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Open Innovation in Financial Institutions: Individual and Organizational Considerations
Abstract
This qualitative empirical paper contributes to extant literature by unveiling peculiarities of: a) the profile of an open innovation leader; b) the organisational practices and mechanisms conductive to an open innovation
corporate environment, by bringing insights from the financial services industry. Thirty in-depth semi-structured interviews have been conducted with C-level executives of major financial institutions in Europe, Americas and Asia-Pacific and 100 job openings and descriptions have been reviewed. This research sharpens the understanding of open innovation in the financial industry, especially in the face of disruptive technological forces and FinTech innovation. Open innovation requires individual, organisational and cultural readiness. Integrated open innovation capabilities, dedicated open innovation teams, along, with, solid talent acquisition/retention, learning and development mechanisms, become crucial components. This paper shares novel academic and managerial implications on this dynamic co-dependence towards understanding the “human side of open innovation” and embracing open innovation practices within financial services institutions.
... This increase in financially excluded adults is because the population is growing faster than the rate of financial inclusion growth. Financial inclusion calls for democratizing financial services, catering for equal unrestricted distribution, and financial services provided in a responsible manner, by legitimate institutions and at a reasonable price and on a cost-effective manner (Salampasis & Mention, 2018). FinTech has gone through so many changes and a lot of evolution in the past couple of years; the recent hype or boom of FinTech can be attributed to the fact that technology has advanced significantly across the globe. ...
Financial technology (FinTech) as a concept and practice, started gaining serious worldwide traction following the outbreak of the global financial crisis in 2008. Thus, this paper is undertaken to critically discuss the emerging trends in financial technology and how they enhance financial inclusion, as well as the problems faced by financial technology in financial inclusion, with a specific focus on Nigeria. The paper adopts the exploratory qualitative research approach, using secondary data sources involving an extensive review of recent articles, periodicals, empirical and analytical studies, policy discussions, working papers, and other documented materials found to be pertinent to the study. The paper reveals that over the last decade, Fintech’s contribution to financial inclusion in Nigeria has exploded. FinTech has improved the usual way of rendering financial services and has created new inventions that have made financial activities not only more accessible but also faster, thereby easing the lives of financial service users in Nigeria, where mobile network technology is powering financial inclusion and bringing more people into the financial system. Despite the contributions of FinTech to financial inclusion in Nigeria, the paper notes the issue of high level of attrition in customer patronization and the threat of Cyber-attacks as major challenges. Based on this therefore, the paper recommends the need for regulatory bodies to do more to bring synergy between the operating companies and their interactions with the customers and prospective consumers for proper sensitization about these fintech services, considering the disinterest of many due to distrust of the system. Furthermore, the paper recommends that regulatory bodies should develop a more effective framework for monitoring cyber risk management at financial institutions using technology and laws that will duly prosecute cyber criminals and serve as a deterrent to others.
... According to National Financial Inclusion Strategy (2020), financial inclusion is achieved when adult Nigerians have access to affordable financial products and services that meet their needs. Financial inclusion calls for democratizing financial services, catering for equal unrestricted distribution, and financial services provided in a responsible manner, by legitimate institutions and at a reasonable price and on a cost effective manner (Salampasis & Mention, 2018). However, the financial system has witnessed a lot of changes in recent years. ...
This study examined the effect of financial technology on financial inclusion in Nigeria. This study used quarterly secondary data and all the data were extracted from Central Bank of Nigeria (CBN) Statistical Bulletin (2021) from 2009-2019. In this study, financial technology was proxy using point of sale, automated teller machine, web banking technology and mobile banking technology, while financial inclusion in Nigeria was proxy using deposit ratio. Time series data were analyzed using the vector auto regression (VAR) estimation technique. The results show that web banking technology has a positive and significant effect on financial inclusion in Nigeria, whereas point of sale, automated teller machine and mobile banking technology have a positive but not significant effect on financial inclusion in Nigeria. This suggests that an increase in the usage of financial technology (ATM, POS, WEB and mobile technology) will cause more Nigerians to be financially included. Based on the findings, the study recommends that policymakers should encourage the development of affordable and accessible 3G and 4G mobile networks in order to provide rural and remote customers with better access to mobile banking and other financial technologies. Finally, banks should seek to improve the financial literacy of their customer base by offering regular educational programmes on topics such as money management and financial planning.
... Due to disruptive technology used by fintech companies, the banking institutions require integrated innovation capabilities, dedicated innovation teams backed by talent acquisition/retention, learning and development, and training mechanisms to adopt the new technologies and innovation practices (Salampasis & Mention, 2018). In the E.U., due to regulatory push coupled with the presence of fintech companies, banks are pulling third parties, having innovative service packages, to offer innovative financial services/products to the banking customers within the framework of O. B. guidelines (Omarini, 2018a). ...
