Adaption To The Emerging Innovation Paradigm:Organizational Determinants Of Low And Medium-Low Technology Firms

The innovation capacity has become salient for the survival of firms in present global and competitive market. In past, the firms adapted closed linear model of innovation by strictly controlling over internal research and development activities. However, later changes in the innovation landscape weaken the sustainability of closed innovation model, and increase the reliance on multiple channels of technology exploration and exploitation. It caused to the emergence of open innovation which works through cooperating with outside institutions over more porous organizational boundaries, In contrast to the closed innovation, open innovation assumes that firms can and should use external ideas (as well as internal ideas), and external (as well as internal) paths to market.Irrespective of its importance, the present open innovation literature ignores open innovation in low-and-medium-low technology (LMT) firms and technologically less advanced countries. Similarly, the role of the organizational determinants in implementing open innovation strategies has received less attention. Building on resource based view, this research postulates that organizational capabilities determine the openness of a firm. Specifically, this research examines the role of capabilities in implementing both open innovation exploration and exploitation strategies. Accordingly, this research investigates the effect of political ties, market orientation, technology orientation, learning orientation and knowledge capability on openness. The proposed hypotheses are tested empirically using cross-sectional survey data collected from272LMT firms in Sri Lanka.The result indicates that LMT firms adapt exploration strategies at a moderate level but, the adaption of exploitation strategies is at a weak position. Capabilities affect implementation of both open innovation strategies but, their effect is higher on exploration strategies. Technology orientation, learning orientation and absorptive capability have positive effect on openness in exploration. Also, political ties, learning orientation and desorptive capability have positive effect on openness in exploitation. Results reveal no effect from R&D capability. Results show that both openness in exploration and exploitation have positive effect on firm performance in that openness in exploration is prominent. Thus, the findings suggest that open innovation is applicable in LMT firms in technologically less advanced countries, and capabilities are salient in open innovation. Further, findings suggest that open innovation enhances performance.This research provides an insight to fill the present knowledge gap by investigating the applicability and role of capabilities in implementing open innovation in LMT firms in technologically less advanced countries. Further, it develops a scale to measure desorptive capability in the open innovation. It also, provides some implications and suggestions for future research.