Automating profitably together: Is there an impact of open innovation and automation on firm turnover?

  • Petra A. NylundEmail author
  • Xavier Ferras-Hernandez
  • Alexander Brem
Original Paper


Technologies like computer vision, advanced sensors, internet of things, 3D printing, big data, or artificial intelligence are penetrating all facets of the industrial value chains. Hence, industry is engaged in an accelerated automation race where industrial automation converts value chains into intelligent, data-driven systems. This generates new business models and spurs firm competitiveness in general. Companies thus pay attention to the development, acquisition, and incorporation of related technologies to profit from these developments in specific. For this, they must incorporate external flows of knowledge to succeed in innovation. Yet, there is a dearth of research that links open innovation to the incorporation of industrial automation, and to firm performance. Hence, this paper takes a knowledge-based view of the firm and sheds light on the moderating role of the processes of open innovation on the economic results of firms’ subject to automation. In order to do so, we estimate the impact of the interaction of open innovation and automation on firm turnover using panel data for 5287 Spanish firms from a variety of manufacture and service industries. We separate the effects for different open-innovation partners and find that turnover is increased for those automating firms that engage in open innovation with suppliers. These results indicate that suppliers possess the knowledge required for successful automation, and firms that innovate together with suppliers fare better at leveraging investments in automation. In addition, automating firms should exercise caution when choosing collaboration partners from the same country.


Open innovation Knowledge Automation Process innovation Supplier innovation Community innovation survey 

JEL Classification

M10 M20 O30 O32 



The authors would like to thank Aline Masuda and Nicholas Clarke for useful comments on earlier versions of this article.


