Sequential coherence as a determinant of open innovation: A case study on a Sri Lankan fintech solution

Abstract

Open innovation is a popular strategy to accelerate innovations among business firms. However, open innovation does not always increase innovation performance. Arguments in extant literature in respect of the relationship between open innovation practices and innovation performance are inconsistent and inconclusive. Most existing theories have an internal focus and therefore fall short of explaining why some firms succeed in open innovation initiatives and why others fail. Open innovation is about knowledge flows. To understand how boundary conditions influence knowledge flows we conducted a detailed qualitative inquiry on an open innovation initiative of a software firm where a leading university and a private commercial bank participated as the knowledge partner and commercialization partner respectively in developing an award winning fintech solution. Analysis of data revealed that ability and willingness of teacher firm to share knowledge and also the ability and preparedness of student firm to acquire knowledge facilitated knowledge flows between the open innovation partner firms. We bundled those factors and named as sequential coherence. We trust that our findings bridge a gap in open innovation literature. These findings could be generalized through a large sample covering many other industry sectors. Managerial implications of the finding is that ability to scan the entire chain of knowledge flow across boundaries and taking corrective measures for any bottlenecks or hindrances observed can bring better results from open innovation initiatives. Further, sequential coherence leads to multiple research opportunities in furthering our knowledge in open innovation.