Chapter 5: Governance of Knowledge Flows in Open Exploration: The Role of Behavioral Control

The burgeoning literature on open innovation clearly suggests firms can make purposive usage of a variety of external knowledge sources for successful exploration of new technologies. Such open exploration requires mutual knowledge flows and extensive knowledge sharing between partner firms to explore new technologies; however, there is a risk of opportunistic behaviors by partner firms related to each other’s shared knowledge. It creates a tension between knowledge sharing and knowledge protecting. This research focuses on how partner firms share internally developed knowledge while protecting knowledge at the same time. In this chapter, we argue that firms may aim to adopt behavioral control as a governance mechanism of open exploration for managing the sharing-protecting tension. Drawing from organizational control perspective, we conceptualize and propose the behavioral control mechanism as open exploration governance and the complementary role of knowledge sharing and behavioral control for improving exploration performance. Moreover, we empirically explore the complementary nature of knowledge sharing and behavioral control based on an open innovation international survey data with a sample of 56 large firms from the United States and Europe that purposively engage in open innovation. The results suggest that the firms engage in knowledge sharing and mutually seek behavioral control to manage the knowledge sharing-protecting tension. In addition, we explore that firms engaging in both knowledge sharing and behavioral control at the same time, can improve their success in open exploration.