The Logic of Open Innovation

Abstract

Companies have traditionally managed innovation as an internal process, relying upon their own skills and capabilities. However, this closed approach to innovation is no longer viable in a period of rapid diffusion of commercially valuable knowledge. If leading firms are to retain their capacity for innovation, they must begin to manage intellectual property via the logic of open innovation. Such an approach is much more fluid, emphasizing both the use of R&D produced outside the firm and the development of internal systems to reward commercially viable innovation within the firm.