Open innovation and firm performance: Evidence from the Chinese mechanical manufacturing industry

This paper studies how human capital can affect the relationship between open innovation and the financial performance of firms. The results demonstrate that there is an inversed U-shape relationship between open innovation and firm profitability. We also indicate how human capital (both quality and structure) will differently moderate above relationship: generally, higher the education level of employees will amplify the positive effect of open innovation, but for production-oriented firms, such argument does not hold; in technology-oriented firms, as the ratio of technical staff to production staff increases, the financial performance of firms improves as a result of the implementation of an open innovation strategy. However, in production-oriented firms, the moderating role is negative.