Managing Open Innovation
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Managing Open Innovation

Connecting the Firm to External Knowledge

André Spithoven, Peter Teirlinck and Dirk Frantzen

Open innovation is about firms’ external relations with other firms and organisations. It is a topic which has attracted an immense amount of attention, but which has also been heavily criticised due to the diversity of the ideas and fuzziness of its key concepts. To date, the bulk of the literature on open innovation draws on case study material to illustrate the operation of firms in an anecdotal way. By contrast, this book examines open innovation practices by using large-scale datasets and stresses their impact on firm performance. The authors examine four key issues: differences between firms in open innovation practices, public funding to enhance external relations, R & D outsourcing of firms, and the role of human resources in R & D and innovation.
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Chapter 7: The Impact of Internal R & D, Strategic Appropriability and Cooperation on R & D Outsourcing

André Spithoven, Peter Teirlinck and Dirk Frantzen


7. The impact of internal R&D, strategic appropriability and cooperation on R&D outsourcing 7.1 INTRODUCTION In the past two decades there has been a remarkable increase in the R&D outsourcing activities of firms in developed market economies. This is observed through the substantial increase in the number of R&D partnerships, through interactions between partners and through the significant growth of firm expenditure on external R&D. This has all taken place in a context of rapidly developing, elaborate R&D networks that combine different kinds of partnership, from straight licensing, consulting and arm’s-length pure subcontracting, through more profound long-term types of subcontracting, to various forms of explicit R&D cooperation. These partnerships involve different types of partners, such as competing firms, firms connected by vertical supplier–customer relations, and public research institutions such as universities and public research centres. And they tend increasingly to become international in nature, involving partners from different countries (Roijakkers et al., 1994; OECD, 2008b). These developments are somewhat puzzling in the light of transaction cost economics. According to this, the development of technology market transactions through subcontracting, and of lasting collaborative R&D agreements, is hampered by factors such as asset specificity, the uncertainty of the outcome of the R&D process, and information asymmetries between buyer and supplier (subcontractor), or between research partners, leading to free-riding behaviour (Williamson, 1981, 1985; Walker and Weber, 1984; Milgrom and Roberts, 1987; Pisano, 1990). In the same vein, papers in the field of industrial...

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