Arif Hartono(1*), Ratih Kusumawardhani(2)

(1) Faculty of Economics, Universitas Islam Indonesia
(2) Faculty of Economics, Universitas Sarjanawiyata Tamansiswa
(*) Corresponding Author


Since the term Open Innovation (OI) was coined by Henry Chesbrough in 2003, OI studies have been frequently conducted. Surprisingly, OI insights, in the context of Indonesian firms, are scarce. Furthermore, there are no existing OI studies that use data derived from innovation surveys. Hence, this study attempts to close the gap in the literature, by providing insights into Indonesian firms’ openness toward external knowledge, and its impact on innovation performance. The main aim of this study is to investigate the impact of OI practices on Indonesian manufacturing firms’ propensity to innovate (i.e. their product, process, organization, and marketing) and innovation performance. Product and process innovations are grouped under the term technological innovation, while organization and marketing innovations are classified as non-technological innovation. Data used in this study were derived from the Indonesia Innovation Survey (IIS) 2011 that covered the period from 2009-2010. Following Laursen and Salter’s (2006) study, OI indicators consist of external search breadth (i.e. the number of external sources or search channels that firms rely upon in their innovative activities) and depth (the extent to which firms draw deeply from the different external sources or search channels) in innovation process. Undertaking logistic and tobit regressions, this study shows that in general, both breadth and depth significantly and positively affect technological and non-technological innovation, as well as innovation performance. However, the over-search on external knowledge, measured by breadth squared and depth squared, negatively and significantly influence innovation and innovation performance. This indicates that too much external knowledge, sourced during the innovation process will diminish the return of innovation. This study also finds an indication of a complementary relationship existing between internal R&D and external knowledge; meaning that the implementation of one knowledge-sourcing strategy (either sourcing from internal R&D or external knowledge) increases the marginal returns from another. Lastly, important implications related to theoretical and innovation strategies are proposed.



Open innovation, manufacturing firms, Indonesia

Full Text:



Ahn, J., Mortara, L., & Minshall, T. (2014). Longitudinal effects of open R&D strategy on firm performance: Comparative study of the UK and Korea. 2014 R&D Management Association Conference, 1–10.

Aminullah, E. (2007). Long term forecasting of technology and economic growth in Indonesia. Asian Journal of Technology Innovation, 15(1), 1–20. 10.1080/19761597.2007.9668625

Aminullah, E. (2012). Coping with low R&D investment in Indonesia: Policy insights from a system dynamics model. Journal of S&T Policy and R&D Management, 10(1), 1–10.

Aminullah, E., Dian, P., Irene, M. N., & Laksani, C. S. (2014). How capital goods firms upgrade innovation capacity: A case study. Journal of S&T Policy and R&D Management, 12(2), 85–98.

Aranha, E. A., Prado Garcia, N. A., & Corrêa, G. (2015). Open Innovation and business model: A Brazilian company's case study. Journal of Technology Management & Innovation, 10(4), 91–98. 10.4067/S0718-27242015000400010

Ayyagari, M., Demirgüç-Kunt, A., & Maksimovic, V. (2011). Firm innovation in emerging markets: The role of finance, governance, and competition. Journal of Financial and Quantitative Analysis, 46(6), 1545–1580.

Baark, E. (2016). Innovation system reform in Indonesia and Vietnam: A new role for universities? Journal of STI Policy and Management, 1(1), 1–15. Retrieved from

Basant, R., & Fikkert, B. (1996). The effects of R&D, foreign technology purchase, and domestic and international spillovers on productivity in Indian firms. The Review of Economics and Statistics, 78(2), 187–199.

Battisti, G., Gallego, J., Rubalcaba, L., & Windrum, P. (2015). Open innovation in services: Knowledge sources, intellectual property rights and internationalization. Economics of Innovation and New Technology, 24(3), 223–247. 10.1080/10438599.2014.924745

Bell, M., & Pavitt, K. (1993). Technological accumulation and industrial growth: Contrasts between developed and developing countries. Industrial and Corporate Change, 2(2), 157–211.

Braga, H., & Willmore, L. (1991). Techno­logical imports and technological effort: An analysis of their determinants in Brazilian firms. The Journal of Industrial Economics, 39(4), 421–432.

Chesbrough, H. W. (2003). Open Innovation: The New Imperative for Creating and Profiting from Technology. Boston, Massachusetts: Harvard Business School Press.

Chesbrough, H. W. (2006). Open Innovation: A New Paradigm for Understanding Industrial Innovation. In H. W. Chesbrough, W. Vanhaverbeke, & J. West (Eds.), Open Innovation: Researching a New Paradigm. Oxford, UK: Oxford University Press.

