Don’t Give Up on Openness
A recent study from the Warwick School of Business explores the benefit of open innovation; specifically how firms learn from prior openness.
The report explores how learning from openness enables firms to be ‘better’ at open innovation, i.e. to generate more innovation outputs from any given level of openness. It found that the accumulation of innovative practices has a positive effect. A heartening finding for organizations that may be facing resistance or a steep learning curve from a venture into open innovation.
The activities and processes involved in developing openness are subject to trial and error. Organizations must learn which sources and partnerships are going to be most useful and most effective. Authors say the results suggest that investing time in learning how to manage partnerships, and deciding which ones have the highest returns has definite future payoffs.
The report used panel data from Irish manufacturing plants and found an inverted “U” shape relationship between the scope of openness and the resulting outputs. The shape of the curve, however, depends on prior openness. Firms that were open innovators in previous periods derive more innovation output from openness in the current period.
Benefits of innovation partnerships are not derived solely from a firm’s current relationships, but from the learning process that takes place over time. In other words, learning which relationships not to pursue is an important part of the process.
Eight potential partner types were identified in the questionnaire: customers, suppliers, competitors, joint ventures, consultants, universities, industry operated laboratories, and government operated laboratories. The most common partners were customers and suppliers followed by links to consultants and universities. Links to competitors, through joint ventures and industry laboratories were significantly less common Prior linkages involving customers seem particularly important in helping boost the effect of current linkages, a finding which the authors say deserves additional research.
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