Business Models for Open Innovation: From Collaboration to Incorporation

Abstract

The paper describes five open innovation business models - collaboration, outsourcing, licensing, trading and incorporation - defined on the basis of open revenues and costs, new investments and divestments in intangibles. A sample of 271 companies from biopharmaceutical and technology hardware & equipment industries is investigated, and their annual reports for the three years period 2010-2012 are analysed. Results show that for biotech companies open innovation represents a characteristic activity, with most of them having high values of revenues deriving from joint development projects. On the other side, for pharmaceutical firms open innovation is somehow ancillary: even if most open innovation activities are widespread, their values are not really significant if compared to the total business volume. As to the technology hardware & equipment industry, the use of spin-ins as a mean for incorporating external knowledge is the most frequent open strategy. This work contributes to the research on open innovation by defining the business models that R&D intense companies may adopt to foster open innovation. From a managerial point of view, the framework can be used by companies for assessing the status of their own open strategies, also allowing the benchmarking with competitors.