When Does Search Openness Really Matter? A Contingency Study of Health‐Care Innovation Projects

Abstract

Given the growing popularity of the open innovation model, it is increasingly common to source knowledge for new product ideas from a wide range of actors located outside of organizational boundaries. Such open search strategies, however, might not always be superior to their closed counterparts. Indeed, widening the scope of knowledge sourcing at the ideation stage typically comes at a price given the substantial monetary and nonmonetary costs often incurred in the process of identifying, assimilating, and utilizing external knowledge inputs. Considering both the benefits and costs of search openness, the authors develop a project‐level contingency model of open innovation. This model suggests that search openness is curvilinearly (taking an invertedU‐shape) related to new product creativity and success. They hence assume that too little as well as too much search openness at the ideation stage will be detrimental to new product outcomes. Moreover, they argue that the effectiveness of open search strategies is contingent upon the new product development (NPD) project type (typologicalcontingency), theNPDproject leader (managerialcontingency), and theNPDproject environment (contextualcontingency). To test these propositions empirically, multi‐informant data from 62NPDprojects initiated in theEnglishNationalHealthService (NHS) were collected. The econometric analyses conducted provide considerable support for a curvilinear relationship between search openness andNPDoutcomes as well as for the hypothesized contingency effects. More specifically, they reveal that explorativeNPDprojects have more to gain from search openness at the ideation stage than their exploitative counterparts. Moreover, the project‐level payoff from search openness tends to be greater, when the project leader has substantial prior innovation and management experience, and when the immediate work environment actively supports creative endeavors. These findings are valuable forNPDpractice, as they demonstrate that effective knowledge sourcing has much to contribute toNPDsuccess. In particular, pursuing an open search strategy might not always be the best choice. Rather, eachNPDproject is in need of a carefully tailored search strategy, effective leadership, and a supportive climate, if the full value of external knowledge sourcing is to be captured.