The limitations of open innovation: an examination of innovation orientation, open innovation and performance in North America

Abstract

PurposePrior innovation orientation research has mostly focused on performance consequences, with some recent work examining its relationship with innovative practices such as open innovation. Yet, despite this growing body of open innovation research, there are still gaps and limitations. Notably, most prior studies have been conducted in Europe, limiting their generalizability to the rest of the world, and are replicative, exploring performance and competitive outcomes. There is very limited work examining the potential limitations of open innovation. This study extends innovation orientation research and examines the limitations of open innovation in North America.Design/methodology/approachThis study explores the relationships between innovation orientation and performance, open innovation and performance and innovation orientation and open innovation among 386 North American companies.FindingsThis study is novel as it examines the relationships between innovation orientation and performance, open innovation and performance and innovation orientation and open innovation among North American companies. The research uncovers a linear relationship between innovation orientation and performance, a correlation between innovation orientation and open innovation and a counterintuitive curvilinear relationship between open innovation and performance. The curvilinear relationship, shaped as an inverted u-shape, suggests there are limitations to the strategy's effectiveness, actionable insight to companies, consultants and scholars alike. In the discussion section, findings are further unpacked with regard to their implications for the scholarly literature. The paper concludes with managerial considerations for creating an innovation orientation and the most effective level of open innovation for maximum competitive and performance implications.Originality/valueBeyond the innovation orientation and open innovation research contributions, this study offers managerial insight for executives seeking to enhance competitiveness and drive firm performance.