Two-way open innovation and firm growth: the moderating effect of external environment

Abstract

A few researchers have studied the relationship of open innovation and firm performance, but the results are controversial. One of the reasons for this inconsistence may be the ignorance of the impact on the external environment. Under the context of open innovation, innovation activities are divided into inbound open innovation and outbound open innovation. Based on a sample of 224 Chinese entrepreneurs from the Pearl River Delta and Yangtze River Delta, the relationship between the two kinds of open innovation and firm growth is discussed, and how this relationship is being affected by environment competitiveness (EC) and environment munificence (EM) is explored. Results show that both the inbound open and outbound open innovations have a positive effect on firm growth. Both EC and EM weaken the relationship between inbound open and firm growth. The study also finds a negative effect of both EC and EM on the relationship between outbound open innovation and firm growth significantly. Limitations and suggestions are proposed for future research on the implementation of open innovation under different circumstances.