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 perfor-mance of R&D projects, drawing on a unique dataset that contains information on the open innovationpractices, management and performance of 489 R&D projects of a large European multinational firm. Weintroduce two types of open innovation partnerships – science-based and market-based partnerships –and examine their relationships with project financial performance. In addition, we investigate whetherthe open innovation—project performance relationships are influenced by the way how R&D projects aremanaged. Our results show that R&D projects with open innovation partnerships are associated with abetter financial performance providing that they are managed in the most suitable way. Market-basedpartnerships are positively correlated with project performance if a formal project management pro-cess is used; however these partnerships are associated with a lower performance for loosely managedprojects. In contrast, science-based partnerships are associated with higher project revenues for looselymanaged projects only.