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OPEN INNOVATION: THE ROLE OF ORGANIZATIONAL

LEARNING CAPABILITY, COLLABORATION
AND KNOWLEDGE SHARING

Jui-Hsi Cheng
College of Business & Management, Xiamen Huaxia University, P.R. China
Corresponding author: zhengrx@hxxy.edu.cn

Jiun-Kai Huang
School of Management, Sanming University, P.R. China

Jian-feng Zhao
College of Accounting, Guangdong University of Finance, P.R. China

Ping Wu
Jinyi College of Internet Economy, Jinhua Polytechnic, P.R. China

Abstract

The study aims to explore the role played by the factors namely external collabora-
tion, organizational learning capability as well as knowledge sharing on the positive
outcomes of the Open Innovation. Three different propositions have also been devel-
oped in the paper based on the discussions made pertaining to the conceptualizations
of open innovation along with its associated factors. All these discussions have been
made in the form of a literature review, wherein only academic research outcomes
have been included for deriving the required data. The developed propositions have
also been proved for the attainment of the ultimate aim of the study.

Keywords: open innovation, collaboration, knowledge sharing

Introduction markets for external use of innovation”

(Alberti & Pizzurno, 2017, p. 51). It
The term ‘open innovation’ refers can, thus, be stated that with the en-
to “the use of purposive inflows and hancement of the firm size as well as
outflows of knowledge to accelerate the expenses, the engagement with the
internal innovation and to expand the open innovation also tends to increase.
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Therefore, innumerable firms of small tributes of the organization and the

and medium sizes are found to be im- management, which further contributes
plementing this paradigm into the prac- in facilitating the learning processes
tice. The basic reasons behind the use within the work environment. This,
of this concept are the reduction in therefore, not only poses a positive im-
market time, costs and risks along with pact on organizational performance but
the improved access to a particular also on its innovation. Furthermore,
level of expertise. Open innovation this capability can be considered as a
plays a significant role in the mainte- key element, which is associated with
nance of a proper flow of knowledge the improvisation of the organizational
and information both unintentionally efficiency along with the potential to
as well as intentionally into the organi- innovate as well as to grow in the long
zation from its external partners (Al- run.
berti & Pizzurno, 2017). The collabo-
ration amidst the various segments On the other hand, it needs to be
within the organization creates a con- understood that the organizational
siderable impact on its overall per- learning capability plays the role of an
formance (Bogers, 2011). important strategic means that contrib-
ute to the attainment of the organiza-
The study therefore, aims at pro- tional success on a long-term basis
viding an in-depth understanding of the (Dominguez Escrig et al., 2016). It has
concept of ‘open innovation’, and the further been stated by Peris-Ortiz et al.,
inclusion of the varied roles into it (2018) that the companies getting at-
such as the learning capability, knowl- tributed with utmost competitiveness
edge sharing along with collaboration along with the potential to get adapted
within the organization. It also focuses with the environmental changes must
on discussing the varied propositions contribute largely in connecting varied
developed on the issue of concern, by types of open innovation with the hu-
reviewing the previously prepared lit- man resource policies. The connections
erature on the concerned issue. The are naturally developed with the com-
propositions that have been covered in panies aiming to get their capabilities
this study are knowledge sharing, or- renewed such as know-how, new ideas
ganizational learning capability and evolving from experiences, knowledge,
external collaboration with respect to and ordinary potential along with the
the concept of open innovation. organizational routines. However, the
development of the connections also
Literature Review and Propositions relies on the competitors, environment,
Development and partners along with the other re-
lated companies (Peris-Ortiz et al.,
Organizational Learning Capability 2018).
and Open Innovation
Sattayaraksa and Boon-itt (2016)
According to Dominguez Escrig provide a clear inference of the fact
et al., (2016), Organizational Learning that the collaboration between the cul-
Capability refers to the factors or at- ture of innovation and organizational
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learning poses a tremendous impact on izational environment (Jimenéz-

