Open Innovation and Market Value: An Extended Resource-Based View

Fuzhen Liu, Kee hung Lai, Chaocheng He

Research output: Journal article publicationJournal articleAcademic researchpeer-review

1 Citation (Scopus)

Abstract

Open innovation (OI) is crucial for firms to obtain external resources and enhance their market value. This article examines whether OI network resources (i.e., breadth and depth) affect firms’ market value and how these relationships are contingent on the firms’ internal capabilities (i.e., absorptive capacity and financial leverage). Based on longitudinal data from 2015 to 2019 for 132 Chinese firms, we use panel data in a fixed effects model to address these research questions from an extended resource-based view. The results show that network breadth and depth are positively associated with firms’ market value. Notably, absorptive capacity strengthens the positive effects of network breadth and depth on firms’ market value, but these effects are weakened by financial leverage. Our findings add new insights to the OI literature by revealing the market value of OI in firms’ external networks and internal capabilities. More importantly, we provide suggestions for managers to occupy an advantageous market position by proactively embracing external search strategies and developing their firms’ absorptive capacity rather than using debt financing to increase their firms’ OI.

Original languageEnglish
JournalIEEE Transactions on Engineering Management
DOIs
Publication statusAccepted/In press - 2022

Keywords

  • Absorptive capacity
  • Business
  • external network
  • financial leverage
  • Knowledge engineering
  • market value
  • open innovation (OI)
  • Product development
  • Search problems
  • Technological innovation
  • Transforms
  • Uncertainty

ASJC Scopus subject areas

  • Strategy and Management
  • Electrical and Electronic Engineering

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