Business Models Based on Open Innovation Strategy

Open innovation and open business models have received a lot of attention during the last decade both from practitioners and academia since Henry Chesbrough launched the two concepts respectively in 2003 and 2006 (Chesbrough, 2003a and 2006a). Careful observation of publications about these two concepts reveals that most researchers as well as practitioners do not make a proper distinction between them. In this chapter, we intend to clarify the distinction between the two concepts and, more importantly, to extend the range of potential innovation strategies by combining open innovation and open business models in different ways. This should lead to a comprehensive classification of possible innovation strategies in which open/closed innovations are combined with open/closed business models. The classification starts with simple combinations of open or closed innovations and traditional vs. open business models in their new product development. Combinations of open innovation and open business models generate interesting models to create and capture value, which to our knowledge are not specified before in the open innovation literature. The classification will also illustrate that (open) innovation targeting new product or new business development is just one possible strategy how firms can create a competitive advantage. Product innovation may not be an option for companies producing commodities (e.g. crude oil) but the competitive drivers in these industries (e.g. finding the best oil wells) may be affected by the product innovations of their (technology) partners (e.g. new technologies to explore oil wells more effectively). Reframing open innovation in this way allows us to shed light on innovation networks in which the instigators of the network are not the innovators themselves, but they nevertheless form the hubs in a broader innovation ecosystem in which they benefit from the innovations of their technology partners. OUP UNCORRECTED PROOF – FIRSTPROOFS, Fri May 3

Characterizing Circular and Open Business Models in a profit-driven environment through Business Model Patterns

The major trends characterising the development of e-business platforms include increasing the performance-to-price ratio of hardware components (e.g., servers and chips), as well as the declining costs of operating systems and middleware software as organisations switch from expensive proprietary software (e.g., Microsoft Windows) to open source software (e.g., Linux). The unique origins of Linux and open source software require the adoption of new business models to allow key players to sustain themselves long-term. Using a historical review of the open software movement and a value chain analysis for the open software industry, we examine, using primary data from interviews, the business models of five Linux players (Red Hat, Novell, Navica, Open Country and SohoLaunch). Case analyses enable us to identify four open source business models that should be sustainable in the long run.

The path to outcome delivery: Interplay of service market strategy and open business models

In the digital platform economy, individual freelance workers are matched to their temporary employers thorough online systems. Workers interact with platform firms individually, undermining collective action and hence worker power. This is an issue for policy, as these workers do not have the protections afforded to those in traditional industries. The platform economy has also enabled open source, where the software architect creates a boundary around the software code they accept from a distributed group of contributors. The role of the software architect raises interesting questions about power in what can be seen as a form of networked organisation. Open source can be viewed as a narrative of software code and discussions about it that create a boundary around the project. Open source can also be framed as a business model, where value created by contributors is captured by the software architect for the benefit of both contributors and users. Business models can be viewed as a narrative that can both express and create a desired future for the entrepreneur. The potential of open source to inform narrative forms of business model is the research area. Taking a social constructionist perspective, this study used workshop and participant observation techniques to engage with the founders and other stakeholders in three case study organisations. The empirical contribution is that a narrative form of open source business model can have a power-balanced structure through a discursive process of boundary management. The methodological contribution is that annotated portfolio techniques can reveal an entrepreneur’s business model design from ethnographic data. The theoretical contribution is the importance of conceptual integrity to business models as well as to software engineering. The issue of conceptual integrity can be explored further in future research on factors in business model success.

Evolving a Value Chain to an Open Innovation Ecosystem: The Cognitive Influence of Stakeholders in Customizing Medical Implants

In the past 10 years, numerous interesting articles, book chapters, and books have been written on open innovation strategies in mainly large companies. While closed innovation models have resulted in important breakthrough innovations, many large companies have abandoned vertical integration strategies in recent years and have moved toward a combination of both closed and open innovation models that are used for reaching different sets of innovative goals. The definition of open innovation as proposed by Chesbrough is still the most commonly used notion of the concept. However, several respectable open innovation researchers have added to the theory and have offered valuable extensions to Chesbrough's widely used definition. While the open innovation literature strongly builds on important existing theories of innovation, there are several new contributions of the open innovation literature to the established body of literature: a strong focus on external technology commercialization; the positioning of the business model as the connection between a firm's innovation efforts and strategy; and the appreciation of the value associated with recognizing false negatives. Open innovation strategies are potentially useful in several different settings: in product innovation and in commodities; in high‐tech industries as well as in low‐tech sectors; and in small and large companies. However, research also shows that in all of these settings companies that have the necessary internal conditions in place find open innovation models to be the most useful. For the next 10 years, there are several interesting research themes in open innovation for researchers, both established scholars and young researchers, to explore.

