External search strategy and innovation performance. Effects on employee loyalty in the German automotive industry

Master's Thesis from the year 2015 in the subject Economics - Innovation economics, grade: 1,3, , course: Innovation Management, language: English, abstract: External knowledge sources are nowadays commonly accepted to be an important element to a firm's innovative performance. Therefore, this research helps to get new insights into the level of a firm's openness behavior referring to its search strategy and innovation performance. Beyond that, I try to find evidence for employee loyalty between high performing and other firms. In detail, the subject here is to explore open innovation by analyzing what dimensions of firm's external search channels are affecting innovation outcomes and whether higher innovation performance could be related to employee loyalty and satisfaction in the R&D department of the German automotive industry. In this study three dimensions of external search strategies that affect firm's innovation performance are investigated. The two concepts of external search breadth and depth that both look into the subject of 'how' firm's access external knowledge are introduced. The third concept shows the relevance of choosing the right partners for the innovation process out of a wide range of external sources emphasizing 'with whom to interact with' (Arruda et al., 2013). Quantitative research within a mail survey was used for data collection purposes. Based on the survey, I found that searching intense and deeply present a curvilinear relation (taking an inverted U-curve) between the search strategy and firm's innovation performance, and discovered the presence of a point of 'over-search'. Regarding widely searching this study indicates that the diversity of different external partners possesses a positive effect on innovation performance of German automotive firms. Next, I found that the level of openness within the innovation process provides evidence that firm's innovation performance depends on different external actors. In particular, customers, other companies in the holding and suppliers possess a significant impact. Finally, the results indicate that open innovation positively affects innovation performance among German automotive firms and that high-innovators tend to have more satisfied and consequently loyal R&D employees than low performing firms.