Search and open innovation

Science-, supplier- and product-market-driven search strategies differ in their effect on innovation performance

The shift toward more open and interconnected innovation activities has been a major topic in recent academic and practitioner discussions. Firms must connect their in-house R&D activities with external partners, such as leading customers or universities, to increase the effectiveness of their innovation activities. Hence, management needs to define where to search for valuable knowledge in its environment. In this paper we argue that knowledge search has to reflect the heterogeneity of various knowledge sources with regard to the knowledge they can provide and how these sources can be activated. We hypothesize that search strategies driven by science, suppliers and the product market will contribute differently to innovation success with new-to-market versus imitated products. Moreover, we explore the effect of these types of knowledge search within different sectoral patterns of innovation. Our empirical analysis rests on a sample of almost 5000 firms from five Western European countries. The results support our hypotheses and highlight the potentials and shortcomings of different types of knowledge search.

Köhler, Christian, Wolfgang Sofka and Christoph Grimpe (2012), Selective Search, Sectoral Patterns, and the Impact on Product Innovation Performance, Research Policy, 41, 1344-1356.

The gains and pains from R&D outsourcing

The outsourcing of research and development (R&D) activities has frequently been characterized as an important instrument to acquire external technological knowledge that is subsequently integrated into a firm’s own knowledge base. However, in this paper we argue that these ‘gains’ from R&D outsourcing need to be balanced against the ‘pains’ that stem from a dilution of firm-specific resources, the deterioration of integrative capabilities and the high demands on management attention. Based on a panel dataset of innovating firms in Germany, we find evidence for an inverse U-shaped relationship between R&D outsourcing and innovation performance. This relationship is positively moderated by the extent to which firms engage in internal R&D and by the breadth of formal R&D collaborations: both serve as an instrument to increase the effectiveness of R&D outsourcing.

Grimpe, Christoph and Ulrich Kaiser (2010), Balancing Internal and External Knowledge Acquisition: The Gains and Pains of R&D Outsourcing, Journal of Management Studies, 47, 1483-1509.

Technological sophistication of a firm’s local environment determines the effectiveness of open innovation strategies

Searching for external knowledge has frequently been characterized as crucial for firm success. However, little is known about how the direction of search strategies influences innovation performance. In this paper, we argue that firms need to specialize their search strategy and that its effectiveness is moderated by research and development (R&D) investments and potential knowledge spillovers from a firm’s environment. Based on a sample of >5,000 firms from five European countries, our results show that being open for innovation generally pays off. However, both moderating factors have a crucial role to play: on the one hand, in-house R&D investments are most effective when combined with a market-oriented search strategy. On the other hand, a technologically advanced environment requires firms to reach out to sources of scientific knowledge in order to access highly novel knowledge and to enhance innovation performance. We develop targeted management recommendations based on these results.

Sofka, Wolfgang and Christoph Grimpe (2010), Specialized Search and Innovation Performance – Evidence Across Europe, R&D Management, 40, 310-323.

Firms in high-tech and low-tech search differently for new knowledge

Searching for externally available knowledge has been characterised as a vital part of the innovation process. Previous research has, however, almost exclusively focused on high-technology environments, largely ignoring the substantial low- and medium-technology sectors of modern economies. We argue that firms from low- and high-technology sectors differ in their search patterns and that these mediate the relationship between innovation inputs and outputs. Based on a sample of 4500 firms from 13 European countries, we find that search patterns in low-technology industries focus on market knowledge and that they differ from technology sourcing activities in high-technology industries.

Grimpe, Christoph and Wolfgang Sofka (2009), Search Patterns and Absorptive Capacity: Low- and High-Technology Sectors in European Countries, Research Policy, 38, 495-506.