DOI: 10.4018/IRMJ.2020100101 Information Resources Management Journal Volume 33 • Issue 4 • October-December 2020 Copyright © 2020, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 1 The Role of Absorptive Capacity and Firm Openness Strategies on Innovation Performance Gad David Kashosi, University of Science and Technology, Beijing, China Yang Wu, University of Science and Technology, Beijing, China Gutama Kusse Getele, University of Science and Technology, Beijing, China https://orcid.org/0000-0002-0801-2124 Epede Mesumbe Bianca, University of Science and Technology, Beijing, China Eric Irakoze, University of International Business and Economics, Beijing, China ABSTRACT Openness and absorptive capacity are both based on the notion that organizations can use external knowledge to increase their innovation outcome. The objective of this paper is to investigate the joint effect of openness strategies, firms’ absorptive knowledge capacity, and the innovation performance of SMEs in a developing country. By using structural equation modeling (SEM) through PLS, the results show that internal practices and means for attracting external knowledge improve innovation performance and indicate that absorptive capacity mediates open search breadth and partially open search depth to affect innovation performance. These results highlight the additional nature of absorptive capacity and reinforce the knowledge of scholars in particularly developing countries. KeywORdS External Knowledge Search, Innovation Performance, Knowledge Absorption INTROdUCTION The theory of open innovation (OI) emphasizes the idea of leveraging external knowledge search (EKS), and has become gradually prevalent both in industry practices and academic research (West, Salter, Vanhaverbeke, & Chesbrough, 2014). However, EKS is not an easily controllable resource because of its intangible nature, its origin or its level of exploitation (Cantner, Meder, & Wolf, 2011). Nevertheless, there is a constrained understanding of its acquisition and implementation into the firm’s internal resources (Clausen, 2013). Additionally, the integration and assimilation of external knowledge (EK) into the firm’s (internal) knowledge base can only occur if the firm possesses internal competencies that support OI processes. Therefore, a deeper understanding regarding OI is crucial to apprehend this sourcing process.