The open innovation model

The open innovation model

The present briefing paper aims to inform policy-market and other stakeholders about the open innovation model, and do draw their attention to certain recent trends related to its use.

This publication is the second of a series of research papers in ICC’s innovation and intellectual property series. 

This first part of this paper describes open innovation, including its origins and evolution, contrasting it with the traditional approach to R&D. In addition, it explains this model’s attractiveness for businesses in light of changes in the innovation environment, and reviews prerequisites for successful collaboration. The second part focuses on the importance of strategic knowledge management in the context of open innovation. In particular, it shows how intellectual property rights (IPRs) can facilitate the sharing of technology and of know-how, thus supporting collaborative innovation.

A range of factors, including globalization, advances in information and communications technology (ICT), and growing technological complexity, has induced businesses to engage increasingly in innovation collaborations. The collaborative approach to innovation, termed “open innovation”, may be contrasted with the traditional “closed” approach to innovation, which entails the complete integration of research and development (R&D) within the boundaries of a firm.

Open innovation enables firms to integrate external knowledge and expertise into their innovative process, improving their offerings while cutting costs and more effectively managing risk (Granstrand 2011). Whatis more, it can enhance absorptive capacity at the firm as well as macroeconomic levels, while accelerating technology development and diffusion.

Open innovation defined

Open innovation is the use of “purposeful inflows and outflows of knowledge to accelerate innovation internally while also expanding the markets for the external use of innovation” (Chesbrough 2006). This model involves strategic, managed exchanges of information with actors outside of the boundaries of an organization, aimed at integrating their resources and knowledge into the organization’s own innovative process). Open innovation is not limited to the private sector, and this model may be adopted by innovative entities other than firms, including universities and not-for-profit organization. This paper focuses predominantly on use of open innovation models by firms, as they are the focus of much of the literature on this topic.