Inbound Open Innovation, Outbound Open Innovation, and their Joint Effect on Firm Performance

This study investigates the relationship between inbound and outbound open innovation activities. More specifically, drawing on a panel dataset of 322 European listed companies over a period of five years, it examines how the joint effect of inbound and outbound knowledge flows affects firm performance, measured both in terms of sales’ growth and profitability (ROA). Our preliminary findings suggest that under certain conditions their interaction may enhance firm performance. More specifically, inbound and outbound flows of knowledge have a synergistic effect on firms’ sales growth only at high level of openness, whereas they have a synergistic effect on profitability only for those firms having large internal technological investments. This study extends our knowledge of the open innovation framework by highlighting some of its boundary conditions. Moreover, it introduces a new measure of open innovation that is both objective and continuous.