Challenges of Open Innovation: The Paradox of Firm Investment in Open-Source Software

13 Pages Posted: 26 May 2006

See all articles by Joel West

Joel West

KGI - Keck Graduate Institute

Scott Gallagher

James Madison University - College of Business

Abstract

Open innovation is a powerful framework encompassing the generation, capture, and employment of intellectual property at the firm level. We identify three fundamental challenges for firms in applying the concept of open innovation: finding creative ways to exploit internal innovation, incorporating external innovation into internal development, and motivating outsiders to supply an ongoing stream of external innovations. This latter challenge involves a paradox, why would firms spend money on R&D efforts if the results of these efforts are available to rival firms? To explore these challenges, we examine the activity of firms in open-source software to support their innovation strategies. Firms involved in open-source software often make investments that will be shared with real and potential rivals. We identify four strategies firms employ - pooled R&D/product development, spinouts, selling complements and attracting donated complements - and discuss how they address the three key challenges of open innovation. We conclude with suggestions for how similar strategies may apply in other industries and offer some possible avenues for future research on open innovation.

Suggested Citation

West, Joel and Gallagher, Scott, Challenges of Open Innovation: The Paradox of Firm Investment in Open-Source Software. R&D Management, Vol. 36, No. 3, pp. 319-331, June 2006, Available at SSRN: https://ssrn.com/abstract=904436 or http://dx.doi.org/10.1111/j.1467-9310.2006.00436.x

Joel West (Contact Author)

KGI - Keck Graduate Institute ( email )

535 Watson Drive
Claremont, CA 91711
United States
909-293-8550 (Phone)

HOME PAGE: http://www.joelwest.org/KGI

Scott Gallagher

James Madison University - College of Business ( email )

Harrisonburg, VA 22807
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
26
Abstract Views
4,574
PlumX Metrics