1 Aarti Patki 2 Vinod Sople
To stay competitive and achieve growth, banks adopt new technologies and services. They are all trying to T transform into the next level of banking services by getting into the open banking (O.B.) system. It allows the banking customers to benefit from the banking system by giving them control over their data. The product and service options, which are not available to customers with other banking apps, 'open banking' can offer the concept of service personalization to customers, and they can have the choice to access multiple accounts from one place. The open banking system is already in force in developed countries and is accepted by customers. However, it is getting implemented in a quiet space in India since the last few years. The Indian government has taken initiatives toward open banking system development and issued regulatory guidelines accordingly. The research on this subject in the Indian context lacks a comprehensive understanding of its development; the pace of implementation, growth, and prospects in supplementing the overall banking system; and the benefits it will impart to all stakeholders. Hence, we have attempted to shed light on the above areas through primary and secondary research. This research study will help ascertain the open banking status in adoption and development, Abstract The financial services industry has globally witnessed rapid changes because of technological advances. Banks started sharing customer information with customer consent but under regulatory guidelines to meet the changing customer demands and market competition. This situation enabled the banking industry to open its IT infrastructures, leading to the following level of banking services: open banking (O.B.). Due to technological advancement, banks and fintech companies started partnering to create innovative financial products/services for meeting customer requirements. Indian banks, in line with their global counterparts, are also in the race. The leading banks like Federal Bank, Yes Bank, ICICI Bank, and RBL Bank have taken open banking ecosystem growth initiatives over the last few years. Many other Indian banks and NBFCs have taken steps to be a part of the O.B. ecosystem. They have made a lot of investments on the technology front and made changes in their organizational culture to meet the new challenges. This paper discussed the implementation status of open banking, APIs, customer data rights, the liability of banks, regulatory framework, and implementation capability of banks. It also covered the implementation journey and its success.
... En effet, les recherches sur le secteur bancaire portent principalement sur l'Open Innovation. Ces recherches se tournent notamment vers l'identification des facteurs propices à cette pratique (Salampasis et al., 2015;Salampasis et Mention, 2018) ou bien encore vers la mise en perspective de processus favorisant le développement des compétences des acteurs impliqués (Gianiodis et al, 2014). Premier pourvoyeur d'emplois privés en France, le secteur bancaire mérite d'être davantage investi en termes de recherche académique. ...
L’objectif de cet article est d’explorer les enjeux du recours au crowdsourcing pour innover dans le secteur bancaire. Fondée sur une méthodologie qualitative, notre recherche souligne qu’au travers de cette modalité d’externalisation, les banques voient l’opportunité d’ouvrir le dialogue avec la foule des internautes et de bénéficier, dans un processus de création de valeur, de leurs idées. Alors que les bénéfices du recours au crowdsourcing semblent prégnants, notre recherche témoigne également de sources de déception et de vigilance. En particulier, pour des raisons juridiques ou stratégiques, les banques se heurtent à l’impossibilité de mettre en place certaines idées des internautes.
... En effet, les recherches sur le secteur bancaire portent principalement sur l'Open Innovation. Ces recherches se tournent notamment vers l'identification des facteurs propices à cette pratique (Salampasis et al., 2015;Salampasis et Mention, 2018) ou bien encore vers la mise en perspective de processus favorisant le développement des compétences des acteurs impliqués (Gianiodis et al, 2014). Premier pourvoyeur d'emplois privés en France, le secteur bancaire mérite d'être davantage investi en termes de recherche académique. ...
L’objectif de cet article est d’explorer les enjeux du recours au crowdsourcing pour innover dans le secteur bancaire. Fondée sur une méthodologie qualitative, notre recherche souligne qu’au travers de cette modalité d’externalisation, les banques voient l’opportunité
d’ouvrir le dialogue avec la foule des internautes et de bénéficier, dans un processus de création de valeur, de leurs idées. Alors que les bénéfices du recours au crowdsourcing semblent prégnants, notre recherche témoigne également de sources de déception et de vigilance. En particulier, pour des raisons juridiques ou stratégiques, les banques se heurtent à l’impossibilité de mettre en place certaines idées des internautes.
The past several decades have witnessed the adoption and diffusion of open innovation processes across a variety of organizational and industry contexts. Despite significant scholarly investigation into open innovation's importance to firms' R&D strategies, a deep theoretical understanding of the open innovation framework remains elusive. This study contributes to this burgeoning literature by providing new theoretical and practical underpinnings of the open innovation framework. Specifically, we conduct a comparative case study of two global banks to articulate the theoretical underpinning of this approach in the micropractices and microfoundations of the two firms. Although all organizations practice some combination of internal and external sourcing of innovation, we find that there is a tendency for these practices to fall into two broad categories: inside-out open innovation and outside-in open innovation. Our comparative case study formalizes these two forms of open innovation as mechanisms to align global and local search in a service industry context. We found that the two banks' deployment of open innovation processes produced strong results including greater top-line growth and bottom-line efficiency gains, albeit by two distinctly different strategies, offsetting the many headwinds that crippled their peers during the past five years. We end this study by translating our results to possible avenues for future theoretical development and empirical investigation.
