Not-Invented-Here Syndrome and Innovation Performance: The Confounding Effect of Innovation Capabilities as Organisational Routines in Service Firms

Abstract

Currently, it is commonly accepted that the not-invented-here syndrome (NIHS) refers to internal resistance against external knowledge, and that it has devastating consequences on innovation performance (IP). Nevertheless, studies on organisational practices that neutralise NIHS are incipient. Moreover, it is accepted that innovation capabilities (ICs) are perhaps the organisational routines with the highest positive influence on IP. In this study, based on the organisational routine framework and agency theory, we propose a model in which ICs (i.e., client-focused, marketing-focused, and technology-focused ICs) have a confounding effect on an NIHS–IP relation. Structural equation modelling (SEM) was used to test the proposed model with survey data from a sample of 161 service firms. We find that (1) NIHS influences IP negatively, and (2) ICs weaken NIHS–IP relation, practically turning it null. Finally, this paper provides insights for researchers and managers regarding a possible overestimation of the negative effects of NIHS on the literature.

How open innovation practices drive innovation performance: moderated-mediation in the interplay between overcoming syndromes and capabilities

“…Ours is among the first empirical studies to demonstrate neutralization of the negative effects of NIHS and NSHS. These findings contribute to literature arguing that scholars overestimate the negative effect of NIHS and NSHS on innovation results (Arias-Pérez et al, 2017), as these negative effects can be countered.…”

“…Absorptive capacity pressures and molds employees' perception of outside knowledge, even aligning that knowledge with organizational aims to demand maximum use of this resource (Arias-Pérez et al, 2017). In such situations, employees are more willing to act without bias toward outside knowledge; they believe the knowledge does not jeopardize their personal interest (Arias-Pérez et al, 2017).…”

“…We derive these measures from dynamic capabilities theory, which argues that extracting and transferring valid knowledge requires firms to develop knowledge-oriented capabilities (absorptive and desorptive capabilities) that transcend internal and external distinctions to understand, recombine and transfer knowledge from outside in and vice versa (Stephen and Ferriss, 2018). Organizational capabilities' can shape attitudes (Arias-Pérez et al, 2017) and neutralize NIHS and NSHS (Amann and Granström, 2019).…”

Strategic orientation toward digitalization to improve innovation capability: why knowledge acquisition and exploitation through external embeddedness matter

“…We suspect that another explanation to attempt to explain the inexistence of the mediations proposed could be the presence and possible negative influence of protective attitudes against knowledge sourcing and knowledge sharing in the form of the not-invented-here (NIH) and the not-shared-here (NSH) syndromes (de Araújo-Burcharth et al , 2014), which are organizational phenomena quite evident in the culture of companies operating in emerging markets (Arias-Pérez et al , 2017; Bogers et al , 2019).…”

Corporate foresight for strategic innovation management: the case of a Russian service company

“…The innovation literature has referenced the problems of not invented here syndrome (Calof et al , 2018a, 2018b; Arias-Pérez et al , 2017) such as the unwillingness to accept ideas from outside the organization due to fear of patent infringement, a lack of understanding of outsiders’ work and inherent fear of future supply issues, among others. In this case, with 94 per cent percent of the recommendations being accepted, clearly the company was open to external ideas provided by HSE and appeared to be so during the project.…”