The Adoption of Open Innovation Practices in Global Firms

In global markets firms respond to increased technological complexity, rising R&D costs, shortened product life cycles and improved market institutions by opening up their boundaries and leveraging inflows and outflows of knowledge and technology. Given these developments, the fundamental assumption of this dissertation is that firms increasingly transform from a closed to an open innovation model. While prior work has developed a first understanding of antecedents and outcomes of Open Innovation (OI), it has, so far, been less clear how firms create and capture value from OI. In that sense this work investigates how global firms adopt open innovation strategies to benefit from external knowledge sources and to improve their competitiveness. OI is implemented in global firms through the opening up of their business model and the adoption of a network structure. Previous studies show that building relationships with different types of partners has a positive impact on innovation performance. This supports my research, finding in networked business model a source of competitive advantage in innovation. Furthermore I find that, external technological sources are not enough to innovation success, increasing attention must be paid to a firm’s capability to integrate external knowledge and manage relationships with partners who possess critical resources, and to environmental contingencies (organizational culture, technological turbulence, dynamics of competition). In connection with a greater engagement in boundary spanning innovation activities, openness and inter-organizational interactions pose new managerial challenges. Despite its growing importance, many firms experience several challenges to actively manage the processes of OI and to benefit from it. Research on large firms highlights that OI requires internal organizational complements that facilitate the absorption of external knowledge and to capture value from it. Thus the shift towards OI requires firms to implement new managerial practices and structures, in terms of ‘how to do Open Innovation’. First case studies on firms that evolve from a closed towards an open innovator indicate that these firms implement new managerial capabilities for Open Innovation at different managerial levels. Finally, to establish these new capabilities firms need to go through an organizational change process. However, the transformation process from closed to Open Innovation is still little understood. In that sense the Panasonic case provides new insights into the managerial dimensions of OI, analyzing the struggling transformation process from a closed technological innovation model to an open one. The Panasonic case suggests that the adoption of OI is a systemic shift that requires re-thinking many aspects of one’s business to utilize it effectively. R&D alone cannot fully implement OI. Other parts of the organization, in marketing, in business development, and in supporting functions must get on board for it to work effectively. Furthermore, evidence from Panasonic confirms that internal and external environmental conditions (organizational culture, technological turbulence, high competitive dynamics) have an important impact on the potential value of acquiring and integrating external knowledge.