Purpose – Open innovation is an emerging paradigm which exposes organisations to networked capabilities and competencies though collaboration relationships. The traditional view of the organisational environment raises concerns regarding the mismatch in the methods used to assess business value and understanding service process maturity. The purpose of this paper is to address this gap. Design/methodology/approach – This paper employs a systematic literature review to present a state-of-the-art literature review with particular focus on the applicability of capability maturity models (CMM) within an open innovation context. Findings – The authors present a conceptual account of our research developments and build on the state-of-the-art which bridges open innovation and CMM. The authors provide a comprehensive discussion on the literature and challenge the applicability of individual organisations evolving through maturity stages. The authors identify a significant gap in the emergence of open innovation and CMM and present a service capability sourcing model (SCSM) to bridge these two research areas. Practical implications – Unpacking the nature of service capabilities allows us to understand the primary components of value co-creation and their contribution towards service maturity within an open service innovation environment. The authors verify the explanation model using a cloud computing scenario within an open service innovation environment. Originality/value – The contribution of this paper is an explanation model of an open service innovation environment through our SCSM. Though an open innovation perspective, the authors examine the nature of service capabilities and the suitability of traditional CMM in a modern service context