The Ties that Change: Open Innovation Strategies and Capability Reconfiguration Under Uncertainty

Abstract

In this chapter, we examine open innovation (OI) strategies that incumbent firms adopt to modify their capabilities in the face of technological change. We introduce the notion of capability reconfiguration advantage and argue that the nature of ties that are involved in OI strategies with entrepreneurial firms and the timing of the use of these ties underlie some of the heterogeneity in performance outcomes among incumbent firms in times of uncertainty. Specifically, we show that while OI strategies that are coupled via contractual ties are likely suited for periods of state and response uncertainty, OI strategies that are coupled via embedded ties are more suitable for periods of effect uncertainty. In essence, the proposed framework provides a more nuanced view of the interface between different OI strategic mechanisms and the nature of uncertainty perceived by incumbent firm managers. We conclude with implications for future research on OI.