Abstract

     While open innovation organizations have grown in popularity, they hold a high failure rate. This paper identifies limiting factors that contribute to this high failure rate at three levels: strategy, process, and community. After validating and expanding these limits through a case study, the paper offers a framework identifying success factors for open innovation and their hierarchical relationships. We classified these success factors into six groups, design, implementation, technology, operation, community readiness, and community development, and their relationships into four groups, deployment, engagement, evaluation, and governance. This framework and the accompanying propositions offer a better theoretical understanding of open innovation models and provide practical recommendations toward their viability, survivability, scalability, and profitability. Lastly, the paper discusses possible research avenues for the further development of open innovation organizations.

Introduction

      Open innovation (OI) is defined as a distributed innovation process based on purposively managed knowledge flows across organizational boundaries to accelerate internal innovation based on the use of external knowledge or support external innovation based on the use of internal knowledge. For a long time, the theoretical development of OI has been focused on the strategic benefits of OI in an attempt to position OI models as alternative solutions for innovation (Albats et al., 2021; Bogers et al., 2019; Chaudhary et al., 2022). While OI initiatives in tandem with digital platform technologies can potentially facilitate and enhance the innovation process and outcomes (Jesus and Jugend 2021; Nguyen et al., 2021), the downsides and the limits of this openness remain understudied (Kohler and Nickel 2017; Saura et al., 2022; Schlagwein and Bjørn-Andersen 2014; Schoder et al., 2019; Stefan et al., 2022).

     Proponents of OI have long argued that the literature falls short in documenting obstacles hindering OI’s successful implementation and governance (Bigliardi et al., 2020; Chesbrough and Brunswicker 2014; Kohler and Nickel 2017; West and Bogers 2017). Instead, previous studies have mainly articulated the general logic of OI, described the success of some well-known cases, and examined the benefits of engaging external actors in new product development (e.g. Chesbrough 2017; Corral de Zubielqui et al., 2019; Henttonen and Lehtimäki 2017; Liem et al., 2019; Xie et al., 2016). However, these success stories have generally failed to acknowledge that OI can fade in its efficacy due to many technical and non-technical reasons (Bigliardi et al., 2020).

Discussion

     Opening up the innovation process to external knowledge exploration and exploitation remains a challenging task for many organizations (Chaudhary et al., 2022; Haim Faridian and Neubaum 2021; Naqshbandi et al., 2019; Saura et al., 2022). This study synthesized the limitations of OI highlighted in recent studies and further explained their effects through a case review. Our case review also offered new insight into the relationships between these limiting factors. By classifying the identified limiting factors at the strategy, process, and community levels, we developed a framework rendering the key OI success factors and their hierarchical relationships (Fig. 2). The case study allowed us to recognize two groups of strategic decisions that could make or break OI initiatives and their design and implementation decisions. At the process level, OI success depends on both operational and technological decisions. At the community level, community readiness and community development are two critical dimensions of OI success.