Capabilities and Implementation of Inbound Open Innovation: Evidence from LMT Firms in Technologically Less Advanced Countries

Abstract

This study examines the applicability of inbound open innovation, and the effect of capabilities on implementation of inbound open innovation in low-and medium-low technology (LMT) firms in technologically less advanced countries. Based on the resource based view, this study postulates positive causation form capabilities and implementation of inbound open innovation. Particularly, the effect of customer and competitor orientation is assessed. Also, the uncertainty in the business environment changes the firms’ strategies thus; a moderating effect of technology turbulence is posited. The proposed hypotheses are tested empirically using cross-sectional survey data collected from 272 LMT firms in Sri Lanka. The results suggest that LMT firms implement inbound open innovation at a moderate level. The results from the hierarchical regression models indicate positive and significant effect from the customer and competitor orientation. Also, the results partially confirm the moderating effect. The effect of competitor orientation is higher in a technologically turbulent environment but, there is no moderating effect on customer orientation. Accordingly, this study empirically confirms the validity of open innovation across the firms and countries irrespective of their technology, and research and development intensity. Further, findings suggest that LMT firms that adapt inbound open innovation should be cautious on capabilities and environment turbulence. Finally, this study provides implication for the managers and suggestions for future research.

Keywords: Inbound open innovation, Capability, Customer orientation, Competitor orientation, Technology turbulence, LMT firms, Technologically less advanced countries