Open innovation: State of the art and future perspectives
Introduction
Open innovation has become one of the hottest topics in innovation management. A search in Google Scholar on open innovation provides over 2 million hits, Henry Chesbrough’s 2003 book has gathered more than 1,800 citations in just seven years (Google Scholar, July 2010), and surprisingly a wide range of disciplines, including economics, psychology, sociology, and even cultural anthropology (von Krogh and Spaeth, 2007) have shown interest in it. When zooming in on a revolution, it often turns out to be more of an evolution. The same is true with open innovation. After Chesbrough’s revolutionary publications of almost a decade ago, most notably Chesbrough, 2003a, Chesbrough, 2003b, Chesbrough, 2003c, it rapidly became clear that the roots of open innovation go far back in history (e.g., Christensen et al., 2005, Gann, 2005). Neither using the input of outsiders to improve internal innovation processes, nor searching for outside commercialization opportunities for what has been developed internally is new. Most of these activities have been implemented by many companies over many decades. In an extensive literature review, Dahlander and Gann (2010) found many references to concepts such as absorptive capacity (Cohen and Levinthal, 1990), complementary assets (Teece, 1986), and the exploration versus exploitation discussion (March, 1991). Pleas for integrating customers in the innovation process echo von Hippel’s (1986) led user concept and open innovation culture studies focus on the not invented here (NIH) syndrome of Katz and Allen (1982). Mowery (2009) even suggests that closed innovation might have been the exception in a history characterized mostly by open innovation practices. One example is Allen’s (1983) discussion of the iron production industry in 19th century, England. Most probably, open innovation practices are from all times. So, what is new (Linstone, 2010)? Why did the term Open Innovation fell in so fertile grounds?
The basic premise of open innovation is opening up the innovation process. One of its most often used definition is: ‘the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and to expand the markets for external use of innovation, respectively’ (Chesbrough et al., 2006: 1). The first process is called inbound open innovation and the second outbound open innovation. Open innovation is usually contrasted with closed innovation, supposedly its predecessor, where companies generate their own innovation ideas, and then develop, build, market, distribute, service, finance, and support them on their own (Chesbrough, 2003a, p. 20). Although in reality, not many firms followed a fully closed innovation approach, a multitude of developments within and outside the innovation arena made it necessary to make innovation processes more open. Relevant developments in the wider innovation environment include social and economical changes in working patterns, increased labor division due to globalization, improved market institutions for trading ideas, and the rise of new technologies to collaborate across geographical distances (Dahlander and Gann, 2010). In this sense, innovation management was more of a follower of other management areas. Trends such as outsourcing, agility, and flexibility had already forced companies to reconsider their strategies and processes in other areas, and to become network organizations. The ‘do-it-yourself’ mentality in innovation management just became outdated (Gassman, 2006).
What made Chesbrough’s early 2000 works so attractive for both scholars and practitioners? As is the case with the rise of other management concepts, some of the reasons are quite straightforward. First of all, Chesbrough assigned a single term to a collection of developments. By giving it a label, it got a face, and the following stream of studies gave it a body too. Open innovation became the umbrella that encompasses, connects, and integrates a range of already existing activities. This enabled both academics and practitioners to rethink the design of innovation strategies in a networked world. Second, the timing was great, coinciding with the current interest for outsourcing, networks, core competences, collaboration, and the internet. For example, Dodgson et al. (2006) documented the important facilitating role of information and communication technologies at Procter and Gamble’s open innovation adoption. Third, Chesbrough’s work offers ample opportunities for extension by developing, e.g., integrated theory (e.g., with other innovation management concepts or related management concepts), measurement instruments (how open is an innovation process?) and management toolboxes (how to do it?), which in turn will further stimulate proliferation. Managers can use measurement instruments as yardsticks and starting points for improvement. Finally, Chesbrough connected the processes of acquiring external knowledge and exploiting internal knowledge externally by placing them both under the open innovation umbrella with the labels inbound and outbound open innovation. Traditionally, external technology commercialization was more of an ad-hoc than a systematic activity (Tschirky et al., 2000). Open innovation integrates outbound innovation by offering a framework in which any intermediate product of innovation processes is considered as an economically good that can be exploited internally and/or externally. External commercialization can be done as a replacement of internal commercialization or in addition to it.
The primary goal of this first article in the Special Issue on Open Innovation is to explore the limits in our understanding of the open innovation concept. These limits are challenges for both practitioners and academics as they represent less understood areas. They require management attention and offer fruitful ideas for further academic research. In discussing them, I follow the distinction between content, context, and process made by Pettigrew (1990) in his discussion of organization change research. In short, I address the questions of what (the content of open innovation, Section 2), when (the context dependency of open innovation, Section 3) and how (the process of open innovation, Section 4). This papers ends with a brief conclusion and outlook into the future.
Section snippets
Content of open innovation
Open innovation is a relatively new and rich concept. Not surprisingly, Dahlander and Gann (2010) conclude, after reviewing 150 open innovation papers, that researchers tend to use different definitions and focus their research on different aspects which makes it hard to build a coherent body of knowledge (di Benedetto, 2010). This section addresses three content aspects of open innovation. First, to show the richness of the concept, several classifications of openness are discussed. Next, the
Context of open innovation
As there is in medicine no panacea, a remedy curing all diseases, it is unlikely that a management concept has positive effects in any situation, implying that the effectiveness of open innovation must be context dependent. A contingency approach is needed (Gassman, 2006) that focuses on the context characteristics determining open innovation effectiveness. Context in this sense can be characterized by both the internal and external environment.
Open innovation process
Two open innovation processes are relevant. First, the process that leads to open innovation, this is the process of opening up innovation practices that formerly were (more) closed. The second process refers to the practices of open innovation: how to do open innovation?
Conclusion
Open innovation is a concept that has recently attracted a lot of attention, both in practice and in academia. One of the main reasons is that the concept fits very well with many trends in the broader management arena. Many studies published in the past decade provide lots of useful insights, and many more studies are currently available as working papers. Since the early works of Chesbrough almost a decade ago, we have learned a lot about the content, context and process of open innovation.
Eelko Huizingh is an Associate Professor of Innovation Management at the Faculty of Economics and Business, University of Groningen, the Netherlands. Dr. Huizingh is Vice President, Scientific Affairs of ISPIM (International Society for Professional Innovation Management). His research focuses on the intersection of marketing, innovation and information technology. He has (co-)authored over 300 articles, which have appeared in Marketing Science, Marketing Letters, European Journal of Innovation
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Eelko Huizingh is an Associate Professor of Innovation Management at the Faculty of Economics and Business, University of Groningen, the Netherlands. Dr. Huizingh is Vice President, Scientific Affairs of ISPIM (International Society for Professional Innovation Management). His research focuses on the intersection of marketing, innovation and information technology. He has (co-)authored over 300 articles, which have appeared in Marketing Science, Marketing Letters, European Journal of Innovation Management, International Journal of Innovation Management, International Journal of Technology Management, International Journal Entrepreneurship and Innovation Management, Decision Support Systems, Information & Management, Organizational Behavior and Human Decision Processes, Socio Economic Planning Sciences, Journal of Retailing, Journal of Marketing Management, and European Journal of Marketing. Dr. Huizingh was the guest editor of several special issues of Technovation, International Journal of Innovation Management, and International Journal of Entrepreneurship and Innovation Management. Recently, Sage published his book Applied Statistics with SPSS.