Despite the fact that it could help to overcome the current global financial crisis, the concept of open innovation is only very scarcely applied in the financial services sector. This international literature review covering the past decade provides an overview of the relevant body of literature on this topic. Two questions represent the starting point of this work: (1) Why is open innovation so scarcely applied in the banking, wealth management and insurance industries? and (2) Should the financial services sector use open innovation more widely? Our findings show that various organizational factors as well as monetary reasons prevent financial services companies from applying open innovation processes. Yet, by taking into account the potential benefits that the concept of open innovation may yield, this approach should indeed be applied more widely in the financial services industry.
Open innovation holds great potential for improving the efficiency of companies' innovation processes, but also presents substantial risks. A key issue in innovation management is finding the right balance of openness, i.e., determining how open companies should be in their innovation activities. However, academics and business practitioners hold conflicting notions of what constitutes open innovation practice and of how "open innovation companies" are defined. In this paper, we present three in-depth case studies of global R&D-intensive companies, where we find that the firms' perception of their openness differs from their actual situation (as determined by the innovation practices that they apply), and that each company has a different view as to what constitutes open innovation. We claim that resolving conceptual ambiguity and differentiating between openness (as a philosophical aspect) and open innovation (as a way of structuring the innovation process) in research is critical in order to clarify the current state of open innovation research and enable the communication of results to practitioners.
Open innovation has received wide attention and has been explored
in various sectors of the economy. However, despite the abundant literature in
the field, there is an on-going debate around the organizational aspect of this
paradigm. This conceptual paper aims at contributing to this debate by
developing a conceptual model, which explores the relationship between
human resources management practices and open innovation adoption in the
banking sector. Based on an extensive literature review, the role of human
resources management towards the adoption of open innovation in the banking
sector is investigated in relation to two fundamental organizational elements:
trust and readiness. The authors highlight the role of human resources
management as a fundamental element towards the adoption of open innovation
practices in the banking sector and strongly suggest that; a) human resources
management affects the adoption of open innovation in the banking sector and
b) trust and readiness moderate the relationship between human resources
management and open innovation adoption. The proposed research
propositions depict a shift towards a more flexible and open human resources
management system in the banking sector and the emergence of an innovative
mindset empowering organizational performance.
This paper explores the role of trust under the prism of open innovation. There is a vast discussion about open innovation and the need for collaboration and knowledge sharing; however, in the process of building up an open and innovative organisation, trust does not yet seem to have a place in this process. The approaches of current literature fail to denote the relationship between the importance and impact of trust within an open and collaborative environment under an organisational perspective. The objective of this conceptual paper is to elevate trust as a core element of open innovation, perceived as an organisational mindset, by proposing a conceptual model leading to a re-contextualisation of the current approaches to open innovation.
This book gathers together some of the most up-to-date thinking in the growing field of innovation in services and more particularly, in financial services. It explores the peculiarities of innovation in financial services firms and surrounding market players, discusses the open nature of the innovation process, and analyses its success factors and its interplay with strategy and performance. This book provides topical insights on the challenges facing the financial industry, such as the convergence with other sectors, and the increasing regulatory burden. By combining multidisciplinary approaches and by selecting a number of cutting-edge research models, theories, empirical findings and practitioners’ insights, it offers unique, contemporary and multidimensional perspectives on innovation for a sector of paramount importance for the running of economies around the world. This book comes at a time of turbulence, uncertainty and within an industry in need of vision and strategic foresight. By synthesizing multiple views from academia and practice, it opens the agenda and contributes to the on-going debate of redefining the multi-polar role of innovation in the financial industry.
SUMMARY—As the workplace has become increasingly diverse, there has been a tension between the promise and the reality of diversity in team process and performance. The optimistic view holds that diversity will lead to an increase in the variety of perspectives and approaches brought to a problem and to opportunities for knowledge sharing, and hence lead to greater creativity and quality of team performance. However, the preponderance of the evidence favors a more pessimistic view: that diversity creates social divisions, which in turn create negative performance outcomes for the group.
The concept of open innovation has been thoroughly investigated. The shift from a closed to an open paradigm is recognized as the main element that fosters organizational performance. However, despite the abundant literature in the field, there is still an on-going debate about the organizational aspects of open innovation. The aim of this paper is to develop a conceptual model emanating the role of intraorganizational trust in relation to open innovation. Based on an extensive and multidisciplinary critical literature review, the organizational antecedents of open innovation are identified: knowledge sharing attitude, ambidextrous thinking, collaborative culture and diversity management. Each of these antecedents is perceived and operationalized by a number of sub-antecedents. This paper highlights the role of trust as the inherent part of open innovation. In addition, this paper strongly suggests that: a) open innovation is an organizational mindset perceived via the direct relationship between the four organizational antecedents and the open innovation adoption and b) intraorganizational trust moderates the individual relationships between the four organizational antecedents and the adoption of open innovation. By revisiting the theory of open innovation, the paper develops research propositions depicting the interplay between the organizational antecedents, the element of intraorganizational trust and the adoption of open innovation. The paper shares academic and managerial implications by bringing an alternative perspective in the field of open innovation.
