The Future Of Open Innovation

Dr Wim Vanhaverbeke

Traditionally, large innovating companies relied mainly on internal innovation to develop new products. Chandlerian economies of scale and scope in R&D explain why large scale internal innovation was effective. Chesbrough and other scholars analyzed why this ‘closed’ innovation dominated for more than half a century, and why closed innovation is nowadays more and more replaced by open innovation. More and more firms switch to an open organization of their innovation activities in response to the increasing costs of R&D, the shorter product life cycles, the growing technology clout of suppliers / customers, the growth of venture capital, and the globalization of knowledge.

Open innovation has proven to be a viable way to manage and organize innovation in firms. However, the long term success of open innovation as a new trend depends on its applicability to different firm and industry contexts. This, in turn, depends on the development of a useable taxonomy that is embedded in sound theories. This taxonomy should broaden the applicability of open innovation, which has been applied originally to new product and new business development in large industrial companies. This also explain why open innovation scholars have been preoccupied with technology driven ventures, which prevented them to consider other sources of innovation. In my view, the following dimensions are central in the taxonomy:

the level of analysis: open innovation is mainly studied at the firm level. Other levels of analysis are the individual, departments and divisions in organizations, bilateral ties between firms, innovation networks and national systems of innovation.

technology lifecycle: technology can be developed to a particular stage. Open innovation strategies are different in an early, precompetitive phase than in a stage where products are ready to go to the market.

sources of innovation: scientific and technological breakthroughs, design, customer insight, market intelligence, etc…

type of partners; upstream / downstream partners in the value chain, eco-system partners, technology partners, etc..

internationalization: large firms are almost always MNEs. How to integrate the geographical dimension into open innovation?

This is not an exhaustive list and the different dimensions are of course not orthogonal to one another. They have to be taken together leading to some archetypes of open innovation.

Developing stronger ties with existing streams of literature is a direct consequence of the taxonomy and the broadening of the application areas of open innovation. The refreshing insights of open innovation are derived from careful observations how contemporary companies innovate. There are however several existing theories that can be brought in line with open innovation. I cannot go into the details here, but benefits and managerial challenges of open innovation can be clarified in terms of real options theory the relational theory of the firm, the resource and resource dependency theory, the transaction cost and transaction value theory. Furthermore, I’m convinced that these theories have to be recombined and integrated to deliver a full theoretical explanation of open innovation. Moreover, open innovation requirees the integration of innovation management and strategic management. The search of firms for external technology and external pathways to the markets can only be explained when the role of business models and strategy in of open innovation are fully analyzed. Similarly, one can only understand open innovation when it is seamlessly integrated in corporate growth strategies.

Article © 2009 Dr Wim Vanhaverbeke. All rights reserved.

about the author...

Dr Wim Vanhaverbeke

Dr Wim Vanhaverbeke

affiliation:   Hasselt University

position:  Prof

country:  Belgium

area of interest:  Innovation Management

contact author

other books and writings by

Dr Wim Vanhaverbeke

Open Innovation: Researching a New Paradigm

keywords for “The Future Of Open Innovation”