Ciptono, W. S. (2006). A sequential model of innovation strategy—company non-financial performance links. International Journal of Purchasiing and Supply Management, 8(2), 137–178.

De Jong, J. P. J., Vanhaverbeke, W., Kalvet, T., & Chesbrough, H. (2008). Policies for open innovation: Theory, framework and cases.

Deolalikar, A. B., & Evenson, R. E. (1989). Technology production and technology purchase in Indian industry : An econometric analysis. The Review of Economics and Statistics, 71(4), 687–692.

Dhewanto, W., & Umam, K. K. (2009). Technology commercialisation in a developing country: Current condition and its challenges. The Asian Journal of Technology Management, 2(1), 1–13.

Ebersberger, B., Bloch, C., Herstad, S. J., & Van De Velde, E. (2012). Open innovation practices and their effect on innovation performance. International Journal of Innovation and Technology Management, 09(06), 1250040. S021987701250040X

Fransman, M., & King, K. (1984). Technological capability in the third world. London, UK: The Macmillan Press Ltd.

Freeman, C. (1989). The economics of industrial innovation. London, UK: Francis Pinter.

Fu, X., Li, J., Xiong, H., & Chesbrough, H. W. (2014). Open innovation as a response to constraints and risks: Evidence from China. Asian Economic Papers, 13(3), 30–58.

Fu, X., & Xiong, H. (2012). Open innovation in China : Policies and practices. Oxford, UK.

Hartono, A., & Kusumawardhani, R. (2019). Innovation barriers and their impact on innovation: Evidence from Indonesian manufacturing firms. Global Business Review, 20(5).

Hill, H., & Tandon, P. (2010). Innovation and technological capability in Indonesia, (June 2010).

Huston, L., & Sakkab, N. (2006). Connect and develop. Inside Procter & Gamble’s New Model for Innovation. Harvard Business Review, 84(3), 58–67. 10.1111/j.1943-278X.2010.00006.x

Indarti, N., & Van Geenhuizen, M. (2005). Knowledge As a Critical Resource in Innovation Among Small Furniture Companies in Indonesia. Gadjah Mada International Journal of Business, 7(3), 371–390. Retrieved from

Kafouros, M. I., & Forsans, N. (2012). The role of open innovation in emerging economies: Do companies profit from the scientific knowledge of others? Journal of World Business, 47(3), 362–370. 10.1016/j.jwb.2011.05.004

Kim, L. (1997a). Imitation to Innovation: The Dynamics of Korea’s Technological Learning. Boston, Massachusetts: Harvard Business School Press.

Kim, L. (1997b). The Dynamics of Samsung’s Technological Learning in Semiconductors. California Management Review, 39(3), 86–100.

Kristiansen, S. (2002). Competition and knowledge in Japanese rural businesses. Journal of Tropical Geography, 23(1), 52–70.

Lakitan, B. (2013). Connecting all the dots: Identifying the “ actor level ” challenges in establishing an effective innovation system in Indonesia. Technology in Society, 35(1), 41–54. j.techsoc.2013.03.002

Laursen, K., Paananen, M., & Salter, A. (2007). Appropriability , Proximity , Routines and Innovation Profiting From Openness: Exploring the Relationship Between. DRUID Summer Conference.

Laursen, K., & Salter, A. (2004). Searching high and low: What types of firms use universities as a source of innovation? Research Policy, 33(8), 1201–1215.

Laursen, K., & Salter, A. (2006). Open for innovation: The role of openness in explaining innovation performance among U.K. manufacturing firms. Strategic Management Journal, 27(2), 131–150.

Mothe, C., & Thi, T. U. N. (2010). The link between non-technological innovation and technological innovation. European Journal of Innovation Management, 13(3), 313–332.

Najib, M., & Kiminami, A. (2011). Innovation, cooperation and business performance. Some evidence from Indonesia's small food processing cluster. Journal of Agribusiness in Developing and Emerging Economies, 1(1), 75–96.

OECD. (2013). Innovation in Southeast Asia. Innovation in Southeast Asia.

OECD & EUROSTAT. (2005). Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data 3rd Edition. Paris, France.

Pippel, G. (2014). R&D cooperation for non-technological innovations. Economics of Innovation and New Technology, 23(7), 611–630. 10438599.2013.871167

Podmetina, D., Fiegenbaum, I., Teplov, R., & Albats, E. (2014). Towards Open Innovation Measurement Systems - A Literature Review. In The XXV ISPIM Conference-Innovation for Sustainable Economy & Society. Dublin, Ireland.

