The relationship between inbound open innovation patents and financial performance: evidence from global information technology companies

Most existing studies on the global information technology (IT) sector examine the causalrelationship between internally generated patents and corporate performance. However,global IT companies acquire patents not only from internal research and development(R&D), but also from inbound open innovation. Focusing on this, we examine thedifferential effects of patents from various sources, including (1) internal R&D, (2)university–industry collaboration, and (3) transaction on corporate sales, profits, and marketvalue in 28 global IT companies. We find that patents by internal R&D boost sales, profits,and corporate value. Purchased patents have small, immediate positive effects on marketvalue and profit, but do not increase sales. University –industry collaboration patents drivesales after more than two years, but negatively impact market value. Overall, internal R&Dis consistently important for sustainable corporate growth, implying that the acquisition ofideas, technologies, and human resources for internal R&D is the most effective method ofinbound open innovation. Purchased patents boost short-term growth, while university –industry collaboration is necessary for mid- and long-term growth. Our study provides thebasis for an optimal balance between internal R&D and inbound open innovation, as well asthe creation of a financial performance-oriented patent portfolio.