The influence of scope, depth, and orientation of external technology sources on the innovative performance of Chinese firms

It is commonly accepted nowadays that external knowledge sources are important for firms' innovative performance. However, it is still not clear, what dimensions of firms' external knowledge search strategy are crucial in determining their innovation success and whether these search strategies are contingent on different innovation modes. In this study, we analyse how the innovative performance is affected by the scope, depth, and orientation of firms' external search strategies. We apply this analysis to firms using STI (science, technology and innovation) and DUI (doing, using and interacting) innovation modes. Based on a survey among firms in China, we find that greater scope and depth of openness for both innovation modes improves innovative performance indicating that open innovation is also relevant beyond science and technology based innovation. Furthermore, we find that decreasing returns in external search strategies, suggested by Laursen and Salter (2006), are not always present and are contingent on the innovation modes. Next, we find that the type of external partners (we label it “orientation of openness”) is crucial in explaining innovative performance and that firms using DUI or STI innovation modes have different sets of relevant innovation partners. This shows that the orientation of openness is an important dimension—in addition to the scope and depth of openness. As respondents are located in China, this study provides evidence that open innovation is also relevant in developing countries.

► Open innovation is also beneficial beyond science and technology based innovation.
► Greater scope and depth of openness improves firm's innovative performance.
► The orientation of openness is crucial in explaining innovative performance.
► Firms using different innovation modes require different types of partners.