Open innovation is crucial for a multinational enterprise (MNE) to maintain its competitive advantage and become a leader in the market. Open innovation has become increasingly important as a source of competitive advantage for a firm (Schneckenberg, 2015). Open innovation indicates that innovative performance can be improved by both acquiring knowledge from outside sources and employing external paths to commercialize knowledge resources developed internally. Innovation performance is often represented by the number of achievements (e.g., the quality of new products, new processes) (Hung, Lien, Yang, Wu, & Kuo, 2011). MNEs exhibit a tendency to seek access to others’ knowledge and technology in order to enhance their global competitiveness (Jasimuddin, Li, & Perdikis, 2015a; Steensma & Lyles, 2000). Park and Ghauri (2011) highlight key factors affecting the acquisition of technological capabilities of MNEs. Due to the challenges of market dynamism, MNEs have started to embrace the open innovation model, and reduce their reliance on the inward-looking closed innovation. Many MNEs currently engage in KM by adopting this model, in order to leverage knowledge both within their boundaries and externally to their stakeholders. MNEs such as Lucent, IBM, Intel and Millennium Pharmaceutical, DMS, P&G and ItalCementi are pioneers in adopting open innovation (Mortara & Minshall, 2011). In the knowledge-based society, MNEs face not only the challenge of offering innovative products and services through effective exploitation of knowledge resources available to them (Vaccaro, Jansen, Van Den Bosch, & Volberda, 2012), but also the challenge of how they capture and use the knowledge available outside their boundaries (Chesbrough & Crowther, 2006; Zahra & George, 2002; Zahra, Nielsen, & Bogner, 1999). Knowledge-based view of the firm regards knowledge as a strategic resource whereby the MNE can create value by exploring and exploiting it through its proper management and gain a competitive market position (Grant, 1996; Jasimuddin, Connell, & Klein, 2005; Zack, 1999). The proper management of knowledge demands leaders to influence their firm for constructive acquisition and application of knowledge (Ribiere & Sitar, 2003). Due to Shifting leadership from the industrial age to the knowledge era (Uhl-Bien, Marion, & McKelvey, 2007), knowledge-oriented leadership become a core factor in organizations to meet challenges in open innovation. For this, MNEs managers need knowledge management (KM) capability (i.e., infrastructure and process) to enhance open innovation. Although research interests in leadership and knowledge management (KM) capability is growing, limited empirical research has been directed towards the impact of knowledge-oriented leadership and KM capability on open innovation. There has been a growing interest among scholars and practitioners in the area of inbound and outbound open innovation. Donate and de Pablo (2015) pioneer in contributing to the leadership and knowledge management theory by presenting a model, which explains how knowledge-oriented leadership promotes effective KM. However, in order to account for the indirect role of leadership, they explore the linkage between knowledge-oriented leadership and innovation through KM practices. The study, however, overlooked how knowledge-oriented leadership might directly influence innovation outcomes. Hence, there is a research gap in explaining the direct association between knowledge-oriented leadership and open innovation outcomes (inbound OI and outbound OI). To the best of our knowledge, the empirical evidence of the intervening role of KM capability on the relationship between knowledge-oriented leadership and open innovation (inbound and outbound) is scant.