Open Innovation Strategy and Competitive Pressure: The Tension between the Need to Compete and Apprehension toward Information Leakage

In this paper, we propose two potential mechanisms - the avoid-leakage effect and the escape-competition effect - that help us understand the association between competitive pressure and firms’ open innovation (OI) strategy. By exploiting moderating effects using appropriation measures and information and knowledge barriers, we testify to the existence of the two mechanisms. Using data from the PITEC database between 2004 and 2008, we studied a longitudinal sample of 7,987 firms. This allowed us to distinguish between three types of innovation strategies: open, semi-open, and the traditional closed models, where avoid-leakage plays a predominant role in a semi-open model of innovation while the escape-competition effect shifts preferences toward the remainder strategy options. We employed a random parameters logit model that was suitable not only for nominal categorical variables but also accommodated panel data investigation. Our findings suggest competitive pressure associated with firms opting for avoid-leakage solutions, while low barriers of information and knowledge and the use of multiple appropriation measures cause firms to shift their attention from avoid-leakage to escape-competition effects.