Antecedents of open innovation at the project level: empirical analysis of Korean firms

The concept of open innovation has recently gained wide academic attention, as it seems to have significant impact for company performance. Most empirical investigations about this emerging concept have been case studies of successful early adopters of open innovation, and their analyses have largely been at the company level. Although case studies at that level provide meaningful implications, the new phenomena merit a more in‐depth examination: that is, we need to collect and analyze data on multiple companies to explore more systematic findings about open innovations across companies. Moreover, analyses may need to go down to the individual project rather than the whole company level because innovation activities are often conducted as part of research and development (R&D) projects. To meet these needs, this study examines companies' open innovation efforts at the level of the individual R&D project. Specifically, the present study focuses on project‐level openness to better understand the mechanisms of open innovation. It explores systematic relationships between various antecedent factors and the degree of openness. Project‐level openness could be affected by team and task characteristics, such as team size, learning distance, strategic importance, technology and market uncertainty, and relevance to the main business. Relevant data collected from 303 companies in Korea were used to identify the antecedents that affect inbound and outbound openness. The research findings are expected to help provide a concrete theoretical framework suited for more generalized application and further practical development of open innovation strategy.     

B2B SME management of antecedents to the application of social media

This paper elucidates how business-to-business (B2B) small and medium-sized enterprises (SMEs) can manage antecedents to the application of social media for potential contributions to their business. This in-depth qualitative research study was conducted at four plastic-producing SMEs from October 2013 to October 2014, with follow-up interviews in October 2015.The findings reveal two important antecedents to the application of social media that overcome the gap between acknowledging the usefulness of social media and its actual limited application in practical B2B contexts. First, open collaborative business model innovation is needed to apply social media in local business processes. Second, central and distributed leadership must be integrated to create ownership and responsibility across the SME organisation and beyond to customers and partners. These findings differ from the social media application stages and the gaps between them identified in the previous literature. The developed model makes a contribution to the B2B SME field and to academia by recognising the importance of integrating critical antecedents before social media application can enhance business in B2B SMEs. This understanding is beneficial for the B2B SMEs and for society.     

Motivation and sorting of human capital in open innovation

This paper studies how business models can be designed to tap effectively into open innovation labor markets with heterogeneously motivated workers. Using data on open source software, we show that motivations are diverse, and demonstrate how managers can strategically influence the flow of code contributions and their impact on project performance. Unlike previous literature using survey data, we exploit the observed pattern of project membership and code contributions—the “revealed preference” of developers—to infer the motivations driving their decision to contribute. Developers strongly sort along key dimensions of the business model chosen by project managers, especially the degree of openness of the project license. The results indicate an important role for intrinsic motivation, reputation, and labor market signaling, and a more limited role for reciprocity. Copyright © 2014 John Wiley & Sons, Ltd.     

Creating value while avoiding its destruction through R&D management and innovation

Value creation and capture remain a key but quite a challenging objective for many organizations. R&D and innovation management have to operate in a context of increasing complexity, particularly enriched by emerging technologies, new opportunities for transformation of business models, and multidimensional changes in market demands. This special section proposes new options to deal with this challenge. One paper contributes to the adoption of open business models by studying their antecedents and casual relationships. The three other papers propose using a different focus on value, avoiding its destruction by adopting different unusual mindsets; i.e. learning through failure, learning by deviating and investigating motivations for not participating in innovation communities.     

Network configuration,customer centricity,and performance of open business models: A solution provider perspective

While research has shown a positive impact of open business models on value creation, it has remained silent on the configuration of the corresponding partner networks and their effect on performance. Studying three cases of solution providers which involve external service partners for solution delivery, we find that solution customer centricity – the degree to which the focal firm focuses on solution customers in the joint delivery of solutions – moderates the relationship between partner networks and open business model performance. For open business models with low solution customer centricity, a network configuration characterized by many weak ties to service partners leads to superior performance. Conversely, for open business models with high solution customer centricity, few but strong ties to partners lead to superior performance. Based on these findings, three ideal configurations of networks for open business models are derived: the controlled, the joint, and the supported model.     

Change processes in open innovation networks – Exploring living labs

Examining change in business networks can illuminate how time, temporality and process unfold and engage different stakeholders in open innovation. Living labs are increasingly popular open innovation networks that provide a fruitful area in which to study change processes and their influencing factors in network dynamics. We adopt a longitudinal process perspective to analyze eight living labs focused on urban development in a Northern European city. Our analysis reveals six pertinent processes: (i) expansion, (ii) reinforcement, (iii) focusing, (iv) unification, (v) termination, and (vi) recurrence. These processes reflect change in networks characterized by diverse actors, the coexistence of individual and shared motives, a high degree of openness, and user involvement. The identified change processes are a result of living labs disclosing their needs, data, and operations to their stakeholders. We propose a theoretical concept, which we describe as “network boosters”, to illustrate the factors that foster change processes. Scholars and practitioners of innovation management can learn from these findings that understanding change in open innovation networks may help to depict and predict short- and long-term relationships, and it may assist them in managing innovation in open environments.     

