Determinants of Openness in Innovation Activities: Evidence from China

Open innovation has received increasingly research interests but so far it has mainly been analyzed in context of the leading and mature economies. Extant research on open innovation still offers little systematic insight of how and why firms in developing countries differ regarding the extent to which they conduct open innovation activities as well as those in developed countries do. Due to the different innovation dilemmas of indigenous firms in China, we focus on explaining the openness in innovation activities as a result of innovation weakness (includes firm-internal and firm-external), specifically, impediments to innovation. Based on our theoretical framework, three hypotheses are proposed on how different impediments to innovation determine the breadth and depth of open innovation. Then we test them by using an exceptionally large and detailed data set - China Innovation Survey (2008). Our results provide support for most of the hypothesized relationships but fail one. It is found that market-/institution-related impediments and finance/risk-related impediments will greatly increase openness. By contrast, knowledge/skill-related impediments do not show significant positive impact on promoting openness for most Chinese firms. We furthermore discuss the underlying reasons of these explorative findings and their significance to both academics and managers.