Objective and main results

This article focuses on the role of IT in open innovation. Based on the argument that the costs of incorporating external knowledge into an organization’s innovation activities are reduced by IT that enable efficient management and integration of knowledge, the article studies the moderating effect of IT investments on open innovation performance.

Main findings:

• 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.
• Investments in IT positively moderate the consequences of open innovation on innovation performance. In other words, IT investments make the relationship between open innovation strategies and invention/product innovation stronger.
  • IT investments influence innovation output by acting as a facilitator of R&D activities.
  • IT investments improve the performance of open innovation activities as the firm moves from lower to higher levels of openness. However, IT investments are less effective when the extent of openness is high.

Summary of practical implications

IT investments have an important role in explaining the production of innovations. The results reveal that the benefits of an open innovation strategy are negligible if firms do not invest in IT. In contrary, as firms invest in IT, they start to benefit from external knowledge. To improve innovation performance, firms should therefore simultaneously invest in both IT and external R&D. This must be considered when designing innovation processes.

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