How to Manage Opportunity and Risk in Open Innovation? Moderating Effects of Network Centrality and Knowledge Protection

Despite the considerable opportunities that open innovation (OI) offers for firms to acquire internally lacking resources, it also has a dark side – the risk of partners’ opportunistic behavior. In light of this risk,... [ view full abstract ]

Despite the considerable opportunities that open innovation (OI) offers for firms to acquire internally lacking resources, it also has a dark side – the risk of partners’ opportunistic behavior. In light of this risk, firms might be reluctant to implement OI activities, such as crowdsourcing, co-development, and other collaborations with suppliers, competitors, or customers. Drawing on network theory, this study investigates how structural network characteristics (network centrality) as well as relational network characteristics (knowledge protection) might help to leverage the opportunities and counter the risk involved in OI. Thereby, it contributes to the debate about the potential gains and pains of OI and adds weight to the emerging dialogue regarding potential remedies of risk in OI. The multisource data for the empirical analyses stem from multi-industry survey data from managers in 181 companies, enhanced by secondary data from a financial database. The results reveal that a central network position counters the risk and enhances resource acquisition from OI. Contrary to expectations, knowledge protection does not serve as a countermeasure and hinders resource acquisition from OI. Hence, the findings provides valuable implications for managers about effective measures for fostering resource acquisition and reducing risk in OI at the same time.