Abstract
PurposePrior research has reported the indirect implications of firm's dynamic capabilities on their competitive firm performance. Our attention now turns to open innovation since it has been confirmed to be an influential factor contributing to the superior performance of technological firms. So far there has been little research on assessing the relationship between a firm's dynamic capabilities as an antecedent of the competitive performance of the firm or investigations into the mediating role of open innovation in this relationship.Design/methodology/approachDrawing on the theory of dynamic capabilities, we developed a framework as a way to better understand the role of open innovation, which could then help to better explain the relationship between firms' dynamics capabilities and their competitive firm performance. Based on the empirical data of 465 firms operating in innovative and non-innovative industries, we employed structural equation modelling (SEM) to examine the research hypotheses and the path relationships in the proposed model.FindingsThe SEM analysis revealed that a firm's dynamic capabilities significantly impact its open innovation performance and that open innovation, consequently, impacts the competitive performance of the firm. Moreover, the results show that the path between dynamic capabilities and competitive firm performance is partially mediated through open innovation.Practical implicationsThe findings provide practical implications and draw managerial attention to the importance of: (1) investing in innovation, (2) engaging customers in the innovation process and (3) maintaining innovation management excellence as significant antecedent factors in increasing competitive firm performance.Originality/valueConsidering the lack of empirical research in the literature on the links between dynamic capabilities and open innovation, this paper contributes to the dynamic capabilities and open innovation literature by confirming that open innovation not only mediates the relationship between these two aspects but also strengthens the effect the dynamic capabilities have on competitive firm performance. Besides, due to the significant impact of dynamic capabilities on open innovation, dynamic capabilities might be regarded as an antecedent of open innovation.
Highlights
Despite the growing body of research on dynamic capabilities and competitive firm performance, there is no clear answer as to why firms still fail. Teece (2014) noted that the dynamic capabilities view was created as a general framework to aggregate the knowledge of firm-level competitive advantage under the conditions of strong innovation-driven and often global competition
The research question, this paper addresses is as follows: What is the role of open innovation in the pathway between dynamic capabilities and competitive firm performance? We answer the question by leveraging the empirical data of 465 firms and by applying structural equation modelling (SEM)
As open innovation can be seen as purposively managing knowledge inflows and outflows in order to meet the needs of the firm for achieving a good firm competitive performance, we propose that open innovation mediates the path between dynamic capabilities and competitive firm performance
Summary
Despite the growing body of research on dynamic capabilities and competitive firm performance, there is no clear answer as to why firms still fail. Teece (2014) noted that the dynamic capabilities view was created as a general framework to aggregate the knowledge of firm-level competitive advantage under the conditions of strong innovation-driven and often global competition. While the significant interlinkages between dynamic capabilities and open innovation have recently been conceptually acknowledged, there is still a lack of empirical research that has attempted to examine and establish the mediating role of open innovation in the relationship between dynamic capabilities and firm performance. This research aimed to empirically examine if dynamic capabilities affect open innovation and, in turn, whether the relationship between dynamic capabilities and firm performance is mediated through open innovation (Bogers et al, 2019; Ferreira et al, 2020; Kitenga et al, 2020; Teece et al, 2020; Teece, 2020). This paper extends our comprehension and sheds new light on the mechanism that facilitates the impact of dynamic capabilities on competitive firm performance by exploring the mediating effect of open innovation on this relationship. We conclude with a discussion of the theoretical and practical implications, followed by the limitations of the paper and the suggested future work
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