20-PM1-12: Master Class: Joel West – Network Forms of Open Innovation: Ecosystems, Platforms, Communities and Consortia
Network Forms of Open Innovation: Ecosystems, Platforms, Communities and Consortia
Keck Graduate Institute, USA
A key premise of open innovation is that multiple firms cooperate to create value for customers. Research inside and outside of open innovation has considered various network forms of cooperation, including alliances, networks, communities, consortia, ecosystems and platforms. This builds on a broader body of research about how firms utilize these network forms to support their innovation strategies.
The network form of open innovation differs from the traditional dyadic view of open innovation, which is as an exchange transaction or asset-specific cooperative project (West et al, 2006; West & Bogers, 2014). Instead, in the network form, embeddedness of a firm in its network both enables and constrains the firm’s strategies (Halinen & Törnroos, 1998). Similarly, for firms managing open innovation networks, the investments of the focal firm and its exchange partners in assets, capabilities and strategies reflect a pattern of recurrent relationships rather than a single market transaction, demonstrating an interdependency of reciprocity and repeated interactions that helps mitigates the risks of opportunism (Powell, 1990).
Prior research on open innovation networks has considered five main areas of research (cf. West, 2014).
Consortia. From the perspective of open innovation, a key challenge of consortia is how firms balance joint value creation with separate value capture (Simcoe, 2006). This separate value capture is particularly challenging in the most open forms of consortia — such as open source software and basic science R&D consortia — where spillovers accrued to firms beyond those that support the consortial efforts (Olk & West, 2009; West & Gallagher, 2006).
Communities. In our network economy, firms are increasingly influenced by external (usually virtual) communities (O’Mahony & Lakhani, 2011). These communities — which often contain a combination of individual, corporate and even nonprofit participants — provide opportunities for firms to leverage this pool of shared activities and knowledge to advance their commercialization strategy (Fichter, 2009; West & Lakhani, 2008).
Crowds. The crowd form allows firms to leverage external individuals to advance its innovation strategy (Boudreau & Lakhani, 2009). While there are important overlaps with communities — and there are intermediate forms in between — a key difference is the transactional rather than relational aspect of the interactions (West & Sims, 2018).
Ecosystems. The ecosystem provides a unique construct and phenomenon to study the interdependent value creation of multiple firms (Adner, 2017; Moore, 1993). Such ecosystems inherently require an alignment of firm strategies and business models for firms to succeed in their open innovation approaches (Bogers et al, 2019; Vanhaverbeke & Cloodt, 2006).
Platforms. Platforms combine the interdependence and joint value creation of an external ecosystem with a modular technical architecture mediated by well-defined interfaces (Gawer, 2014). While prior research has emphasized platform success, member firms or even the sponsor may be unable to capture enough value to be viable without proper governance (West, 2014).
In conclusion, the network form offers opportunities for researchers to integration understanding of these various phenomena and constructs with the growing literature in open innovation. This is particularly true for research on new and small firms, which have generally been understudied in each, but face unique opportunities in practicing their open innovations strategies while embedded in such networks (Lee et al, 2019; West, 2014).
Adner, R. (2017). Ecosystem as structure: An actionable construct for strategy. Journal of Management, 43(1), 39-58.
Bogers, M., Sims, J., & West, J. (2019). What Is an Ecosystem? Incorporating 25 Years of Ecosystem Research. Paper to presented at the Academy of Management Annual Meeting, Boston, Mass.
Boudreau, K., & Lakhani, K. (2009). How to manage outside innovation. Sloan Management Review, 50(4), 69.
Fichter, K. (2009). Innovation communities: the role of networks of promotors in Open Innovation. R&D Management, 39(4), 357-371.
Halinen, A., & Törnroos, J. Å. (1998). The role of embeddedness in the evolution of business networks. Scandinavian journal of management, 14(3), 187-205.
Lee, S., Park, G., Yoon, B., & Park, J. (2010). Open innovation in SMEs—An intermediated network model. Research policy, 39(2), 290-300.
Moore, J.F. (1993). Predators and prey: a new ecology of competition. Harvard Business Review 71 (3), 75-86.
O’Mahony, S., & Lakhani, K. R. (2011). Organizations in the shadow of communities. Research on the Sociology of Organizations, 3-36.
Olk, P., & West, J. (2019). The relationship of industry structure to open innovation: cooperative value creation in pharmaceutical consortia. R&D Management. https://doi.org/10.1111/radm.12364
Gawer, A. (2014). Bridging differing perspectives on technological platforms: Toward an integrative framework. Research policy, 43(7), 1239-1249.
Powell, W. W. (1990). Neither Market Nor Hierarchy. Research in Organizational Behavior, 12, 295-336.
Simcoe, T. (2006). Open standards and intellectual property rights. In H. Chesbrough. W. Vanhaverbeke & J. West (Eds.), Open innovation: Researching a New Paradigm, Oxford: Oxford University Press, 161-183.
Vanhaverbeke, W., & Cloodt, M. (2006). Open innovation in value networks. In H. Chesbrough. W. Vanhaverbeke & J. West (Eds.), Open innovation: Researching a New Paradigm, Oxford: Oxford University Press, 258-281.
West, J. (2014). Challenges of funding open innovation platforms. In H. Chesbrough. W. Vanhaverbeke & J. West (Eds.), New Frontiers in Open Innovation, Oxford: Oxford University Press, 22-49.
West, J., & Bogers, M. (2014). Leveraging external sources of innovation: a review of research on open innovation. Journal of Product Innovation Management, 31(4), 814-831.
West, J., & Lakhani, K. R. (2008). Getting clear about communities in open innovation. Industry and Innovation, 15(2), 223-231.
West, J., & Gallagher, S. (2006). Challenges of open innovation: the paradox of firm investment in open‐source software. R&d Management, 36(3), 319-331.
West, J. & Sims, J. (2018). How Firms Leverage Crowds and Communities. In A. Afuah, C. Tucci and G. Viscusi, eds. Creating and Capturing Value through Crowdsourcing. Oxford: Oxford University Press, 58-96.
West, J., Vanhaverbeke, W., & Chesbrough, H. (2006). Open innovation: a research agenda. In H. Chesbrough. W. Vanhaverbeke & J. West (Eds.), Open innovation: Researching a New Paradigm, Oxford: Oxford University Press, 285-307.