Open innovation

Innovation is seen as the only strategy available today that can assemble solutions for new needs, unstated needs, or market demands. These outcomes are made possible by more effective procedures, services, products, technology, and business ideas that are easily accessible to society, the government, and the market as a whole (Anderson, Potonik, and Zhou 2014, p. 1978). Innovation, in general, refers to something that is both creative and effective and whose outcomes transcend a system or transaction. On the other side, Henry Chesbrough coined the term "open innovation" to promote discourse and ideas on innovation, particularly the intercompany in R&D. The term illustrated that company has and should use exterior and interior views to advance their technologies. Open innovation paves the way for a community of user’s innovator and creative consumer (Chesbrough, Vanhaverbeke and West 2014 p.25). The fundamental initiative of open innovation is that on the planet of general knowledge firms cannot afford to depend only on their internal research but also processes of innovations. It is evident that the effects of de-globalization, as well as the staggering cost of R&D across organizations, have contributed to the need for a fresh approach to innovation where interconnectivity and openness is the role. The principle of open innovation has called for the distribution of resources and knowledge within and among companies (Bena and Li 2014, p.56). This article places its focus on the concepts and the future of free innovation. In addition, it presents issues in technology management and innovation.



Literature review

From a report done by Aghion, Akcigit, Bergeaud, Blundell and Hemous ( 2015,p.28) it is evident that to utilize open innovation one has to re-orient the design of the firm to meet new requirements. On the research concerning spatial perspective, it is true that product development and technology have turned out to be more global to a flat planet making open innovation easier. Additionally, the report revealed that moving closer to a region of excellence enable organizations to increase their absorptive capacity. These factors promote access to the competencies and knowledge without applying them. The study on structural perspective revealed that work division could increase innovation levels ( Davies, Roderick, and Williams, 2017,p.182). The works of literature show the presence of a high trend towards massive R&D alliances and outsourcing driven by specialization that is more significant and cost reduction due to sophisticated technology and product structures. The utilization of open innovation compensates for the centered R&D units away from short-term focus and customer-oriented business elements (Brunswick and Vanhaverbeke 2015, p1258). The research on user perspective reported that customers are in cooperated in the innovation process to allow the use of the freedom available to provide a custom view on specific products and services. The study began with the integration of users in the open innovation process, the availability of toolkit and the proposal of mass customization (Ehde, Dillworth and Turner 2014,p.153). Consequently, the supplier perspective shows that there is a high effect of open innovation. The report revealed that suppliers in cooperated in the initial stages of open innovation significantly increase the quality of innovation for most organization. For a useful innovation to take place, it is significant to evaluate the existing society, market, and business. The current study competencies and the intellectual company’s advancement into a new market have often been underestimated despite its perspective to form innovative revenue flow. (Davies, Roderick and Williams, 2017, p.182) argues that creating technology and innovative commercialization provides a high potential future field.

Open innovation theory

According to Spithoven, Vanhaverbeke, and Roijakkers (2013,p.552) open innovation is a model that allows integration of both internal and external generated ideas to support an organization. The concept allows intellectual property rights and plans to be valuable regardless of whether they are in use or not and this outlines how an organization capture and form significance that is created in the open R &D structure. The model is widely used around the world where organizations commercialize, develop, and organize research processes within the company’s environment. Critical thinking concept in business is at the heart of open innovation where the theory becomes essential once integrated into the company’s strategy. The idea consists of in sourcing structure that utilizes in licensing, research agreements, and corporate venturing, outright-acquisition, and co-development deals (Souto, 2015, p.149). In other context, organizations tap into societies of users, or they rely on the service of specialized innovations. Organizations outsource their knowledge and ideas through spin-offs, alliances, and licensing agreements. According to West and Bogers (2014, p.822) agencies utilizing open innovation are continuously developing decisions on which idea or expertise they have to establish interiorly, which to purchase, to co-develop as well as which they should sell or license. It is factual that choices between exterior and interior technology advancement within the open innovation concept are diligently associated to make-and-buy allay decision-making procedure. Selection of suitable sourcing structures is vital to deploy open innovation productively. The decision between them relies on uncertainty in market and technology as well as the type of idea involved. In open innovation theory, organizations can trade technology through a market transaction, but mostly they invest in long-term and complex agreements with their invention associate. The concept begins as ideas and grows over time into fresh market products. These processes require capabilities and resources to take care of the newly invented knowledge (Schubert, Van, and Donoso, 2014, p.150).



Open innovation theory analysis

According to the available literature, open innovation paves the way for a resource-based view and new technological advancement (Saebi and Foss, 2015, p.210). The theory considers ideas and knowledge as the fundamental principle of a resource-based light, which are focused on the internal development of abilities. As illustrated by NPD (New Product Development) open innovation is a risk-laden task that calls for a sequence of capital, first with small adjustable steps followed by money with increased financial commitment (Poot, Faems and Vanhaverbeke, 2014, p.302). It is advisable to integrate the Stage-Gate process into open innovation to reduce market and technological uncertainty at the initial stages of development as well as enable organizations to postpone massive investment until uncertainties lower. These collaborations make an open innovation to become a staged decision undertaking a procedure that can be scrutinized from a real option concept perspective. Working together with exterior innovation associates in the early stages of development is perceived as option-creating choices that provide organizations a chance to make better-informed decisions on external technology and costly investment on subsequent steps of innovation (Berrone Fosfuri, Gelabert and Gomez 2013,p.899).



