Enhancing innovation performance of SMEs through open innovation and absorptive capacity: the moderating effect of business model

Open innovation (OI) is an effective way for small and medium-sized enterprises (SMEs) to acquire external resources and enhance innovation performance. This study focuses on the effect of OI on innovation performance of SMEs. Specifically, this study classifies OI into inbound and outbound OI, and explores their respective impacts on SMEs’ innovation performance. Besides, this study investigates the mediating role of absorptive capacity and the moderating role of business model on the above relationships. Based on the survey data from 218 Chinese manufacturing SMEs, our empirical results show that: (1) both inbound and outbound OI have positive impacts on SMEs’ innovation performance; (2) absorptive capacity partially mediates relationships between inbound and outbound OI and innovation performance of SMEs; (3) efficiency-centered business model positively moderates the inbound and outbound OI-SMEs’ innovation performance relationships, and novelty-centered business model only exhibits a moderating effect on outbound OI-innovation performance relationship. This study provides deeper insights into the relationship between OI and SMEs’ innovation performance. Besides, this study reveals the mediating mechanism of OI on SMEs’ innovation performance, and enhances our understanding of why some SMEs more successfully utilise OI activities to improve innovation performance than others.