Empirical research on the negative impacts of open innovation has traditionally focused on the view of transaction cost which suggested that complicated open R&D structure may lead to excessive management and information processing cost. This paper takes a different approach to this issue, focusing on outgoing knowledge transfer in open innovation that may adversely affect the focal firm’s performance and competitive advantage. To measure outgoing knowledge transfer, I use employees’ voluntary turnover for that tacit knowledge is always embedded in human-being. I theorize that employees’ turnover decisions are affected by the interaction of underutilized knowledge within firms, and enhanced individual absorptive capacity and social capital enhanced by open R&D. I take a quantitative methodology to test this theory, using 728 firms’ data based on the Survey of Research and Development held by the Statistics Bureau of Japan annually. As a result, I find that open R&D positively affects employees’ turnover, which suggests firms face a dilemma when they decide to adopt open innovation. It is that firms can build a competitive advantage through incoming knowledge from external organizations, however, they can also lose their advantages due to the outgoing knowledge transfer held by their employees.