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

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.