The Effects of Open Innovation on Firm Performance: A Capacity Approach

STI Policy Review 4 (1) 79-93, 2013

20 Pages Posted: 21 Sep 2013 Last revised: 24 Sep 2013

See all articles by Joon Mo Ahn

Joon Mo Ahn

University of Cambridge - Institute for Manufacturing; Graduate School of Management of Technology, Sogang University

Letizia Mortara

University of Cambridge - Institute for Manufacturing

Tim Minshall

University of Cambridge - Institute for Manufacturing

Date Written: June 30, 2013

Abstract

Although open innovation (OI) has been an important research theme for over a decade, its theoretical framework has been relatively under-researched. As OI involves a wide range of innovation activities, a firm’s capacities in the use of the various firm resources play a critical role in OI implementation. However, it is unclear how they affect firms’ performances for little is known of OI capacities. Based on a theoretical framework derived from the literature, this study looks into the relationships between six OI capacities (inventive, absorptive, transformative, connective, innovative, and desorptive) and financial performance using the Korean Innovation Survey (KIS) 2008 data. The research model was tested using structural equation modelling (SEM) while potential differences in capacities between different firm groups were also investigated. The results indicate that 1) OI capacities are significantly associated with firms’ financial performance; 2) capacities are highly correlated with one another; and 3) some capacities are differently configured between different types of firms. Findings suggest that policy makers should pay more attention to helping firms enhance OI capacities and attempt to develop relevant policies in order to complement inadequate capacities.

Keywords: Open innovation, capacity, structural equation modelling, Korea

JEL Classification: O32, O38, O53

Suggested Citation

Ahn, Joon Mo and Ahn, Joon Mo and Mortara, Letizia and Minshall, Tim, The Effects of Open Innovation on Firm Performance: A Capacity Approach (June 30, 2013). STI Policy Review 4 (1) 79-93, 2013, Available at SSRN: https://ssrn.com/abstract=2328625

Joon Mo Ahn (Contact Author)

University of Cambridge - Institute for Manufacturing ( email )

17 Charles Babbage Road
Cambridge, CB3 0FS
United Kingdom

Graduate School of Management of Technology, Sogang University ( email )

Seoul 121-742
Korea, Republic of (South Korea)

Letizia Mortara

University of Cambridge - Institute for Manufacturing ( email )

17 Charles Babbage Road
Cambridge, CB3 0FS
United Kingdom

HOME PAGE: http://www.ifm.eng.cam.ac.uk/people/lm367/

Tim Minshall

University of Cambridge - Institute for Manufacturing ( email )

17 Charles Babbage Road
Cambridge, CB3 0FS
United Kingdom

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