Open innovation in local authorities in Malaysia : The antecedents and impact on organizational performance

The public sector is often criticized for inefficiency and underperformance. As the backbone of the country, its performance reflects a country’s overall growth and citizen well-being. This makes it becoming more imperative for the public sector, including local authorities, to improve their organizational performance. In response, open innovation has emerged as a strategic approach to enhance organizational performance. However, despite its potential, empirical evidence on its impact remains scarce, particularly within Malaysian local authorities. Hence, this study investigates the impact of open innovation on the organizational performance of local authorities in Malaysia. Additionally, this study also investigates the effect of three antecedent factors, which are collaboration network, relational capability, and collaborative leadership and its impact towards the implementation of open innovation. A quantitative research design was employed, utilizing survey data collected from 112 local authorities in Malaysia. Partial Least Squares Structural Equation Modelling (PLS-SEM) was used to analyze the relationships among all the variables involved. The findings confirm that open innovation positively influences organizational performance, regardless of innovation type. Furthermore, collaboration depth and collaborative leadership were found to have a positive and significant impact on open innovation. Whereas, for the collaboration breadth and relational capability were found to be insignificant. These findings contribute theoretically by extending the resource-based view theory and collaborative leadership theory, demonstrating how external collaborations and leadership styles facilitate open innovation, subsequently improving performance. Practically, this study provides policy makers and civil servants with insights on fostering open innovation initiatives to improve the performance of local authorities. Future research should explore longitudinal and qualitative approaches to deepen the understanding of open innovation dynamics in other organizations within the public sector