Managing open innovation projects with science-based and market-based partners

Abstract

This paper examines the relationship between (outside-in) open innovation and the financial performance of R&D projects, drawing on a unique dataset that contains information on the open innovation practices, management and performance of 489 R&D projects of a large European multinational firm. We introduce two types of open innovation partnerships - science-based and market-based partnerships and examine their relationships with project financial performance. In addition, we investigate whether the open innovation project performance relationships are influenced by the way how R&D projects are managed. Our results show that R&D projects with open innovation partnerships are associated with a better financial performance providing that they are managed in the most suitable way. Market-based partnerships are positively correlated with project performance if a formal project management process is used; however these partnerships are associated with a lower performance for loosely managed projects. In contrast, science-based partnerships are associated with higher project revenues for loosely managed projects only. (C) 2014 Elsevier B.V. All rights reserved.