Exploiting Knowledge Flows: Openness and the innovative performance of Business Services

Innovation requires a capacity to seek, absorb and utilize external knowledge, and an ability to develop, leverage or exchange internally-generated knowledge. Internally, it requires the structuring of information channels within and across hierarchical or divisional levels. Externally, it implies choices and costs in selecting and managing interactions and collaborations. Based on an original survey of open innovation practices amongst UK firms, this paper addresses this gap by exploring the impact of external and internal openness, the role of formal vs. informal knowledge sourcing practices (and their interaction), on the innovative performance of business services. Not only external but also internal openness positively affect the innovative performance of firm. Among different types of knowledge exchange mechanisms, informal practices are especially effective. On the contrary, joint engagement in formal and informal practices appears to decrease the firm’s share of innovative sales, a possible indica...