Balancing Absorptive Capacity and Inbound Open Innovation for Sustained Innovative Performance: An Attention-Based View

How can a firm develop new ideas and turn them into profitable innovations on a sustained basis? We address this fundamental issue in a novel way by developing an integrative framework of absorptive capacity (AC) and inbound open innovation that is rooted in the attention-based view of the firm. We specifically address why a balance between open and closed innovation is important from the perspective of absorptive capacity, and show how it may be brought about. Pursuing either open or closed inbound innovation alone may result in an imbalance between potential AC and realized AC as well as inward-looking AC and outward-looking AC, which will hinder innovative performance.We argue that practicing open and closed inbound innovation repeatedly and alternately by switching organizational attentions, and thus developing the associated AC, can facilitate balancing absorptive capacity and lead to innovative performance.