Closed or open innovation? Problem solving and the governance choice

Research Policy

Volumn 43, Issue 5, 2014, Pages 914-925

  Felin, Teppo ^a   Zenger, Todd R ^b  

^a UNIVERSITY OF OXFORD   (United Kingdom)

^b WASHINGTON UNIVERSITY IN ST LOUIS   (United States)

Author keywords

Governance choice; Open and closed innovation; Problem solving; Strategy

Indexed keywords

ENGINEERING; PROBLEM SOLVING;

BENEFITS AND COSTS; CLOSED INNOVATIONS; GOVERNANCE CHOICE; GOVERNANCE FORMS; KNOWLEDGE-SHARING; MANAGING INNOVATION; SOLUTION SEARCHES; STRATEGY;

INNOVATION;

EID: 84899632935     PISSN: 00487333     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.respol.2013.09.006     Document Type: Article

References (111)

1. Afuah, A., Tucci, C., 2012. Crowdsourcing as a solution to distant search. Academy ofManagement Review 37, 355-375.
2. Ahuja, G., Lampert, C.M., 2001. Entrepreneurship in the large corporation: a longitu-dinal study of how established firms create breakthrough inventions. StrategicManagement Journal 22, 521-543.
3. Argyres, N., Bigelow, L., 2010. Innovation, modularity, and vertical integration: evi-dence from the early US auto industry. Organization Science 21, 842-853.
4. Argyres, N., Felin, T., Foss, N., Zenger, T., 2012. Organizational economics of capabil-ities and heterogeneity. Organization Science 23, 1213-1226.
5. Argyres, N., Mayer, K.J., 2007. Contract design as a firm capability: an integrationof learning and transaction cost perspectives. Academy of Management Review32, 1060-1077.
6. Arrow, K.J., Hahn, F., 1974. General competitive analysis. North Holland
7. Arora, A., Fosfuri, A., 2003. Licensing the market for technology. Journal of EconomicBehavior and Organization 52, 277-295.
8. Baer, M., Dirks, K., Nickerson, J., 2012. Microfoundations of strategic problem for-mulation. Strategic Management Journal.
9. Baldwin, C., 2008. Where do transactions come from? Modularity, transactions,and the boundaries of the firm. Industrial and Corporate Change 17, 155-195.
10. Baldwin, C., von Hippel, E., 2012. Modeling a paradigm shift: from producer innova-tion to user and open collaboration. Organization Science.
11. aldwin, C., Clark, K.B., 2003. Managing in an age of modularity. Harvard BusinessReview 75, 84-93.
12. Baldwin, C., Henkel, J., 2012. The Impact of Modularity on Intellectual Property andValue Appropriation. HBS, Workign Paper.
13. Bercovitz, J.E., Feldman, M.P., 2007. Fishing upstream: firm innovation strategy anduniversity research alliances. Research Policy 36, 930-948.
14. Benkler, Y., 2002. Coase's penguin, or linux and the nature of the firm. Yale LawJournal 112, 369-447.
15. Benkler, Y., 2004. Sharing nicely: on shareable goods and the emergence of sharingas a modality of economic production. Yale Law Journal 114, 273-358.
16. Bingham, A., Spradlin, D., 2011. The Open Innovation Marketplace: Creating Valuein the Challenge Driven Enterprise. FT Press, Upper Saddle River, NJ.
17. Boudreau, K., Lacetera, N., Lakhani, K.R., 2011. Incentives and problem uncertaintyin innovation contests: an empirical analysis. Management Science 57, 843-863.
18. Boudreau, K., Lakhani, K.R., 2013. Using the crowd as an innovation partner. HarvardBusiness Review, 61-69.
19. Brunt, L., Lerner, J., Nicholas, T., 2011. Inducement Prizes and Innovation. HarvardBusiness School.
20. Chatterji, A.K., Fabrizio, K.R., 2012. How do product users influence corporate inven-tion? Organization Science 23, 971-987.
21. Chatterji, A.K., Fabrizio, K.R., 2013. Using users: when does external knowledgeenhance corporate product innovation. Strategic Management Journal.
22. Chesbrough, H., 2003. Open Innovation: The New Imperative for Creating and Prof-iting from Technology. Harvard Business Press.
23. Chesbrough, H., 2007. The market for innovation: implications for corporate strat-egy. California Management Review 49, 45-66.
24. Chesbrough, H., 2006. Open Business Models: How to Thrive in the New InnovationLandscape. Harvard Business School Press, Boston, MA.
25. Coase, R.H., 1937. The nature of the firm. Economica 4, 386-405.
26. Cohen, M.D., March, J.G., Olsen, J.P., 1972. A garbage can model of organizationalchoice. Administrative Science Quarterly 17, 1-25.
