Problem types and open innovation governance modes: A project-level empirical exploration

Irrefutable evidence shows that greater openness toward external partners enhances a firm’s ability to solve innovation-related problems. To manage open innovation (OI) projects, firms use a variety of governance modes, including market-based contracts, platform intermediaries, and equity and non-equity partnerships. While innovation projects can be very diverse and characterized by various attributes, such as complexity and knowledge hiddenness, only a few conceptual studies have hitherto considered project attributes as drivers of OI governance mode selection. Using a sample of 85 OI projects and a set of illustrative cases, this paper explores empirically how project attributes influence OI governance mode selection. This empirical study advances previous conceptual work on OI governance. By accounting for project-level heterogeneity, we explore the micro-foundations of OI and provide more stable and fundamental insights into OI governance than previous industry- and firm-level analyses did. In addition, we suggest that effective OI management depends on matching project attributes with the benefits and costs of specific governance modes. Finally, we argue that this study enhances understanding and conceptualization of the relationship between project complexity and decomposability in the context of OI.