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

Abstract

Purpose –This paper investigates whether and under what conditions open innovation (OI) drives innovation performance (IP) in the financial sector. To this end, the paper first analyzes in depth the indirect effect of overcoming two attitudinal mediators: Not-Invented-Here Syndrome (NIHS) and Not-Sold-Here Syndrome (NSHS). It then uses dynamic capabilities theory to hypothesize that the indirect effects are moderated by absorptive and desorptive capabilities, respectively. Design/methodology/approach – The authors perform empirical study of major Spanish financial entities. Data are collected from 288 questionnaires from employees at branches of 13 bank entities. Regression analysis tests the mediating role of overcoming syndromes and the moderated-mediating role of dynamic capabilities in the OI – IP relationship. Findings – Results confirm the indirect effect of overcoming NIHS on the relationship between outside-in OI and IP, and the indirect effect of overcoming NSHS on the relationship between inside-out OI and IP. Further, absorptive capacity moderates the indirect effect between outside-in OI practices and IP by overcoming NIHS, and desorptive capacity moderates the indirect effect between inside-out OI practices and IP by overcoming NSHS. Originality/value – This paper advances knowledge by explaining discrepancies in the sign of the OI – IP relationship. Introducing comprehensive absorptive and desorptive capacity models to explain OI, it advocates an integrative framework to understand OI activities and their outcomes. Managers should develop these capacities using human talent training and cultural values development to mitigate NIHS and NSHS, and optimize firms’ OI efforts and the improved IP benefits derived from them.