Rasiah, R. (2009). Technological Capabilities of Automotive Firms in Indonesia and Malaysia. Asian Economic Papers, 8(1), 151–169.

Roper, S., Du, J., & Love, J. H. (2008). Modelling the innovation value chain. Research Policy, 37(6–7), 961–977.

Sağ, S., Sezen, B., & Güzel, M. (2016). Factors That Motivate or Prevent the Adoption of Open Innovation by SMEs in Developing Countries and Policy Suggestions. In Procedia - Social and Behavioral Sciences (Vol. 235, pp. 756–763). The Author(s).

Salge, T. O., Bohne, T. M., Farchi, T., & Piening, E. P. (2012). Harnessing the Value of Open Innovation: the Moderating Role of Innovation Management. International Journal of Innovation Management, 16(03), 1–26. S1363919612400051

Sandee, H., & Rietveld, P. (2001). Upgrading Traditional Technologies in Small-Scale Industry Clusters: Collaboration and Innovation Adoption in Indonesia. The Journal of Development Studies, 37(4), 150–172.

Savitskaya, I., & Podmetina, D. (2013). Environmental influences on open innovation: Evidence from Russia. International Journal of Business Excellence, 6(3), 310–330. 10.1504/IJBEX.2013.053612

Savitskaya, I., Salmi, P., & Torkkeli, M. (2010). Barriers to Open Innovation: Case China. Journal of Technology Management & Innovation, 5(4), 10–21. 10.4067/S0718-27242010000400002

Schmidt, T., & Rammer, C. (2006). The determinants and effects of technological and non- technological innovations – Evidence from the German CIS IV. ZEW. Mannheim. Retrieved from http://

Todo, Y., & Miyamoto, K. (2006). Knowledge Spillovers from Foreign Direct Investment and the Role of Local R&D Activities: Evidence from Indonesia. Economic Development and Cultural Change, 55(1), 173–200.

Utami, T. L. W., Indarti, N., Sitalaksmi, S., & Makodian, N. (2017). The Effect of Knowledge Sources on Innovation Capabilities Among Restaurants and Café Businesses in Indonesia. Journal of Indonesian Economy and Business, 32(1), 33–50.

Vahter, P., Love, J. H., & Roper, S. (2014). Openness and Innovation Performance: Are Small Firms Different? Industry and Innovation, 21(7–8), 553–573. https://

Wamae, W. (2009). Enhancing the role of knowledge and innovation for development. International Journal of Technology Management and Sustainable Development, 8(3), 199–220. ijtm8.3.199/1

Wang, Y., Vanhaverbeke, W., Roijakkers, N., & Chen, J. (2011). How Chinese Firms Employ Open Innovation to Accelerate the Development of Their Technological Capability. SSRN Electronic Journal.

Wie, T. K. (2005). The major channels of international technology transfer to Indonesia: An assessment. Journal of the Asia Pacific Economy, 10(2), 214–236.

Xiaobao, P., Wei, S., & Yuzhen, D. (2013). Framework of open innovation in SMEs in an emerging economy: Firm characteristics, network openness, and network information. International Journal of Technology Management, 62(2/3/4), 223. 10.1504/IJTM.2013.055142

Yahya, A. (2013). The Effect of Unique Resource , Innovation Management and Partnership on Business Performance at Digital Creative Industry in Indonesia. International Journal of Innovation in Business, 2(5), 444–464.

Yusuf, M., & Trondsen, T. (2013). Improving Indonesia’s Competitiveness: Innovation, Value Chains and Cluster-Bases for Realising the Huge Potential of Marine and Fisheries. International Journal of Organizational Innovation, 6(1), 128–136. Retrieved from


Article Metrics

Abstract views : 5330 | views : 4537


  • There are currently no refbacks.

Copyright (c) 2018 Journal of Indonesian Economy and Business

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Journal of Indonesian Economy and Business


Editorial Team
Focus and Scope
Peer Review Process
Publication Ethics
Screening for Plagiarism


Author Guidelines
Submission Guidelines
Online Submissions
Copyright Notice
Privacy Statement
Author Fees


Author Pack
Submission Form & Manuscript Template



Reviewer Guidelines
Reviewer Acknowledgement



General Search
Author index
Title index



The Journal of Indonesian Economy and Business (print ISSN 2085-8272; online ISSN 2338-5847) is published by the Faculty of Economics and Business Universitas Gadjah Mada, Indonesia. The content of this website is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License

© 2019 Journal of Indonesian Economy and Business 
 Visitor Statistics