Open innovation under institutional constraints: Relational knowledge improvisation in post-Soviet startups

Abstract

While open innovation (OI) research increasingly addresses emerging economies, the distinct institutional challenges of post-Soviet startup ecosystems remain underexplored. This study introduces Relational Knowledge Improvisation (RKI), a socially embedded, recursive capability through which Azerbaijani startups engage in inbound OI under institutional constraint. Drawing on 20 interviews with startup founders and managers, the paper shows how firms initiate innovation through institutional bricolage to gain immediate agility in the face of formal voids. However, this agility often exposes fragility, which entrepreneurs address through trust-based relational strategies rooted in kinship, reputation, and diaspora ties. These ties, in turn, support informal, practice-based learning via mentoring, experimentation, and embedded knowledge exchange. RKI thus unfolds as a cyclical process that transforms institutional voids into proto-institutional routines. The concept contributes to Institutional Theory by revealing microfoundations of informal institutional emergence, advances the Relational View by specifying affective trust as a coordination mechanism, and extends the DUI framework by demonstrating how trans-local networks substitute for absent formal infrastructures. RKI offers a grounded framework for understanding how startup innovation practices emerge and stabilise in settings where codified systems are weak or absent.