An empirical investigation on the relationship between open innovation and innovation performance

Globalization and the increased connectivity of economic actors have led to increased competition in business markets. Innovation is a major driver enabling and sustaining of a competitive advantage and promoting increases in productivity in a contested environment. Especially in times of limited resources and economic downturns, innovations are essential for the survival of companies and industries as a whole. Notably, innovations are more than just the first occurrence of an idea; they include its successful introduction into markets. Therefore, innovations are defined as the implementation of new or significantly improved products (goods or services) or processes (OECD/Eurostat, 2005). “Today no one needs to be convinced that innovation is important – intense competition, along with fast changing markets and technologies, has made sure of that. How to innovate is the key question” (Drucker, 1988, p. 149). The traditional perspective has followed Schumpeter (1934, 1939) and has emphasized the required abilities of the lone entrepreneur. Open innovation presents a more interactive way for companies to innovate and was first proposed by Henry Chesbrough (2003a, 2003b). He claims that internal research and development (R& D) is no longer the invaluable strategic asset that it used to be. Firms should make use of knowledge inflows and outflows to accelerate internal innovation and find new commercialization opportunities for internally developed knowledge (Chesbrough, 2006a). Hence, the open innovation model fosters the openness of R& D projects toward external stakeholders. Openness encompasses being open to new influences from outside the firm and bringing ideas and knowledge from the inside to the outside environment. Especially in early phases of R& D projects, openness is considered essential for successful innovations. The explanation lies in a fundamental characteristic of innovation: new innovations can consist of new combinations of existing ideas, capabilities, skills and resources. A greater variety of these factors leads to a greater scope and complexity of new combinations (Fagerberg, 2006). This fundamental logic has also been used to explain why, in ancient times, the inhabitants of the large Eurasian landmass have become more innovative and technologically sophisticated than more isolated populations, such as Native Americans and Australian Aborigines (Diamond, 1998; Fagerberg, 2006).