Purpose
The purpose of this paper is to investigate the main factors affecting researcher engagement in knowledge transfer exchanges (KTE) in an Open Innovation (OI) context, devoting special attention to specific factors such as personal and professional profile, institutional variables, social networks and recognition.
Design/methodology/approach
An extensive literature review was conducted, focusing on current studies concerning the OI concept and research lines, OI and universities, KTE, and the factors affecting researcher engagement in university KTE. Based on this review a conceptual framework was proposed, including four main factors that affect KTE researcher engagement (personal and professional, institutional, social networks and recognition). The assumptions of this framework were explored in an empirical study involving 382 senior researchers, acting as leaders of different research groups, at Spanish universities. This was followed by univariate, bivariate and multivariate statistical analysis.
Findings
Results show that, apart from recognition, most of the proposed factors affect researcher engagement in KTE processes. The social network factors appear to be the most important, as all items were significant in affecting the engagement of researchers in these processes.
Research limitations/implications
Both the study and the statistical analysis are exploratory, therefore results should be treated with caution. Moreover, the data were collected from only one country, hence, in order to improve validity, additional data would be needed.
Practical implications
Social networks (between researchers, businesses, university administrators, University Technology Transfer Office directors, etc.) should be promoted in order to improve researcher involvement in university KTE in an OI context.
Originality/value
There is a lack of research literature discussing factors affecting researcher engagement in KTE processes. Moreover, researcher involvement is a key factor in contributing to the success of KTE. This paper provides a thorough discussion of these factors and proposes a conceptual framework with which they may be studied in the context of OI.
Traditional approaches to organizational change have been dominated by assumptions privileging stability, routine, and order. As a result, organizational change has been reified and treated as exceptional rather than natural. In this paper, we set out to offer an account of organizational change on its own terms--to treat change as the normal condition of organizational life. The central question we address is as follows: What must organization(s) be like if change is constitutive of reality? Wishing to highlight the pervasiveness of change in organizations, we talk about organizational becoming. Change, we argue, is the reweaving of actors' webs of beliefs and habits of action to accommodate new experiences obtained through interactions. Insofar as this is an ongoing process, that is to the extent actors try to make sense of and act coherently in the world, change is inherent in human action, and organizations are sites of continuously evolving human action. In this view, organization is a secondary accomplishment, in a double sense. Firstly, organization is the attempt to order the intrinsic flux of human action, to channel it towards certain ends by generalizing and institutionalizing particular cognitive representations. Secondly, organization is a pattern that is constituted, shaped, and emerging from change. Organization aims at stemming change but, in the process of doing so, it is generated by it. These claims are illustrated by drawing on the work of several organizational ethnographers. The implications of this view for theory and practice are outlined.
The article by Geoff Mulgan (2007) entitled “Ready or not? Taking innovation in the public sector seriously” points out how it is difficult for public organizations to innovate. It also states that innovation in the public sector is more likely to happen if people with their ideas, skills and competences are taken into due account. Starting from these considerations, the paper provides an overview of the concept of innovation and its relationships with the concepts of human and (positive) psychological capital. Through literature related to business, management and applied and organizational psychology, the article starts by defining closed and open innovation, goes on to show the role that human and psychological capital can play in organizational innovation and concludes by reviewing the latest list of competences that research has identified as necessary in open innovation teams. This review will be useful to researchers and practitioners in their respective activities,
including the public sector.
The human side of open innovation (OI) has not been extensively studied; however, when companies develop new products or services, it is essential to foster corporate innovativeness, and managing personnel is a key to this. Human resource (HR) practices are an essential means by which companies can influence and shape the skillset, attitudes, and behaviour of individuals to do their work and can systematise the work of the whole organisation. In this paper, we aim to contribute to understanding the role of HR in open innovation, by analysing the HR practices in companies operating under an open innovation approach. We test our model with the PLS-SEM method, using Smart PLS software. Our findings suggest that personnel education is essential in supporting corporate open innovation strategies. Internal motivation systems prove to be valuable assets to support internal and external openness in OI implementation. High appreciation of personnel and its value to company are important for increasing external and internal openness.
Open innovation, taken from the fields of business strategy and technology development, can offer planners fresh insights into their own practice. Open innovation, like citizen participation, goes outside the boundaries of the organization to find solutions to problems and to hand ideas off to partners. A key technique for open innovation is “crowdsourcing,” issuing a challenge to a large and diverse group in hopes of arriving at new solutions more robust than those found inside the organization. The differences between citizen participation and Internet-based crowdsourcing are discussed. Crowdsourcing case studies are provided as a means for extending an emerging literature.