  1. Acemoglu D, Dorn D, Hanson GH, Price B (2014) Return of the Solow paradox? IT, productivity, and employment in US manufacturing. Am Econ Rev 104(5):394–399CrossRefGoogle Scholar
  2. Afcha S, García-Quevedo J (2016) The impact of R&D subsidies on R&D employment composition. Ind Corp Change 25(6):955–975Google Scholar
  3. Ahuja G (2000) Collaboration networks, structural holes, and innovation: a longitudinal study. Adm Sci Q 45:425–455CrossRefGoogle Scholar
  4. Almirall E, Casadesus-Masanell R (2010) Open versus closed innovation: a model of discovery and divergence. Acad Manag Rev 35:27–47Google Scholar
  5. Andries P, Faems D (2013) Patenting activities and firm performance: does firm size matter? J Prod Innov Manag 30(6):1089–1098CrossRefGoogle Scholar
  6. Arrow KJ (1974) The limits of organization. Norton, New YorkGoogle Scholar
  7. Autor DH, Levy F, Murnane RJ (2003) The skill content of recent technological change: an empirical exploration. Q J Econ 118(4):1279–1333CrossRefGoogle Scholar
  8. Baldwin CY, von Hippel E (2011) Modeling a paradigm shift: from producer innovation to user and open collaborative innovation. Organ Sci 22(6):1399–1441CrossRefGoogle Scholar
  9. Baltagi B (2008) Econometric analysis of panel data. Wiley, New YorkGoogle Scholar
  10. Barney J (1991) Firm resources and sustained competitive advantage. J Manag 17:99–120Google Scholar
  11. Baron RM, Kenny DA (1986) The moderator-mediator variable distinction in social psychological research: conceptual, strategic, and statistical considerations. J Pers Soc Psychol 51:1173–1182CrossRefGoogle Scholar
  12. Benzell SG, Kotlikoff LJ, LaGarda G, Sachs JD (2015) Robots are us: some economics of human replacement (No. w20941). National Bureau of Economic Research. Working Paper no 20941Google Scholar
  13. Bogers M, Lhuillery S (2011) A functional perspective on learning and innovation: investigating the organization of absorptive capacity. Ind Innov 18(6):581–610CrossRefGoogle Scholar
  14. Bouncken RB, Plüschke BD, Pesch R, Kraus S (2016) Entrepreneurial orientation in vertical alliances: joint product innovation and learning from allies. Rev Manag Sci 10(2):381–409CrossRefGoogle Scholar
  15. Brem A, Tidd J (2012) Perspectives on supplier innovation: theories, concepts and empirical insights on open innovation and the integration of suppliers. World Scientific, SingaporeCrossRefGoogle Scholar
  16. Brem A, Gerhard DA, Voigt KI (2014) Strategic technological sourcing decisions in the context of timing and market strategies: an empirical analysis. Int J Innov Technol Manag 11(03):1450016CrossRefGoogle Scholar
  17. Brem A, Nylund PA, Schuster G (2016) Innovation and de facto standardization: the influence of dominant design on innovative performance, radical innovation, and process innovation. Technovation 50:79–88CrossRefGoogle Scholar
  18. Brusoni S, Prencipe A, Pavitt K (2001) Knowledge specialization, organizational coupling, and the boundaries of the firm: Why do firms know more than they make? Admin Sci Q 46:597–621CrossRefGoogle Scholar
  19. Carnevale A, Jayasundera T, Gulish A (2016) America’s divided recovery: college haves and haves-not. Georgetown University, WashingtonGoogle Scholar
  20. Cassiman B, Veugelers R (2006) In search of complementarity in innovation strategy: internal R&D and external technology acquisition. Manag Sci 52(1):68–82CrossRefGoogle Scholar
  21. Castells M (2000) The rise of the network society, 2nd edn. Blackwell, OxfordGoogle Scholar
  22. Chesbrough HW (2006) Open innovation: the new imperative for creating and profiting from technology. Harvard Business Press, BostonGoogle Scholar
  23. Chesbrough HW (2007) Why companies should have open business models. MIT Sloan Manag Rev 48(2):22Google Scholar
  24. Chesbrough H (2013) Open business models: how to thrive in the new innovation landscape. Harvard Business Press, BostonGoogle Scholar
  25. Chesbrough H, Bogers M (2014) Explicating open innovation: clarifying an emerging paradigm for understanding innovation. In: Chesbrough H, Vanhaverbeke W, West J (eds) New frontiers in open innovation. Oxford University Press, Oxford, pp 3–28CrossRefGoogle Scholar
  26. Chui M, Manyika J, Miremadi M (2015) Four fundamentals of workplace automation. McKinsey Q 11:1–9Google Scholar
