Inter-Organizational Relationships in Open Innovation - A Case study in Mature Industry

This paper borrows from social network theory insights into the supply network structure in order to understand how companies can gain leverage from supply networks in open innovation (OI). In a rapidly changing environment and with an increasing cost of innovation, companies need to search outside for new knowledge and technology to sustain their competitive advantages. Through the in-depth case study of a leading company in the Home Appliances Industry, this paper describes how a company in mature industry gain leverage from its supply networks in inbound open innovation to enhance knowledge flow. The evidence illustrates that the company has involved both strong and weak supply ties in inbound OI as important source of knowledge and technology to accelerate innovation. In particular, we argue that apart from a supporting effect of strong ties in OI activities, involvement of strong supply ties in OI activities may also stimulate the implementation of OI by suppliers and may result in higher innovative performance. Also forming new interactions with new partners and spanning industry boundaries allows companies to gain access new knowledge from different industrial and technological sectors. More precisely, we highlight the importance of creating trust with weak ties and transparent evaluation process.