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 Policy, 39(6), 699–709.