Impact of Open Innovation on Firm Performance: A Literature Review

This study investigates how the open innovation paradigm influences firm performance by synthesizing the existing literature on open innovation and firm performance. This study provides a better understanding of the concept of open innovation based on the current literature. The selection criteria were executed by the PRISMA article selection process linking open innovation and firm performance, published in peer-reviewed journals from 2015 to June 2021. The search string was tailored by Ebsco host, Elsevier, Emerald Insight and Sage publishers considering the inclusion and exclusion criteria. The descriptive method was used to analyze the selected articles. Numerous studies investigated that open innovation positively impacts firm performance, and few researchers demonstrated that open innovation has a U-shaped relationship with firm performance. Some studies discovered negative and mixed results on open innovation and firm performance. Due to the contradictory findings, more investigations on open innovation and firm performance are needed and this review produces knowledge for both practitioners and policymakers to implement their roles effectively. Especially these findings are significant for future researchers to identify the key areas that need to be investigated in the field of open innovation.