The Innovation Value Chain of Outbound Open Innovation

Topics: Innovation, User innovation, Technology transfer Pages: 6 (1773 words) Published: January 16, 2013
The Innovation Value Chain of Outbound Open Innovation
Yan Ailing1, Jiang Hong2 School of Business Administration, Zhejiang Gongshang University, Hangzhou, China. E-mail: alyan@foxmail.com. 2 Institute of Policy and Management, Chinese Academy of Science, Beijing, China. 1

Abstract Open innovation is the focus of academic attention. As one type of open innovation, outbound open innovation is central to the survival and growth of firms, and ultimately to the health of the economies of which they are part especially in the era of knowledge economy. This paper demonstrates the use of a conceptual framework and modeling tool, the innovation value chain (IVC), through the construction of an innovation value chain of outbound open innovation framework, and reveals the operation mechanism of desorptive capacity, and provides a theoretical basis for implementation of the outbound open innovation. Keywords: Outbound Open Innovation; Innovation Value Chain; 1.Introduction The pressures of globalization have forced firms around the world to change their innovative ways. For years, firms have relied on the closed innovation model to be competitive and bring new product and services to the market (Chesbrough, 2006). Chesbrough and Crowther (2006) define two types of open innovation companies may engage in: inbound open innovation and outbound open innovation. In the case of outbound open innovation, companies do not only rely on internal paths to market, but also look for external organisations that are better suited to commercialise a given technology. In this paper, we focus on outbound open innovation. 2.Conceptual foundations Traditionally, most industrial firms focused on internally developing new technologies and applying them in their own products(March, 1991; Calantone and Stanko, 2007). However, research on open innovation highlights that not all good ideas come from inside the organization Desorptive Capacity

(Chesbrough,

2003;

Chesbrough&Crowther,

2006; Laursen&Salter, 2006). Open innovation (OI) represents a newly emerging business model across a wide range of industries, enabling an ‘open’ flow of internal and external expertise across company barriers in order to enhance success. innovation The open and commercialization paradigm innovation

(Chesbrough, 2003) involves both inflows of knowledge to and outflows of paths to accelerate internal innovation knowledge to pursue external market for proprietary

innovations(Chesbrough et al., 2006). We know that there are basically two ways to adopt open innovation in a company: the inbound process, which exploits external sources of innovation in order to integrate external know-how and innovation into the company; The outbound process, which utilizes external innovation opportunities with internal capabilities and resources. This outbound process, and Crowther(2006), refers to named outbound open innovation (OOI) by Chesbrough the practice of establishing relationships with external firms with the purpose to commercially exploit technological opportunities. The practice of OOI often takes the form of out-licensing agreements(Anand and Khanna, 2000), involve the exchange of knowledge disembodied from products in the form of technologies, patents, know-how open ideas. However, i.e., prior open external innovation research has focused on inbound innovation, acquiring technology(Enkelet al., 2005; Van de Vrande et al., 2006). By contrast, the recent increase in outbound open innovation is a trend from practice, which has been relatively neglected by academic research (Lichtenthaler and Ernst, 2007). By way of outbound open innovation, firms attempt to achieve monetary and strategic

opportunities. Regarding monetary benefits, several pioneering firms, e.g., Texas Instruments, generated hundreds of millions of dollars in annual licensing revenues(Rivette and Kline, 2000). The practice of OOI is increasingly regarded as a strategic activity by firms, which can profit...

References: Anand, B. N. and Khanna, T. (2000). The structure of licensing contracts. Journal of Industrial Economics, 48, 103-135. Arora, A., Fosfuri, A. and Gambardella, A.(2001). Markets for Technology, Cambridge, Massachusetts: The MIT Press, 338 pp. Calantone, R. J. and Stanko, M. A.(2007) Drivers of outsourced innovation: an exploratory study. Journal of Product Innovation Management, 24, 230–241. Chesbrough, H. W.(2003). Open innovation: The new imperative for creating and profiting from technology. Boston: Harvard Business School Press. Chesbrough, H.(2006). The era of open innovation D. Mayle (Ed.) Managing innovation and change. Chesbrough, H.(2006) Open Business Models: How to Thrive in the New Innovation Landscape. Boston: Harvard Business School Press. Chesbrough, H. and Crowther, A.K.(2006) Beyond high tech: early adopters of open innovation in other industries, R&D Management, Vol. 36, No. 3, pp. 229-236. Hansen, M.T., Birkinshaw, J., 2007, The innovation value chain, [J] Harvard Business Review 85(6): 121~130. I. Prigogine, From Being to Becoming: Time and Complexity in the Physical Sciences, W. H. Freeman & Co, San Francisco, CA (1980). Laursen, K.,& Salter, A. (2006). Open for innovation: The role of openness in explaining Innovative performance among UK manufacturing firms. Strategic Management Journal,27:131–150. Lichtenthaler, U. and Ernst, H.(2007) External technology commercialization in large firms: results of a quantitative benchmarking study. R&D Management, 37, 383–397. March, J. G.(1991) Exploration and exploitation in organizational learning. Organization Science, 2, 71–87. Rivette, K. G. and Kline, D. (2000) Rembrandts in the Attic: Unlocking the Hidden Value of Patents. Boston: Harvard Business School Press. Roper S,Du J,Love J H.Modelling the Innovation Value Chain[J].Research Policy,2008,37(6-7) : 961-977. Teece, D. J.(1986). Profiting from technological innovation: implications for integration, collaboration, licensing and public policy. Research Policy, 15, 285–305. Van de Ven, A., Polley, D., Garud, R., Venkataraman, S., 1999, The Innovation Journey, [M] Oxford University Press, New York.
creation
1.Creation Within a unit 2.Cross-units 3.external
Figure1. The flow chart of the innovation value chain of outbound open innovation.
Knowledge creation Desorptive capacity Knowledge control Enterprise performance
Knowledge output
Figure2. the framework of the innovation value chain of outbound open innovation. 4.Conclusions This paper serves as a literature review and reference to the leading works in the area of the innovation value chain of outbound open innovation, integrates many previous findings. In previous research and practice, we just ignored the importance of the outbound open innovation and has not been able to reveal the complete operation mechanism. Through the construction of an innovation value chain of outbound open innovation framework, this article reveals the operation mechanism of desorptive capacity and provides a theoretical basis for implementation of the outbound open innovation. Based on the relevant research literature derived from logical reasoning, this paper constructed an innovation value chain of outbound open innovation
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