Towards a Theory of Open Innovation: Three Core Process Archetypes

Open Innovation is a phenomenon that has become increasingly important for both practice and theory over the last few years. The reasons are to be found in shorter innovation cycles, industrial research and development's escalating costs as well as in the dearth of resources. Subsequently, the open source phenomenon has attracted innovation researchers and practitioners. The recent era of open innovation started when practitioners realised that companies that wished to commercialise both their own ideas as well as other firms' innovation should seek new ways to bring their in-house ideas to market. They need to deploy pathways outside their current businesses and should realise that the locus where knowledge is created does not necessarily always equal the locus of innovation - they need not both be found within the company. Experience has furthermore shown that neither the locus of innovation nor exploitation need lie within companies' own boundaries. However, emulation of the open innovation approach transforms a company's solid boundaries into a semi-permeable membrane that enables innovation to move more easily between the external environment and the company's internal innovation process. How far the open innovation approach is implemented in practice and whether there are identifiable patterns were the questions we investigated with our empirical study. Based on our empirical database of 124 companies, we identified three core open innovation processes: (1) The outside-in process: Enriching a company's own knowledge base through the integration of suppliers, customers, and external knowledge sourcing can increase a company's innovativeness. (2) The inside-out process: The external exploitation of ideas in different markets, selling IP and multiplying technology by channelling ideas to the external environment. (3) The coupled process: Linking outside-in and inside-out by working in alliances with complementary companies during which give and take are crucial for success. Consequent thinking along the whole value chain and new business models enable this core process.

[1]  E. Hippel,et al.  FROM EXPERIENCE: Developing New Product Concepts Via the Lead User Method: A Case Study in a “Low-Tech” Field , 1992 .

[2]  Daniel A. Levinthal,et al.  ABSORPTIVE CAPACITY: A NEW PERSPECTIVE ON LEARNING AND INNOVATION , 1990 .

[3]  J. Rayport,et al.  Spark innovation through empathic design. , 1997, Harvard business review.

[4]  Will Mitchell,et al.  Evolutionary diffusion: internal and external methods used to acquire encompassing, complementary, and incremental technological changes in the lithotripsy industry , 1998 .

[5]  R. Handfield,et al.  Involving Suppliers in New Product Development , 1999 .

[6]  Bernard Croisier.  The governance of external research: empirical test of some transaction‐cost related factors , 1998 .

[7]  David F. Mcqueeney.  IBM's Evolving Research Strategy , 2003 .

[8]  J. Burke,et al.  Petroleum Progress and Profits: A History of Process Innovation by John Lawrence Enos (review) , 1962 .

[9]  O. Gassmann,et al.  Organization of industrial R&D on a global scale , 1998 .

[10]  Thomas V. Scannell,et al.  Success Factors for Integrating Suppliers into New Product Development , 1997 .

[11]  C. Freeman.  Chemical Process Plant: Innovation and the World Market , 1968, National Institute Economic Review.

[12]  A. Arora.  Contracting for tacit knowledge: the provision of technical services in technology licensing contracts , 1996 .

[13]  H. Chesbrough.  The Era of Open Innovation , 2003 .

[14]  William M. Riggs,et al.  Incentives to innovate and the sources of innovation: the case of scientific instruments☆ , 1994 .

[15]  Klaus Brockhoff,et al.  Customers' perspectives of involvement in new product development , 2003, Int. J. Technol. Manag..

[16]  J. Marshall.  Open Innovation: The New Imperative for Creating and Profiting from Technology , 2004 .

[17]  E. von Hippel,et al.  Sources of Innovation , 2016 .

[18]  Changqi Wu,et al.  On the organization of cooperative research and development: Theory and evidence , 1997 .

[19]  H. Gemünden,et al.  Technological interweavement: a means of achieving innovation success , 1992 .

[20]  R. Veugelers,et al.  COMPLEMENTARITY BETWEEN TECHNOLOGY MAKE AND BUY IN INNOVATION STRATEGIES : EVIDENCE FROM BELGIAN MANUFACTURING FIRMS , 1998 .

[21]  C. A. Heaton.  The Chemical Industry , 1991 .

[22]  Richard R. Nelson,et al.  On the Sources and Significance of Interindustry Differences in Technological Opportunities , 1995 .

[23]  G. Haour.  Stretching the knowledge‐base of the enterprise through contract research , 1992 .

[24]  S. Vickery,et al.  The ability to minimize the timing of new product development and introduction: an examination of antecedent factors in the North American automobile supplier industry , 2000 .

[25]  G. Pisano.  The R&D Boundaries of the Firm: An Empirical Analysis , 1990 .

[26]  J. Hagedoorn,et al.  External Sources of Innovative Capabilities: The Preferences for Strategic Alliances or Mergers and Acquisitions , 2002 .

