How Do Informal Ties Drive Open Innovation? The Contingency Role of Market Dynamism

Scholars and practitioners have recently shifted their attention from traditional closed internal innovation to open innovation (OI). Building on both the resource-based view and the network perspective, we explore the roles of three types of informal ties (i.e., business, government, and university) in driving inbound and outbound OI, and further examine such effects contingent on market dynamism. Empirical results from our study of 260 Chinese firms show that all three types of informal ties positively affect inbound innovation openness, whereas only business ties facilitate outbound innovation openness. In addition, market dynamism strengthens the relationship between university ties and inbound innovation openness, but weakens the effect of business ties on inbound innovation openness. These findings indicate the salience of informal ties in increasing innovation openness and the contingent role of external market conditions. The findings contribute to the understanding of the drivers of innovation openness, and help clarify the differences between inbound and outbound OI.