Case: W. L. Gore & Associates, Inc
In light of the trend towards open innovation, inter-organizational technology transfer by means of alliances and licensing has become a key component of the open innovation processes. In this assignment we will discuss how open innovation can be the key of success and open up different opportunities, describe innovation in terms of what managerial consequences it can have on a company and try to find out what can be the driving forces of innovation in a company.
We have chosen W. L. Gore & Associates, Inc. as an example of an innovative company. Gore does research in use of its advanced technology in four main areas: electronics, industrial, medical and fabrics. The company is American, founded in 1958 and today it has about 7000 employees and facilities in more than 30 countries. (Gore 1, 2011) W.L. Gore & Associates is a company with a long history of innovation. In the beginning R&D and product development was conducted inside the organizational boundaries and the firms’ critical technological knowledge was primarily developed and applied in-house, in other words they pursued traditional, closed innovation processes. (Lichtenthaler et al. 2010) In recent decades, W.L. Gore & Associates also actively collaborate with external partners throughout the innovation process. They do this in two ways:
Firstly, Gore acquire technology from external sources to complement their internal R&D through strategic alliances which is known as inward technology transfer and requires absorptive capacity to acquire and utilize external knowledge (Lichtenthaler et al. 2010).One example is the strategic alliance with Sefar AG for the Architectural Fabrics Texchtestile 2009 in Frankfurt am Main (Gore 1, 2011). Secondly, they exploit their own technology in outbound open innovation processes through licensing agreements to generate additional income, which requires desorptive capacity to transfer technological capabilities outwards (Lichtenthaler et al. 2010). One example is the licensing programs for products made with Gore-Tex® fabric and fibers (Gore 1, 2011). Absorptive capacity depends on path dependency because, it requires the ability to recognize, assimilate, and apply external knowledge in the context of innovation and learning processes. On the other hand, desorptive capacity determines the potential volume of technology transfer based on two process stages; identification and transfer of a firm’s technology portfolio (Lichtenthaler et al. 2010). However, outward technology transfer or licensing of a particular technology may not always be permitted by management, especially for the core technologies, because of the competitive threats and risk of losing competitive advantage.
Virtually all of Gore's thousands of products are based on just one material, a versatile polymer ePTFE, which the company engineers to perform a wide variety of functions (Carter, 2002). Gore has been granted more than 2,000 patents worldwide in a wide range of fields, including electronics, medical devices, and polymer processing (Gore 1, 2011). Gore uses a type of open innovation strategy, keeping control of its core technology and licenses the use and allows for innovation within a particular field to its licensees. Baudreau and Lakhani claim that Gore is using product platform innovation, where the control of the platform (ePTFE) is shared between external developers and Gore, as Gore provide the core technology, which the licensees innovate on and then sell the developed products to the final consumer. External innovators (other companies) and customers can transact freely as long as they affiliate with the platform owner. Gore maintains some control through the rules and regulations they impose on their licensees (Boudreau et al. 2009). The platform design theory closely resembles the type of open innovation that Chesbrough...
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