Findings

Additionally, it is significant to embed open innovation process in an organization’s business strategy. This is because business concept thinking as part of business strategy is at the heart of public innovation. According to Frenken ( 2017, p.42), it is evident that different strategic developments goals lead to diverse ways to organize open innovation in a firm, a separate section in the company is responsible for facilitating projects and other associates available for collaboration. Ultimately, public innovation should be linked to development strategy to enable companies to incubate early stages scheme in a business environment that is objected by the management as corporate developmental ecologies. Arranging open innovation for purposes of corporate developments and renewal indicates that an organization has to develop new technological competencies (Ellis, Gianiodis and Secchi, 2014, p.52). As objected by open innovation inter-companies associations are designed into transactions between different legal agencies.



Conclusion

The century of open innovation has just started, and it will enhance reduction of over-capacities, bring down cost, reduce risks, and increase complimentary assets. More strategic concepts of open innovation are becoming fundamental in the business environment where the theory’s success has disseminated open model to other areas in the business industry. The trend towards open innovation concept is continuously growing. Closed innovation model and R&D are experiencing increased pressure to validate their refusal to integrate with the broader world and utilize the public innovation theory.

























































Reference list



Aghion, P., Akcigit, U., Bergeaud, A., Blundell, R. and Hemous, D., 2015. Innovation, income inequality, and social mobility. Vox CEPR’s Policy Portal, 28.

Anderson, N., Potočnik, K. and Zhou, J., 2014. Innovation and creativity in organizations: A state-of-the-science review, prospective commentary, and guiding framework. Journal of Management, 40(5), pp.1297-1333.

Bena, J. and Li, K., 2014. Corporate innovations and mergers and acquisitions. The Journal of Finance, 69(5), pp.1923-1960.

Berrone, P., Fosfuri, A., Gelabert, L. and Gomez‐Mejia, L.R., 2013. Necessity as the mother of ‘green’inventions: Institutional pressures and environmental innovations. Strategic Management Journal, 34(8), pp.891-909.

Brunswicker, S. and Vanhaverbeke, W., 2015. Open innovation in small and medium‐sized enterprises (SMEs): External knowledge sourcing strategies and internal organizational facilitators. Journal of Small Business Management, 53(4), pp.1241-1263.

Chesbrough, H., Vanhaverbeke, W. and West, J. eds., 2014. New frontiers in open innovation. Oup Oxford.

Cresswell, K. and Sheikh, A., 2013. Organizational issues in the implementation and adoption of health information technology innovations: an interpretative review. International journal of medical informatics, 82(5), pp.e73-e86.

Davies, G.H., Roderick, S. and Williams, M., 2017, September. A Sub-Regional Innovation Ecosystem? Life Sciences and Health in the Swansea Bay City Region. In 12th European Conference on Innovation and Entrepreneurship ECIE 2017 (p. 182).

Drucker, P., 2014. Innovation and entrepreneurship. Routledge.

Ehde, D.M., Dillworth, T.M. and Turner, J.A., 2014. Cognitive-behavioral therapy for individuals with chronic pain: Efficacy, innovations, and directions for research. American Psychologist, 69(2), p.153.

Ellis, S.C., Gianiodis, P.T. and Secchi, E., 2014. Advancing a typology of open innovation. In Open Innovation Research, Management and Practice (pp. 39-85).

Frenken, K., 2017. A complexity-theoretic perspective on innovation policy. Complexity, Innovation and Policy, pp.35-47.

Goldberg, D.E., 2013. The design of innovation: Lessons from and for competent genetic algorithms (Vol. 7). Springer Science & Business Media.

Grimm, R., Fox, C., Baines, S. and Albertson, K., 2013. Social innovation, an answer to contemporary societal challenges? Locating the concept in theory and practice. Innovation: The European Journal of Social Science Research, 26(4), pp.436-455.

Hargreaves, T., Hielscher, S., Seyfang, G. and Smith, A., 2013. Grassroots innovations in community energy: The role of intermediaries in niche development. Global Environmental Change, 23(5), pp.868-880.

Lüthje, C. and Stockstrom, C., 2016. Cost Advantages in Innovation—A Comparison of Users and Manufacturers. Revolutionizing Innovation: Users, Communities, and Open Innovation, p.45.

Moulaert, F. ed., 2013. The international handbook on social innovation: collective action, social learning and transdisciplinary research. Edward Elgar Publishing.

Nicholls, A., Simon, J., Gabriel, M. and Whelan, C. eds., 2015. New frontiers in social innovation research. Springer.

Poot, T., Faems, D. and Vanhaverbeke, W.I.M., 2014. Toward a dynamic perspective on open innovation: A longitudinal assessment of the adoption of internal and external innovation strategies in the Netherlands. In Open Innovation Research, Management and Practice (pp. 297-322).

Saebi, T. and Foss, N.J., 2015. Business models for open innovation: Matching heterogeneous open innovation strategies with business model dimensions. European Management Journal, 33(3), pp.201-213.

Schubert, C., Van Langeveld, M.C. and Donoso, L.A., 2014. Innovations in 3D printing: a 3D overview from optics to organs. British Journal of Ophthalmology, 98(2), pp.159-161.

Seltzer, E. and Mahmoudi, D., 2013. Citizen participation, open innovation, and crowdsourcing: Challenges and opportunities for planning. CPL bibliography, 28(1), pp.3-18.

Souto, J.E., 2015. Business model innovation and business concept innovation as the context of incremental innovation and radical innovation. Tourism Management, 51, pp.142-155.

Spithoven, A., Vanhaverbeke, W. and Roijakkers, N., 2013. Open innovation practices in SMEs and large enterprises. Small Business Economics, 41(3), pp.537-562.

West, J. and Bogers, M., 2014. Leveraging external sources of innovation: a review of research on open innovation. Journal of Product Innovation Management, 31(4), pp.814-831.