Exploring the dynamics of openness and formal appropriability and its impact on innovation performance in start‐ups

Abstract

A tension between openness and formal appropriability (FA) emerges in start‐ups as they require both in order to attract investors or innovation partners, yet their limited resources are a challenge in this pursuit. This paper sheds light on this tension through the study of the dynamics of openness and formal appropriability over time and the impact of combining openness and formal appropriability mechanisms (FAMs) on innovation performance. Using a longitudinal panel sample of Spanish start‐ups during a period of ten years, it is found that start‐ups change their openness and formal appropriability strategies over their development and that a combination of openness and formal appropriability enhances start‐ups' innovation performance. This combinative strategy is more relevant for start‐ups during the early years of start‐up growth, and if they have a high R&D intensity. The study contributes to literature that analyses the trade‐off between openness and appropriability, and bridges entrepreneurship and open innovation literatures, providing valuable implications for managers.