27. Cohen, W.M., Nelson, R.R., Walsh, J.P., 2002. Links and impacts: the influence ofpublic research on industrial R&D. Management Science 48, 1-23.
28. Crossan, M.M., Apaydin, M., 2009. A multi-dimensional framework of organizationalinnovation: a systematic review of the literature. Journal of Management Studies47, 1154-1191.
29. Cyert, R.M., March, J.G., 1963. A Behavioral Theory of the Firm. Prentice Hall, Engle-wood Cliffs, NJ.
30. Dahlander, L., Gann, D.M., 2010. How open is innovation? Research Policy 39,699-709.
31. Demsetz, H., 1988. The theory of the firm revisited. Journal of Law, Economics, andOrganization 4, 141-161.
32. Dushnitsky, G., Lavie, D., 2010. How alliance formation shapes corporate ven-ture capital investment in the software industry: a resource-based perspective.Strategic Entrepreneurship Journal 4, 22-48.
33. Dushnitsky, G., Lenox, M., 2005. When do incumbents learn from entrepreneurialventures: corporate venture capital and investing firm innovation rates.Research Policy 34, 615-639.
34. Dyer, J., Singh, H., 1998. The relational view: cooperative strategy and sources ofinterorganizational competitive advantage. Academy of Management Review23, 660-679.
35. Eickelpasch, A., Fritsch, M., 2005. Contests for cooperation: a new approach in Ger-man innovation policy. Research Policy 34, 1269-1282.
36. Felin, T., Zenger, T.R., 2009. Entrepreneurs as theorists: on the origins of col-lective beliefs and novel strategies. Strategic Entrepreneurship Journal 3,127-146.
37. Felin, T., Zenger, T.R., 2011. Information aggregation, matching and radical market-hierarchy hybrids: implications for the theory of the firm. Strategic Organization9, 163-173.
38. Fey, C., Birkinshaw, J., 2005. External sources of knowledge, governance mode andR&D performance. Journal of Management 31, 597-621.
39. Foss, N.J., Laursen, K., Pedersen, T., 2011a. Linking customer interaction and innova-tion: the mediating role of new organizational practices. Organization Science22, 980-999.
40. Fernandes, R., Simon, H.A., 1999. A study of how individuals solve complex andill-structured problems. Policy Sciences 32, 225-245.
41. Fisk, C.L., 1998. Removing the 'fuel of interest' from the 'fire of genius:' law and theemployee-inventor. University of Chicago Law Review 65, 1127-1198.
42. Fitzgerald, B., 2006. The transformation of open source software. MIS Quarterly 30,587-598.
43. Foss, N., 2003. Selective intervention and internal hybrids: interpreting and learningfrom the rise and decline of the Oticon spaghetti organization. OrganizationScience 14, 331-349.
44. Foss, N., Laursen, K., Pedersen, T., 2011b. Linking customer interaction and innova-tion: the mediating role of new organizational practices. Organization Science22, 980-999.
45. Franke, N., Shah, S., 2003. How communities support innovative activities: an explo-ration of assistance and sharing among end-users. Research Policy 32, 157-178.
46. Garicano, L., Kaplan, S.N., 2001. The effects of business-to-business e-commerce ontransaction costs. Journal of Industrial Economics 49, 463-485.
47. Gavetti, G., Levinthal, D.A., 2000. Looking forward and looking backward: cognitiveand experiential search. Administrative Science Quarterly 45, 113-137.
48. Geyskens, I., Steenkamp, J., Kumar, N., 2006. Make, buy, or ally: a transaction costtheory meta-analysis. Academy of Management Journal 49, 519-543.
49. Good, B.M., Su, A.I., 2011. Games with a scientific purpose. Genome Biology 12,135-137.
50. Hadfield, G., 2011. Law for a flat world: legal infrastructure and the new economy.Journal of Law and Policy for the Information Society.
51. Hagedoorn, J., Letterie, W., Palm, F., 2011. The information value of R&D alliances:the preference for local or distant ties. Strategic Organization 9, 283-309.
52. Hayek, F., 1945. The use of knowledge in society. American Economic Review 35,519-530.
53. Holmstrom, B., 1999. Managerial incentive problems: a dynamic perspective. TheReview of Economic Studies 66, 169-182.
54. Howells, J., 2006. Intermediaries and the roles of intermediaries in innovation.Reseach Policy 35, 715-728.
55. Jacobides, M.G., Knudsen, T., Augier, M., 2006. Benefiting from innovation: valuecreation, value appropriation and the role of industry architectures. ResearchPolicy 35, 1200-1221.
