Tilt Toward Exploration: How Does Firms' Innovation Openness Affect Exploratory Innovation Tendency?

ABSTRACT Firms' exploratory technology innovation plays an important role in industrial upgrading, especially in emerging economies. What drives a firm's tendency to exploratory innovation over exploitative innovation? Drawing on the knowledge‐based theory, this study empirically investigates the impact of firms' innovation openness on exploratory innovation tendency. Innovation openness reflects the extent to which firms tend to adopt joint innovation strategies in technological innovation, capturing the dependence of firms' technological innovation on outsiders. Based on an unbalanced panel dataset of observations of Chinese A‐share listed firms from 2009 to 2021, we employ standard two‐way fixed effects regressions to estimate our hypotheses. We find that focal firms' innovation openness significantly promotes the tendency to exploratory innovation. From the perspective of knowledge structure, we further offer a contingent framework by revealing that the positive relationship between firms' innovation openness and exploratory innovation tendency is more prominent in the focal firms with greater knowledge breadth and depth. Our findings contribute to the literature on the antecedents of firms' exploratory innovation tendency by emphasizing the significant role of technological collaboration strategy and its interaction with focal firms' knowledge characteristics.