Study note on open innovation for class exercise on literature review

 

Giustina Secundo and Antonio Toma Department of Engineering for Innovation, Facolta di Ingegneria, Universita del Salento, Lecce, Italy Giovanni Schiuma Universita degli Studi della Basilicata, Potenza, Italy, and

Giuseppina Passiante Department of Engineering for Innovation, University of Salento, Lecce, Italy. “Knowledge transfer in open innovation A classification framework for healthcare ecosystems” Business Process Management Journal Vol. 25 No. 1, 2019 pp. 144-163 © Emerald Publishing Limited.

 

[point 1] In a world of ever-changing corporate environments and reduced product life cycles, organizations working in R&D and technology-intensive industry “can and should use external ideas as well as internal ones, and internal and external paths to market” to make the most out of their technologies (Chesbrough, 2003, p. 24).

 

[point 2] Chesbrough et al. (2006) proposed a quite broad definition of open innovation as the “purposive inflows and outflows of knowledge to accelerate internal innovation and to expand the markets for external use of innovation” (Chesbrough et al., 2006, p. 1) using pecuniary and non-pecuniary mechanisms in line with the organization’s business model (Chesbrough and Bogers, 2014).

 

[point 3] Since 2003, there has been an abundance of research conducted into open innovation, even though much of this research has focused on individual firms interacting with external partners, large-scale enterprises, leaving a gap in R&D intensive industry and at inter-organizational value network level (alliance, network and, specifically, ecosystem) (Chesbrough et al., 2014).

 

[point 4] The innovation of healthcare ecosystems will likely take the form of a constellation of improvements and not the adoption of a singular product or service. Healthcare ecosystems usually involve a wide number of actors (patients, doctors, nurses, companies and government bodies) that open their innovation processes in order to incorporate knowledge flows originated from or co-produced with external stakeholders (academia, research centers, industry, government, NGOs and public institutions) (Chesbrough and Bogers, 2014; Dahlander and Gann, 2010; Huizingh, 2011; Enkel et al., 2009; Ardito and Messeni Petruzzelli, 2017). Characterizing knowledge in terms of flows means looking at knowledge as “a fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information” (Davenport and Prusak, 2000, p. 5).

 

Cinzia Battistella, Alberto Felice De Toni, Elena Pessot, (2017) "Practising open innovation: a framework of reference", Business Process Management Journal, Vol. 23 Issue: 6, pp.1311-1336.

 

[point 5] The open innovation (OI) paradigm has received an extensive number of contributions from different research streams (Gassmann, 2006), taking into account a variety of dimensions such as strategy, leadership and organisational structure (Giannopoulou et al., 2011). The exponential growth of this research field has also led to the publication of numerous reviews, addressing major research streams on different topics. In particular, previous studies have focussed on notions of OI, OI forms (in terms of inbound/outbound/coupled processes, number, type and variety of partners, mechanisms, opened phases of the innovation process, types of innovation, focus), effectiveness (in terms of the firm’s general or innovation performance), contextual factors (size of the company, industry/technology intensity) and strategic orientation (leader/follower, leadership and internal culture, business models, impact of appropriability) (see e.g. literature reviews by Elmquist et al., 2009; Huizingh, 2011; Kovacs et al., 2015; West et al., 2014).

 

[point 6] Beyond theoretical issues, little research has been conducted to thoroughly investigate effective OI implementation in companies, i.e. practices or modes (Giannopoulou et al., 2011; Spithoven et al., 2013; West and Bogers, 2014). While OI practices adoption has been widely proved in different companies and in different contexts (Huizingh, 2011), scholars (Chesbrough and Brunswicker, 2014; Docherty, 2006; Gassmann, 2006; Giannopoulou et al., 2011) agree that companies are still facing difficulties in implementing them, particularly in terms of organisational and cultural barriers. Moreover, companies interact with various combinations of actors, with different roles and strength of ties (Lee et al., 2010) and adopt diverse sets of instruments (Rass et al., 2013) in their OI activities.