Our introduction provides the foundation and background for this special issue on open innovation. Since the beginning of the 21st century, innovation has evolved from being the artefact of an individual or internal process within firms to an interactive process between firms and/or in collaboration with knowledge-creating institutions at both the domestic and global levels. The open innovation model suggests that firms should combine external and internal ideas and technologies as effective pathways to market when advancing and commercialising technologies. However, existing research focuses mainly on high-technology multi-national firms hence, theoretically driven and empirically-based research exploring open innovation in small and medium-sized enterprises remains relatively scarce. This special issue offers a critical contribution to this gap with four articles which explore differing aspects of open innovation within smaller firms. The introduction to this special issue commences with an overview of the relevant literature; it then describes the articles and, finally, suggests potential avenues for future research.
Profound change in the global business environment is foregrounding the need for new competitive strategies in organizations. The realization that success in the era of knowledge capitalism depends upon the creative productivity of knowledge workers is focusing attention on the forms of intangible capital that underpin creativity, learning and innovation as sources of competitive advantage. In this article we argue that many organizations are failing to execute mission-critical change because their leaders fail to comprehend how such change is inhibited by the `enterprise logic' of the organization. Through the case of an Australian financial services company, we show that embedded within the functional hierarchical structure of most large organizations is the strategic intention of managerial control, and we argue for the envisioning and development of a form of enterprise logic that is predicated on new structural forms that encompass the principles of co-ownership and lateral power relations.
Purpose
The purpose of this paper is to review the emerging research field of open innovation and identify where the field is going as well as suggest future fields of research.
Design/methodology/approach
All academic papers and books published until November 2007 under the label of open innovation were systematically reviewed. Also, nine key researchers were asked to contribute with their opinions on the research frontier.
Findings
A number of key themes in the research were identified, and conclusions on the underlying structure were drawn. This reveals that there is a tendency towards a broader definition and application of the term, a growing critical perspective, and a concentration on theory development and managerial implications.
Research limitations/implications
The paper suggests that the locus of the innovation process and the extent of collaboration should be used as two dimensions in a model to further understanding of how open innovation develops. These dimensions have an important impact on both the human and the organizational side of innovation, areas that are highlighted as important fields for further research.
Originality/value
Despite the interest in the open innovation topic, a comprehensive review of the academic publications in the area does not seem to exist. The review and the conclusions drawn support the understanding of the growing field.
Acknowledgments: Special thanks to Peter Abell, Torben Juul Andersen, Russ Coff, Rachel Hilliard, Lasse Lien, Anoop Madhok, Joe Mahoney, Jackson Nickerson, and
In the open innovation management literature, it is widely acknowledged that individuals play
a crucial role in collaborative knowledge creation processes. However, the literature tends not
to explore the human side of open innovation teams. The present article therefore examines the
competencies that professionals need for working in open innovation teams (specific but not
necessarily unique to open innovation) and to cope with the challenges they face. A qualitative
study consisting of explorative interviews and focus group discussions was conducted, resulting
in a competence profile for open innovation professionals. The profile adds a new perspective to
the field of open innovation management by focusing on how individuals involved in open
innovation teams can enhance open innovation success. It reveals, among other things, how
professionals can generate new knowledge, build trust, and deal with low reciprocal commitment
in open innovation teams. Especially, brokering solutions and being socially competent
seem to be important for open innovation professionals. Companies should focus on these
competencies when supporting their professionals in open innovation teams.
In this first paper of the special issue, we identify some trends in open innovation research by analysing how the literature on this topics has evolved since the introduction of the concept in 2003. Research on open innovation has been mushrooming ever since and the scope has been broadened in different directions. Researchers also started to analyse open innovation at different level of analysis from the individual actors in organisations to ecosystems and national innovation systems. Despite the vast growth in research on open innovation, we identified several directions for further research: open innovation research should be linked to other management areas such as marketing, HRM, change management, etc. In addition, our understanding of open innovation could be improved if the recently developed insights could be related to the existing management theories.
The steady growth of R&D costs and the increasingly widespread dissemination of information and communication technology over the past decade have resulted in the affirmation of the paradigm of open innovation, which consists in the continual expansion of access to sources of technological innovation outside the firm itself. Industrial companies are, in fact, turning more frequently to collaboration with university departments and other public and private research centers, and there is a notable increase in agreements regarding technological cooperation and the exchange of know-how between companies. In addition, recourse to highly specialized small research companies is on the rise. This is common, for example in the pharmaceutical sector and, more generally, in the area of biotechnological research. Furthermore, we are witnessing the development of the new role of innovation broker. These factors alter the traditional profile of company R&D structures, within which the role of researchers and technologists often changes. In particular, matrix and network organizational models are on the increase, and the professional figures of ‘integrators of knowledge and expertise’ (T-men) are assuming major importance at the expense of traditional scientists. As a consequence, the model for training and managing scientific personnel tends to change. This model, as it moves away from the prevailing pattern adopted by firms in Anglophone countries, is continually drawing closer, even from a cultural standpoint, to the R&D management approach found in the Japanese and German companies. The aim of this article is to investigate how the adoption of open innovation has changed the organizational structures of R&D and altered the methods used in managing its personnel. The results of the study are based on the analysis of four case studies of Italian multinational firms operating in the pharmaceutical, food, specialty chemical, and aerospace industries.
