Harnessing the value of open innovation: The moderating role of innovation management

In this paper, we develop and test a firm-level contingency model of inbound open innovation in an attempt to contribute to explaining the substantial disparities in open innovation payoff that exist between firms. Integrating elements from the resource-and knowledge-based views and the absorptive capacity literature, we propose that specific innovation management activities can play an important moderating role as they are likely to enhance firms' capacity to identify, assimilate and utilise external knowledge inputs. Drawing on longitudinal data from 1,170 German manufacturing and service firms, econometric analyses reveal that returns from open innovation are greatest when firms maintain their internal research capacity, employ a dedicated incentive system for innovation and advocate strong cross-functional collaboration. Decision-makers are thus well advised not to take positive returns from open innovation for granted. Rather, they need to achieve excellence in key innovation management activities, if their firm is to fully harness the value of openness. © 2012 Imperial College Press