Leveraging Open Innovation Using Intermediary Networks

Abstract

Open innovation, fuelled by the rise of the Internet, has made it feasible and cheaper for firms to open themselves up to a wide range of external sources of innovative ideas. The explosive growth of open innovation intermediary networks, such as InnoCentive or Linked‐in, enables the rapid pairing of firms seeking knowledge to address a wide range of business challenges (seekers) with other firms or individuals who already have relevant knowledge (solvers or knowledge brokers). These intermediary networks allow procurement departments to source codified and un‐codified knowledge from firms or individuals outside their traditional supplier networks using one‐off transactional relationships. Although sourcing ideas in this way theoretically poses problems for knowledge search and transfer, we have found that companies can draw on processes and integration mechanisms developed by procurement and design engineering to develop effective organizational learning routines. These routines are strategically vital to source new ideas through open innovation using intermediary networks and create competitive advantage.