that the non‐pecuniary orientation of both seekers and solvers means that the motives of government crowdsourcing are fundamentally different from corporate crowdsourcing, but the process in our sample more closely resembles that of a firm‐sponsored community rather than government sponsored contests. More generally, we show how seeker organizational factors and choices shape project‐level implementation and success of crowdsourcing efforts, as well as provide insights for OI activities of other smaller, geographically bound organizations.     

Managing business-to-business open innovation: A project-level approach

Embracing business-to-business open innovation (B2B OI) can enable firms to remain competitive in an increasingly saturated business environment. Whilst B2B OI is generally undertaken to serve the needs of a specific innovation project, previous research has mainly studied it from the firm-level perspective. Accordingly, the number of project-level studies on B2B OI, especially empirical, remains limited, resulting in an incomplete understanding of B2B OI management. In this editorial, we briefly review the B2B OI literature, discuss the importance of studying B2B OI at project level, and describe how each of the six articles included in our special issue contributes to this field. Moreover, we suggest future research opportunities with regard to issues and topics that remain largely under-investigated in project-level B2B OI, but which also open up to a multilevel perspective.     

How Firms Develop Capabilities for Crowdsourcing to Increase Open Innovation Performance: The Interplay between Organizational Roles and Knowledge Processes

In recent years, crowdsourcing has emerged as a promising open innovation strategy for firms searching for solutions to technical problems. Previous research has shown that crowdsourcing can provide quick access to distant knowledge at relatively low costs, when compared to other forms of innovation governance such as internal sourcing or contract research. Recent studies, however, indicate that firms differ considerably in their ability to reap the benefits from crowdsourcing. Drawing upon recent work on the microfoundations of capabilities, we hypothesize how three types of lower level organizational elements may affect gains from crowdsourcing: informal organizational roles, formal organizational roles, and knowledge processes. Following a mixed‐method research design and drawing on rich quantitative and qualitative data, we find that informal and formal organizational roles work through processes of knowledge articulation and codification in developing a firm’s crowdsourcing capability. By going beyond the direct effects of the three antecedents, our research sheds light on the process of capability development for open innovation.     

A Bibliometric Review of Open Innovation: Setting a Research Agenda

Through an objective, systematic, and comprehensive review of the literature on open innovation (OI), this article identifies gaps in existing research, and provides recommendations on how hitherto unused or underused organizational, management, and marketing theories can be applied to advance the field. This study adopts a novel approach by combining two complementary bibliometric methods of co‐citation analysis and text mining of 321 journal articles on OI that enables a robust empirical analysis of the intellectual streams and key concepts underpinning OI. Results reveal that researchers do not sufficiently draw on theoretical perspectives external to the field to examine multiple facets of OI. Research also seems confined to innovation‐specific journals with its focus restricted to a select few OI issues, thereby exerting limited influence on the wider business community. This study reveals three distinct areas within OI research: (1) firm‐centric aspects of OI, (2) management of OI networks, and (3) role of users and communities in OI. Thus far, studies have predominantly investigated the firm‐centric aspects of OI, with a particular focus on the role of knowledge, technology, and R&D from the innovating firm's perspective, while the other two areas remain relatively under‐researched. Further gaps in the literature emerge that present avenues for future research, namely to: (1) develop a more comprehensive understanding of OI by including diverse perspectives (users, networks, and communities), (2) direct increased attention to OI strategy formulation and implementation, and (3) enhance focus on customer co‐creation and conceptualize “open service innovation.” Marketing (e.g., service‐dominant logic), organizational behavior (e.g., communities of practice), and management (e.g., dynamic capabilities) offer suitable theoretical lenses and/or concepts to address these gaps.     

Product Innovation Processes in Small Firms: Combining Entrepreneurial Effectuation and Managerial Causation

