HOW OPEN DO MNCS NEED TO BE TO EXTRACT VALUE IN OPEN INNOVATION?

We investigate the relationship between openness and value appropriation in the open innovation strategies of multinational corporations (MNCs). Previous research has suggested an inverted U-shaped relationship between external knowledge sourcing and innovative performance of firms engaged in open innovation (Laursen and Salter, 2006). Little research, however, has been conducted on the specific relationship between openness and value appropriation in the context of open innovation involving MNCs. To address this, we conduct a sequential mixed-methods study involving: (1) interviews with 31 elite key informants in large, well-known MNCs, and (2) a survey questionnaire of innovation managers in 75 MNCs. We find strong support for an inverted U-shaped relationship between openness and value appropriation in MNCs engaging in open innovation. Our interview data provides rich and substantive insight into this relationship. We discuss implications for theory and practice.