Open innovation has so far been studied mainly in high-tech, multinational enterprises. This exploratory paper investigates if open innovation practices are also applied by small-and medium-sized enterprises (SMEs). Drawing on a database collected from 605 innovative SMEs in the Netherlands, we explore the incidence of and apparent trend towards open innovation. The survey furthermore focuses on the motives and perceived challenges when SMEs adopt open innovation practices. Within the survey, open innovation is measured with eight innovation practices reflecting technology exploration and exploitation in SMEs. We find that the responding SMEs engage in many open innovation practices and have increasingly adopted such practices during the past 7 years. In addition, we find no major differences between manufacturing and services industries, but medium-sized firms are on average more heavily involved in open innovation than their smaller counterparts. We furthermore find that SMEs pursue open innovation primarily for market-related motives such as meeting customer demands, or keeping up with competitors. Their most important challenges relate to organizational and cultural issues as a consequence of dealing with increased external contacts.
The concept of 'open innovation' has received a considerable amount of coverage within the academic literature and beyond. Much of this seems to have been without much critical analysis of the evidence. In this paper, we show how Chesbrough creates a false dichotomy by arguing that open innovation is the only alternative to a closed innovation model. We systematically examine the six principles of the open innovation concept and show how the Open Innovation paradigm has created a partial perception by describing something which is undoubtedly true in itself (the limitations of closed innovation principles), but false in conveying the wrong impression that firms today follow these principles. We hope that our examination and scrutiny of the 'open innovation' concept contributes to the debate on innovation management and helps enrich our understanding.
This article was published in the journal, International Journal of Management Reviews [© Blackwell Publishing] and the definitive version is available at http://www.blackwell-synergy.com/loi/ijmr Organisations increasingly rely on external sources of innovation via interorganisational network relationships. This article explores the diffusion and characteristics of collaborative relationships between universities and industry, and develops a research agenda informed by an ‘open innovation’ perspective. A framework is proposed, distinguishing university-industry relationships from other mechanisms such as technology transfer or human mobility. On the basis of the existing body of research, the role of practices such as collaborative research, university-industry research centres, contract research and academic consulting is analysed. The evidence suggests that such university-industry relationships are widely practiced whereby differences exist across industries and scientific disciplines. While most existing research focuses on the effects of university-industry links on innovation-specific variables, such as patents or firm innovativeness, the organisational dynamics of these relationships remain under-researched. A detailed research agenda addresses research needs in two main areas: search and match processes between universities and firms, and the organisation and management of collaborative relationships.
Many product innovation studies have described key determinants that should lead to successful incremental product innovation. Despite numerous studies suggesting how incremental product innovation should be successfully undertaken, many firms still struggle with this type of innovation. In this paper, we use an institutional perspective to investigate why established firms in the financial services industry struggle with their complex incremental product innovation efforts. We argue that although the impact of micro institutional forces is often overlooked in innovation studies, these forces matter for innovation success. Our study complements the existing innovation literature and provides an additional explanation why incremental product innovation is highly complex and suffers from several liabilities in established firms. Using qualitative data from the Dutch financial services sector collected over the period 1997-2002, the paper illustrates how micro institutional forces at the business unit level affect complex incremental product innovation and how the interaction of these forces delivers their impact.
The external exploitation of technologies by companies by means of licensing-out, sale of patents, and collaborations has grown tremendously over the last few years. The systematic use of this technology exploitation mode is hindered by a large knowledge gap in the efficient and effective organisation of this process. The aim of this contribution is therefore to learn more about how the external technology exploitation process is performed in technology intensive multi-business companies. The research results of ten exploratory in-depth case studies in leading European companies are presented. Firstly, from an historical analysis of the development of the technology exploitation process, three generations of organising the technology exploitation process are derived. Secondly, fundamental policy issues of organising the external technology exploitation process are described. Thirdly, based on the case studies and literature, fundamental principles of organising the external technology exploitation process are developed.
The right open innovation strategy can yield performance benefits-but first your company needs to overcome "not-invented-here" and "not-sold-here" attitudes.
Executive Overview
Strategic managers and researchers have long been interested in understanding sources of competitive advantage for firms. Traditionally, this effort has focused on the relationship between a firm's environmental opportunities and threats on the one hand, and its internal strengths and weaknesses on the other. Summarized in what has come to be known as SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis, this traditional logic suggests that firms that use their internal strengths in exploiting environmental opportunities and neutralizing environmental threats, while avoiding internal weaknesses, are more likely to gain competitive advantages than other kinds of firms.¹
This simple SWOT framework points to the importance of both external and internal phenomena in understanding the sources of competitive advantage. To date, the development of tools for analyzing environmental opportunities and threats has proceeded much more rapidly than the development of tools for analyzing a firm's internal strengths and weaknesses. To address this deficiency, this article offers a simple, easy-to-apply approach to analyzing the competitive implications of a firm's internal strengths and weaknesses.
