The Innovation Value Chain of Outbound Open Innovation

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The Innovation Value Chain of Outbound Open Innovation
Yan Ailing1, Jiang Hong2 School of Business Administration, Zhejiang Gongshang University, Hangzhou, China. E-mail: alyan@foxmail.com. 2 Institute of Policy and Management, Chinese Academy of Science, Beijing, China. 1

Abstract Open innovation is the focus of academic attention. As one type of open innovation, outbound open innovation is central to the survival and growth of firms, and ultimately to the health of the economies of which they are part especially in the era of knowledge economy. This paper demonstrates the use of a conceptual framework and modeling tool, the innovation value chain (IVC), through the construction of an innovation value chain of outbound open innovation framework, and reveals the operation mechanism of desorptive capacity, and provides a theoretical basis for implementation of the outbound open innovation. Keywords: Outbound Open Innovation; Innovation Value Chain; 1.Introduction The pressures of globalization have forced firms around the world to change their innovative ways. For years, firms have relied on the closed innovation model to be competitive and bring new product and services to the market (Chesbrough, 2006). Chesbrough and Crowther (2006) define two types of open innovation companies may engage in: inbound open innovation and outbound open innovation. In the case of outbound open innovation, companies do not only rely on internal paths to market, but also look for external organisations that are better suited to commercialise a given technology. In this paper, we focus on outbound open innovation. 2.Conceptual foundations Traditionally, most industrial firms focused on internally developing new technologies and applying them in their own products(March, 1991; Calantone and Stanko, 2007). However, research on open innovation highlights that not all good ideas come from inside the organization Desorptive Capacity

(Chesbrough,

2003;

Chesbrough&Crowther,

2006; Laursen&Salter, 2006). Open innovation (OI) represents a newly emerging business model across a wide range of industries, enabling an ‘open’ flow of internal and external expertise across company barriers in order to enhance success. innovation The open and commercialization paradigm innovation

(Chesbrough, 2003) involves both inflows of knowledge to and outflows of paths to accelerate internal innovation knowledge to pursue external market for proprietary

innovations(Chesbrough et al., 2006). We know that there are basically two ways to adopt open innovation in a company: the inbound process, which exploits external sources of innovation in order to integrate external know-how and innovation into the company; The outbound process, which utilizes external innovation opportunities with internal capabilities and resources. This outbound process, and Crowther(2006), refers to named outbound open innovation (OOI) by Chesbrough the practice of establishing relationships with external firms with the purpose to commercially exploit technological opportunities. The practice of OOI often takes the form of out-licensing agreements(Anand and Khanna, 2000), involve the exchange of knowledge disembodied from products in the form of technologies, patents, know-how open ideas. However, i.e., prior open external innovation research has focused on inbound innovation, acquiring technology(Enkelet al., 2005; Van de Vrande et al., 2006). By contrast, the recent increase in outbound open innovation is a trend from practice, which has been relatively neglected by academic research (Lichtenthaler and Ernst, 2007). By way of outbound open innovation, firms attempt to achieve monetary and strategic

opportunities. Regarding monetary benefits, several pioneering firms, e.g., Texas Instruments, generated hundreds of millions of dollars in annual licensing revenues(Rivette and Kline, 2000). The practice of OOI is increasingly regarded as a strategic activity by firms, which can profit...
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