Effects of relational ties paradox on financial and non-financial consequences of servitization: Roles of organizational flexibility and improvisation

Drawing from relational governance and dynamic capabilities literature streams, we develop a conceptual model in which business and political ties are antecedents of organizational flexibility, which in turn are related to organizational improvisation and, ultimately, financial and non-financial firm performance. We test our model using a data collected from 302 Turkish senior managers. We find positive direct and indirect impacts of business ties on organizational improvisation, and negative direct and indirect impacts of political ties on organizational improvisation. We find organizational improvisation significantly related to several indicators of firm performance. Our results provide clarity on relational governance and firm performance. The intermediate variables of organizational flexibility and improvisation shed light on equivocal findings regarding the effects of business and political ties on firm performance.     

When Does Search Openness Really Matter? A Contingency Study of Health‐Care Innovation Projects

Given the growing popularity of the open innovation model, it is increasingly common to source knowledge for new product ideas from a wide range of actors located outside of organizational boundaries. Such open search strategies, however, might not always be superior to their closed counterparts. Indeed, widening the scope of knowledge sourcing at the ideation stage typically comes at a price given the substantial monetary and nonmonetary costs often incurred in the process of identifying, assimilating, and utilizing external knowledge inputs. Considering both the benefits and costs of search openness, the authors develop a project‐level contingency model of open innovation. This model suggests that search openness is curvilinearly (taking an inverted U‐shape) related to new product creativity and success. They hence assume that too little as well as too much search openness at the ideation stage will be detrimental to new product outcomes. Moreover, they argue that the effectiveness of open search strategies is contingent upon the new product development (NPD) project type (typological contingency), the NPD project leader (managerial contingency), and the NPD project environment (contextual contingency). To test these propositions empirically, multi‐informant data from 62 NPD projects initiated in the English National Health Service (NHS) were collected. The econometric analyses conducted provide considerable support for a curvilinear relationship between search openness and NPD outcomes as well as for the hypothesized contingency effects. More specifically, they reveal that explorative NPD projects have more to gain from search openness at the ideation stage than their exploitative counterparts. Moreover, the project‐level payoff from search openness tends to be greater, when the project leader has substantial prior innovation and management experience, and when the immediate work environment actively supports creative endeavors. These findings are valuable for NPD practice, as they demonstrate that effective knowledge sourcing has much to contribute to NPD success. In particular, pursuing an open search strategy might not always be the best choice. Rather, each NPD project is in need of a carefully tailored search strategy, effective leadership, and a supportive climate, if the full value of external knowledge sourcing is to be captured.     

The sites and practices of business models

This paper examines the concept of business models. Drawing on the business model literature, we first identify technology, market offering and network architecture as the three core elements of business models. The theoretical routes of each element are then examined through the associated literatures: technology and innovation studies, industrial marketing, operations strategy, and evolutionary economics. Multiple dimensions of each element are identified and the resultant framework is used to explore developments within the recorded music market across three centuries.Through changes in the recorded music market since the 1870s, we explore how business models emerged, took on multiple sites and evolved through their practice over time. We look at how interlinking business models become spread out across the business network as different network actors play their part. The recorded music market generates important insights into how business models are created, developed and practiced. We suggest that firms, business networks and markets form embedded systems within which multiple overlapping business models can be considered as constituent parts. In this way, the business model is understood as having agency to shape action; but in turn actions (of others in the business network as well as within the firms themselves) also shape the business model.     

Innovativeness: Its antecedents and impact on business performance

In this study, we address three research questions: (1) Why are some industrial firms more innovative than others? (2) What effect does innovativeness has on business performance? (3) Does the linkage between innovativeness and business performance depend on the environmental context? Accordingly, we draw on various theoretical perspectives to develop hypotheses that propose market orientation, entrepreneurial orientation, and learning orientation as key antecedents to innovativeness, as well as a direct relationship between innovativeness and business performance. A model is devised and tested that examines these relationships in general and in the context of varying market turbulence. Findings confirm the validity of the model and afford various insights on the role of market turbulence in the proposed relationships. Lastly, implications are offered on the antecedents and consequences of organizational innovativeness.     