56. Jeppesen, L.B., Frederiksen, L., 2006. Why do users contribute to firm-hosted usercommunities? The case of computer-controlled music instruments. Organiza-tion Science 17, 45-63.
57. Jeppesen, L.B., Lakhani, K.R., 2010. Marginality and problem solving effectiveness inbroadcast search. Organization Science 21, 1016-1033.
58. Kapoor, R., Adner, R., 2012. What firms make vs. what they know: how firms' pro-duction and knowledge boundaries affect competitive advantage in the face oftechnological change. Organization Science.
59. Kauffman, S., 1993. Origins of Order. Oxford University Press, New York.
60. Keil, T., Maula, M., Schildt, H., Zahra, S.A., 2008. The effect of governance modes andrelatedness of external business development activities on innovative perfor-mance. Strategic Management Journal 29, 895-907.
61. Kogut, B., Zander, U., 1996. Knowledge of the firm, combinative capabilities and thereplication of technology. Organization Science 3, 383-397.
62. Kogut, B., 2000. The network as knowledge: generative rules and the emergence ofstructure. Strategic Management Journal 21, 405-425.
63. Kotha, S.,2012. Boundary emergence: a multi-theoretical approach to understandingboundary choice in a large transnational corporation. In: Department of Infor-mation Systems Friday Research Seminar Series. Washington State University.
64. Lakhani, K.R., Hifshitz-Assaz, Tushman, M.L., 2012. Open Innovation and Orga-nizational Boundaries: The Impact of Task Decomposition and KnowledgeDistribution on the Locus of Innovation. HBS, Working paper.
65. Langlois, R., 2003. The vanishing hand: the changing dynamics of industrial capital-ism. Industrial and Corporate Change 12, 351-385.
66. Langlois, R., 2006. The secret life of mundane transactions. Organization Studies 27,1389-1410.
67. Laursen, K., Salter, A., 2006. Open for innovation: the role of openness in explaininginnovation performance among UK manufacturing firms. Strategic ManagementJournal 27, 131-150.
68. Leiblein, M.J., Macher, J.T., 2009. The problem solving perspective: a strategicapproach to understanding environment and organization. Advances in Strate-gic Management 26, 1-24.
69. Leiponen, A., Helfat, C.E., 2010. Innovation objectives, knowledge sources, and thebenefits of breadth. Strategic Management Journal 31, 224-236.
70. Lerner, J., Tirole, J., 2002. Some simple economics of open source. Journal of IndustrialEconomics 50, 197-234.
71. Lerner, J., Merges, R.P., 1998. The control of technology alliances: an empirical anal-ysis of the biotechnology. Journal of Industrial Economics 46, 125-156.
72. Levinthal, D., 1993. Adaptation on rugged landscapes. Management Science 43,934-950.
73. Love, J.H., Roper, S., Vahter, P., 2013. Learning from openness: the dynamics ofbreadth in external innovation linkages. Strategic Management Journal.
74. Macher, J.T., 2006. Technological development and the boundaries of the firm: aknowledge-based examination in semiconductor manufacturing. ManagementScience 52, 826-843.
75. Macher, J.T., Boerner, C., 2012. Technological development at the boundaries of thefirm: a knowledge-based examination of drug development. Strategic Manage-ment Journal 33, 1016-1036.
76. March, J.G., Simon, H.A., 1958. Organizations. Wiley, New York.
77. Malone, T.W., Laubacher, R.J., Johns, T., 2011. The big idea: the age of hyperspecial-ization. Harvard Business Review 89, 56-65.
78. Mowery, D.C., Rosenberg, N., 1998. Paths to Innovation: Technological Change in20th-Century America. Cambridge University Press.
79. Nalebuff, B.J., Stiglitz, J.E., 1983. Prizes and incentives: towards a general theory ofcompetition and compensation. Bell Journal of Economics 14, 21-23.
80. Nickerson, J.A., Silverman, B., Zenger, T.R., 2007. The problem of creating and cap-turing value. Strategic Organization 5, 211-225.
81. Nickerson, J.A., Zenger, T.R., 2004. A knowledge-based theory of the firm: the prob-lem solving perspective. Organization Science 15, 617-622.
82. Nickerson, J.A., Zenger, T.R., 2008. Envy, comparison costs, and the economic theoryof the firm. Strategic Management Journal 29, 1429-1449.