Open innovation often requires wholesale changes to the nature of R&D. However, academic research and managerial practice have paid little attention to the challenges that individuals face in the daily pursuit of open innovation. As a result, there is little understanding of how individuals cope with open innovation, and which organizational practices can support them in this role. Drawing on the experiences of R&D professionals, this article identifies four specific challenges and coping strategies of individuals engaged in open innovation. It proposes a range of open innovation practices that organizations can implement to better equip their staff to undertake effective external engagement.
The Strategic Management Journal encourages studies using qualitative empirical methods that investigate important research questions and phenomena in order to generate new insights. Researchers believe that qualitative research often provides a means of identifying generalizable patterns concerning important questions in the field of strategic management. The opportunity is clear?multiple qualitative methods provide more options for research. But the challenge arises because the multiplicity of qualitative methods can also lead to unproductive debates between authors and reviewers, in which the conversation focuses more on preferences for particular forms of qualitative method than on the content of the research.
Purpose
The purpose of this paper is to assess the impact of open innovation practices on the innovation capability and export performance of UK small and medium‐sized enterprises (SMEs).
Design/methodology/approach
The empirical (quantitative) investigation is based on a sample of 64 SMEs in the UK – 33 “open” innovation firms and 31 “closed” innovation firms.
Findings
The overall results demonstrate that the international competitiveness of SMEs is highly dependent on the cumulative effects and interrelationship between two key internal components, i.e. R&D capacity and managerial structure and competencies, coupled with two external factors, i.e. open innovation practices and the ability of the firm to attract government grants for R&D and technological development.
Research limitations/implications
Owing to the size of the sample, it has not been possible to undertake research within the context of specific regional disparities and/or sectoral characteristics.
Practical implications
In order to achieve and sustain competitive advantage in today's global market, SMEs need to collaborate with universities and other firms to advance and commercialise their technologies through “open innovation”.
Originality/value
Results show that open innovation activities and their impact on the international competitiveness of SMEs are complex and multi‐faceted. Essentially, they are highly related to and dependent upon the cumulative effects of, and interrelationship between, several key internal and external factors. Such factors cannot be fully explored through qualitative approaches as they require more complex and rigorous statistical analyses.
One of the key elements of Fiat's recent resurgence is the superiority of its clean, fuel-efficient engine technologies that were mostly developed during the 1990s by Centro Ricerche Fiat (CRF), the Fiat Group company in charge of R&D and technology development. In the early 1990s, when the Italian carmaker was going through troubling times (along with many other players in the automotive industry), CEO Gian Carlo Michellone radically turned around CRF's organization and innovation strategy, adopting and mastering a strategic approach to innovation that resembles what would become known as the open innovation paradigm. This revolution allowed the Fiat Group to keep its “innovation engine” running, despite the heavy downturn of the industry. The CRF case demonstrates how open innovation can protect the firm's innovation capability from the risk of severe resource rationalizations during periods of crisis while proffering a starting point to replicate innovation capability once the downturn is over. The efforts to streamline the adoption of open innovation need to be targeted at several aspects of a firm's organization, i.e. the structures, organizational roles, the planning and control and performance management systems, corporate values, and individual competencies and attitudes. The role played by the senior executive leadership in promoting the successful implementation of open innovation is critical, especially during tough economic times.
This paper addresses a major gap in reported research on open innovation (OI): how do companies implement open innovation? To answer this question a sample of 43 cross-sector firms were reviewed for their OI implementation approaches. The study analyzed how firms moved from practising closed to open innovation, classifying the adoption path according to the impetus for the adoption of the OI paradigm and the coordination of the OI implementation. The way firms adopted OI was found to vary according to (1) their innovation requirements, (2) the timing of the implementation and (3) their organizational culture.
In 1994 an unusual, if not unique, collaborative effort emerged to manage the highly contested and interconnected system of waters, levees, and habitat in the San Francisco Bay Estuary and Sacramento-San Joaquin Delta. This CALFED Bay-Delta Program (CALFED) engaged 25 federal and state agencies and representatives of 35 major stakeholder groups and local agencies in a joint search for solutions to Bay-Delta problems. It changed how water was managed and produced new practices that persisted until at least 2005. CALFED's collaborative approach is by nature informal, and it coexists uneasily with the norms and structure of formal government. This story illustrates how formal and informal systems are interdependent, yet in tension, across planning, participation, and decision making. Because planners often operate in the interface between the formal and the informal, the story offers lessons that can be applied at many levels of government and for many planning tasks.
It is self-evident that financial innovation is a key player in the contemporary economy. However, its significant importance has largely been overlooked in innovation studies. To fill up this gap, and through an interdisciplinary approach, this article details a research agenda for innovation in financial services. It reviews the 'what', 'why' and 'how' of financial innovation in order to clarify all the ambiguities surrounding its nature, creation, purpose and impact. Specifically, the article investigates its definition and distinguishing features, its key determinants, its supporting processes, and finally its effects, mainly at firm-level. Therefore, the article opens the black box of financial innovation and uncovers its peculiarities in order to understand how it occurs when innovation is considered both as an 'outcome' of financial innovation and a 'process' supporting its creation.