This paper discusses dynamics and differences of business models in the car-sharing industry and focuses on open innovation as the trigger of diverse business models among Uber in the U.S., DiDi Chuxing in China, and KakaoT in Korea. We seek to answer the following two questions: What creates the differences in the business models of the car-sharing industry? Do the differences in open innovation motivate the diversity of business models among Uber, DiDi Chuxing, and KakaoT? We incorporated participatory observation, interviews, and semi-structured questionnaire methods in our study. We used two-step participatory observation and interview methods, hence carrying out observation and interviews two times by different researchers with Uber drivers in the U.S., DiDi-Chuxing drivers in Beijing, and KakaoT taxi drivers in Korea to confirm the interview and participatory observation results. First, business models of the car-sharing firms Uber, DiDi-Chuxing, and KakaoT are not fixed but rather are dynamically changing. Second, business models of car-sharing firms are the result of interaction with government regulations, the taxi industry, public transportation, and the automotive car industry. Third, open innovation strategies of car-sharing firms determine the contents and dynamics of car-sharing business models, such as the revenue business model, responsibility business model, and system business model upon interaction with four agencies.

Popularized in the early of 2000s, the concept of Open Innovation (OI) is a systematic process that instigates the circulation of ideas among different exploitation vectors focused on value creation. Over the past decade, the OI paradigm had a significant impact on the emergence of innovation networks and ecosystems. With the emergence of digital disruptive technologies, a new approach to OI has emerged -Open Innovation 2.0 (OI2) -incorporating technological, social, political, environmental dimensions, based on principles of integrated collaboration and co-created shared value, cultivating innovation ecosystems, unleashing the power of exponential technologies, with extraordinarily rapid adoption. This article will begin by explaining the evolution from IO to IO2. Key incentives, risks and costs associated with this new strategic approach to innovation will also be identified, as well as, the factors and the conditions of success that lead companies to formulate OI2 strategies starting from OI. This study will culminate in the identification of some initiatives developed in Portugal that are contributing to this transition. The analysis carried out will show that OI2 is not a panacea that can solve any challenge, but help drive significant structural changes and benefits through innovation to society and industry.

Purpose — The goal of this research is to create a model of influencing factors of open innovation (OI) in startups. This research has also looked into how OI affects gaining a competitive advantage by taking into account the moderator role of environment dynamics.Design/methodology/approach — Possible factors influencing OI in startups, determined through research background studies and interviews with experts in the startup fields, then along with the factors of competitive advantage and environmental dynamics, were evaluated in a sample of 120 managers of Iranian start-up companies. Using structural equation modelling, we analysed data collected from startup managers pertaining to variables of OI, competitive advantage, and environmental dynamics. Structural equation modelling is a multivariate analysis method that enables the examination of relationships among multiple variables within a model. A two-stage partial least squares structural equation modelling method was employed in this study. In the first stage, the construct validity and reliability of the measurement models were evaluated, and in the second stage, the conceptual model and research hypotheses were put to the test.Findings — Results showed that organisational entrepreneurship, open business model, knowledge management capabilities, absorption capacity, organisational readiness, and participatory capability are important influences on OI in startups. Furthermore, the study found that applying OI techniques can help startups succeed more often in gaining a competitive edge. Additionally, the study found that environmental dynamics have a positive moderating effect on this relationship.Practical implications — Considering the vital role of startups in economic development programs, the results of this research can lead the managers of start-up companies and growth centers to use the OI approach to overcome the limitations of being new and small. Also to survive startups and increase productivity and competitive advantage, startup managers by focusing on these factors can take steps to create the necessary internal foundations in the organisation and negotiate with large companies in line with better policies.Originality/value — The study’s significant contribution is believed to be the development of a model that identifies the factors that influence OI in startups. Moreover, the study verified the influence of OI on achieving competitive advantage, as per the established model, while also considering the moderating effect of environmental dynamics on this association.

