A Critical Look at the Effects of
Open Versus Closed Innovation
In the Innovative Firms of the Twenty-first Century

June 17, 2010

Abstract

In today’s fast paced business world, which innovation method should companies adopt, open or closed innovation? In this paper we will explore the methods of closed and open innovation. Then we will explore the pros and cons of both innovation methods and discuss which method works better in the business world of the twenty-first century. After reviewing the results this paper explores the particle implications that innovative firms should be aware of regarding Open and Closed innovation and recommendations will be made for future research in this area.

Introduction

Background …show more content…
To be able to quickly acquire a variety of knowledge of great use, managers from different areas, from inside and outside the firm, can make a strategic community with internal and external members, which could involve customers. A huge benefit is that strategic communities are not bound by the same limitations as the official organization.

Now that we have explored what CI and OI is we will now go on to look at why one of the methods might be better then the other for companies competing in the twenty-first century and why companies decide to choose one either CI or OI.

Open versus Closed Innovation

OI involves risk such as knowledge and sensitive information leakage and the risks must be weighed against the benefits that would be gained from participating in OI. One more trouble with OI is that well some areas open up to help the flow of knowledge it has been found that to keep sensitive information secure there has actually been a reduction in the amount of information being share between internal departments which could effect the companies internal innovation (Trott & Hartmann, 2009).

It has been found that OI is especially needed in fields such as knowledge-intensive industries where competition is strong and companies need to work together to be able to gain a competitive advantage in the field (Trott & Hartmann, 2009). Almirall & Casadesus-Masanell,