In our constant asking of questions in our organizations we use a
combination of open and closed questions. This is generally done in a
haphazard manner according to custom or spontaneity. Argues that
research evidence suggests there are appropriate contexts and occasions
for the use of either type. Sets out the pros and cons in tabular form.
Finds it is possible to obtain different responses according to the type
of question. Claims that this is an unrecognized finding which has to be
worrying to managers and organizations which may be making wrong
decisions due to such misplaced questioning. States that a more
conscious approach to questioning, with an awareness of what is likely
to succeed in obtaining accurate response and what is not, should
improve the efficiency and effectiveness of an organization's workings.
This study examines two alternative views--universal and contingency--of the human resources (HR)-performance relationship in manufacturing settings. Results from a survey of 97 plants primarily support a contingency approach to human resource management (HRM). An HR system focused on human capital enhancement was directly related to multiple dimensions of operational performance (i.e., employee productivity, machine efficiency, and customer alignment), but subsequent analysis revealed that this main effect was predominately the result of linking human-capital-enhancing HR systems with a quality manufacturing strategy. Other manufacturing strategies also moderated the HR-performance relationship.
Analyzing emerging practices of collaboration in planning and public policy to overcome the challenges complexity, fragmentation and uncertainty, the authors present a new theory of collaborative rationality, to help make sense of the new practices. They enquire in detail into how collaborative rationality works, the theories that inform it, and the potential and pitfalls for democracy in the twenty-first century. Representing the authors' collective experience based upon over thirty years of research and practice, this is insightful reading for students, educators, scholars, and reflective practitioners in the fields of urban planning, public policy, political science and public administration. © 2010 Judith E. Innes and David E. Booher. All rights reserved.
Out-licensing is a technology exploitation option to generate revenues without investing in downstream complementary assets. Despite its increasing strategic relevance, the strong complexity of out-licensing activity determines a substantial discrepancy in firms’ ability to extract monetary benefits from this practice. Searching for determinants of out-licensing performance, the paper focuses in particular on the role of licensing managers. Based on a multiple case study analysis involving 26 out-licensing deals executed in seven Italian biotech NTBFs, the study shows that expert scientific skills, extensive licensing practice and prior employment in multinationals, but not an intense social network, characterise successful licensing managers, while high delegation and powerful intrinsic rewards enable individual capacities of licensing managers to translate into actual economic value.
Practices used in recruiting, training, performance review, and compensation all contribute to employee beliefs in a psychological contract with their employer. This article presents the basic features of contract-making which human resource practices must manage. Organizations with multiple contract makers must align the messages they send to create a contract that works and can be kept. Recommendations are made for managing the psychological contract more effectively. (C) 1994 by John Wiley & Sons, Inc.
Existing literature on open innovation shows the evolving diffusion of open innovation in certain industries and contexts. Also various case studies and theoretical work suggest that the open innovation adoption decision could be triggered by internal and external factors. The current study provides empirical evidence for a set of open innovation drivers. We use data from 180 European firms to link the adoption of open innovation with organisational capabilities, characteristics of the market environment, and human capabilities. The results indicate that open innovation adoption is strongly dependent on the level of technology and the level of hostility in an industry. We also find that organisational variables like the strategic breadth and human capabilities have significant influence on the adoption of open innovation strategies.
Modern strategic management theories try to explain why firms differ, because new sources of competitive advantage are keenly sought in the dynamic and complex environment of global competition. Two areas in particular have attracted the attention of researchers: the role of dynamic capabilities, and the firm's abilities for knowledge management. In this paper, we argue that there is a link between these two concepts, which has not been fully articulated in the literature. The aim of the paper is therefore to ascertain the conceptual connection between them as a basis for future research. Our proposed framework acknowledges and critiques the distinct roots of each field, identifies boundaries, and proposes relationships between the constructs and firm performance.
Reimagining the Digital Bank: how US Banks can Transform Customer Interactions to Increase Profitability
- J Bradley
- J Loucks
- P Jameson
- K O'connel
- J Barbier
Bradley, J., Loucks, J., Jameson, P., O'Connel, K. and Barbier, J. (2014) Reimagining the Digital
Bank: how US Banks can Transform Customer Interactions to Increase Profitability, Cisco
Consulting Services [online] http://www.cisco.com/c/dam/en/us/solutions/collateral/executiveperspectives/Internet-of-Everything-executive-summary.pdf (accessed 5 December 2017).
Biannual Financial Services Barometer
- Brunswick Insights
Brunswick Insights (2016) Biannual Financial Services Barometer [online] http://www.
brunswickgroup.com/media/803257/Brunswick-Financial-Services-Barometer.pdf (accessed
25 October 2017).
International Competitiveness: Internal Capabilities and Open Innovation as Sources of Export Performance
- T H Clausen
- M Pohjola
Clausen, T.H. and Pohjola, M. (2009) International Competitiveness: Internal Capabilities and
Open Innovation as Sources of Export Performance, Working Paper No. 05, University of
Oslo.