Open Innovation: definition and explanation
What is open innovation?
The term open innovation means a situation where an organisation doesn’t just rely on their own internal knowledge, sources and resources (such as their own staff or R&D for example) for innovation (of products, services, business models, processes etc.) but also uses multiple external sources (such as customer feedback, published patents, competitors, external agencies, the public etc.) to drive innovation.
There are two types of open innovation
There are considered to be two types of open innovation:
- Inbound open innovation, and
- Outbound open innovation.
Inbound open innovation
Inbound innovation is about sourcing and acquiring expertise from outside the organisation, and scanning the external environment for new information to identify, select, utilise and internalise ideas.
Outbound open innovation
Outbound innovation is the purposive commercialisation and capture of internally developed ideas in the organisation’s external environment. This might be through selective revealing of a product to journalists and reviewers or selectively selling the technology or service to customers with a view to getting feedback.
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Naqshbandi, M. M., & Kamel, Y. (2017). Intervening role of realized absorptive capacity in organizational culture–open innovation relationship: Evidence from an emerging market. Journal of General Management, 42(3), 5-20.
Chesbrough, H., & Bogers, M. 2014. Explicating open innovation: Clarifying an emerging paradigm for understanding innovation. In H. Chesbrough, W. Vanhaverbeke, & J. West (Eds.), New Frontiers in Open Innovation: 3-28. Oxford: Oxford University Press. Page 17.
What is an organisational culture?
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