The Impact of Openness on Innovation Efficiency: Manufacturing and Service Industry

As innovation activity within cooperation, network, and openness is paid attention, open innovation that reinforces competitiveness of innovation activity using various inside and outside sources, was introduced. In this study, the innovation efficiency of Korean manufacturing and service industry is measured and relationship with openness is analyzed. In comparative analysis among observed firms with relative efficiency measurement, it should be evaluated under identical conditions by ruling out external environmental influences. Therefore a three-stage approach is applied to estimate net innovation efficiency that excludes advantage or disadvantage from environmental factors. This study estimates net innovation efficiency that terminates effects of external factors placed in out of operational control of firm using the three-stage approach. It aims to improve reliability of research because observed firms are evaluated under identical conditions. Furthermore, the results show the degree of openness affects innovation efficiency positively in manufacturing sector. It implicates the needs of policy that encourages manufacturing firms to cooperate with external facilities actively.