Fostering radical innovations with open innovation

The purpose of this paper is to examine the influence of inside‐out open innovation (as opposed to closed innovation) on firm innovation performance. Inside‐out open innovation involves the exploitation of existing internal technologies through innovation and commercialization.

Hypotheses are tested empirically using survey data collected from stock‐listed companies in Germany, Switzerland and Austria. The data include the complete responses from 141 R&D managers for the period from 2004 to 2008.

The results reveal that companies that emphasize inside‐out open innovation are more likely to create radical innovations and tend to sell a greater number of new products. Companies pursuing closed innovation are more likely to exhibit a higher incremental product innovation performance.

The cross‐sectional data approach and its dependency on the perceptions and experiences of the respondents has its limitations. Future research should extend the focus and concept of this study and explore additional closed and open innovation strategies.

The adoption of open innovation in practice has not been examined in depth. This study provides empirical insights into the open innovation approaches in German‐speaking countries and, by drawing important conclusions and implications for managers involved in the R&D processes, fills a gap in the innovation management literature.