Disentangling the effects of open innovation in the time of financial crisis: A strategic choice perspective

Abstract

This study sets out to disentangle the effects of open innovation on firm growth in the time of economic crisis. Adopting the strategic choice perspective, we argue that the adoption of OI can lead to better performance in terms of business growth in the time of financial crisis, particularly through the “quick-shot solutions” approach relative to the “long-term horizon” approach. We also argue that collaboration, as well as out-bound approach, is complementary to internal R&D in achieving firm growth, whilst in-bound approach is a substitute for internal R&D in achieving firm growth. We further argue that firms with greater openness breadth and depth will achieve higher growth and that there is diminishing marginal benefit from openness breadth and depth. Analyzing a sample of about 300,000 Chinese manufacturing firms matched with patent dataset, we find evidence to support our arguments. This study makes several contributions to the crisis and OI literature.