The concept of open innovation (OI) has recently captured the wide attention of academics and practitioners alike, as it seems to have positive impacts on firm performance. Despite its benefits, adopting this innovation model does not seem to be easy as several challenges beset the open process. For example, OI primarily focus on identification of proper and compatible external knowledge as well as their exploitation, respectively. However, extant researches provide little evidence about how to implement that. In addition, a large amount of researches suggest, even adopting this innovation model, firms may benefit differentially from various open strategies; and it is unclear why this is so.

This thesis aims to address the above issues by examining the drivers of OI as well as the impacts of OI. It consists of two essays, the first essay focuses on OI antecedents while the second essay focuses on OI consequences. Building on both the resource-based view and the network perspective, the first essay explores 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.

The second essay explores two kinds of inbound OI strategies and their interaction with business model to accelerate firm new product development process. Specifically, even though previous studies highlight the benefits of open innovation substantively, recent researches reveal that firms benefit differentially from adopting various open innovation strategies. One plausible explanation is that firms’ business models does not fit with their open innovation. Based on the contingent perspective, we explore how firms align open innovation strategies with business models to speed up their product development. Empirical results from our study of 265 Chinese firms show that both horizontal and vertical strategies of open innovation positively affect new product development speed. More importantly, we find that efficient business model design strengthens the positive effect of vertical open innovation, whereas weakens the positive effect of horizontal open innovation. We also find novel business model design strengthens the positive effect of horizontal open innovation, whereas dampens the positive effect of vertical open innovation. This research contributes to open innovation literature by illustrating the salience of business model in conducing the success of open innovation strategies in terms of new product development.

Collectively, this thesis contributes to current OI literature by more precisely explaining the relationships between informal ties and OI as well as the relationships between different OI strategies and firm business model design. This thesis therefore highlights and confirms the positive effect of informal ties on innovation openness and also accounts for the changing market conditions that could vary such effect by showing the strengthened effect of university ties and weakened effect of business ties on inbound openness, respectively. In addition, firms that attempt to adopt inbound OI to facilitate new product development speed should focus on changing their business model around either the efficient or novel design, to accommodate different inbound OI strategies. For OI breadth that broadly involves various external partners into innovation process, novel business model is more appropriate, while efficient is more suitable for OI depth that deeply relies on few knowledge-intensive partners.

Such knowledge offers a better understanding of how firms could exert their network to implement both inbound and outbound OI, and how to design business model along with the inbound OI breadth and depth may therefore greatly benefit innovation performance.