An Introduction to Open Innovation

Chesbrough (2005): Inflows and Outflows Shifting loci of Innovation, exploitation Emphasis on the internal business model aspects (cf. Chesbrough, 2003; 2006; West et al. 2006). Where and how do firms acquire innovations?

A governance structure is “the explicit or implicit contractual framework within which a transaction is located” (Williamson, 1981, p.1544). Governance structures are generally regarded as being either hierarchical or market structures (Schmid, 1993; Hess and Kemerer, 1994). Hayek (1945) argued that knowledge does not exist in a concentrated or integrated form but as “dispersed bits of incomplete and frequently contradictory knowledge which all separate individuals possess” (p.77).

Type of Relationship Characteristics Hierarchy  Structure that spans two separate firms.  Long-term relationship between firms.  Relationship governed by managerial decisions. Decentralised Market  Parties search each other out directly.  No intermediary involved.  High search costs.  Typically arms length and short term in nature. Centralised Market  Intermediaries assist in search process.  Intermediaries possess market knowledge.  Improved search capabilities possibly offset by higher uncertainty.  Typically arms length and short term in nature.

Solution Brokerages Solver Brokerages Solution Hierarchies Solver Markets Direct Mediated Intellectual Property Innovation Capability