the relationship that is shared between Jimenéz et al., 2014). Another signifi-
the process of new product develop- cant concept that is related to the inno-
ment and the transformational leader- vations taking place in the organization
ship of an organizational CEO. This and management is the strategic fit,
has been stated based on the under- which is said to be strongly connected
standing that, it is the foremost re- with the contingency theory pro-
quirement of the company to develop pounded by Tamayo-Torres et al.
new products for being able to sustain (2016). It largely concentrates on the
in the competitive market in the long organizational performance at the time
run. of aligning the firm with its environ-
ment and its strategies as well as its
It has, in this context, also been characteristics. Contextually, for the
stated by Mat and Razak (2011) that attainment of competitive advantages
innovation is led by organizational and improvement of the performances,
learning, especially in the knowledge- the organizational learning, as well as
intensive industry. This is because innovation, can be considered as the
firms need to put huge efforts for the foremost capabilities. This can further
purpose of gaining competitive advan- contribute in the overall investigation
tage as well as sustaining in the market of the manner, in which the organiza-
for long-run (Mat and Razak, 2011). It tional learning and the innovation can
has further been acknowledged by Mat pose a completely positive impact on
and Razak (2011) that “organizational the decision-making of the managerial
learning is considered by many schol- professionals of an organization. This
ars as a key to future organizational further pushes them towards the emer-
success” (p. 218). Moreover, the role gence of the increased need for getting
played by organizational learning ca- adjusted with the shortcomings in the
pabilities in the generation of innova- dynamic environments (Tamayo-
tion can be inferred from the fact that Torres et al., 2016).
businesses in the present scenario tend
to carry out the related activities Wang and Xu (2018), in the pa-
through a constant learning process. per, provide a detailed discussion on
the relationship amid the three factors
According to Jimenéz-Jimenéz et namely radical innovation, open inno-
al. (2014), the process of innovation vation, and customer knowledge man-
plays a pivotal role in the operations of agement. In this context, it has been
a contemporary business firm. This found that varied ranges of activities
enables the organizations to create a related to open innovation posed dif-
significant position for itself in the tar- ferent impacts on the functioning of
get market and lead itself towards the radical innovation, thereby affecting
attainment of sustainable development the learning ability of the organizations
in the long run. Proper knowledge as a whole. The activities of open in-
management can thus be portrayed as novation are of two types, one is the
one of the most important factors driv- activities of the inbound open innova-
ing open innovation within an organ- tion, which influences the radical in-
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novation directly. Another is the out- is, therefore, important for the organi-
bound open innovation, which has an zations to become aware of the fact
indirect effect on the combination of that incorporating the behavior of an
the organizational learning ability that altruistic leader may influence organ-
is exploitative in nature and the radical izational learning, which may further
innovation-related activities. However, contribute to the attainment of radical
the experiential outcomes clearly por- innovation (Dominguez Escrig et al.,
trayed the fact that, with the support of 2016). It has, in this context, been
organizational learning ability, radical mentioned by Wang and Xu (2018)
innovation is indirectly affected (Wang that the products of radical innovation
& Xu, 2018). It has further been men- in order to succeed for an organization,
tioned by Abdi et al. (2018) that inno- it contributes largely in gaining long-
vation is the only factor driving the term competitive advantages thereby
strategic concerns associated with in- improving the customer values, corpo-
creased level of innovation. This is rate performance, and reducing the
mainly done by encompassing the costs among others. Wang and Xu
augmentation of the levels of produc- (2018) also opined about the customer
tivity, economic growth, business knowledge management, which aims at
competitiveness, and sustainability delivering continuous customer im-
among others. The concept also takes provement and this can be obtained
into consideration the fact that this fac- largely with the support of open as
tor of innovation is a continuous proc- well as radical innovation both directly
ess of searching, learning as well as and indirectly. Therefore,
exploring the outcomes in the form of
new techniques, products, and even Proposition 1: Organizational Learn-
new markets to a large extent (Abdi et ing Capability is positively re-
al., 2018). lated to the effectiveness of the
outcomes of open innovation.
According to Dominguez Escrig
et al. (2016), the contributions of such External Collaboration and Open
researches on organizational learning Innovation
and innovation within workplaces are
primarily found to surpass the aca- According to Henttonen and Le-
demic sphere of both the organizations htimäki (2017), the concept of open
as well as the businesses. Our results innovation is considered to be an un-
thus, prove to be advantageous for the ending subject of research and, there-
organization in implementing a favor- fore, can be explored using both inter-
able working environment, thereby at- nal as well as external viewpoints. It
taining the innovation performance for has further been opined by Aloini et al.
accomplishing radical innovations in (2016) that one of the most important
the long run. The challenges faced by factors that are considered to be of
the organization have been clearly il- great importance in understanding the
lustrated as the push for innovation and concept of open innovation is the col-
competitiveness along with the con- laboration of the external resources and
tinuous as well as insightful shifts. It the partners. This collaboration is
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found to contribute to a large extent in new market imperatives have largely