 

[point 7] “…an integrated framework to support companies in decision making on when, how and which OI practices to adopt is still lacking (Huizingh, 2011; Bellantuono et al., 2013)”

 

[point 8] The valuable advantages of opening up the innovation process to the outside are widely acknowledged (Boudreau and Lakhani, 2009; Docherty, 2006) and have been experienced in different companies and in different contexts (Huizingh, 2011). OI is associated with superior firm performance (Laursen and Salter, 2006; Rass et al., 2013) and higher innovative activity in companies (Cosh and Zhang, 2011), both in large and small-to-medium-sized ones (Spithoven et al., 2013). This is true in particular: when the technology, design and innovation approaches have yet to be ascertained; when customer needs are highly varied or not yet fully understood; and when companies can separate and outsource distinct parts of the innovation process in order to take advantage of different knowledge and ideas (Boudreau and Lakhani, 2009).

 

[point 9] Developing and exploiting innovation activities in collaboration with external parties requires new decisions that should be delineated in: when, how, with whom, with what purpose and in what way (Huizingh, 2011). While previous research studied management challenges for effective OI implementation (see e.g. van de Vrande et al., 2009 for a study on SMEs in this sense), there is still little research on putting OI into practice (Giannopoulou et al., 2011; West and Bogers, 2014), especially in the case of SMEs.

 

[point 10] Bellantuono et al. (2013) introduce a framework that supports managers in identifying the OI practices that best fit a specific innovation project. For this purpose they study different combinations of variables related to OI practices – e.g. access mode, degree or formality, etc. – and variables related to a companies’ innovation context in terms of knowledge supply – e.g. the level of knowledge they possess. Despite this, they do not provide a list of practices, i.e. they do not explore thoroughly all the possible OI practical approaches.

 

Susanne Ollila and Maria Elmquist. “Managing Open Innovation: Exploring Challenges at the Interfaces of an Open Innovation Arena” CREATIVITY AND INNOVATION MANAGEMENT Volume 20 Number 4 2011.

 

[point 11] The emergence of open innovation initiatives, in which R&D and innovation processes are increasingly opened to external parties, seems to be associated with amplifying the levels of collaboration. Initiatives by large companies such as Procter & Gamble are often cited as success stories of how to use external sources to innovate (Dodgson, Gann & Salter, 2006; Huston & Sakkab, 2006). However, most research has a ‘one firm focus’ and discusses, for instance, how the firm might benefit from open innovation.

 

[point 12] Research on open innovation focuses on new actors, such as innovation intermediaries (Chesbrough, 2006) that provide an open marketplace for ideas, talent and technologies. Innovation intermediaries are variously described in the literature as bridgers (Bessant & Rush, 1995; McEvily & Zaheer, 1999), brokers (Hargadon & Sutton, 1997; Provan & Human, 1999) and as third parties (Mantel & Rosegger, 1987). In an overview of innovation intermediation, Howells (2006) argues that innovation intermediation can be considered as a function, a process and a relationship. In a study of InnoCentive, an innovation intermediary that facilitates open problem solving, Lakhani and Jeppesen (2007) investigate how companies leverage collaboration with these open innovation actors. But again the focus is on a single firm collaborating with an intermediary.

 

[point 13] It is becoming more frequent for organizations to find they are unable to have all the competencies they require in-house, which is forcing them to open up their R&D processes – and to engage in open innovation (Chesbrough, Vanhaverbeke & West, 2006). This has led to experimentation with new types of collaboration between organizations. Chesbrough’s (2003a, 2003b) original open innovation model describes inbound innovation, where firms commercialize external ideas, and outbound innovation where firms out-license or spin-off internal ideas. Enkel, Gassmann and Chesbrough (2009) added a third process to this model: the coupled process that combines the two directions.

