THE RELATIONSHIP BETWEEN OPEN INNOVATION AND ORGANIZATIONAL PERFORMANCE: EVIDENCE FROM MALAYSIAN PUBLIC SERVICE ORGANIZATIONS

Abstract

While confronting a multitude of internal and external challenges, public service organizations are consistently subjected to greater expectation and public scrutiny to perform. As such, previous studies have suggested that innovation could play important roles in enhancing the performance of public service organizations, especially by leveraging external resources and capabilities through open innovation. Despite the promise of how advantageous open innovation is, there is conflicting evidence of its impact on organizational performance. Therefore, this study was conducted to investigate the relationship between open innovation and organizational performance in the context of public service organizations. Through a survey questionnaire collected from 112 out of 155 local authorities in Malaysia, quantitative data were analyzed using PLS-SEM in the SmartPLS 4 software to test hypotheses of this study. The results suggest that while open innovation has a significant positive effect on organizational performance, the relationship was not moderated by the type of innovation. The findings of this study provide some new insights into the impact of open innovation on organizational performance, particularly in the public sector. Nevertheless, it is recommended for future research to investigate the specific impacts of different open innovation activities or types on performance in a more diverse context.