The term open innovation has been used to characterize a system where innovation is not solely performed internally within a firm, but in a cooperative mode with other external actors (Chesbrough 2003). According to Chesbrough and Crowther (2006), open innovation is the “use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. […] firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology”. Open innovation is opposed to closed innovation, in which companies use only ideas generated within their boundaries, characterized by big corporate research labs and closely managed networks of vertically integrated partners.
Ín our understanding (which is more narrow than much of the literature), open innovation is the formal discipline and practice of leveraging the discoveries of unobvious others as input for the innovation process through formal and informal relationships.
The objective is to access external information to reduce uncertainties in an innovation project with regard to need and solution information. In our opinion, especially the informal relationships define the “innovativeness” of open innovation. Open innovation goes beyond conventional contractual arrangements of organizing collaborative value creation. It especially includes new forms of knowledge exchange which are based on informal, non-contractual, flexible and often short-term relationships.
Open innovation is different to traditional cooperative arrangements like contract research, R&D alliances and networks in such as it uses different mechanisms to bridge between a seeker (the company) and an actor that can provide relevant knowledge (discoveries) like crowdsourcing, broadcasting of problems, and open search. Sources of external information for the innovation process are plentiful, including market actors like customers, suppliers, competitors; the scientific system of university labs and research institutions; public authorities like patent agents and public funding agencies; and mediating parties like technology consultants, media, and conference organizers.