The effectiveness of strategic alignment between open innovation and generic strategies: Empirical evidence from restaurant SMEs in Vietnam

Recently, scholars have indicated that open innovation is appropriate in restaurant enterprises. However, there needs to be more understanding of whether open innovation adoption permits restaurant SMEs to gain business performance directly and indirectly. In this regard, drawing upon the contingency theory and generic strategic framework, this study examines the effectiveness of strategic alignment between open innovation and two generic strategies, such as cost-leadership and differentiation strategy, in the context of restaurant SMEs in Vietnam. To do that, this study proposes the research model suggesting that both strategies mediate the relationship between open innovation and business performance. The sample used in this study consists of 268 restaurant SMEs currently operating in Vietnam. This study executes PLS-SEM to assess the proposed research model. The findings suggest that open innovation has no direct effects on business performance, while it has two indirect effects on this performance through cost-leadership and differentiation strategy. These findings cast light on open innovation by executing quantitative approaches to examining the indirect effects of open innovation on performance in the contexts of restaurants operating in Vietnam. Besides, while prior studies in restaurant and hospitality contexts focus much on one aspect of open innovation, this study focuses on three aspects of open innovation by conceptualizing open innovation as a high-order construct. Furthermore, this study contributes to strategic management literature by assessing the mediating effects of strategy. Fourth, this study casts light on the mixed relationship between generic strategies and performance by examining them in Vietnam. Last, this study contributes to the theoretical development by examining the alignment between organizational characteristics with strategies rather than organizational structure.