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How does open innovation contribute to the firm's dynamic capabilities?

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  • Hutton, Steven
  • Demir, Robert
  • Eldridge, Stephen

Abstract

A pressing management issue exists to understand how firms can develop dynamic capabilities (DC) through processes such as open innovation (OI). Our study aims to expand knowledge in this area by explicating the underlying mechanisms of OI that contribute to a firm's DC. Adopting a microfoundations perspective, we examined three separate new product development projects in a UK manufacturer over a period of two years. Our findings demonstrate that manufacturing firms can exploit technological and market-based knowledge resources during OI activities and we have developed a process model to reflect these findings. We were able to identify three underlying mechanisms of OI: realization, engagement, and appropriation, that contribute to the creation of firm resources and the firm's DC. Our study reveals that each mechanism links the process of OI to a firm's DC by sequentially and reciprocally altering the firm's abilities for sensing and seizing opportunities. This improved understanding of the microfoundations of OI enables us to explain how external knowledge search and the ensuing knowledge appropriation can correct misalignment between a firm's current capabilities and its future market opportunities, and, thus, enhance the firm's DC.

Suggested Citation

  • Hutton, Steven & Demir, Robert & Eldridge, Stephen, 2021. "How does open innovation contribute to the firm's dynamic capabilities?," Technovation, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:techno:v:106:y:2021:i:c:s0166497221000699
    DOI: 10.1016/j.technovation.2021.102288
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    5. Lucia Vigoroso & Roberto Sorrenti & Eugenio Cavallo & Federica Caffaro, 2023. "Non-Profit Organizations as Facilitators of the Sustainable Social Innovation of Firms: An Italian Case Study," Sustainability, MDPI, vol. 15(10), pages 1-20, May.
    6. Wang, Xuemei & Han, Xu & Li, Huimin, 2023. "The impact of innovation openness on innovation performance of manufacturing corporates –Moderating effect based on knowledge reorganization," Finance Research Letters, Elsevier, vol. 55(PA).
    7. Na Zhang & Lu Cheng & Chao Sun & Julie Callaert & Bart Looy, 2023. "The role of inter- and intra-organisational networks in innovation: towards requisite variety," Scientometrics, Springer;Akadémiai Kiadó, vol. 128(7), pages 4117-4136, July.
    8. Ogink, Ruben H.A.J. & Goossen, Martin C. & Romme, A. Georges L. & Akkermans, Henk, 2023. "Mechanisms in open innovation: A review and synthesis of the literature," Technovation, Elsevier, vol. 119(C).
    9. Wang, Nan & Wan, Jiahao & Ma, Zhenzhong & Zhou, Yan & Chen, Jin, 2023. "How digital platform capabilities improve sustainable innovation performance of firms: The mediating role of open innovation," Journal of Business Research, Elsevier, vol. 167(C).
    10. Tikas, Gaurav Dilip, 2023. "Team innovation capability: Scale development and validation," Technovation, Elsevier, vol. 126(C).
    11. Eltigani Mohamed Ahmed, 2022. "Predicting the mediating effect of resource orchestration on the relationship between leadership strategy and the resilience of Kenyan Listed Banks," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(6), pages 56-73, September.
    12. Nieto, María Jesús & Santamaria, Luis & Bammens, Yannick, 2023. "Digitalization as a facilitator of open innovation: Are family firms different?," Technovation, Elsevier, vol. 128(C).

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