The journey towards open innovation: why do firms choose different routes?

Prior research on open innovation provides no systematic insight whether firms with internal innovation constraints increase the scale of R&D outsourcing or the number of innovation cooperation partnerships. Motivated by this research gap in the literature, we study the effect of economic- and knowledge-related innovation impediments on a degree of formal openness in innovation. Analyzing a 3 years panel dataset of German manufacturing firms obtained from Mannheim Innovation Panel (MIP) database, we find that knowledge-related obstacles induce firms to increase the scale of R&D outsourcing as well as to engage in innovation cooperation partnerships. Contrariwise, a non-significant relationship is detected between economic related innovation impediments and R&D openness. Hence, the study suggests that a high degree of openness in innovation is driven by knowledge shortages rather than cost-risk minimization objectives.