[27]  V. Chiesa,et al.  Organizing for technological collaborations: a managerial perspective , 1998 .

[28]  G. Hamel.  Competition for competence and interpartner learning within international strategic alliances , 1991 .

[29]  D. Mowery,et al.  Inward technology transfer and competitiveness: the role of national innovation systems , 1995 .

[30]  Alan Jacob Berger.  Factors influencing the locus of innovation activity leading to scientific instrument and plastics innovations , 1975 .

[31]  Hans Georg Gemünden,et al.  Managing Technological Networks: The Concept Of Network Competence , 1996 .

[32]  Caroline Mothe,et al.  How to learn in R&D partnerships? , 1998 .

[33]  O. Gassmann,et al.  Trends and determinants of managing virtual R&D teams , 2003 .

[34]  Stephan M. Wagner,et al.  Sourcing Concepts: Matching Product Architecture, Task Interface, Supplier Competence and Supplier Relationship , 2003 .

[35]  Oliver Gassmann,et al.  Leading Pharmaceutical Innovation: Trends and Drivers for Growth in the Pharmaceutical Industry , 2004 .

[36]  Jeffrey H. Dyer,et al.  Strategic Supplier Segmentation: The Next “Best Practice” in Supply Chain Management , 1998 .

[37]  E. Hippel.  Innovation by User Communities: Learning From Open-Source Software , 2001 .

[38]  Thomas J. Allen,et al.  Managing the flow of technology: technology transfer and the dissemination of technological informat , 1977 .

[39]  T. S. Robertson,et al.  TECHNOLOGY DEVELOPMENT MODE: A TRANSACTION COST CONCEPTUALIZATION , 1998 .

[40]  Matthew J. Robson,et al.  Relationships and Networks in International Markets , 1999 .

[41]  B. Kogut.  Joint ventures: Theoretical and empirical perspectives , 1988 .

[42]  Laura M. Birou,et al.  Supplier Involvement in Integrated Product Development , 1994 .

[43]  Alok K. Chakrabarti,et al.  Corporate strategic objectives for establishing relationships with university research centers , 2001, IEEE Trans. Engineering Management.

[44]  Andrew C. Inkpen,et al.  Believing Is Seeing: Joint Ventures and Organization Learning* , 1995 .

[45]  W Kuemmerle,et al.  Building effective R&D capabilities abroad. , 1997, Harvard business review.

[46]  J. Hagedoorn.  Understanding the rationale of strategic technology partnering: Nterorganizational modes of cooperation and sectoral differences , 1993 .

[47]  Henry Chesbrough,et al.  Open Innovation: The New Imperative for Creating and Profiting from Technology , 2003 .

[48]  Walter Kuemmerle,et al.  Foreign Direct Investment in Industrial Research in the Pharmaceutical and Electronics Industries: Results from a Survey of Multinational Firms , 1999 .

[49]  Kwaku Atuahene-Gima,et al.  Inward Technology Licensing as an Alternative to Internal R&D in New Product Development: A Conceptual Framework , 1992 .

[50]  E. C. Baughan,et al.  Science and Strategy , 1956, Nature.

[51]  L. Nesta,et al.  What kind of knowledge can a firm absorb , 1999 .

[52]  Gary L. Ragatz,et al.  Benefits associated with supplier integration into new product development under conditions of technology uncertainty , 2002 .

[53]  L. F. Haber,et al.  The chemical industry, 1900-1930 : international growth and technological change , 1971 .

[54]  Paul Almeida,et al.  Knowledge sourcing by foreign multinationals: Patent citation analysis in the U.S. semiconductor industry , 1996 .

[55]  I. Cockburn,et al.  Absorptive Capacity, Coauthoring Behavior, and the Organization of Research in Drug Discovery , 2003 .

[56]  E. Hippel,et al.  Customers As Innovators: A New Way to Create Value , 2002 .

[57]  D. Audretsch,et al.  The decision between internal and external R&D , 1996 .

[58]  John S. Fryer.  The Production and Application of New Industrial Technology , 1977 .

[59]  E. Bohlin,et al.  External Technology Acquisition in Large Multi-Technology Corporations , 1992 .

[60]  Rod Coombs,et al.  `Knowledge management practices' and path-dependency in innovation , 1998 .

[61]  Oliver Gassmann,et al.  Internationales F&E-Management , 1997 .

[62]  F. Wynstra,et al.  Managing supplier involvement in product development:: Three critical issues , 2001 .

[63]  Ralph Katz,et al.  Shifting Innovation to Users via Toolkits , 2002, Manag. Sci..

[64]  Oliver Gassmann,et al.  Insourcing Creativity with Listening Posts in Decentralized Firms , 2004 .

[65]  C. T. Taylor,et al.  The Economic Impact of the Patent System: A Study of the British Experience , 1973 .

