This paper investigates the role of specific intra-organizational mechanisms in analyzing performance implications of openness by addressing two questions: does openness to innovation influence innovation performance? And if so, what organizational activities facilitate increased effectiveness of both inbound and outbound open innovation practices? The paper identifies a set of internal management mechanisms that allows the firm to couple the outside-in and inside-out knowledge flows in support of integrating external knowledge and internal competencies. The empirical basis of the study is a survey carried out in 321 Danish SMEs in manufacturing industries. The paper cannot substantiate the thus far, seemingly positive evidence of openness on innovation performance. Rather, the paper finds that inbound open innovation is related to the introduction of new products, whereas the adoption of outbound open innovation is positively related to innovation profitability. Furthermore, the paper finds that the use of internal coupling activities mediates the relationship between openness and innovation profitability. The main result is that the benefits of open innovation are fully captured only when firms adopt a number of coupling activities that provide employees with time, autonomy and empowerment to conduct their work. The paper therefore contributes to the innovation management literature by developing the concept of internal coupling activities, testing these on a set of open innovation practices, while distinguishing between respectively the effects of inbound and outbound openness on innovation performance. The paper concludes with implications to theory and practice.
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The 35th DRUID Celebration Conference 2013 on INNOVATION, STRATEGY AND ENTREPRENEURSHIP