This document is an academic essay that examines whether open innovation currently exists as a coherent theory accepted among academics and practitioners or if it remains a phenomenon in search of a theory. The essay is divided into three parts: 1) it defines what constitutes a theoretical contribution based on the evolution of management theory; 2) it discusses the current debate around whether open innovation can develop into a theory or faces barriers to theory formation; and 3) it provides a futuristic perspective on how further research can help address limitations and barriers in order to develop an established open innovation theory. While some frameworks proposed for open innovation could be considered theoretical contributions, limitations and lack of consensus currently prevent the formation of an integrated and widely accepted open innovation theory.
Research on the Knowledge Creation Process of the University-Industry Collabo...
Searching for an Open Innovation Theory
1. IN SEARCH OF OPEN INNOVATION THEORY
MG418 ESSAY
EXAM NUMBER: 35998
WORD COUNT: 1,892.
2. IN SEARCH OF OPEN INNOVATION THEORY
A phenomenon can be described as an event that generates interest susceptible to
scientific description and explanation (Merriam-Webster, 2011). Henry Chesbrough
introduced one such phenomenon (Chesbrough, 2003). It is called Open Innovation
and it has caught the eye of academics as well as practitioners all over the
management world and beyond. Since its introduction a lot of articles have been
written on this phenomenon but it is vital to assess whether a particular coherent body
of Open Innovation theory accepted among the academics and practitioners in the
world exists. Through this essay I will attempt to explain why Open Innovation is
currently present as a phenomenon still in search of a theory inspite of experience
inspired theoretical contributions that form a part of many academic journals.
The essay is divided into three parts.
The first looks at the evolution of management theory. By doing so I will attempt to
define a theoretical contribution and the components within it. The second focuses on
the current debate topic based on Open Innovation within academics. Whether Open
Innovation has the potential to develop a theory or does it form too many barriers for
theory formation is discussed. Here I will attempt to weigh in on both sides of the
debate. Finally the article will look at a futuristic perspective illustrating how further
areas of research can contribute to the conversion of this phenomenon to an Open
Innovation theory.
What is a theory?
Even though there is little consensus on a universal definition of a theoretical
contribution in the management discipline, it is vital to briefly analyze the reasons
behind the start of organizational theory and its progress over the last four decades.
3. Through this I will aim at defining the components and qualities that a theoretical
contribution may posses.
Organizational theorizing took form in the 1960’s and 1970’s to bestow upon the field
of management an academic and scientific legitimacy (Gioia and Corley, 2011). This
legitimacy was obtained through the theories being both quantitative and
interdisciplinary. The 1980’s saw a rising importance of qualitative research methods
(Morgan and Smirchich, 1980). The qualitative approach attempts to demonstrate a
strong link between the research methodology and the theory derived from it.
The 1990’s gave importance to the generation of novel concepts (Smith, 1997). These
ideas not only extended the boundaries of previous academic work but also created
new ones thus encouraging change. Gioia and Corely have summarized the first
decade of the new millennium of management theory (Gioia and Corley, 2011). They
describe a theoretical contribution as original or incremental by being revelatory
whilst useful via a thorough grounding in science and pragmatism.
According to Whetten, for a theoretical contribution to be made, three questions have
to be answered through the literature (Whetten, 1989). What are the concepts
discussed, how were they identified and why is it justified to talk about them?
Considering the views presented above I believe that a theoretical contribution is a
thorough body of research that has the qualities of being interdisciplinary, scientific,
pragmatic, original with roots in either quantitative and/or qualitative methods and
answers Whetten’s three questions of how, what and why.
The Debate on Open Innovation Theory.
Henry Chesbrough while introducing the term defined Open Innovation as a
phenomenon which indicates to organizations a need for using not only internal but
4. also external ideas available in the market to improve their technologies (Chesbrough,
2003).
This advent of Open Innovation generated excitement among many academics that
led to the current debate on Open Innovation being suited for the production of
management theory versus its production of barriers to theory development
(Lichtenthaler, 2011). I will try and shed light on both sides of the coin by starting the
discussion by highlighting a few of the current academic contributions that describe
the frameworks within Open Innovation. What I wish to demonstrate is that these can
be classified as theoretical contributions but with certain limitations. This will be
followed by the view that Open Innovation brings with itself certain hindrances to
theory compilation. Coupled with the limitations within current frameworks these
hindrances are preventing the formation of an integrated body of widely accepted
Open Innovation theory.
