Opening Up Early or Late? The Effect of Open Innovation Before and After Product Launch on New Product Market Performance

Despite a growing literature on open innovation in new product development (NPD), little is known about when openness is most beneficial during the innovation process. This study investigates the effectiveness of opening up NPD projects early or late, or before or after product launch, leading to four intertemporal NPD strategies: closed-closed, closed-open, open-closed, and open-open. Utilizing novel data of product innovation and market performance of 536 digital games, the authors study the effects of intertemporal NPD strategies on new product market performance under moderating effects of technological capability, marketing capability, and project complexity. The results indicate that the early open (open-closed) NPD strategy outperforms the late open (closed-open) strategy. Furthermore, the positive effect of open NPD strategies is stronger when technological capability is high, but weaker when marketing capability is high and when projects are complex. This study contributes to the literature by proposing a typology of NPD strategies that conceptualizes open innovation before and after product launch, and by demonstrating that NPD benefits from early openness, although firms decide to close the NPD project after launch. Managerially, this study offers empirical evidence that open NPD strategies with a consideration of project contingencies are important predictors of new product success.