Category Archives: About Open Innovation

Open Innovation: how it works?

Since “innovation” means to have something new that works in practice, companies need to somehow acquire that “new”. When they are unable to invent a new product, process or activity by themselves, companies turn to external sources in order to get a new idea that could help them improve. This means that companies need to connect with subjects who possess creative potential that could be used in company’s business. This type of innovation is called “inbound” innovation, since invention needs to get inside the company.

On the other hand, sometimes a company has something “new”, and looks around for external partners who could use that for their own purposes. This type of innovation is called “outbound” innovation, since invention needs to get out of the company, to find a new application elsewhere.

If we also observe whether the financial resources are to be used directly in the open innovation process (pecuniary dimension), we can distinguish four basic types of open innovation, as presented in the following table (1).

 

  Inbound innovation Outbound innovation
Pecuniary Acquiring

This type of openness refers to acquiring input to the innovation
process through the market place. Following this reasoning,
openness can be understood as how firms license-in and acquire
expertise from outside.

Selling

This type of openness refers to how firms commercialize
their inventions and technologies through selling or licensing out
resources developed in other organizations.

Non-pecuniary Sourcing

This type of openness refers to how firms can use external
sources of innovation.

Revealing

This type of openness refers to how internal resources are
revealed to the external environment. In particular, this approach
deals with how firms reveal internal resources without immediate
financial rewards, seeking indirect benefits to the focal firm.

 

 

(1) Dahlander, L., & Gann, D. M. (2010). How open is innovation? Research Policy39(6), 699–709.