improving the potential of the firm in directed the organization in moving to
order to opt for innovation. It further the horizontally aligned operations
relies on the viewpoint that both inven- from the vertically aligned ones. It has
tions along with innovation contribute further resulted in shifting the competi-
largely in emerging as a successful at- tion to the networks of businesses from
tempt not only inside but also outside the single-level firms (Lassen &
the organizational boundaries (Aloini Laugen, 2017). However, it has been
et al., 2016). It has been argued by An- opined by Burdon et al. (2015) that co-
tikainen et al. (2010) that innovation is creation acts as another significant
not only the aspect which can improve concept, which leads to the clear vision
the potential of the firm. alignment, the processes of supporting
and the improvement of the inter-
Moreover, monetary rewards can- organizational collaboration skills. All
not be considered as the appropriate these aspects seem to be some way or
means of motivating the users at all the other more helpful in nature as it
point of time. The intangible factors suggests the manner, in which partner-
may also at a certain point help the or- ing relationships can be developed.
ganization in gaining the interest of the
employees, thereby influencing them On the contrary, according to
to work voluntarily for the attainment Huang et al. (2018) the innovative per-
of the organizational goals. These in- formances are limited by the factor of
tangible factors may include the as- openness, since it is only concerned
pects of acquiring knowledge of new with the “quantitative” factors, thereby
ideas, community cooperation as well ignoring the “qualitative” distinction
as entertainment, support, and usage of amidst them. Due to the presence of
proper tools of cooperation (Anti- increased openness, the knowledge on
kainen et al., 2010). the other partners along with that of the
company deems to overlap their exter-
Contextually, Lassen and Laugen nal knowledge with respect to acquir-
(2017) stated that R&D has been or- ing the collaboration of homogeneous
ganized in the firms internally, which partners to assume the respective addi-
further depends on the external con- tional costs. Furthermore, the collabo-
tract research for the purpose of devel- ration amidst the homogeneous part-
oping simple products or functions as ners leads to the improvement of tech-
well. The firms of all genres and those nology, mostly at the time of including
located all around the world are found the similarities in the fields of techni-
to be contributing in every single step cal backgrounds, products as well as
of its production process in the present industrial backgrounds (Huang et al.,
scenario, starting from generation of 2018). To this Yoon and Song (2014),
the idea about the product to that of stated that with the increasing compli-
distribution. These can be made possi- cations of knowledge related to the
ble only with the support and assis- technology innovation, the firms are
tance of an external collaboration such found to have decided on extending
as R&D. It can further be found that their boundaries for the purpose of get-
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ting their potentials complemented. Myhren et al. (2018) focused largely

