Coupled open innovation and innovation performance outcomes: Roles of absorptive capacity

Abstract

A recent paradigm for firms to solve problems is searching boundary-spanning solutions, a process known as open innovation. Among the different types of open innovation, the coupled approach is the most typical and challenging approach. Based on the organization search theory, this paper aims to provide a comprehensive understanding of coupled open innovation and its relationship with absorptive capacity and innovation outcomes. We ask whether coupled open innovation leads to innovation and how the two dimensions of absorptive capacity - potential and realized absorptive capacity - facilitate this process to increase performance. We employ survey data, annual reports and financial data for 216 Taiwanese high-tech firms to test the research hypotheses. The results show that coupled open innovation is positively associated with incremental performance outcomes but not with radical outcomes. Regarding the role of absorptive capacity, potential absorptive capacity strengthens the positive relationship between coupled open innovation and incremental performance, while realized absorptive capacity strengthens the coupled open innovation- radical performance relationship. This study contributes to organizational search theory by connecting the dynamic capability view of absorptive capacity with open innovation research. Practical implications are also provided.