In the vanguard of openness : which innovation capabilities should KIBS focus on?

A major question in the research on openness concerns its connection to in-house innovation activities. Building on the notion of the innovation value chain, scholars have started to assess the relevance of external parties during the distinct phases in which knowledge is translated into business value. The possibility to substitute internal capabilities is particularly interesting in the domain of knowledge intensive business services (KIBS), which are relatively open by their very nature. On the basis of a literature review and an in-depth case study, we assess the opportunities for KIBS to rely on the knowledge and competences of external partners when pursuing innovation. We argue that openness can substitute a KIBS? internal capabilities for both the explorative and exploitative aspects of service innovation, but is of less relevance for the intermediate translation of raw ideas into marketable service propositions. Using panel-data from a survey conducted in the Netherlands, we show that openness in KIBS only has an interaction effect with the capability of conceptualizing. Our contribution lays in the demonstration of a functional limitation to substituting innovation capabilities for openness.