Moreover, it has been found that open on one form of open innovation i.e. the
innovation has contributed largely in New Service Development in the ser-
reinforcing innovation management, vice-oriented firms, which is similar to
thereby considering an expanded range the New Product Development in case
of disciplines such as economics, soci- of product businesses. New knowledge
ology as well as psychology. is co-created in this case with the cus-
tomers, based on which the process is
initiated and commenced. The external
Considering the already discussed collaboration is also predominant in
factors, it can be stated based on the the business-to-business (B2B) market
viewpoint of Tobiassen and Pettersen as it also involves the inclusion of
(2018) that the majority of the firms other players such as partners, com-
understand that they do not possess the petitors, and the suppliers as well.
confidence to completely depend on
the resources associated with innova- It can also be argued that service-
tion along with the in-house capabili- related open innovation is regarded as
ties amidst tremendous competition. completely different from that of the
They, therefore, seek for the proper products. These differences are not
implementation of the open innovation provided or mentioned in the previous
practices. Moreover, it has been found researches. It can also be inferred that
that high-technology oriented Small open innovation is largely benefitted
and Medium-sized Enterprises by the external knowledge along with
(SMEs), which aim at competing glob- the accessibility of the new markets’
ally, must essentially implement inno- channels contributing to the develop-
vation performance in practice, thereby ment of the new products and/or ser-
bringing newer technologies into the vices (Myhren et al., 2018). Schneck-
market. enberg (2015) further mentioned open
innovation to be a strategic concept
The open innovation thus needs to leading to the innovation of firms as a
take into consideration the propensity part of the modern businesses. This
of the individual firms to introduce the further opens up the firm’s boundaries
required innovations into their prac- for enabling the flow of scattered
tices, which in turn, contributes to the knowledge into the activities of corpo-
acceleration of the market perform- rate innovation from the industrial en-
ances. This, therefore, makes the fact vironments.
clear that the business organizations
need to implement external collabora- The primary reason behind its
tion into the practices. This collabora- popularity as a strategic framework is
tion can be done with parties such as that open innovation becomes impor-
the customers, who can help the firms tant for the firms to acquire and sustain
to meet the future demands as well as competitive advantage in the long run.
for keeping up with their competitors. This can be clearly understood with the
support of an example of TechCorp,
the leadership level of which is in con-
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stant need for strategic innovation. laborations for the purpose of develop-
With the passage of time, the company ing an innovative technology. It can
has been able to integrate its growth thus be stated that, “a central dimen-
with internationalization, thereby fol- sion in the tension field of knowledge
lowing a process of structural differen- sharing and protection is “knowledge
tiation (Schneckenberg, 2015). There- characteristics” as the properties of
fore: knowledge determine how it can be
both shared and protected (Bogers
Proposition 2: The collaboration be- 2011, p.101) It also helps in determin-
tween firms is positively related to ing the action that can be undertaken
the effectiveness of the outcomes for supporting the knowledge ex-
of open innovation. change concept (Bogers, 2011). Ham
et al. (2017), taking into concern the
Knowledge Sharing and Open aspect of knowledge sharing has de-
Innovation fined the concept of open innovation
as, “the use of purposive inflows and
According to Bogers (2011), outflows of knowledge to accelerate
monitoring the regular trends increases internal innovation and expand the
the necessity of learning the pressure markets for external use of innova-
between the protection of R&D col- tion, respectively” (p. 1166). Its basic
laborations as well as knowledge shar-
assumption thus portrays the con-
ing activities. The majority of the firms
junction between the external as well
have thus come up with their bounda-
as the internal knowledge and the
ries to tap knowledge from the external
world just for the sake of using the firms’ performance with regard to its
market as the firms’ extension. There- improvement even within the rapidly
fore, it is considered to be the best op- changing working environment (Ham
tion for incorporating a strategic appli- et al., 2017).
cation into the collaborative agree-
ments of a firm in relation to the other Contextually, Alberti and
organizations. A varied range of theo- Pizzurno (2017) mentioned the out-
retical perspectives has been used in comes of open innovation, which poses
the corporate world for the sake of ex- a tremendous impact not only on the
ploring the knowledge sharing aspects policymakers but also on the managers
and in general considering the collabo- of the organizations. This open innova-
rative agreements. Bogers (2011) fur- tion is thus said to have initiated from
ther opined that transaction cost eco- a mixture of different types of knowl-
nomics, as well as the resource-based edge, especially the ones acquired with
view of the firm, are the two different the support of the heterogeneous play-
theories, which contributes largely to ers’ collaboration, which also includes
serve as an appropriate environment the new start-ups. The managers, in
for the strategic management. It has this case, are found to possess the po-
also been noted that firms from all gen- tential to develop the strategies of open
res integrate their surroundings’ innovation for the purpose of balancing
knowledge in the case of R&D col- their collaboration portfolio. This is
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done in order to influence the startup According to Díaz-Díaz and de Saá

