Open Innovation: Is it a Good Strategy in Consumers' Eyes?

Xuefeng Liu, Eric Fang

Abstract

Open innovation has become increasingly popular in practice because of its effectiveness in improving firms’ financial and innovation performances. As a result, more and more products developed via open innovation are available on the market. However, thus far no empirical study has investigated how consumers evaluate and respond to new products developed through open innovation. In this study, we argue that knowing that a product has been developed via open innovation impacts consumer evaluation and adoption intentions of a new product. Across three studies, we find that consumers perceive new products developed through open innovation to be either more reliable or more technologically advanced than their counterparts developed via closed innovation, depending on which type of open innovation is involved in the product development process. These findings have significant theoretical and managerial implications. The limitations of this study are also discussed.