Implications and future study

Through the theoretical lens of organizational search, this study asks whether coupled open innovation leads to favorable organizational outcomes and whether performance can be facilitated by absorptive capacity. With numerous companies adopting coupled open innovation, this study provides insights for theory and practice.

The research on open innovation originated from the observations of several large companies’ practices, and many studies have followed this path to provide more empirical evidence. This is, of course, appropriate and inspiring to some extent due to its complex processes. However, following some previous exceptional work that aims to theorize these practices (Enkel et al., 2009;

Gassmann and Enkel, 2004), this study contributes to building a more coherent theoretical basis for further studies by specifically examining coupled open innovation and its organizational outcomes. Hopefully, future studies can build upon the results of this study to refine the open innovation model and continue the debate on this issue.

Organizational search theory notes that firms searching for solutions from external sources face the costs of building organizational practices to handle these processes (Laursen and Salter, 2006). Coupled open innovation is a more complicated and costly search behavior than solely inbound or outbound modes.

Our results show that firms adopting coupled open innovation can experience incremental innovation outcomes but need the accumulation of realized absorptive capacity to jointly achieve positive radical innovation performance.

This finding is encouraging because, given the costs associated with adopting this approach, the positive performance outcome can still be anticipated with the assistance of other organizational conditions. That said, while a local search is usually adopted due to firms’ routines and past experiences, a non-local search

can pay off with high absorptive capacity. This evidence opens the research agenda that connects the study of open innovation to organizational search theory.

Another academic dialog occurs when organizational search theory interacts with the dynamic capability view. Both theories aim to explore how firms use external resources to solve their problems. However, organizational search theory emphasizes the path or boundary of search behavior, while absorptive capacity focuses on how internal organizational mechanisms help to utilize the search results more efficiently. Connecting the two theories opens a debate and makes inroads for future studies. There are several worthwhile questions, such as whether these internal mechanisms to assist the transformation of external knowledge have limitations, as Cohen and Levinthal (1990) noted that absorptive capacity may also limit the resources that can be absorbed. Future studies can follow this line of research and investigate the possible optimal level of absorptive capacity.

The results of this study also benefit practitioners. Previous studies not only suggest that open innovation is almost imperative for all firms (Chesbrough, 2003b) but also warn of the potential paradox of openness (Laursen and Salter, 2006). Our empirical results generate the encouraging message that when firms aim to achieve incremental innovation outcomes, coupled open innovation is highly recommended, even with the costs of setting up new organizational practices to handle it. It is even more advisable if firms are equipped with a high level of ability to acquire and assimilate external knowledge. As for the radical innovation outcome, the process is more complicated. Firms need to accumulate adequate abilities to transform and exploit external knowledge so that they can benefit from coupled open innovation for a more radical innovation outcome.

Managers might need more patience for the cultivation and accumulation of these abilities when their objective is to attain radical innovations.

Although these results are compelling, this study has several limitations that warrant additional research. This study uses annual reports to collect the practices that firms adopted for coupled open innovation. Some companies regard these practices as confidential data that should not be disclosed. Other measurements, in-depth interviews or experimental designs (Wang, Chen, Lin, Lin, and Lee, 2011) can be developed and used in future studies to complement

the current research. In addition, this study uses a sample of high-technology firms that are typically characterized by high innovative capabilities and are thus suitable for observing coupled open innovation and its performance outcomes.

To achieve generalizable findings, future studies should use other industries as samples. Furthermore, our study considers only the impact of coupled open innovation on innovation performance outcomes; future studies are advised to research the impact on financial outcomes or strategic outcomes, such as competitive situations or the creation of networks.

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