Hot News

Why Do We Need Open Innovation?

Why Do We Need Open Innovation?

Why Do We Need Open Innovation First, as the knowledge-based economy develops, the areas of knowledge such as protected knowledge, protectable knowledge, and normal knowledge have all increased in the economic system? Therefore, any firm can easily and inexpensively obtain technologies that are required for the firm to innovate with modern products and processes or to introduce new business models (Foray and Lundvall 1998).

Second, the growth energy of the globally weakened economy can be recovered through open innovation. Surplus value or enterprise returns are diminishing. According to Kondratieff, despite the economic fluctuations, every advanced capitalized economy system, in the end, arrives at the top of the growth chart. The concrete evidence of this is that basic interest rates, which indicate the price of capital, are approaching an actual value of zero (Freeman 2011). The world’s economically developed major countries are showing true zero as the prevailing interest rate. In this zero-interest-rate era, open innovation can be a new trigger for economic growth. Open innovation lets firms find new breakthroughs by allowing them to look for new markets outside of their firm for their technology or for new technologies outside of the firm for new or more modern markets. Korea’s creative economic policy has several sub-policies that are based on open innovation.

Third, the power law in the economy can be conquered by open innovation (Laherrere and Sornette 1998). Currently, a small number of large companies obtain the majority of economic benefits in most growing and mature industries. Open innovation can give new entrants the chance to compete continuously with these

companies in new and growing industries. In the end, open innovation will make new firms to continuously emerge in new sectors and in the economy. The long tail phenomena can occur in diverse industries through the open innovation paradigm (Elberse 2008).

Fourth, we can construct a creative economy through open innovation. A creative economy requires creative new products and processes introduced by new firms in various emerging sectors. Open innovation can allow a creative connection between technology and the market. As a result, several creative new products and processes will appear in the market. In the end, creative firms can appear, grow, and construct the creative economy (Howkins 2002; Markusen et al. 2008).

The Requirements and Method to Vitalize Open Innovation

As the knowledge-based economy develops, the amount of knowledge that is circulated rapidly increases. Therefore, it is becoming necessary for firms to increase their use of external knowledge and technologies (Yun and Mohan 2012; Yun et al. 2013) and for governments to arrange policies to bolster open innovation strategies among firms (Yun 2010; Yun and Park 2012). The literature on strategic alliances, virtual corporations, buyer-supplier collaborative relationships, and technology collaborations continuously increases, which indicates the importance of external integration and outsourcing (Teece et al. 1997).

Earlier, Henry W. Chesbrough tried to explain such patterns of corporate activities with the colossal concept of open innovation (Kim 2009). Summing up these issues, aside from large companies such as IBM, 3M, and Intel (Chesbrough 2003), small companies should consider open innovation strategies as essential to their survival rather than as merely an option (Laursen and Salter 2006; Vad de Grande et al. 2009; Yun and Jung 2013; Yun and Mohan 2012; Yun and Park 2012). As the knowledge-based society progresses, the necessity of open innovation strategies continues to grow along with such issues as technology transfers and industry-university collaborations. 

How Can We Vitalize Open Innovation at the National Level or Higher?

First, we should conquer two cultures, referring to the differentiation between the humanities or social science culture and the engineering and natural science culture (Snow 1959). Mutual penetration between the two cultures can yield creative results in several industries, engineering sectors, and social sciences. If we conquer this two-culture duality, as the Western countries and Japan started to do in the 1950s–1960s, we can vitalize open innovation through convergence or fusion between the humanities or social sciences and engineering or the natural sciences (Stokes 1997; Tushman and O’Reilly 2007). 

Second, patent trolls should be allowed and should be constructed by universities, national labs, and firms (McDonough III 2006; Risch 2012). Patent trolling means that new technologies that are developed at universities and national labs can be compulsorily transferred to firms. In addition, every researcher in every national lab and every professor at every university will have a few more chances to commercialize their technologies through patent trolling. If intellectual ventures have a few more chances to buy patents from national labs and universities, which receive research funds from the government, the commercialization of new technology will increase dramatically. We can find evidence of this in the case of the USA. 

Third, the business model’s patent production and utilization should be encouraged. Business model patents are creative bridges between the technology and the market. Accordingly, an increase in the number of business model patents will mean that more technologies can meet new markets creatively (Calia et al. 2007; Chesbrough 2012; Zott and Amit 2008). According to increasing trends in US business model patents, business models concretely connect technologies and markets. Examples include the one-click patent or cloud-sourcing patent of Amazon or the escrow patent of eBay. These are examples by which any business model patent can create a specific industry and forge a new large business (May and Flint 2009; Harinarayan et al. 2010; Hartman et al. 1999). Autonomous cars or the intelligent robot industry is appearing based on diverse business model patents (Yun et al. 2016).