A practical view portrayed by the use of both qualitative and quantitative research
methods used over ten years defines an open innovation framework of capturing value
by explaining organizational boundaries (Gassmann and Enkel, 2004). The authors
define the borders of the firm as semi permeable where the locus of innovation is not
only in the R&D department of the company but also through interactions with the
outside world. They demonstrate three archetypes of core information flow processes
that are outside-in, inside-out and coupled. The company characteristic to which each
of these archetypes is contingent to is also defined. This indicates that only a selected
few organizations can employ Open Innovation which proves to be a limitations of
this approach.
Another Open Innovation framework that has been widely written about is the lead
user process. It is defined as fulfilling needs and solving problems of organizations by
5. using ideas collected from consumers that lead target markets and other similar
markets (Morrison et al, 2002). The lead users are the customers that self innovate to
fill gaps within markets. The core of a lead user process is idea generation that
involves forming teams, finding lead users, networking with these users and finally
working with them to solve the company’s problem. This approach was tested in the
company 3M and found viable through qualitative and quantitative analysis (Morrison
et al, 2002). However in large markets such as the consumer market, finding lead
users is difficult since people do not have any incentive to self innovate (Luthje,
2004). This limits the scope of organizations where the lead user process can be
utilized.
Daren Brabham introduces crowdsourcing as another framework of Open Innovation
and describes its meaning, function and potential (Brabham, 2008). Through case
study methods he defines crowdsourcing as model that utilizes collective information
and pulls in the intelligence of large crowds. This can be done using the theory of
crowd wisdom based on the fact that given right circumstances; a group of people is
collectively more intelligent than the smartest people within those groups. A major
weakness of the framework is that an obstruction to technology results in automatic
expulsion of people from the crowd leading to a loss of ideas.
The few frameworks of Open Innovation described above have their roots in scientific
research processes. They are interdisciplinary, practical since they are being used in
organizations currently and provide an increment in management knowledge through
their originality. Hence I am convinced that these are theoretical contributions in the
field of Open Innovation.
A practical example in the use of Open Innovation is the Procter and Gamble’s
connect and develop innovation model (Huston and Sakkab, 2006) resulting in 35%
6. of their products being innovated outside the company with a 60% increase in
productivity. By leveraging the intelligence of potentially 1.5 million people outside
the organization through strong networking P&G managed to reduce their research
investments, launch more than a 100 new products in two years and doubled their
share price.
However due to limitations such as the ones mentioned above it has not been proven
that Open Innovation works in every organization. Neither is the concept clear cut and
academics have pointed this out as barriers to theory by illustrating the incapacity of
Open Innovation to answer Whetten’s three questions in certain examples. The name
Open Innovation itself acts as a barrier. Currently there are two competing definitions
in academics that are based on different perceptions of the word ‘open’ (von Hippel,
2010). One encompasses innovation without property rights; something that can be
used by everybody while the second includes licensing external innovation by
organizations for their own benefit.
Secondly there are varying degrees of openness. They can be widely classified as
inbound and outbound (Dahlander and Gann, 2010). Within these two classifications,
openness can be in the form of acquiring, sourcing, revealing and licensing. Each has
its own advantages and limitations and is contingent to particular industries that have
selected competencies. But according to Dahlander and Gann these contingencies are
not well defined and hence the associated benefits and costs to organizations for using
this phenomenon cannot be well articulated resulting in a barrier for theorizing. Thus
there are discrepancies due to the multidimensional nature of Open Innovation that
has led to a lack of a formal definition in both academics and practice (di Benedetto,
2010).
7. A barrier to theory may also develop due to Open Innovation being termed as old
wine in a new bottle (Trott and Hartmann, 2009). Both the authors believe that the
concept of Open Innovation lacks originality since it’s just a repackaging of forty
years worth of literature presented in innovation management without any value
addition in knowledge.
Thus the current debate on Open Innovation has showed us that even though there
exist theoretical contributions, till the terminological challenge and limitations within
frameworks can be overcome, consensus on the answer to what is Open Innovation
and how it can be applied within different organizations cannot be reached resulting in
a lack of an integrated body of theory.
