Role of Organisational Culture in Open Innovation: An Empirical Study of Service Sector Organisations in Sri Lanka

Abstract

Innovation underpins the process of bringing novel products and services to market and is critical to a firm's viability, competitive advantage and performance. Open innovation has been proposed as a new paradigm for the management of innovation. Success in this open innovation paradigm offers great benefits to business organisations. Many firms have succeeded in the open innovation paradigm but failures have also been reported. Being a new area of research, not much is known about the factors affecting open innovation. In view of this, the current research was conducted with the aim to study the effects of organisational culture on open innovation. The main purpose of the study was to identify organisational culture types which enable and retard both in-bound open innovation and out-bound open innovation. Cross-sectional data were collected using the survey method from 124 middle and top managers working in finance and information technology sectors in Sri Lanka. The data analysis has been done using the statistical software packages of SPSS and AMOS. Both cluster analysis method and hierarchical multiple regressions were employed to test the hypothesised relationships. Highly integrative culture was found to relate positively to in-bound open innovation. No evidence of a significant relationship between highly integrative organisational culture and outbound open innovation was found. Hierarchy culture related negatively to both in-bound open innovation and out-bound open innovation. This research paper is probably the first empirical study which investigates the role of organisational culture in open innovation in the Sri Lankan context. Practical implications for the managers are given and suggestions are offered for future research building on the findings of this study.