How Managerial Ties and Appropriability Regimes affect Open Innovation

Given the rapid technological advances and implications of globalization, the need to create not only innovations but faster innovation has become a part of sustaining or gaining competitive advantage. Due to this, firms are increasingly seen shifting from the traditional innovation model which relied on a firm's internal R&D to the more porous open innovation paradigm which utilizes resources both internal and external to a firm to come up with innovations. However success in the open innovation paradigm is contingent upon some internal and external factors of a firm. This conceptual paper first discusses how one such internal factor - managerial ties - impacts the success of open innovation. Second, this paper looks at the moderating role of an external factor - appropriability regimes on the relationship between managerial ties and success of open innovation. We propose that building managerial ties is important for the creation of open innovation since open innovation requires exploration and exploitation of external resources. We further posit that presence of strong appropriability regimes is crucial to reap the benefits of managerial ties in the open innovation model and that in presence of weak appropriability regimes, managerial ties may not produce results as valuable. Propositions are developed, managerial implications underscored and future research directions highlighted.