managers and entrepreneurs to incor- Pérez (2014), for the firms to accom-
porate open innovation into their prac- plish competitive advantage, a large
tices so as to contribute to the accelera- amount of innovation must be consid-
tion of knowledge absorption. There- ered. Therefore, it is highly important
fore, managers must be warned about for the firm to make the investment
the potential risks such as knowledge most effective, especially for an ap-
leaks, which can be eliminated easily propriate working of the knowledge
through the use of open innovation management process. This is because
(Alberti & Pizzurno, 2017). innovation can be considered as a re-
flection of a firm’s potential to under-
A varied range of resources is re- stand as well as avail accessibility and
quired by the firms for resolving a exploit knowledge sharing aspect to
large scale of innovation-related prob- the utmost level.
lems. This can enable the firms to pos-
sess accessibility to widespread infor- The foremost reason behind the
mation on a timely basis through their need of a large amount of investment
networks of innovation, thereby boost- for bringing about innovation is the
ing up organizational learning. These fact that, a firm must be able to boost
partners in the existing network con- its awareness by acquiring the most
tribute largely to acquire the skills of optimum and appropriate knowledge
innovation as well as opportunities for from the external resources. Moreover,
learning. This further highlights the it is vital for the firms to motivate in-
fact that a firm’s accessibility of “rela- dividuals to enhance their commitment
tive novelty of the knowledge” aug- towards the processes of articulating,
mented the growing patterns of net- learning, as well as knowledge sharing
work diversity (Fisher & Qualls, 2018, of what they have successfully ac-
pp. 247). This is therefore regarded as quired. Following this process can en-
completely beneficial with respect to hance organizational performance
the exploratory innovation. However, thereby facilitating the development of
it needs to be noted that a firm can at- new processes as well as products
tain its diverse outlook only based on (Díaz-Díaz, & de Saá Pérez, 2014).
the fact that all its partners are closely This has been agreed upon by Marti-
connected through the central position. nez-Conesa et al. (2017), who added
that the majority of the firms gaining a
Thus, it can be inferred that the competitive advantage in the present
ties of innovation with centrality offer scenario are found to be depending
the companies to increase their poten- largely on the external information and
tial for directly accessing the opportu- research collaborations for bringing
nities of learning. It further provides about innovation globally.
the firms with a connection to influ-
ence the incorporation of collaborative Contextually, Natalicchio et al.
approach i.e., through knowledge shar- (2017) opined that knowledge plays a
ing as well newer creation of the same crucial role in a paradigm associated
(Fisher & Qualls, 2018). with open innovation, which can be
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scantly investigated through the adop- of knowledge in all these arrangements