Strategies for Integrating Stakeholders into Sustainability Innovation: A Configurational Perspective

Sustainability is a key driver of innovation for products, services, and business models. Sustainability innovations are aimed at improving the environmental, social, and economic performance of the innovated solution. Given the complexity of many sustainability challenges, leading innovators may seek to boost their innovation capacity by tapping into the ideas, knowledge, and expertise of their stakeholders. In doing so they need to consider how many and which stakeholders to integrate into new product development (NPD) processes, and at what stage. This study investigates stakeholder integration strategies associated with high sustainability performance of innovation. Building on the literatures of sustainability innovation and stakeholder integration in the context of NPD, this study developed a configurational model to analyze stakeholder integration strategies. The empirical data consisted of 80 interviews and documents from 13 medium to large companies and their stakeholders in Europe. Using the fsQCA method, it was found that there is not just one effective strategy but three stakeholder integration strategies for high sustainability performance of innovation. The results imply that deep organizational engagement with stakeholders is necessary for the achievement of high performance. Otherwise, the three strategies range from progressive openness, which allows stakeholders to exert a fundamental influence on the sustainability innovation, to limited openness toward stakeholder integration. With the early secondary strategy pointing to progressive openness, companies integrate secondary stakeholders early on and so maximize the influence of different views on the innovation. As to limited openness, companies following the selective strategy limit the number of stakeholder groups in NPD but are indifferent to the timing of these groups’ inputs. Finally, the fine‐tuning strategy is least open to atypical views as it restricts the share of secondary stakeholders and only allows external inputs after the fuzzy front end phase when key decisions regarding the innovation have been made.     

A platform approach in solution business: How platform openness can be used to control solution networks

This paper explores how customer solution providers leverage digital platform architectures and particularly platform openness to exert control over complex organizational networks. A multiple case-study approach studies three companies with digital platforms that orchestrate solution networks in the LED and ICT industries. Our findings show that the features of product modules (core or peripheral), service modules (relationship intensity and customization), and knowledge modules (explicit, tacit and codified) have differential influence on the levels of platform openness. By managing platform openness of different subsystems accordingly, the solution providers can achieve different control benefits, including ensuring module quality, increasing offering variety, reducing dependence on module providers, and facilitating resource sharing. We contribute to the literature on solution business by reconceptualising the platform approach from a two-level perspective. We also deepen the field's understanding of the role of digital platforms in solution business from an architectural perspective.     

Developing business customer engagement through social media engagement-platforms: An integrative S-D logic/RBV-informed model

While the service-dominant logic-informed nature of customer engagement in social media has been recognized in business-to-consumer contexts, little is known regarding this theoretical interface in business-to-business (B2B) settings. Insight into business customer engagement (BCE), as expressed through social media and/or other B2B engagement-platforms (e.g. trade shows) and its S-D logic-based antecedents and consequences thus remains limited. Based on the observed gap, this paper integrates the theoretical entities of BCE, B2B social media engagement-platforms, and S-D logic and through its analyses, uncovers the related importance of the resource-based view (RBV) in affecting this association. An integrative S-D logic/RBV-informed model is developed, where BCE denotes an industrial customer's investment of operant/operand resources in supplier interactions via particular B2B engagement-platforms, including social media. The model considers business customer actors and resources in driving business customer resource integration, business customer resource integration effectiveness, and business customer resource integration efficiency, which act as BCE antecedents that extend to coincide with BCE. BCE, in turn, triggers business customer cocreation and relationship productivity, which subsequently, contribute to business customer relationship quality and ultimately, supplier performance. A set of research propositions is derived from the model, which serves as a useful guide for further research. Managerial implications focused on B2B social media marketing are discussed, before we conclude with an overview of research limitations and future research directions.     

Conceptualizing business models in industrial networks

This paper is concerned with business model conceptualizations and outlines a framework for their analysis in industrial networks. A literature review suggests that there is a broad range of current conceptualizations of business models. Analyzing them as they pertain to interaction, business relationships, and industrial networks reveals two main explanations for their differences: first, they clearly rely on different basic theoretical assumptions, and second, they seem to address two types of business models. We refer to these as firm-centric and network-embedded business models. Based on this distinction, a scheme of analysis at the levels of the firm, relationship and network is suggested for the two types of business models. Business models are challenging from an analytical as well as managerial perspective. Further research on emerging network-embedded business models is suggested.     

The role of proximity in business model design: Making business models work for those at the bottom of the pyramid

This paper explores the role of proximity in designing business models that work for those at the BoP. BoP markets represent an extreme setting where actors struggle to access and organise limited resources and develop appropriate socio-economic-political practices. Drawing on Boschma's (2005) concept of proximity, we analyse three historical cases of business at the BoP to uncover the spatial-temporal dimensions of business model design in practice. Findings suggest that 1) business model design practices iteratively structure connections with markets and open up new spaces for market activity. This means that business models are necessarily understood as plastic and continuously in-the-making; 2) by taking into account the stability and change of proximity dimensions and the dynamics between them as they relate to business activities, managers are better equipped to identity opportunities that create, shape and connect with markets; and 3) the spatial-temporal dynamic of the business model proximities framework reveals that some proximities strengthen others through time, with negative and positive consequences.     

