A new perspective on open innovation: established and new technology firms in UK bio‐pharmaceuticals

Abstract

The aim of this paper is to explore open innovation (OI) implementation and its impact on firm innovation performance in sectors experiencing technological discontinuities. The paper employs the framework of inbound, outbound and coupled OI to identify processes reflecting sourcing, externalising and exchanging knowledge across organisational boundaries on upstream and downstream innovation activities and explores their impact on the innovation performance of new and established technology firms. The empirical setting is the UK bio‐pharmaceuticals sector during 1991 and 2001, a paradigmatic era of discontinous change and intensified OI implementation. First, our findings show that new technology firms (NTFs) and established technology firms (ETFs) differ in their extent and patterns of inbound, outbound and coupled OI, reflecting that they implement OI to manage their competences in light of technological change. Second, we identify a complex and multifaceted relationship between OI and patenting performance, with NTFs experiencing enhanced performance from some OI processes while ETFs experiencing challenges. The paper suggests that delineating OI into inbound, outbound and coupled, along upstream and downstream activities, offers a deeper understanding of the role of OI in innovation, guiding selective implementation in pursuing enhanced innovation performance during periods of discontinuous technological change.

The Limits of Open Innovation: A Literature Review and Research Agenda

“…Organizational limitations are mainly associated with limitations that require strategic resources or strategic decisions (e.g., decisions concerning cost, structure, policies). These limitations are thus related to the implementation and governance of OI independent from their inbound/outbound orientation [31], [40], [41]. Operational limitations are mainly associated with managing OI projects, from incentivizing external actors to time management and coordination.…”

“…From a broad strategic viewpoint, resource allocation is an issue of finding the right balance between competing priorities. For example, OI practices come with a prohibitive cost [40] associated with extending a firm's resources and processes to external actors [27]. Research on this limitation reveals that 70% of firms cite financial pressure as the root of their struggle to effectively adopt OI practices [50].…”

“…Alignment with the strategic objectives is key to the successful implementation of an OI model [29], [55]. Second, the firm's shifting the allocation of their resources may face different challenges from managing innovation performance to meeting market demand [40]. These risks can be decreased with proper planning and coordination but exist, nevertheless [27], [41], [56].…”

“…Firms are affected by varying degrees of scope constraints-too big to manage or too small to be effective. [40], [51]. Lastly, we must consider the effects of changing an organization's existing workflow to incorporate OI practices and the effect that may have on the internal innovation team [58].…”

How firms use inbound Open Innovation practices over time: evidence from an exploratory multiple case study analysis

“…Chesbrough and Crowther, 2006; Enkel et al, 2009), for example by reducing costs or speeding up the process. This second view identifies another peculiarity of inbound OI practises, namely the possibility of using them as a problem‐solving approach, to find solutions to any problems which emerge during the innovation process more quickly or even to tackle radical discontinuities (Filiou, 2021). This brief overview presents the two major goals of involving external resources that firms may pursue through inbound OI: sensing and solving (Figure 2).…”