Conclusion and discussion
This paper studies how human capital can affect the relationship between open innovation and the financial performance of firms. The analysis used the cost of purchasing external patent and non-patent technology as the operating variables measuring open innovation, which is explorative in the emerging area of open innovation study. A panel data analysis was then conducted using data from China’s manufacturing industry over the course of eleven years. First, the results demonstrate that there is an inversed U-shape relationship between open innovation and firm profitability, indicating the existence of a threshold for the effectiveness of open innovation strategy. Once investment in open innovation exceeds the threshold, firm financial performance will deteriorate. Prior researches have extensively investigated the value creation process of openness, i.e. the relationship between open innovation and innovation performance. This paper focus on the value capture process of open innovation, indicated by the financial performance. It is a complementary and further-step research to the extensively studied relationship between openness and innovative performance.