This article reports a multimethod study of product innovation processes in small manufacturing firms. Prior studies found that small firms do not deploy the formalized processes identified as best practice for the management of new product development (NPD) in large firms. To explicate small firms' product innovation, this study uses effectuation theory, which emerged from entrepreneurship research. Effectuation theory discerns two logics of decision‐making: causation, assuming that means are selected to attain goals; and effectuation, assuming that goals are created based upon available means. The study used a process research approach, investigating product innovation trajectories in five small firms across 352 total events. Quantitative analyses revealed early effectuation logic, which increasingly turned toward causation logic over time. Further qualitative analyses confirmed the use of both logics, with effectual logic rendering product innovation resource‐driven, stepwise, and open‐ended, and with causal logic used especially in later stages to set objectives and to plan activities and invest resources to attain objectives. Because the application of effectuation logic differentiates the small firm approaches from mainstream NPD best practices, this study examined how small firms' product innovation processes deployed effectuation logic in further detail. The small firms: (1) made creative use of existing resources; (2) scoped innovations to be realizable with available resources; (3) used external resources whenever and wherever these became available; (4) prioritized existing business over product innovation projects; (5) used loose project planning; (6) worked in steps toward tangible outcomes; (7) iterated the generation, selection, and modification of goals and ideas; and (8) relied on their own customer knowledge and market probing, rather than early market research. Using effectuation theory thus helps us understand how small firm product innovation both resembles and differs from NPD best practices observed in larger firms. Because the combination of effectual and causal principles leverages small firm characteristics and resources, this article concludes that product innovation research should more explicitly differentiate between firms of different sizes, rather than prescribing large firm best practices to small firms.     

Commercialization performance of outbound open innovation projects in public research organizations: The roles of innovation potential and organizational capabilities

The current literature on open innovation (OI) has been limited to organization-level studies of inbound OI despite the importance of understanding outbound OI to improve performance of public research organizations (PRO) at project level. Our study contributes to the OI literature by investigating the relationship between the innovation potential and the commercialization performance of 189 outbound OI projects between PROs and firms, and the effect of network and project management processes on this relationship. In line with our expectation, our results demonstrate that PRO-firm outbound OI projects with technologies of high innovation potential are likely to have high commercialization performance. In addition, we empirically establish that among projects with technologies of high innovation potential, those with high resource allocation quality are more likely to have high commercialization performance. Finally, our findings indicate that among projects with technologies of high innovation potential, those with high opportunity discovery through networks are more likely to have high commercialization performance.     

Innovation Management Practices Compared: The Example of Project‐Based Firms*

The importance of project‐based firms is increasing, as they fulfill the growing demands for complex integrated systems and knowledge‐intensive services. While project‐based firms are generally strong in innovating their clients' systems and processes, they seem to be less successful in innovating their own products or services. The reasons behind this are the focus of this paper. The characteristics of project‐based firms are investigated, how these affect management practices for innovation projects, and the influence of these practices on project performance. Using survey data of 203 Dutch firms in the construction, engineering, information technology, and related industries, differences in characteristics between project‐based and nonproject‐based firms are identified. Project‐based firms are distinguished from nonproject‐based firms on the basis of organizational configuration, the complexity of the operational process, and the project management capabilities of the firm. Project‐based firms also differ with regard to their level of collaboration and their innovation strategy, but not in the level of autonomy. A comparison of 135 innovation projects in 96 of the firms shows that project‐based firms do not manage their innovation projects different from other firms. However, the effects of specific management practices on project performance are different, particularly the effects of planning, multidisciplinary teams and heavyweight project leaders. Differences in firm characteristics provide an explanation for the findings. The implication for the innovation management literature is that “best” practices for innovation management are firm dependent.     

Market-facing innovation networks: How lead firms partition tasks, share resources and develop capabilities

We focus, in this paper, on ‘market-facing innovation networks’. Rooted in the modular and integrated nature of the products they develop, high levels of product innovation activity are occurring through the behaviours of firms, leading and developing such networks. These lead firms are small and medium enterprises, traditionally tasked with business to business distribution and commercialisation activities. This study enhances our understanding of how task partitioning and resource sharing practices, and their evolution over time, are related to the nature and scope of capabilities of lead firms within the context of market-facing innovation networks. Through a multiple case study methodology, our findings depict and characterise efficiency and relational approaches of lead firms. Outcomes, in terms of firm and network level innovativeness and commercialisation, are discussed. Findings are explained by the tension created by the need to manage on-going routine distribution activities and emergent networked product innovation activities.     

How to leverage the impact of R&D on product innovation? The moderating effect of management innovation

Although research and development (R&D) is a key indicator of (technological) innovation, scholars have found mixed results regarding its effect on product innovation and firm performance. In this paper, we claim that variations in R&D effectiveness can be explained by changes in a firm’s social system, in particular in its management innovation. It is still unclear how management innovation influences R&D effectiveness in terms of product innovation. In this study, we address this theoretical and empirical gap in the innovation literature. Our theoretical arguments and findings from a large-scale survey among Dutch firms show that R&D has a decreasingly positive relationship with product innovation, particularly for firms with low levels of management innovation. However, in firms with high levels of management innovation, this relationship becomes more J-shaped, especially in small and medium-sized firms. Our findings also appear to indicate that management innovation may be more important for competitive advantage than just R&D. Overall, our insights reveal that management innovation is a key moderator in explaining firms’ effectiveness in transforming R&D into successful product innovation.     