tion of knowledge management. The is mostly administered in a formal
concepts of innovation and knowledge manner, structured as alliances and
management are the varied streams of monetized with the support of licenses
a research, which are strongly inter- (Randhawa et al., 2017). Therefore:
twined. Thus, knowledge is considered
to be a segment of management and Proposition 3: The more knowledge
the most relevant resource of a firm sharing between firms, the more
leading to its sustenance and develop- effective the outcomes of open
ment in the long run (Natalicchio et al., innovation.
2017). With respect to the similar issue
of concern i.e. innovation but in rela- Discussion
tion to the online platform, it has been
stated by Randhawa et al. (2017) that Open innovation is actually a
knowledge collaboration between the paradigm, which encompasses not only
online user communities and the busi- the internal but also the external organ-
ness organizations is facilitated with izational factors associated with the
the intermediaries of open innovation. organization of the firms for the pur-
pose of attaining competitive advan-
The mechanisms of these inter- tage and sustaining in the target market
mediaries comprise of the syntactic, in the long run. The first proposition
pragmatic, and semantic aspects. These has been developed for the purpose of
contribute largely in enabling transla- determining the impact of Organiza-
tion, knowledge transfer and transfor- tional Learning Capability of a firm on
mation within the organization in the its implementation of open innovation.
modern competitive world. The ex- In this context, it can be inferred that
change of knowledge in this case as Organizational Learning Capability
per the traditional theories has been plays a significant role in maintaining
evident through three different modes a proper learning environment with the
namely the outbound, inbound and workplace to enhance the knowledge
coupled. In this context, it has been and awareness of the management and
noted that the knowledge follows a employees regarding their work proc-
unidirectional flow both in as well as ess. This may, therefore, improve their
out of an organization in cases of in- efficiency level and maximize the per-
bound and outbound modes respec- formance of the company as a whole
tively. (Dominguez Escrig et al., 2016). It can
thus be evaluated that the developed
However, the coupled mode is proposition, “Organizational Learning
completely different from the other Capability is positively related to the
two forms as it has its base “on inter- effectiveness of the outcomes of open
firm dyadic collaboration and bidirec- innovation” has been proved.
tional knowledge flows” (p. 1295). Be-
sides, the inter-firm networks are used In order to prove the second
by firms as an external source of inno- proposition, i.e., “The collaboration
vation and knowledge. The exchange between firms is positively related to
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the effectiveness of the outcomes of able development and sustenance in

open innovation”, the concept of ex- the market for a longer span of time.
ternal collaboration is considered to be These aspects mostly comprise of the
of great importance. It is one of the three elements namely knowledge
most important requirements of a firm sharing within and even outside the
for carrying out its business proceed- firm, the entry or inclusion of external
ings as the external collaborators are collaboration/partnership and lastly the
the ones, who support it at varied in- proper implementation of the organiza-
stances. It was in this context, been tional learning capability within the
inferred that the collaborators may in- operational procedures. In this context,
clude the competitors, partners, and it has been understood that the fore-
even the suppliers to a large extent, most requirement of an organization to
who are responsible for enhancing the meet the regular needs of its target cus-
knowledge of the firms in varied gen- tomers is the factor of innovation in all
res, influencing the positive impacts of its fields of operations.
open innovation on the organizational
performance (Myhren et al., 2018). Therefore, the companies all
around the world are seeking for those
The last proposition that has been factors, which can help them to be-
developed for discussion is on Knowl- come innovative in their proceedings,
edge Sharing, which is considered to operations, and products as well as the
be the most important task of a busi- services in the long run. While re-
ness firm. This knowledge is one of the search on these factors three different
primary resources for any organization propositions could be developed per-
to innovate or to gain competitive ad- taining to the concept of open innova-
vantages in the long run. Majority of tion. The first proposition clearly helps
the companies even invest a large in depicting that the outcomes of open
amount on this process of knowledge innovation are highly effective in na-
sharing as the entire work process de- ture with respect to the Organizational
pends on the knowledge that is shared Learning Capability i.e. creation of a
not only within the firms, but also with learning environment within the work-
the external world such as the custom- place. The second proposition that has
ers (Díaz-Díaz, & de Saá Pérez, 2014). been developed focuses on the context
Therefore, the third proposition, “The of External Collaboration, which refers
more knowledge sharing between to the inclusion of external partners
firms, the more effective the outcomes such as the supplier firms.
of open innovation” also gets proved.
The effectiveness of the open in-
Conclusion novation’s results also has positive im-
pacts due to the inclusion of the exter-
From the discussions made in the nal collaborators. Lastly, the third
earlier section, it can be concluded that proposition is about knowledge shar-
open innovation takes into considera- ing, which refers to the flow of knowl-
tion all the different aspects that can edge both in and out of the organiza-
lead an organization towards sustain- tional environment. In this context, it
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has been proposed that with the in- supporting collaboration in open
crease in the level of knowledge shar- innovation. European Journal of
ing with the firms, the effectiveness Innovation Management, 13(1),
also rises. 100-119.

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