  27. Coase RH (1937) The nature of the firm. Economica 4(16):386–405CrossRefGoogle Scholar
  28. Conner K, Prahalad CK (1996) A resource based theory of the firm: knowledge versus opportunism. Organ Sci 7:477–501CrossRefGoogle Scholar
  29. D’Este P, Rentocchini F, Vega-Jurado J (2014) The role of human capital in lowering the barriers to engaging in innovation: evidence from the Spanish innovation survey. Ind Innov 21(1):1–19CrossRefGoogle Scholar
  30. Davenport TH (1993) Process innovation: reengineering work through information technology. Harvard Business Press, BostonGoogle Scholar
  31. Dodgson M, Gann D, Salter A (2006) The role of technology in the shift towards open innovation: the case of Procter & Gamble. R&D Manag 36(3):333–346CrossRefGoogle Scholar
  32. Dyer JH, Singh H (1998) The relational view: cooperative strategy and sources of interorganizational competitive advantage. Acad Manag Rev 23:660–679CrossRefGoogle Scholar
  33. Fosfuri A (2006) The licensing dilemma: understanding the determinants of the rate of technology licensing. Strateg Manag J 27(12):1141–1158CrossRefGoogle Scholar
  34. Frey CB, Osborne MA (2013) The future of employment: How susceptible are jobs to computerisation? Oxford University Working PaperGoogle Scholar
  35. Funk K, Lyall B, Wilson J, Vint R, Niemczyk M, Suroteguh C, Owen G (1999) Flight deck automation issues. Int J Aviat Psychol 9:109–123CrossRefGoogle Scholar
  36. Gassmann O, Enkel E, Chesbrough H (2010) The future of open innovation. R&D Manag 40(3):213–221CrossRefGoogle Scholar
  37. Grant RM (1996) Toward a knowledge-based theory of the firm. Strateg Manag J 17:109–122CrossRefGoogle Scholar
  38. Greene WH (1993) Econometric analysis, 2nd edn. Macmillan, New YorkGoogle Scholar
  39. Hagedoorn J (2002) Inter-firm R&D partnerships: an overview of major trends and patterns since 1960. Res Policy 31(4):477–492CrossRefGoogle Scholar
  40. Ho V (2016) Alibaba’s new internet-connected car can pay for gas and control your home appliances. Mashable, 7 July 2016. Accessed 20 July 2016
  41. Huddleston T (2016) Elon Musk confirms Tesla’s Model 3 has nearly 400,000 orders. Fortune, 21 April 2016. Accessed 20 July 2016
  42. Huizingh EK (2011) Open innovation: state of the art and future perspectives. Technovation 31(1):2–9CrossRefGoogle Scholar
  43. Kafouros MI, Buckley PJ, Sharp JA, Wang C (2008) The role of internationalization in explaining innovation performance. Technovation 28(1):63–74CrossRefGoogle Scholar
  44. Knowles-Cutler A, Frey C, Osborne M (2014) Agiletown: the relentless March of technology and London’s response. Deloitte. Accessed 20 July 2016
  45. Kogut B, Zander U (1992) Knowledge of the firm, combinative capabilities, and the replication of technology. Organ Sci 3:383–397CrossRefGoogle Scholar
  46. Kogut B, Zander U (1996) What firms do? Coordination, identity, and learning. Organ Sci 7:502–518CrossRefGoogle Scholar
  47. Kokalitcheva K (2016) Here’s why Uber is building its own driverless cars. Fortune, 14 June 2016. Accessed 20 July 2016
  48. Kutner MH, Nachtsheim CJ, Neter J (2004) Applied linear regression models. McGraw-Hill, New YorkGoogle Scholar
  49. Laursen K, Salter AJ (2006) Open for innovation: the role of openness in explaining innovation performance among UK manufacturing firms. Strateg Manag J 27:131–150CrossRefGoogle Scholar
  50. Lechevalier S, Nishimura J, Storz C (2014) Diversity in patterns of industry evolution: how an intrapreneurial regime contributed to the emergence of the service robot industry. Res Policy 43(10):1716–1729CrossRefGoogle Scholar
  51. Leiponen A, Helfat CE (2010) Innovation objectives, knowledge sources, and the benefits of breadth. Strateg Manag J 31:224–236CrossRefGoogle Scholar
  52. Lippert J (2016) Toyota, Microsoft team up on connected-car technologies. Bloomberg, 4 April 2016. Accessed 20 July 2016
  53. Love J (2016) Apple invests $1 billion in Chinese ride-hailing Didi Chuxing. Reuters, 13 May 2016. Accessed 20 July 2016
  54. McIntyre DA (2016) Can Tesla build 500,000 cars a year? 24/7 Wall St., 5 July 2016. Accessed 20 July 2016
  55. Narla SRK (2013) The evolution of connected vehicle technology: from smart drivers to smart cars to… self-driving cars. Institute of Transportation Engineers. ITE J 83(7):22Google Scholar
