Open Innovation Networks and the Role of Intermediaries: An Agent-Based Simulation

Abstract

This paper builds an agent-based simulation model that illustrates the dynamics of an open innovation (OI) network of firms in search of a technological development partnership. The model simulates an environment populated by innovation seekers and innovation providers. Each of these agents (firms) has half of the final product and has to decide whether to develop the rest internally or seek a partner that developed the other half of the product. Moreover, this paper explores the effects on the innovation network dynamics of the presence of intermediaries that act as brokers between innovation seekers and innovation providers. The results suggest that innovation providers are on average better off when they establish partnerships, especially when their number is limited and intermediaries are present in the market. The model shows that the presence of intermediaries makes the market more efficient by lowering costs of all firms in the network, whether they use an intermediary or not.