The Impact Of Open Innovation On Incremental Innovation Capability

For the technologically intensive firms, innovation is the key element for them to maintain competitive advantage and sustainable competitiveness. As one of the important strategy for enterprises' implementation of innovation activities, incremental innovation serves as the instrument of enterprise to make up the technology distance between enterprises and shorten the potential difference of their capabilities. With the rapid development of technology economy and the accelerated updating of information technology, industrial life cycle continuously shortens. In order to manage the innovation task quickly, firms adopt an open innovation strategy, in which they cooperate with other partners, and integrate both internal and external sources to increase the efficiency of innovation and occupy a predominant position. So, in an open innovation paradigm, how to effectively enhance firms' innovation capability, especially incremental innovation capability, is very important for the future development of firm.Current researches on the relationship between open innovation and firms'innovation capability, focus mainly on the outsourcing of innovation sources. And network embeddedness in innovation network has received widespread attentions. In terms of theories of open innovation, incremental innovation and network embeddedness, this paper explores the dynamic effect of innovation openness on firms'incremental innovation capability in different development stages of industrial technology. Firstly, the paper states the theoretical foundation in detail, and then constructs a model of the relationship between open innovation and incremental innovation capability. Moreover, this study explores the impact of innovation openness on firms'incremental innovation capability in different development stages of industrial technology by conducting patent network analysis using UCINET 6.0 and hierarchical regression using SPSS 20.0 with patent data of 54 firms in Smart phone industry during 2000-2014.These results of the empirical tests show that, Firstly, two constituents of network embeddedness have a significant impact on incremental innovation capability. specifically, relational embeddedness is positively related to incremental innovation capability. structural embeddedness is negatively related to incremental innovation capability. Openness moderates the relationship between network embeddedness and firms'incremental innovation capability. Further, the moderating effects of breadth of openness and depth of openness are different in different development stages of industrial technology. Secondly, at the budding period of technology, both the breadth of openness and depth of openness have positive moderating effect on relationship between network embeddedness and incremental innovation capability. Thirdly, at the emerging period of technology, the moderating effects of breath of openness breadth and depth of openness disappear. Fourthly, at the stable period of technology, breadth of openness has a positive moderating effect on relationship between network embeddedness and incremental innovation capability, but the moderating effect of depth of openness disappears.The purpose of this study is mainly focused on exploring the way in which open innovation affects firms' incremental innovation capability through network embeddedness in the process of industrial technology development. The results can guide the technologically intensive firms to efficiently cultivate and improve firms' incremental innovation capability and realize firms' sustainable development through the adoption of appropriate open innovation strategy.