  56. Ngai EW, Jin C, Liang T (2008) A qualitative study of inter-organizational knowledge management in complex products and systems development. R&D Manag 38(4):421–440CrossRefGoogle Scholar
  57. Nonaka I (1994) A dynamic theory of organizational knowledge creation. Organ Sci 5:14–37CrossRefGoogle Scholar
  58. Penrose ET (1959) The theory of the growth of the firm. Wiley, New YorkGoogle Scholar
  59. Ramsey M (2016) Panasonic ups ante in Tesla gigafactory investment. MarketWatch, 7 Jan 2016. Accessed 20 July 2016
  60. Ramsey M, Nagesh G (2016) GM, Lyft to test self-driving electric taxis. The Wall Street Journal, 5 May 2016. Accessed 20 July 2016
  61. Reichstein T, Salter A (2006) Investigating the sources of process innovation among UK manufacturing firms. Ind Corp Change 15(4):653–682CrossRefGoogle Scholar
  62. Remneland-Wikhamn B, Ljungberg JAN, Bergquist M, Kuschel J (2011) Open innovation, generativity and the supplier as peer: the case of iPhone and Android. Int J Innov Manag 15(01):205–230CrossRefGoogle Scholar
  63. Rumelt RP (1984) Towards a strategic theory of the firm. In: Lamb RB (ed) Competitive strategic management. Prentice-Hall, Englewood CliffsGoogle Scholar
  64. Sandulli FD, Fernandez-Menendez J, Rodriguez-Duarte A, Lopez-Sanchez JI (2012) Testing the Schumpeterian hypotheses on an open innovation framework. Manag Decis 50(7):1222–1232CrossRefGoogle Scholar
  65. Schuster G, Brem A (2015) How to benefit from open innovation? An empirical investigation of open innovation, external partnerships and firm capabilities in the automotive industry. Int J Technol Manag 69(1):54–76CrossRefGoogle Scholar
  66. Simon HA (1965) The shape of automation for men and management. Harper & Row, New YorkGoogle Scholar
  67. Simon HA (1971) Designing organizations for an information-rich world. In: Greenberger M (ed) Computers, communication, and the public interest. The Johns Hopkins Press, BaltimoreGoogle Scholar
  68. Snyder B (2016) iPhone maker Foxconn has replaced 60,000 human jobs with robots. Fortune, 26 May 2016, Accessed 20 July 2016
  69. Spithoven A, Vanhaverbeke W, Roijakkers N (2013) Open innovation practices in SMEs and large enterprises. Small Bus Econ 41(3):537–562CrossRefGoogle Scholar
  70. Stringham EP, Miller JK, Clark JR (2015) Overcoming barriers to entry in an established industry: Tesla motors. Cal Manag Rev 57(4):85–103CrossRefGoogle Scholar
  71. Teece DJ (1984) Economic analysis and strategic management. Cal Manag Rev 26(3):87–110CrossRefGoogle Scholar
  72. Teece DJ (1986) Profiting from technological innovation: implications for integration, collaboration, licensing and public policy. Res Policy 15(6):285–305CrossRefGoogle Scholar
  73. Trigo A, Vence X (2012) Scope and patterns of innovation cooperation in Spanish service enterprises. Res Policy 41(3):602–613CrossRefGoogle Scholar
  74. Voigt KI, Buliga O, Michl K (2017) Business model pioneers: how innovators successfully implement new business models. Springer, BerlinCrossRefGoogle Scholar
  75. Von Hippel E (1976) The dominant role of users in the scientific instrument innovation process. Res Policy 5(3):212–239CrossRefGoogle Scholar
  76. Wernerfelt B (1984) A resource-based view of the firm. Strateg Manag J 5:171–180CrossRefGoogle Scholar
  77. West J (2003) How open is open enough?: Melding proprietary and open source platform strategies. Res Policy 32(7):1259–1285CrossRefGoogle Scholar
  78. Whittaker J, Whitehead J, Somers M (2005) The neglog transformation and quantile regression for the analysis of a large credit scoring database. Appl Stat 54:863–878Google Scholar
  79. Williamson O (1975) Markets and hierarchies: analysis and anti-trust implications. Free Press, New YorkGoogle Scholar
  80. Williamson O (1981) The economics of organization: the transaction cost approach. Am J Soc 87:548–577CrossRefGoogle Scholar
  81. Young A (2014) Nike unloads contract factory workers, showing how automation is costing jobs of vulnerable emerging market laborers. IBT, 20 May 2014. Accessed 20 July 2016

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Faculty of Business and Communication StudiesUniversity of VicVicSpain
  2. 2.Department of Operations, Innovation and Data SciencesESADESant CugatSpain
  3. 3.Chair of Technology ManagementFriedrich-Alexander-Universität Erlangen-Nürnberg (FAU)FuerthGermany

Personalised recommendations