 

[point 14] When firms open up their R&D and innovation processes they need to acknowledge the managerial challenges this entails. The degree of firm openness depends on the people and the company culture (Herzog, 2008), and cultural change is thus essential for certain innovation activities (Slowinski et al., 2009). Herzog (2008) argues that open and closed innovation cultures are different and that open innovation requires a risk-taking culture. It has been argued also that being able to combine internal and external sources of innovation requires an ambidextrous mentality (Vanhaverbeke, Van De Vrande & Chesbrough, 2008).

 

 

Marcel Bogers, (2011),"The open innovation paradox: knowledge sharing and protection in R&D collaborations", European Journal of Innovation Management, Vol. 14 Iss: 1 pp. 93 – 117.

 

[point 15] Despite the growing importance of R&D collaborations in particular and open innovation in general, many important questions are still unexplored – also due to the (growing) complexity of such collaborative efforts and the nature of the underlying resources and knowledge (Chesbrough, 2003; Das and Teng, 2000; Granstrand, 2000; Gulati and Singh, 1998; Haefliger et al., 2008; Henkel, 2006). For example, although there is an inherent paradox caused by the natural tension between knowledge sharing and protection, little attention has been given to how firms can protect their technological competencies while they, at the same time, collaborate with other organizations (McEvily et al., 2004) and how firms create and capture value in an era of open innovation when innovating organizations are highly dependent on each other (Vanhaverbeke, 2006). A better understanding of the exact tension between knowledge sharing and protection is therefore important, for academics who wish to further advance the field of open and collaborative innovation as well as for managers who have to cope with this tension field in practice.

 

[point 16] “… it is not surprising that it has been argued that we have entered an era of intellectual and alliance capitalism (Gerlach, 1992; Granstrand, 2000; Narula and Duysters, 2004; Teece, 2000). Gulati and Singh (1998) furthermore note that the growth of inter-firm collaborations has been characterized by increasing diversity of collaborations, with respect to partners’ nationalities, motives and goals, and the formal structures used in collaborations. Moreover, because of the increasing complexity of knowledge, more and different kinds of partners are often needed to achieve a certain goal, including partners from other industries, universities and public research organizations as well as competitors.

 

[point 17] Collaborative agreements in general and knowledge sharing in particular have been explored from a variety of theoretical perspectives (Bogers, 2010). Two notable theories – also in strategic management theory in general (see Acedo et al., 2006; Besanko et al., 2010; Foss and Stieglitz, 2010; Leiblein, 2003) – that have served as a background for studying collaborative efforts are transaction cost economics and the resource-based view of the firm (see Das and Teng, 2000; Hagedoorn et al., 2000; Kogut, 1988; Tsang, 2000). While transaction cost economics and the resource-based view are fundamentally different, they also complement each other (Argyres and Zenger, 2007; Foss, 2003; Mayer and Salomon, 2006; Tsang, 2000). Osborn and Hagedoorn (1997) in fact expect to see more attempts that integrate both transaction cost and non-transaction cost arguments into a more comprehensive theory of inter-organizational alliances and networks.

 

[point 18] According to transaction cost economics, collaboration (as a kind of relational contracting) is the preferred governance mechanism in case of medium production and transaction costs (Dyer, 1997; King, 2007; Oxley, 1997; Williamson, 1975, 1985). In this vein, collaboration copes with high degree of asset specificity (causing switching costs), creates lower uncertainty over specifying and monitoring partners’ performance,  internalizes spillovers, balances the partners’ contributions, and lowers opportunistic behavior (e.g. mutual hostage situation).

 

[point 19] In the resource-based view, on the other hand, collaborations can be used to exploit resource complementarities (Barney, 1991; Das and Teng, 2000; Eisenhardt and Schoonhoven, 1996; Hitt et al., 2000; Lavie, 2006; Mowery et al., 1996). Accordingly, motives for collaboration and partner selection are exploitation of resource complementarity and economies of scale, gaining low cost new market entry, cost and risk management, tacit collusion, and capability building and learning.

 

For class exercise, study the literature review blog article to conduct a literature review on the 19 points above. The link: https://josephho33.blogspot.com/2019/08/literature-review-process-of-alra-for.html.