The Determintants of Strategic Choice Over Openness

This paper seeks to explore the drivers of the rate of openness in firms’ innovation processes. The study aims to underscore the role played by scale economies, the innovativeness of product portfolio, the existence of financial slack, and the rate of internal change in operations. We find that competitive pressure due to economies of scale and possession of financial slack encourage firms to pursue a more open innovation strategy, while a valuable product portfolio embedding superior technologies and the rate of commitment toward internal process changes make firms refrain from being open innovators. To better address the choice toward openness, we apply a more fine-grained measure as distinguishing three types of innovation strategies: open, semi-open, and the traditional closed model. For our empirical analysis, we take data from the 2008 PITEC database, which is the Spanish correspondence of the Community Innovation Survey, and apply a sample of 2148 firms. The econometric model useful to accommodate multiple categorical responses implied by our model specification, is the multinomial logit model.