83. Nigrinis, A., 2009. Essays on the Economic History of Industrial Research and Devel-opment. Stanford, Dissertation.
84. Poppo, L., Zenger, T., 2002. Do formal contracts and relational governance functionas substitutes or complements. Strategic Management Journal 23, 707-725.
85. Powell, W.W., Koput, K.W., Smith-Doerr, L., 1996. Interorganizational collaborationand the locus of innovation: networks of learning in biotechnology. Administra-tive Science Quarterly 41, 116-145.
86. Raymond, E. (2001). The cathedral and the bazaar.
87. Reuer, J.J., Arino, A., 2007. Strategic alliance contracts: dimensions and determinantsof contractual complexity. Strategic Management Journal 28, 313-330.
88. Robinson, D.T., Stuart, T.E., 2007. Network effects in the governance of strategicalliances. Journal of Law, Economics, and Organization 23, 242-273.
89. Roper, S., Vahter, P., Love, J.H., 2013. Externalities of openness in innovation.Research Policy.
90. Shah, S., Tripsas, M., 2007. The accidental entrepreneur: the emergent and col-lective process of user entrepreneurship. Strategic Entrepreneurship Journal 1,123-140.
91. Simon, H.A., 1962. The architecture of complexity. Proceedings of the AmericanPhilosophical Society 106, 467-482.
92. Simon, H.A., 1973. The structure of ill structured problems. Artificial Intelligence 4,181-201.
93. Stiglitz, J.E., 2008. Economic foundations of intellectual property rights. Duke LawJournal 57, 1693-1724.
94. Taylor, C.R., 1995. Digging for golden carrots: an analysis of research tournaments.American Economic Review 85, 872-890.
95. Tether, B., Tajar, A., 2008. Beyond industry-university links: sourcing knowledgefor innovation from consultants, private research organisations and the publicscience-base. Research Policy 37, 1079-1095.
96. Van de Vrande, V., Vanhaverbeke, W., Duysters, G., 2009. External knowledge sourc-ing: the effect of uncertainty on governance mode choice. Journal of BusinessVenturing 24, 62-80.
97. Van de Vrande, V., Vanhaverbeke, W., Gassmann, O., 2010. Broadening the scope ofopen innovation: past research, current state and future directions. InternationalJournal of Technology Management 52, 221-235.
98. Van de Vrande, V., Vanhaverbeke, W., 2012. How prior corporate venture cap-ital investments shape technological alliances: a real options approach.Entrepreneurship Theory and Practice.
99. Vanhaverbeke, W., Cloodt, M., 2014. Theories of the firm and open innovation. In:Chesborough, H., Vanhaverbeke, W., West, J. (Eds.), Open Innovation: New Direc-tions and Applications. Oxford University Press.
100. Veugelers, R., Cassiman, B., 1999. Make and buy in innovation strategies: evidencefrom Belgian manufacturing firms. Research Policy 28, 63-80.
101. von Hippel, E., 1986. Lead users: a source of novel product concepts. ManagementScience 32, 791-805.
102. von Hippel, E., von Krogh, E., 2003. Open source software and the private-collectiveinnovation model: issues for organization science. Organization Science 14,208-223.
103. von Hippel, E., 2005. Democratizing Innovation. MIT Press, Cambridge, MA.
104. von Krogh, G., Spaeth, S., Lakhani, K.R., 2003. Community, joining, and special-ization in open source software innovation: a case study. Research Policy 32,1217-1241.
105. Weber, M., 1949. On the Methodology of the Social Sciences. The Free Press, Glencoe,IL.
106. West, J. (2007). openinnovation.net, blog post: what is open innovation?
107. West, J., Bogers, M., 2011. Profiting from external innovation: a review of researchon open innovation. In: 9th International Open and User Innovation Workshop,Vienna, Austria http://ssrn.com/abstract=1949520
108. Williamson, O., 1991. Comparative economic organization: The analysis of discretestructural alternatives. Administrative Science Quarterly 36, 269-296.
109. Zenger, T.R., 1992. Why do employers only reward extreme performance? Exam-ining the relationships among performance, pay and turnover. AdministrativeScience Quarterly 37, 198-219.
110. Zenger, T.R., Hesterly, W.S., 1997. The disaggregation of corporations: selective inter-vention, high-powered incentives, and molecular units. Organization Science 8,209-222.
111. Zenger, T.R., Felin, T., Bigelow, L., 2011. Theories of the firm-market boundary.Academy of Management Annals 5, 89-133.