Research on Dynamic Capability and Enterprise Open Innovation

Abstract

Chinese firms urgently need to use open innovation models to access external knowledge, resources, and skills to improve their internal innovation performance and achieve innovation catch-up. Using a dataset of joint patent applications of Chinese-listed manufacturing firms from 2006–2018, we construct a panel fixed-effects model to empirically test the effect of dynamic capabilities on firms’ open innovation. The results show that dynamic capabilities can effectively promote firms’ open innovation activities. In addition, the different dimensions of dynamic capabilities, namely sense capabilities, absorptive capabilities, complementary capabilities, and coordinative capabilities, also have significant incentive effects on firms’ open innovation. The results of the extended analysis show that dynamic capabilities have heterogeneous effects on the open innovation activities of different types of firms. Specifically, the impact of dynamic capabilities on open innovation is stronger for private firms, large and medium-sized firms, and multinational firms. The findings of this paper can provide important theoretical support and management insights for governments and enterprises to effectively manage the “paradox of openness” problem, thereby enhancing the firm’s innovation capability and achieving major bottleneck breakthroughs in key and core technologies.