In the vanguard of openness: which dynamic capabilities are essential for innovative KIBS firms to develop?

In this paper, we examine whether the innovativeness of knowledge intensive business services (KIBS) firms is affected by their inherently high rate of interactions with clients and partners. Even if such firms do not deliberately follow an open innovation strategy, they are exposed to knowledge flows from other organisations. A particularly interesting issue is the connection between openness and the need to develop dynamic capabilities for distinct phases of knowledge processing. Building on resource-based views, we have developed hypotheses on the respective importance of KIBS firms? dynamic capabilities and their inclination to engage in open innovation. Since clients and partners can contribute to activities especially at the beginning and end of the innovation value chain, KIBS should consider focusing on developing a ?conceptualizing? capability for translating raw ideas into marketable service propositions. The importance of this capability is confirmed by our regression analyses on survey data from 125 KIBS in the Netherlands. By contributing to the literature on KIBS and open innovation, we shed light on strategically balancing capability development and external capability sourcing.