[66]  Edwin Mansfield,et al.  How Rapidly Does New Industrial Technology Leak Out , 1985 .

[67]  D. Littler,et al.  Collaboration in new technology based product markets , 1998 .

[68]  C. Fey,et al.  EXTERNAL SOURCES OF KNOWLEDGE AND PERFORMANCE IN R & D ORGANIZATIONS , 2001 .

[69]  O. Gassmann,et al.  New concepts and trends in international R&D organization , 1999 .

[70]  D. Mowery,et al.  Strategic alliances and interfirm knowledge transfer , 1996 .

[71]  J. D. Jong,et al.  Incentives to innovate , 2002 .

[72]  V. Chiesa,et al.  Managing the internationalization of R&D activities , 1996 .

[73]  H. Ernst,et al.  Patentmanagement in jungen Technologieunternehmen , 2003 .

[74]  S. Zahra,et al.  Absorptive Capacity: A Review, Reconceptualization, and Extension , 2002 .

[75]  Gary L. Lilien,et al.  Performance Assessment of the Lead User Idea-Generation Process for New Product Development , 2002, Manag. Sci..

[76]  B. Shaw.  The Role of the Interaction between the User and the Manufacturer in Medical Equipment Innovation , 1985 .

[77]  E. Hippel,et al.  Lead users: a source of novel product concepts , 1986 .

[78]  Michael Fritsch,et al.  Who cooperates on R&D? , 2001 .

[79]  U. Zander.  Exploiting a technical edge : voluntary and involuntary dissemination of technology , 1991 .

[80]  Ashish Arora,et al.  Evolution of Industry Structure in the Chemicals Industry , 1998 .

[81]  Sarah Slaughter,et al.  Innovation and learning during implementation: a comparison of user and manufacturer innovations , 1993 .

[82]  D. Leonard-Barton,et al.  Wellsprings of Knowledge: Building and Sustaining the Sources of Innovation , 1995 .

[83]  A. Arora.  PATENTS, LICENSING, AND MARKET STRUCTURE IN THE CHEMICAL INDUSTRY , 1996 .

[84]  Oliver Gassmann,et al.  Leading Pharmaceutical Innovation: How to Win the Life Science Race , 2018 .

[85]  Julian Lowe,et al.  R&D and technology purchase through licence agreements: complementary strategies and complementary assets , 1998 .

[86]  Christopher A. Voss,et al.  Determinants of success in the development of applications software , 1985 .

[87]  O. Gassmann,et al.  Market versus technology drive in R&D internationalization: four different patterns of managing research and development , 2002 .

[88]  L. F. Haber,et al.  The chemical industry during the nineteenth century: A study of the economic aspect of applied chemistry in Europe and North America, , 1969 .

[89]  Oliver Gassmann,et al.  Innovationsprozesse: Öffnung statt Alleingang , 2004 .

[90]  Rebecca Grant,et al.  Determinants of new product designers' satisfaction with suppliers' contributions , 1997 .

[91]  J. Liker,et al.  Risky Business or Competitive Power? Supplier Involvement in Japanese Product Design , 1997 .

[92]  U. Biegel,et al.  Kooperation zwischen Anwender und Hersteller im Forschungs- und Entwicklungsbereich , 1987 .

[93]  Peter J. Lane,et al.  Relative absorptive capacity and interorganizational learning , 1998 .

[94]  H. Håkansson,et al.  A Model of Industrial Networks , 1992 .

[95]  A. J. Bailetti,et al.  Assessing the impact of university interactions on an R&D organization , 1992 .

[96]  Svein Ulset.  R&D outsourcing and contractual governance: An empirical study of commercial R&D projects , 1996 .

[97]  K. Clark.  Project scope and project performance: the effect of parts strategy and supplier involvement on product development , 1989 .

[98]  D. L. Meadows,et al.  Estimate accuracy and project selection models in industrial research. , 1968 .

[99]  S. Conway.  Informal boundary-spanning communication in the innovation process: an empirical study , 1995 .

[100]  R. Veugelers.  Internal R & D expenditures and external technology sourcing , 1997 .

[101]  Kwanghui Lim,et al.  The many faces of absorptive capacity : spillovers of copper interconnect technology for semiconductor chips , 2000 .

[102]  P. Patel,et al.  Patterns of internationalisation of corporate technology: location vs. home country advantages. , 1999 .

[103]  Massimo G. Colombo,et al.  Technological cooperative agreements and firm's R & D intensity. A note on causality relations , 1996 .

[104]  E. Hippel.  The dominant role of users in the scientific instrument innovation process , 1993 .

[105]  Ravipreet S. Sohi,et al.  The development of interfirm partnering competence: Platforms for learning, learning activities, and consequences of learning , 2003 .