Governing open innovation projects: The relationship between the use of trust and legal bonds

There is a growing interest in the open innovation (OI) literature to focus on the project level, and to explore the impact of project characteristics for realizing OI. We add to prior OI and governance studies by exploring the roles of, and relationship between, trust and legal bonds in maximizing the level of satisfaction with OI relationships. We conducted a survey of 203 firms and their OI projects in the UK. Our results indicated that there is a substitutional relationship between trust and the use of legal bonds, with trust being positively associated with the level of satisfaction with OI relationships, in incremental OI projects. In radical OI projects, high level of trust and strong legal bonds complement each other in enhancing the level of satisfaction with OI relationships. Our study contributes to the OI literature by showing the importance to shift from the firm to the project level. Our findings also indicate that firms need to calibrate governance mechanisms with external partners in relation to the level of innovativeness of the product’s technology to the industry and market.