Dynamic capabilities and economic crises: has openness enhanced a firm's performance in an economic downturn?

Joon Mo Ahn, Letizia Mortara and Tim Minshall

Industrial and Corporate Change, 2018, vol. 27, issue 1, 49-63

Abstract: Many studies have attempted to investigate the potential benefits of open innovation. However, the long-term effects of openness have yet to be demonstrated, even if few researchers hypothesized that high openness could increase firms’ dynamic capabilities and hence their resilience in the face of adversities, such economic downturns. Hence, this article attempts to investigate this dynamic relationship between openness and firm performance with particular considerations addressing the recent financial crisis in 2008. Based upon the UK Community Innovation Survey (CIS) panel data collected between 2006 and 2012, this study finds evidence that supports the positive influence of openness on long-term firm performance. The results show that (i) increasing a firm's openness is an effective way of enhancing its dynamic capability and hence its resilience, and (ii) of all the various configurations of openness, the collaboration with partners outside the firm's value chain and international partners has the highest impact on turnover recovery, as they will increase the chances of acquiring newer knowledge, which in turn will help firms to identify new opportunities to achieve sustainable growth. The findings of this article have some practical implications for managers and policymakers.

JEL-codes: C23 O25 O32 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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