Open Innovation: The new way of knowledge transfer?

Due to globalization, competition has increased and companies have reorganized their activities in order to maintain profitability. The consequence has been an emphasis on short term results, at the expense of long term research. Therefore, most Corporate Research laboratories were closed or built down considerably. However, long term research is required for products that are difficult to copy by competitors. Moreover, companies have come to realize that only radical innovation, based on long term research, will distinguish them from their competitors. Since the end of the 1990s, attempts are being made to combine short term financial interests with long term innovation requirements. Many of these attempts can be classified under the heading of Open Innovation, which may be viewed as a company’s endeavour to profit from external knowledge without making heavy internal investment in long term research. This paper examines the prospects of Open Innovation, on the basis of own research and reported literature work. It is argued that companies cannot totally rely on external sources of knowledge, and that new ways must be found to compensate for the results that used to be achieved by companies’ own Corporate Research.