Abstract
The increasing competition in the marketplace has led firms to change their innovation patterns to a more open system according to which they rely on networks to manage knowledge resources and innovate. The so-called open innovation paradigm has been developed by taking single-business firms and external networks as cornerstones of the standard model. However, in the case of multi-business firms, the role of internal networks has been neglected. Business units within multi-business corporations have the potential advantage of relying on both external partners and internal peers in order to support their product innovation process. The corporate network thus enables business units to provide knowledge (source knowledge from) to peers in their quest to bring new products onto the market. This study analyses the impact of four types of open innovation activities on business units’ product innovation performance, which are classified according to the directionality (outside-in and inside-out) and locus (cross-business and across-boundaries) of the innovation flows. The results from a sample of 227 business units show that business units should look outside firm boundaries for inbound innovation and throughout business units for outbound innovation if they are to improve their innovation performance.
Highlights
Creativity and knowledge are increasingly important if firms are to remain competitive in the global economy (Schiavone and Villasalero 2013; Villasalero et al 2011), andJ Knowl Econ (2018) 9:162–179 this aspect is gradually leading firms to change their innovation patterns to a more open system, according to which they rely on external networks in order to manage knowledge resources and innovate (Chesbrough 2003, 2006)
The strong correlation between prospector strategy and innovation performance is in line with theoretically derived expectations (DeSarbo et al 2005), and, in this respect, represents a further proof of the validity of the innovation performance measure at the business unit level used in this study
The strong correlation between the intra-network measures of inbound and outbound innovation suggests that those business units that are active as providers of innovations within organizational boundaries are active seekers of innovations from the internal knowledge network
Summary
J Knowl Econ (2018) 9:162–179 this aspect is gradually leading firms to change their innovation patterns to a more open system, according to which they rely on external networks in order to manage knowledge resources and innovate (Chesbrough 2003, 2006). Existing studies on open innovation have assumed a model of the firm according to which decision-making, as regards innovation, is centralized and firm boundaries are well-defined, as in the case of single-business firms. Strategic decision-making is divided between the corporate office and the business units in diversified firms, which may lead to a divergence of interests as regards inbound and outbound innovation activities and the differentiated impact of those decisions on corporate and business unit levels. A business unit’s boundaries include the internal network, which is composed of sister business units and the corporate office, in addition to the widely-studied external network beyond the firm boundaries, which signifies the possibility of trade-offs between the internal and external networks
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