2. In an open system of innovation, are there certain models that are more suitable in balancing value capture with value creation?

How can stakeholders exchange values in an open system of innovation?

Sub-questions:

  1. Which are the most effective process techniques for capturing and creating value in an open system of innovation?
  2. In an open system of innovation, are there certain models that are more suitable in balancing value capture with value creation?
  1. How can firms strengthen stakeholder collaboration in capturing and creating value in an open system of innovation?

Literature Review

It has notably been suggested that there is a need for institutions to tap into knowledge sources which lie outside the boundary of the organizations’ culture. According to Chesbrough (2003) and Von Hippel & Von Krogh (2003), in many organizations, the inward focusing innovation practices centrally lie on inadequate innovation performance. The idea that institutions should become more open and engage with the external environment centrally lies in modern innovation strategies. Chesbrough (2003) says that this is because of the increase in manpower mobility, wide dispersion of knowledge, abundance of venture capital and the drastic contraction of the product life cycles. In simple terms, Chesbrough points out that not everyone who is smart works for us but there is a need for engagement with people outside and inside the company. Fischer and Henkel (2012) affirm that whereas the earlier literature urged organizations to be open and focus on the value creation aspect, the later work emphasizes on value capture. However, there has not been any systematic study that has concomitantly investigated value creation and capture aspects in Open Innovation.

Open Innovation

In the current competitive business environment, organizations should be innovative in order to survive in the market. According to Enkel, Gassmann and Chesbrough (2009), the outdated are continually getting destroyed by innovation while continually creating new. Innovation has resulted in the surfacing of new theories and ideas on its best implementation and benefits. The open innovation model sheds light on how collaboration between open innovators and suppliers, organizations as well as clients within their innovation systems is important. A number of organizations have realized that they should seek for innovative ideas outside the in-house capabilities and resources for them to improve their efficiency. Open innovation is not only creation of new ideas but also a process which may be replicated and can take different forms. Whereas some forms of innovation can be naturally cumulative, others tend to be transformational or ground-breaking. In the public sector, Open Innovation may either be an improvement of institutional practice or introduction of new technologies. According to Al-Ansari (2014), this can either be steered by public sector employees or people who are not employed by the sectors.

Open innovation has in the recent years gained a lot of interest in the management field. It enables the diffusion of concepts both inside and outside the organization through what is commonly known as porous boundaries. Enkel, Gassmann and Chesbrough (2009) argue that there has been an increase in open innovation system among researchers and practitioners. Such practices as corporate entrepreneurship, proactive intellectual property and networking collaboration are being adopted and implemented by companies. However, there have been a number of criticisms as the management rises despite its rising popularity in the modern world. According to Trott and Hartmann (2009), open innovation practices have over the years been in practice and it only comprises of old idea repacking in management literature.