Understanding the relationship between competitive strategy and product-service innovation: the role of the paradox of openness

Abstract

PurposeThis study aims to investigate the relationship between strategy intent (product-service innovation intention) and outcome (product-service innovation outcome), and the role that external sources of innovation play in influencing this relationship.Design/methodology/approachUsing data obtained from the community innovation survey, we apply a logit regression to a sample of 1,419 Portuguese firms. By examining the moderating effect of open innovation breadth, we assess how the relationship between differentiation intent and outcome is contingent upon the involvement of external stakeholders.FindingsOur findings reveal that the relationship between differentiation intent and outcome is contingent upon the moderating effect of open innovation breadth. Our analysis suggests that the negative influence of different sources of innovation can be addressed by adopting a paradox lens.Practical implicationsThis research provides valuable insights for managers. By simultaneously pursuing a differentiation strategy and engaging in collaboration with external sources, firms may compromise their ability to effectively differentiate their offer. Managers should consider the potential tensions arising from internal and external stakeholder relationships to optimize their innovation strategies.Originality/valueThis study contributes to the existing literature by shedding light on the role of external innovation sources in influencing the relationship between differentiation intent and outcome and the importance that information systems may have in this relationship. By exploring the moderating effect of open innovation breadth, we provide a nuanced understanding of how firms can navigate organizational tensions and leverage innovation for competitive advantage.