Does Information Technology Improve Open Innovation Performance? An Examination of Manufacturers in Spain

Abstract

Our objective in this paper is to explore the impact of information technology (IT) on the performance of open innovation models. We study the effect of IT on the production of patents and product innovations. Our analysis of a large panel of Spanish manufacturing firms confirms that the effect of the proportion of external research and development (R&D) investments on the production of patents and new products has an inverted U-shape. The results also reveal that investments in IT positively moderate the consequences of open innovation on innovation performance by reducing identification, assimilation, and utilization costs. Our results provide evidence of the viability and benefit of a new strategic alternative to innovation that is different than the traditional process of vertically integrated R&D. The online appendix is available at https://doi.org/10.1287/isre.2017.0705 .

Information technology and innovation outcomes: is knowledge recombination the missing link?

“…With regard to innovation outcomes, prior studies have documented a direct effect of firms' IT use on innovation outcomes as either increasing the quantity of patent inventions (e.g., Gómez et al, 2017;Joshi et al, 2010;Saldanha et al, 2017;Xue et al, 2012) or improving the quality of patent inventions (e.g., Kleis et al, 2012;Ravichandran et al, 2017). Based on these findings, we further propose that IT use can support knowledge recombinant intensity, which, in turn, generates a high quantity of patent inventions.…”

“…As mentioned earlier, prior studies have separately shown the positive impacts of IT use on patent quantity and quality (e.g., Gómez et al, 2017;Joshi et al, 2010;Kleis et al, 2012;Ravichandran et al, 2017;Saldanha et al, 2017;Xue et al, 2012). We further propose that IT use can support knowledge recombinant diversity, which, in turn, generates a high quantity of patent inventions.…”

“…IT use: We follow prior studies to measure IT use as the count of servers, personal computers (PCs), local area network (LAN) nodes, and the storage capacity in gigabytes used by a firm, scaled by the number of employees (e.g., Gómez et al, 2017;Joshi et al, 2010;Tambe, Hitt, & Brynjolfsson, 2012;Zhu & Kraemer, 2002). Such a measure of IT use per capita reflects the degree to which IT infrastructure is intensively used by employees in a firm.…”

“…First, we open up the black box of the innovation process through which IT use influences patent inventions by proposing the missing link of knowledge recombination. Prior studies documented some controversial findings about IT use and innovation outcomes; most studies found a positive link between IT use and innovation outcomes (e.g., Gómez et al, 2017;Joshi et al, 2010;Ravichandran et al, 2017;Xue et al, 2012), while others reported a non-significant effect (e.g., Aral & Weill, 2007) or a weak relationship (e.g., Kleis et al, 2012). Thus,…”

“…Information technology (IT) is an organizational resource enabling knowledge production, leading to innovation outcomes in the form of patent inventions (Kleis, Chwelos, Ramirez, & Cockburn, 2012;Nambisan, Lyytinen, Majchrzak, & Song, 2017). In the IS literature, firms' use of IT has been found to be a key enabler of performance outcomes (Devaraj & Kohli, 2003) and, more recently, innovation outcomes such as patent inventions (e.g., Gómez, Salazar, & Vargas, 2017;Joshi, Chi, Datta, & Han, 2010;Kleis et al, 2012;Ravichandran, Han, & Mithas, 2017;Saldanha, Mithas, & Krishnan, 2017;Xue, Ray, & Sambamurthy, 2012). Prior studies linking IT and innovation outcomes have examined the direct link between IT use and patent inventions without providing much insight into the innovation process through which this link is established.…”