Futuristic Perspective
I agree with the view that there will come a time when Open Innovation theory will
be incorporated within innovation management practices (Huizingh, 2011). It will
become a common practice within organizations across all industries. However before
we reach that stage steps have to be taken to form an established body of theory.
Through this futuristic perspective I will highlight how further research carried out in
the field of Open Innovation can try to remove current limitations within each
framework, answer its critics and produce new ideas.
The concept of openness can be made clear and continuous by better understanding its
costs, its different forms and its application in organizations with various
competencies (Dahlander and Gann, 2010). Within frameworks such as
crowdsourcing there is tremendous scope for research (Brabham, 2008). Feelings of
the crowd towards being laborers for companies and motivation for crowd
participation can be studied. Examinations of crowd attracting techniques and its
legal and ethical implications can also be carried out. Within the lead user paradigm
8. new methods in identification of lead users and extraction of knowledge from them
along with structuring organizations tailored to lead user methods can be considered
(Morrison et al, 2002). Through such improvements and innovations within each
framework, the formation of an integrated Open Innovation theory in the near future
is imminent.
So we have seen that based on the qualities that a theoretical contribution should
posses, there have been various inputs by academics on Open Innovation and few of
its frameworks. Some of these frameworks have also been tried and tested by
successful multinational companies. However due the limitations within these
frameworks and the barriers posed a lack of understanding of Open Innovation itself,
the formation of an integrated theory is still lacking. Through this article I tried to
show that the one widely accepted theory that accurately defines Open Innovation,
explains how it can be used, where it can be used and what it can achieve is
something this phenomenon is still searching for. But this transition from a
phenomenon to a theory to practice and from observation to revolution is inevitable.
9. Bibliography
Brabham, D. (2008). Crowdsourcing as a model for problem solving. Convergence,
14 (1), pp 75-90.
Chesbrough, H. (2003). Open Innovation: The New Imperative for Creating and
Profiting from Technology. Harvard Business School Press, Boston.
Dahlander, L & Gann, D. (2010). How open is innovation? Research Policy, 39, pp
699-709.
Di Benedetto, A. (2010). Comment on ‘Is open innovation a field of study or a
communication barrier to theory development?’ Technovation, 30, p 557.
Gassmann, O and Enkel, E. (2004). Towards a Theory of Open Innovation: Three
Core Process Archetypes. In: Paper presented at R&D Management Conference,
Lisbon.
Gioia, D & Corely, E. (2011). Building theory about theory building: what constitutes
a theoretical contribution? Academy of Management Review, 36 (1), pp 12-32.
Huizingh, E. (2011). Open Innovation: State of the art and future perspectives.
Technovation, 31, pp 2-9.
Huston, L & Sakkab, N. (2006). Inside Procter and Gamble’s new model for
innovation. Harvard Business Review, pp 58-66.
Lichtenthaler, U. (2011). ‘Is Open Innovation field of study or a communication
barrier to the field of development?’ A contribution to the current debate.
Technovation, 31, pp 138-139.
Luthje, C. (2004). Characteristics of innovating users in a consumer goods field: An
empirical study of sport-related product consumers. Technovation, 24, pp. 683-695.
Morgan, G & Smircich, L. (1980). The case for qualitative research. Academy of
Management Review, 5(4), pp 491–500.
Morrison, P et al. (2002). Performance Assessment of the Lead User Idea Generation
Process for New Product Development. Management Science, 48(8), pp 1042-1059.
Smith, G. (1997). Editor’s comments. Academy of Management Review, 22 (1), pp 7–
10.
The Merriam-Webster dictionary. Definition of phenomenon. Accessed on the 8th
of
April 2011, from http://www.merriam-webster.com/dictionary/phenomenon.
Trott, P and Hartmann,D. (2009). Why ‘Open Innovation’ is Old Wines in New
Bottles. International Journal of Innovation Management, 13 (4), pp 715-736.
10. Von Hippel, E. (2010). Comment on ‘Is open innovation a field of study or a
communication barrier to theory development?’ Technovation, 30, p 555.
Whetten, D. (1989). What constitutes a theoretical contribution? Academy of
Management Review, 14 (4), pp 490–495.