Choosing between Closed and Open Innovation

This article investigates how moving from closed to open innovation is associated with innovation performance. It defines relative openness as the extent to which firms engage in open innovation relative to closed innovation. By focusing on two underlying forces: legitimation and complexity, we theorize a U-shaped relationship between relative openness and firms’ innovation performance. Empirical evidence based on survey data collected from 130 companies in Serbia supports the hypothesis. The result is robust under different model specifications. This article contributes to the open innovation literature by conceptualizing that closed and open innovation are two ends of a continuum and discussing its implications in innovation performance.