Intellectual property protection need as a driver for open innovation: Empirical evidence from Vietnam

In previous research, open innovation (OI) has been considered to be driven by the need for new or advanced technologies unavailable within a firm, and to be a process with the risk of leaking intellectual property to competitors. Drawing on the resource-based view, this paper contends that OI increases causal ambiguity and social complexity of the innovation processes, creates imitation barriers to competitors and provides “informal” protection of intellectual property. This informal approach is particularly attractive to firms in developing economies where the formal institutional protection for intellectual property is weak. Thus, contrary to conventional wisdom, the need for intellectual property protection (IPP) pushes firms to undertake OI. We test this argument against firm-level data from Vietnam and find supporting evidence: the need for IPP is a robust driver for OI regardless of whether the firm is located in a more competitive or less competitive context. Furthermore, the need for IPP is a stronger driver for small firms than for larger firms.