The differential impact of open innovation on the efficiency of firms

Abstract

The effects of open innovation strategies on the economic efficiency of firms is a topic often avoided, and about which little is known. This paper contributes to the exploration of that connection, revealing persistent collaboration and the embeddedness of firms within their environments to be two crucial aspects. Impacts on efficiency are conditioned by the type of external links employed, by the agents with whom a firm collaborates, and by the inherent differences between foreign and domestic firms. Findings obtained from fresh empirical evidence provided in this paper reveal that: 1) collaboration with competitors on innovation generates a direct effect on a firm’s efficiency, whether foreign or domestic; 2) only persistent and vertical linkages have a positive impact; and 3) access to complementary sources of knowledge becomes increasingly relevant to a rise in efficiency as a firm increases its embeddedness within a location, making institutional collaboration especially significant for domestic firms.