Understanding a firm's openness decisions in innovation

The degree of openness in innovation, ranging from closed to multiple levels of openness, is a key strategic decision for managers. Therefore, this study aims to carefully investigate the underlying drivers of openness. A major result of this study is that the degree of openness underlies separate mechanisms for being closed in innovation and higher degrees of openness. The factors that prevent firms from being open are a lack of market and technological knowledge (knowledge gaps), ineffective intellectual property (IP) protection mechanisms, and competitor threats such as market entries and imitation. The most important factors that increase the degree of openness are a firm's need for financial funding in innovation and the effectiveness of a firm's IP protection mechanisms.