External technology acquisition, exploitation and process innovation performance in emerging market small and medium sized enterprises: the moderating role of organizational slack

Abstract

This study is among the very few to examine the firm's simultaneous use of both dimensions of open innovation and its influences on the firm's process innovation performance (PIP). Specifically, the authors consider the relationship between firm's external technology acquisition (ETA) and external technology exploitation (ETE) and examine their direct, indirect and mediating effect on the firm's PIP. The authors also examine the moderating effect of the organizations' unabsorbed slack (UASL) on the relationship between ETA and ETE. Analyzing data collected from 311 small- and medium-sized software development firms in emerging market; Thailand, we show that both ETA and ETE have a positive effect on PIP and that ETE fully mediates the relationship between ETA and PIP. The authors show that both ETA and ETE have a positive effect on PIP and that ETE fully mediates the relationship between ETA and PIP. Moreover, the relationship between ETA and ETE is positively moderated by the firms' unabsorbed slack (UASL) and that the influence of ETA on PIP through ETE is stronger under higher unabsorbed slack. The authors extend the “traditional” performance outcome of outbound dimension of open innovation concept, which focuses exclusively on commercialization and market (Chesbrough, 2003b), by showing that ETE positively influences the firm's PIP. Moreover, the study explains the mechanism through which ETA influence the firm's PIP by proposing that ETE fully mediates the relationship between ETA and PIP.