Coopetition-based business models: The case of Amazon.com

Coopetition (collaboration between competing firms) is a phenomenon that has recently captured a great deal of attention due to its increasing relevance to business practice. However, current research on coopetition is still short on explaining how the potential advantages of coopetition can be realized over time as part of an individual firm's business model. In order to gain insights into this, we conduct a longitudinal, in-depth case study on the coopetition-based business models of Amazon.com. We find evidence of three distinct coopetition-based business models: (1) Amazon Marketplace, (2) Amazon Services and Web Services, and (3) the collaboration between Apple and Amazon on digital text platforms. We conclude by forwarding several propositions on how value can be created and captured by involving competitors in a firm's business model. As a whole, the results contribute to the current understanding of how firms – as well as their stakeholders – can better benefit from coopetition.     

The Effect of Selective Openness on Value Creation in User Innovation Communities

Open innovation research and practice recognize the important role of external complementors in value creation. At the same time, firms need to retain exclusive control over some essential components to capture value from their product and/or service system. This paper contributes to the literature by analyzing some of the trade‐offs between openness to external value creation and closedness for internal value capture. It focuses on selective openness as a key variable and investigates how it affects value creation by external complementors, specifically the members of user innovation communities. Openness, it is hypothesized, matters to community members: The more open a product design is, the higher their sense of involvement in the innovation project, and the larger the effort they devote to it. Unlike prior literature, different forms and loci of openness are distinguished, specifically the transparency, accessibility, and replicability of different components of the product being developed. Hypotheses are tested based on survey data (n = 309) from 20 online communities in the consumer electronics and information technology hardware industries. Multilevel regression analysis is used to account for clustering, and thus nonindependent data, at the community level. We find that openness indeed increases community members’ involvement in the innovation project and their contributions to it. Interestingly, however, some forms and loci of openness strongly affect community perceptions and behavior, while others have limited or no impact. This finding suggests that, at least in relation to user communities, the trade‐off that firms face between external value creation and internal value capture is softer than hitherto understood. Contingency factors that may be able to explain these patterns are advanced. For example, users are expected to value the form of openness that they have the capabilities and incentives to exploit. The findings in this paper extend the literature on selective openness in innovation. They emphasize the need to study the demand for different forms of openness at the subsystem level and align supply‐side strategies to it. In managerial practice, a careful assessment of the demand for openness enables firms to successfully use selective openness and to effectively appropriate value from selectively open systems.     

Toward an optimal degree of openness in IT innovation projects

In spite of substantial interest in open innovation (OI), both research and practice lack methods that support companies in managing their IT innovation projects (ITIPs) relative to OI. We contribute to the closure of this gap by providing an approach for an ex ante financial evaluation of OI application, which involves developing a theoretical model that determines the optimal degree of openness in ITIPs. Based on our model, we examine relevant causal relationships by analyzing the influence of a company's ability to manage OI and the probability of success in OI application on the theoretical optimum. We find that the optimal openness level is linked with the company's ability to manage OI, which can incorporate organizational, cultural, and technological maturity. To increase the value contribution of OI, companies should focus on a steady improvement in managing OI. The results provide both an indicator for practical decision‐making and a starting point for future research.     

Managing the challenges of business-to-business open innovation in complex projects: A multi-stage process model

Research shows that knowledge sharing and system integration are two major challenges posed by openness to business partners in complex innovation projects. However, there remains limited research on the microfoundations (i.e., actions and practices) underpinning the organizational capabilities required to address these challenges. Drawing on a case study of a pioneering electric vehicle manufacturer, we develop a multi-stage process model showing how these capabilities are developed and phased out in terms of the organizational principles (e.g., hierarchical product architecture) and actions and practices (e.g., sharing knowledge by deputing staff to/from business partners). Our study contributes to the literature by taking a microfoundations approach to unpack the ‘black box’ of organizational capabilities critical for managing complex innovation projects into actions and practices, and emphasizes the importance of firms' internal preparedness for managing openness.     

Industrial internet of things business models in the machine-to-machine context

This study analyzes Industrial Internet of Things (IIoT) business models in the machine-to-machine (M2M) context. Thereby, it develops a conceptual framework to categorize different types of business model innovation for companies operating in the M2M business space. Business model innovations tend to cross multiple industries and drive ecosystems in which smart objects facilitate business models and service applications that are incrementally or radically novel in terms of their modularity or architecture. Our framework identifies four distinct types of IIoT business models: (I) Company-specific business models, (II) Systemic business models, (III) Value designs, and (IV) Systemic value designs. Moreover, it sheds light on different abstraction levels of business model building blocks and exposes the characteristics and differences in the value potential between the four business models. Finally, we advance the idea of ‘value design’ referring to business models of multiple actors coupled together, ultimately resulting in complex networks and ecosystems of diverse things, processes, and companies.