Open innovation (OI) involves the deliberate use of external and internal knowledge flows by organisations in order to accelerate their innovations and expand the markets for the external use of innovations. Despite the relevance of OI for firms’ competitiveness, firms’ abilities to leverage and combine internal and external knowledge flows cannot be taken for granted. In this context, innovation policies can play a crucial role in stimulating firms’ OI strategies. The objective of this research is to examine the degree to which existing public innovation policies promote open innovation by companies. In doing so, we review the set of innovation policy instruments developed by governments within the Spanish national and regional innovation systems and examine the extent to which they support open innovation by companies, either by facilitating firms’ open innovation practices or by acting on the external factors that influence them. Our results show that innovation policies in Spanish national and regional settings partially promote firms’ open innovation, since governments base their actions on the interaction between science, industry and government, sometimes with intermediaries that promote it. We propose the development of instruments to encourage firms to implement open innovation practices in such a way that they complement the existing ones and can fully achieve the benefits associated with open innovation.

This article discusses the structures of value propositions in cultural heritage tourism site business models in the context of the concept of open innovation. The objective of the study is to identify value propositions in tourism sites and the tendency of managers to use open innovation. The analysis was based on the example of European cultural heritage tourism sites associated with the European Route of Industrial Heritage. The research process included literature analysis and empirical research in the form of interviews conducted with managers of 73 sites. The research allowed for identifying 16 key values observed in the business models of cultural heritage tourism sites and then classify them into three groups, i.e., values proposed to the customer, values captured by the enterprise and social values. The following values were of the highest importance: promotion of historical industrial heritage, satisfying cognitive needs, acting as a symbol of the area, brand strengthening and organization of tourist traffic, so that the industrial heritage is preserved. It was noticed that some values were significantly correlated with the attitudes of managers towards the exchange of knowledge within open innovation. The majority of managers participating in the research were convinced that the revitalization of cultural heritage sites and the business models of these sites should be in the form of open innovation. The limitation of the research carried out is the inability to deepen the interviews, which was caused by the lack of direct contact with managers due to the COVID-19 pandemic.

High-tech firms face constant innovation and challenges due to a rapidly changing tech environment. Open innovation strategies are an important solution for fostering rapid and efficient innovation by leveraging external capabilities. This study explores the critical factors that influence open innovation strategies in high-tech companies, assessing their importance and providing key insights for promoting these strategies. Through a comprehensive literature review and expert interviews, 16 key factors impacting open innovation were identified. A hierarchical research model was developed using the ser-M (subject, environment, resource, mechanism) framework, focusing on subject, environment, resource, and mechanism for a corporate strategy analysis. A survey and an AHP analysis were conducted with 30 participants, comprising engineers and open innovation experts, all with over a decade of experience in the field within Korean high-tech companies. The analysis focused on four critical elements: subject, environment, resource, and mechanism; subject emerged as the most critical factor for successfully implementing open innovation strategies. Specifically, the will of chief executives, the direction of decision-making, and technological environment changes were found to be significant contributors. The consensus between engineers and experts confirms that while environmental and resource factors are vital, strong leadership and effective decision-making are paramount for successful open innovation in high-tech companies.

Purpose The aim of this paper is to review and synthesise the recent advancements in the business model literature and explore how firms approach business model innovation. Design/methodology/approach A systematic review of business model innovation literature was carried out by analysing 219 papers published between 2010 and 2016. Findings Evidence reviewed suggests that rather than taking either an evolutionary process of continuous revision, adaptation and fine-tuning of the existing business model or a revolutionary process of replacing the existing business model, firms can explore alternative business models through experimentation, open and disruptive innovations. It was also found that changing business models encompasses modifying a single element, altering multiple elements simultaneously and/or changing the interactions between elements in four areas of innovation: value proposition, operational value, human capital and financial value. Research limitations/implications Although this review highlights the different avenues to business model innovation, the mechanisms by which firms can change their business models and the external factors associated with such change remain unexplored. Practical implications The business model innovation framework can be used by practitioners as a “navigation map” to determine where and how to change their existing business models. Originality/value Because conflicting approaches exist in the literature on how firms change their business models, the review synthesises these approaches and provides a clear guidance as to the ways through which business model innovation can be undertaken.

With the development of global economic, the communication and cooperation among enterprises more frequent, therefore the traditional closed innovation paradigm can not maintain the competitive advantage of company. In this situation, a new innovation paradigm-open innovation comes out and compensates the disadvantages of closed innovation. In the open innovation paradigm, companies can obtain external knowledge resources to improve the ability of knowledge management. From the perspective of knowledge management, this paper analyzes the characteristics of open innovation paradigm and the relationship between open innovation and knowledge management. According to the analysis result this paper will put forward some useful suggestions about how to construct and develop the open innovation paradigm for Chinese enterprises.