Purpose: The purpose of this paper is to investigate alliance partner diversity (APD) as a driving force that potentially enhances firms’ innovation generation (IG) in interfirm open alliance contexts. The authors propose that APD enhances IG but that the effects depend on both alliance network position and the double-edged external knowledge search strategy. Building on the knowledge-based view and social capital theory, the authors formally model how external knowledge search strategies can lead to productive or destructive acquisitions of external knowledge in interfirm open alliance networks. The authors theorize that when an individual firm adopts a central position in a complex interfirm open alliance network, its propensity toward beneficial IG depends on its knowledge search strategy (i.e. its breadth and depth) due to the joint influence of network position and knowledge search strategy on innovation.Design/methodology/approach: Using an original large-scale survey of high-tech firms, this study shows that the relationship between partner diversity and IG is contingent on a firm’s network position and knowledge search strategy. The authors also offer an original analysis of how knowledge search strategy (i.e. its breadth and depth) in network centrality (NC) affects the efficacy of knowledge acquisition in interfirm open alliance networks. Empirically, the authors provide an original contribution to the open innovation literature by integrating social capital and knowledge-based theory to rigorously measure firm IG.Findings: Overall, our findings suggest that the knowledge search strategy imparts a double-edged effect that may promote or interfere with external knowledge in IG in the context of the diversity of alliance partners.Research limitations/implications: The work has important limitations, such as its analysis of a single industry in the empirical models. Therefore, further studies should consider multiple industries that may provide useful insights into innovation decisions.Practical implications: External knowledge search is valuable, particularly in the high-tech industry, as external knowledge acquisition generates innovation output. This study serves to raise managers’ awareness of various approaches to external knowledge searches and highlights the importance of network position in knowledge acquisition from interfirm open alliance collaborations.Originality/value: This paper is the first to investigate the double-edged effect of knowledge search on interfirm open alliance networks. It also contributes to the theoretical and practical literature on interfirm open alliance networks by reflecting on external knowledge search and underlying network centrality and APD factors.

Absorptive capacity and appropriability depth are two concepts based on a firm’s capabilities that leverage external knowledge to facilitate new product development performance. This study analyzes the joint effects of absorptive capacity and depth of appropriability regime forms on a firm’s new product development. Specifically, we distinguished absorptive capacity between the potential and realized absorptive capacities and appropriability depth as formal and strategic forms. To test our research hypotheses, we analyzed empirical evidence from 311 Taiwanese service firms. The results reveal that the potential and realized absorptive capacities have significant effects that help explain a firm’s new product development. Additionally, there are moderating effects of absorptive capacity on new product development performance. The formal appropriability depth exerts a positive effect on the relationship between the realized absorptive capacity and a firm’s new product development. The strategic appropriability depth positively moderates the influence of the potential absorptive capacity on a firm’s new product development. Finally, the study concludes that complementary nature of absorptive capacity and appropriability strength plays a critical role in contributing to new product development.

This study examines how social trust facilitates firms’ collaborative efficiency in an informal economy. We extend the open innovation theory to explain the straightforward role of social trust in the Shenzhen mobile phone industry. This single case study yields two principal findings. First, social trust fosters the efficient integration of value chains for mobile phone development. Four types of informal entrepreneurs with high social trust built on homogenous sanctioned ethnic groups (i.e., Fujian, Hunan, Chaoshan, and Wenzhou) collaboratively conform to the chip vendors, independent design houses, integrators, manufacturers and channel retailers in the Shenzhen mobile phone industry. These four groups of informal entrepreneurs achieve ethnic legitimacy by organizing the value chains with mobile feature phones built on Shenzhen mobile phone modes. Second, social trust among the four sanctioned ethnic groups is a critical determinant for shortening the time-to-market of new products and catalyzes product specialization to effectively respond to market needs in the Shenzhen mobile phone industry. Finally, we discuss the implications of our findings for research on social trust and open innovation in informal institutions.