Do not miss the boat to outside-in open innovation: Enable your employees

In a highly competitive business environment, firms are increasingly opening up to external partners and gathering their knowledge to improve internal innovation processes. Although researchers have found that outside-in open innovation (OI) has a multitude of positive outcomes (e.g., improved innovation performance), few have studied its antecedents, and especially the “softer” ones. Thus, this study aims to empirically examine three “softer” drivers of outside-in OI (i.e., entrepreneurial culture, OI support, and OI enablement), based on a cross-industry sample of 104 firms. The results show that the relationship between entrepreneurial culture and outside-in OI is fully and positively mediated by OI enablement, whereas the mediating role of OI support in such relationship is not significant. This implies that entrepreneurial culture is unlikely to increase the level of outside-in OI, unless firms enable their employees, through systematic training and the deployment of teams, to effectively gather relevant knowledge from external partners.     

Facilitating open innovation processes through network orchestration mechanisms

Participation in open innovation networks presents challenges, as firms must recognize value before being willing to openly collaborate, yet opportunities typically cannot be realized without active engagement. Innovation intermediaries can address these tensions through orchestration mechanisms which create value at different levels of innovation networks. This paper addresses an important research gap by identifying the role of intermediaries in delivering open innovation activities across different levels and describing how these activities form interrelated orchestration mechanisms. A longitudinal case study follows the development of an open innovation network from inception, based on interviews and observations with participants including start-ups and large firms. Findings highlight how intermediary activities and practices align with orchestration mechanisms used simultaneously at different levels and create value for members. A multi-level analysis contributes to the open innovation literature by describing the interdependent nature of value creation within the innovation intermediary model.     

Evaluating internal and external knowledge sources in firm innovation and productivity: an industry perspective

Both internal knowledge – investment in internal R&D and information and communication technologies (ICT) as well as external knowledge – knowledge spillovers and active collaboration with partners are rapidly fostering firm productivity and innovation. In this study, we investigate the role of internal and external knowledge in firm productivity and innovation. In addition, we test interactions between investment in R&D and ICT as well as between knowledge spillovers and knowledge collaboration in their association to firm innovation and productivity. We use a recombinant innovation approach and four samples for firms in manufacturing, creative, ICT and science, and professional services industries during 2002–2014 and for pre-and post-crisis periods to perform our analysis. In addition to innovation and productivity, we also examine the role of internal and external knowledge as a conduit to the development of innovation internally and the co-creation of innovation with external partners. Our results lead to managerial and policy implications.     

Organizing for knowledge generation: internal knowledge networks and the contingent effect of external knowledge sourcing

Research summary : When faced with a new technological paradigm, incumbent firms can opt for internal development and/or external sourcing to obtain the necessary new knowledge. We explain how the effectiveness of external knowledge sourcing depends on the properties of internal knowledge production. We apply a social network lens to delineate interpersonal, intra‐firm knowledge networks and capture the emergence of two important firm‐level properties: the incumbent's internal potential for knowledge recombination and the level of knowledge coordination costs. We rely on firm‐level internal knowledge networks to dynamically track the emergence of these properties across 106 global pharmaceutical companies over a 25‐year time period. We find that a firm's success in developing knowledge in a new technological paradigm using external knowledge sourcing is contingent on these internal knowledge properties . Managerial summary : Incumbent firms in high‐tech industries often face competence‐destroying technological change. In their effort to adapt and develop new knowledge in a novel paradigm, incumbent firms have several corporate strategy options available to them: internal knowledge development and a wide array of external knowledge sourcing strategies, including alliances and acquisitions. In this study, we make an effort to address a critical question: How effective is external knowledge sourcing under different internal knowledge generation regimes? We find that external sourcing strategies are less effective when firms can already internally generate new knowledge or if they have high internal coordination costs. Therefore, when considering external sourcing, managers must carefully weigh the benefits of it vis‐à‐vis its commensurate costs as the benefits of external sourcing may be overstated . Copyright © 2015 John Wiley & Sons, Ltd.