When Leaders’ Linguistic Openness Leads to Innovation Outcomes Throughout Three-staged R&D Process?

This paper aims to answer the question: When will open innovation have a positive impact on innovation outcomes (e.g., radical innovation)? Exploring the answer to this ‘when’ inquiry can help firms leverage external and internal resources to improve innovation outcomes in a timely manner. Building on the burgeoning research on the human side of open innovation, we introduce CEOs’ linguistic openness, defined as an individual-level construct that highlights CEOs’ expressions of openness and captures the utilized language in explaining firms’ open innovation strategy. We hypothesize that linguistic openness is positively associated with total innovation outcome in the three-staged R&D process. Specifically, the positive relationships start at the second stage (experimentation) and continue to the last stage (commercialization, representing radical innovation performance). Analyzing data from the world’s 24 largest pharmaceutical firms during 2000-2018 based on topic modeling technique and fixed effects negative binomial models, we find support for most of our hypotheses. This paper contributes to the intersection of open innovation and strategic leadership literature, suggesting that CEOs’ linguistic openness is a meaningful measure of open innovation and that leaders’ language matters to firm innovation.