Over the last two decades, the need by companies to achieve consistent growth has increased, and this can only be realized through innovation. Vanhaverbeke and Chesbrough, notes that, “The increasing complexity of technologies, the (typical) over-utilization of own R&D personnel, the specialization of technology players such as universities and high tech start-ups and the emergence of more effective technology markets with new types of intermediaries and technology services companies as main growth accelerators are important drivers of the popularity of open innovation among practitioners” (Vanhaverbeke and Chesbrough, 2014, pp. 2). Companies seem to be shifting to open innovation which is seen to be flourishing (Chesbrough, and Ghafele, 2014, pp. 5). There have been several drivers for open innovation as stated above. Many countries around the world fund research centers, universities, and also companies to drive researchers that have a potential of triggering innovations. Universities generally refer to the concept of open innovation as technology transfer and are capable is capable of initiating cooperation within an industry. Universities and non-profit institutions have increasingly produced a lot of quality work that is accessible to firms in the course of their operations (Cantamessa and Montagna, 2016, pp. 156). Firms can obtain technologies from research institutions instead of inventing them by themselves. These factors have led to the prevalence of open innovation.
Open innovation has been prevalence due to its nature of making it possible for firms to have access to external technologies. Innovation takes place in both predictable and unplanned setups where the planned setup refers to innovation within structures such as R&D units (Djellal, Gallouj, and Miles, 2013, pp.98-117). Open innovation is using inflows of knowledge to enhance internal innovation while at the same time using outflows of knowledge to promote external use of innovation (Salter, Vanhaverbeke, and Chesbrough, 2014, pp. 806). The realization that innovation can also originate from the external environment has immensely contributed to the prevalence of open innovation. In other words, helpful innovations can arise from outside or inside of the business and can proceed to the market in a similar manner (Salter, Vanhaverbeke, and Chesbrough, 2014, pp. 806). The idea of open innovation operates on the assumption that companies are in a position to use internal and external plans and pathways to the market in an attempt to progress with their operations.
Unlike open innovation, closed innovation holds that firms should control and own intellectual property rights to achieve successful innovation. Moreover, open innovation has also been prevalent since knowledge was widely diffused such that no single firm would claim a monopoly in its field. For large firms, open innovation means selling or purchasing inventions while for small companies it means partnering and sharing innovations with other firms (Curley and Salmelin, 2017, pp. 41). Here issues have been raised as to how much information a firm can share while still ensuring that it preserves its sensitive data.
Firms that practiced closed innovation operated their research and development R&D units where they developed new products and services and then incorporated them within the firm. Internal R&D was perceived to be a strategic tool since it created a barrier to competitors in the market. It is only big firms with a substantial resource base and long-term research programs that were in a position to compete with such companies. Therefore, in closed innovatio
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