How Open is Too Open? The ‘Dark Side’ of Openness Along the Innovation Value Chain

Abstract

In this article, we provide first insights on how open innovation is connected to the imitation of intellectual property (IP). Analyzing survey data concerning the open innovation orientation along the innovation value chain of 3956 German firms, we show that companies engaged in open innovation are more exposed to imitation. The breadth and depth of open innovation activities both positively contribute to the likelihood of imitation.

Further, we analyze imitation along the different phases of the innovation value chain. Our results show that every innovation phase positively influences imitation with the exception of the testing and marketing phase. Moreover, we find that all potential open innovation partner types expose the risk of imitation with the exception of competitors, which is a surprising result.

We suggest that companies should consciously decide for an open innovation strategy which does not reveal their core competencies neither to competitors nor to partners which may eventually turn into competitors by vertical diversification (e.g., customers or suppliers). A conscious decision for the partner types in the various open innovation phases is a crucial strategic step to obtain the benefits of open innovation while mitigating the threat of imitation.

Keywords: open innovation, imitation, intellectual property, R&D cooperation

JEL Classification: O31, O34