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Management article
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Reference no. SMR51117
Published by: MIT Sloan School of Management
Published in: "MIT Sloan Management Review", 2009
Length: 9 pages

Abstract

While the protection of intellectual property, or IP, seems to be at odds with a company''s pursuit of open innovation, or OI - the selective use of research carried out elsewhere - businesses in the know can align these two approaches. An appropriate IP strategy can actually be an enabler of OI activities. In fact, an increasing number of companies, such as International Business Machines Corp, are involved in interconnected ''ecosystems'' - critically dependent on co-operating with other parties to generate innovations and profits. The authors'' research has found that the enabling function of IP depends on the specific circumstances under which companies engage in OI. Two variables in particular have emerged as critical determinants: the technological environment in which the business is active, and the knowledge distribution among potential collaborators. Each variable is presented as having two possible values. The technological environment, for instance, is either calm or turbulent. Concerning the nature of innovative knowledge distribution, external knowledge can be thought of as residing either with the few (in puddles) or with the many (in oceans). By combining these two dimension sets, and thus creating four possible scenarios, we provide a better sense of a firm''s most appropriate IP/IO strategy. Depending on the category into which the company falls, IP plays a different role as an enabler of OI.

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Abstract

While the protection of intellectual property, or IP, seems to be at odds with a company''s pursuit of open innovation, or OI - the selective use of research carried out elsewhere - businesses in the know can align these two approaches. An appropriate IP strategy can actually be an enabler of OI activities. In fact, an increasing number of companies, such as International Business Machines Corp, are involved in interconnected ''ecosystems'' - critically dependent on co-operating with other parties to generate innovations and profits. The authors'' research has found that the enabling function of IP depends on the specific circumstances under which companies engage in OI. Two variables in particular have emerged as critical determinants: the technological environment in which the business is active, and the knowledge distribution among potential collaborators. Each variable is presented as having two possible values. The technological environment, for instance, is either calm or turbulent. Concerning the nature of innovative knowledge distribution, external knowledge can be thought of as residing either with the few (in puddles) or with the many (in oceans). By combining these two dimension sets, and thus creating four possible scenarios, we provide a better sense of a firm''s most appropriate IP/IO strategy. Depending on the category into which the company falls, IP plays a different role as an enabler of OI.

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