Abstract
Despite the growing interest in open innovation, previous studies have ignored the role of firms’ strategic capability in evoking open innovation, especially in low and medium-low technology (LMT) firms from technologically less advanced countries. This study rectifies this problem by examining the impact of technology orientation on the implementation of inbound open innovation. Also, assessing the effect of the environment on the relationship between technology orientation and inbound open innovation, this study considers technology turbulence and market potential. The hierarchical regression analysis, based on cross-sectional survey data collected from 272 LMT firms in Sri Lanka reveals that LMT firms adopt inbound open innovation at a moderate level. LMT firms value technology and face above-average level technology turbulence and market potential. Results show that both technology orientation and market potential have a significant positive effect on the implementation of inbound open innovation, but no evidence from technology turbulence. Also, technology turbulence negatively, and market potential positively moderate the relationship between technology orientation and inbound open innovation. The findings indicate that LMT firms in Sri Lanka should exploit technologically superior products to meet customers’ needs and attract the market. Also, technology orientation plays a salient role in attractive markets but not in technologically turbulent environments.
Highlights
During the latter part of the twentieth century, the innovation landscape underwent a drastic change due to the growing mobility of highly experienced and skilled workers, presence of private venture capitals, shorten time to market (Chesbrough, 2006a), short innovation and product life cycles, the rising cost of research and development (R&D), the dearth of resources, etc. (Drechsler & Natter, 2012)
This study aims to investigate the effect of technology orientation, technology turbulence, and market potential on implementing inbound open innovation, and evaluate the moderating effect of technology turbulence and market potential focusing on LMT firms in technologically less advanced countries
Results show that LMT firms in technologically less advanced countries adopt inbound open innovation at a moderate level (M = 5.69, SD = 1.80)
Summary
During the latter part of the twentieth century, the innovation landscape underwent a drastic change due to the growing mobility of highly experienced and skilled workers, presence of private venture capitals, shorten time to market (Chesbrough, 2006a), short innovation and product life cycles, the rising cost of research and development (R&D), the dearth of resources, etc. (Drechsler & Natter, 2012). (Drechsler & Natter, 2012) Those changes caused to erode the underpinnings of closed innovation and emerge open innovation (Chesbrough, 2006a). The firms implement closed innovation by strictly controlling R&D activities. Open innovation works through cooperating with outside firms over more porous organizational boundaries. The resource-based view highlights that the firms apply assets and capabilities to achieve competitive advantages (Hunt & Morgan, 1995). Prior researches show distinctive capability can promote innovation (Zhou, Yim, & Tse, 2005) and generate competitive advantages (Barney, 1991; Zhou et al, 2005). Irrespective of its reliability and validity, a few studies focus on the role of capabilities in implementing open innovation. Though the present literature discusses the effect of some capabilities such as absorptive and desorptive capabilities, a few studies have inquired about the effect of strategic capabilities on open innovation (i.e. Deegahawature, 2014b; 2014c)
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