Collaboration scope and product innovation in B2B Markets: Are there too many cooks or is it the customer who spoils the broth?

• Main Authors: MOOI, Erik, OSINGA, Ernst C., SANTOS, Carlos D.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2022
• Subjects: Customer collaboration; Collaboration scope; Product innovation; R&D; Marketing; Technology and Innovation
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/6983; https://ink.library.smu.edu.sg/context/lkcsb_research/article/7982/viewcontent/Collaboration_B2B_av.pdf
• Institution: Singapore Management University

Purpose: Product innovations are often the result of combinations of internal and external knowledge. A significant amount of Open Innovation literature has argued that working with external partners can be beneficial, in particular when this is complemented by internal R&D yet a wholesale shift to Open Innovation has not occurred. Our work demonstrates two new limits of openness, grounded in attention-based theory, that help explain why such a shift has not occurred. We argue that specific combinations of identities a firm collaborates with, i.e., whether a partner is classified as a customer, supplier, competitor, or university and/or technological center predictably increase and decrease product innovation.Findings: We observe positive effects of customer collaboration, partner scope (collaboration with other outside identities), and internal R&D when considered separately. Critically, we observe two important situations where these positive effects are reduced. First, we argue and observe that when customers are added to the mix of identities, diminished returns on product innovation results. Second, we argue and observe that technological customer collaboration reduces the benefits from an internal R&D department (more than collaboration with other identities). Our findings are robust in that singling out another partner identity does not reveal such patterns.Design/Methodology/Approach: We demonstrate these findings using econometric techniques on a large-scale panel dataset, comprising 14,682 observations.Research implications: Our findings stress the importance of considering the identity of collaborating parties in studying the impact of openness on innovation success. We conceptually and empirically reject the–implicitly held–assumption in the literature that different partners provide similar benefits and are interchangeable.Practical Implications: We propose new limits to the “open innovation” literature. As identities are easy to observe by managers and are shown to impact product innovation, we argue they are highly relevant to managerial decision-making. We also observe, through counterfactual analysis, that attention limits are critical as a theoretical setting of no attention limits would significantly lift product innovations.Originality/value: We show important limitations to the Open Innovation literature by showing that customer collaboration leads to declining rates of product innovation when combined with greater collaboration scope or the internal R&D department. We add the novel insight that customer collaboration weakens the positive effect of collaboration scope and internal R&D on product innovations.