Establishing open innovation culture in cluster initiatives: The role of trust and information asymmetry

Highlights

• We examine inbound and outbound open innovation in terms of organizational culture in a geographic cluster.

• We find that agglomeration effects lead to higher trust and information asymmetries in the cluster initiative.

• Higher trust fosters open innovation culture whereas information asymmetries reduce it.

• We find membership in cluster initiative increases effects of trust and information asymmetries on open innovation culture.

Abstract

Extant research has found superior performance of firms located in clusters. However, it is unclear whether this is based on mere proximity or other unobserved factors. We extend this literature by developing a framework to examine in what way institutions promote open innovation processes between clustered firms. Specifically, we develop a set of hypotheses to investigate to what extent structural and relational elements in a cluster organization affect the open innovation culture. Our model integrates effects of agglomeration, networks, information asymmetries and trust on open innovation culture. We focus on the underlying organizational norms established in clustered firms in relation to open innovation. Specifically, we measure open innovation culture in terms of not-invented- and not-sold-here syndromes, which is facilitated by the integration of trust and reduced by information asymmetry within the cluster region. We test this framework using novel and unique data from member and non-member firms of a cluster initiative in a German high-tech cluster. Our findings from moderation analysis show that a regulatory body in the cluster significantly influences the emergence of both inbound and outbound open innovation activities by member firms in the cluster initiative through increased effects of trust and information asymmetries. Thereby, our paper contributes to literatures of open innovation, including networks of small and medium sized enterprises (SMEs), and cluster policy.

Introduction

Open innovation has developed as an important research domain and industrial practice to describe “a distributed innovation process based on purposively managed knowledge flows across organizational boundaries” (Chesbrough and Bogers, 2014, p. 17). The literature on open innovation has described many facets of the phenomenon, such as the key concepts and mechanisms that underlie the open innovation process (Dahlander and Gann, 2010; Randhawa et al., 2016; West and Bogers, 2014). However, despite the enormous progress, there is still a large focus on the organization—often large organizations—per se as the level of analysis with relatively little attention to other levels of analysis (Bogers et al., 2017; West et al., 2014). In particular, while Chesbrough and Bogers (2014) specifically identify some higher levels of analysis, such as networks and regions, as important research opportunities, they also describe a strong need to better understand intra-organizational attributes of open innovation. In this paper, we address these gaps considering how specific individual, relational and network level characteristics jointly promote open innovation between clustered firms. Thereby, we contribute to the literatures of open innovation and (regulation in) clusters as we show how some of the underlying concepts jointly determine how such boundary-crossing innovation processes can be shaped.

Building on Bogers et al. (2017) we consider multiple levels of analysis as being important to more fully explain certain parts of the open innovation process. Indeed, some scarce work has highlighted the important of considering certain intra-organizational attributes, such as culture (e.g., not-invented-here or not-sold-here) (Antons and Piller, 2015; Herzog and Leker, 2010; Kratzer et al., 2017), information asymmetries (Henkel, 2006), trust (Lee et al., 2010; Perrons, 2009; Rost, 2011), and clusters and geography (Di Minin and Rossi, 2016; Simard and West, 2006). While these studies address important aspects of open innovation, they only address the connections between these elements—e.g., the connection between trust and cluster (Abu El-Ella et al., 2015)—to a limited extent. To further explore the relationships and contingencies in this complex set of related concepts, we investigate the question to what extent structural and relational elements in a cluster organization affect the open innovation culture, while also considering some regulatory constraint in terms of cluster membership.

In order to investigate this question, we develop and test a framework regarding the role of trust and information asymmetries for the emergence of open innovation culture among geographically clustered firms with and without membership in a cluster initiative, respectively. In doing so, we create a multi-level perspective on how open innovation culture can be established as well as how a regulatory body (cluster initiative) fosters the emergence of trust in research-intensive industries and its effects on inter-organizational innovation processes.

Building on Chesbrough's (2003) seminal work, and the large body of research on a variety of aspects pertaining to open innovation that has emerged ever since (Dahlander and Gann, 2010; Randhawa et al., 2016; West and Bogers, 2014), this study helps to shed light on the specific relationship across concepts and levels. For example, we build on the notion of information (asymmetries) (e.g. Henkel, 2006) and connect this to trust (Lee et al., 2010; Perrons, 2009; Rost, 2011) in the context of clusters (Abu El-Ella et al., 2015; Di Minin and Rossi, 2016). Interestingly, there has been relatively little research to explicate the role of trust for open innovation, which is somewhat surprising given that open innovation arrangements may often involve less formal contractual measures, hence implying an inherent need for trust-based relationships. This paper contributes to closing this gap with a study of a particularly trust-affine setting from a spatial perspective (Gassmann et al., 2010, p. 213). Using novel and unique data from a cluster region in South-Western Germany, we were able to disentangle geographical effects of proximity from those linked to membership in a cluster organization. Scholars have found external search strategies to be organized in regional systems (Belussi et al., 2010; Cooke, 2016). We extend this literature by differentiating the cluster effect into two components and find that among all firms located in the same region, membership in a cluster initiative increases both inbound and outbound open innovation activities; in other words not-invented-here (Katz and Allen, 1982) and not-sold here (Herzog, 2008) syndromes are decreased for these firms. This innovation process-oriented analysis supports earlier findings (Love et al., 2011), however, we could not differentiate different inbound (sourcing, acquiring) or outbound (revealing, selling) processes (Dahlander and Gann, 2010).

The rest of the paper is organized as follows. We delineate the conceptual background consisting mainly of cluster and network literatures, which is the context in which we analyze the role of information asymmetry and trust. We then develop our hypotheses. In the following two sections we describe our data and measures, before we present corresponding findings from at the structural model level. Finally, we discuss our findings, provide some theoretical contributions and practical implications and conclude with limitations and future research avenues.