The Challenges and Prospects of Open Innovation through Strategic Alliances

Abstract

It has been a decade since the concept of open innovation (OI) was first introduced in management literature and began to be practiced in organizations. Although it has provided new insights and useful directions in the management of innovation beyond company boundaries in the areas of new products, processes, and technologies, both researchers and practitioners still face some challenges that need to be addressed. In the past, in management literature, various popular trends, approaches, or techniques (like sociotechnical systems and total quality management) have been put forward; but, today, we hardly hear about them anymore. So we could aptly ask: is OI a fact or a fad? (Chesbrough and Brunswicker, 2014; Trott and Hartman, 2009). The pioneering scholars (Ches-brough, 2003; 2006; Gassmann and Enkel, 2010; West, 2003) of OI have convincingly argued that firms are heavily dependent upon the development and adoption of OI in products and processes for gaining competitive advantage and achieving above average returns. Today we live in an increasingly interdependent global business environment where almost no single firm, even one with vast resources, can afford to stay within its company boundaries and develop all of its R&D aims without collaboration with or help from external sources. Although OI sounds appealing in theory, a critical question is whether companies can embrace this approach by allocating their scarce resources, time, and energy, and especially how they can work with other potential firms by sharing their valuable intellectual properties.