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NIFU STEP studies in Innovation Research and EducationOpen innovation and firm innovation performancePreliminary findings NorwayOECD business symposium February 26thSverre J HerstadNIFU STEPNIFU STEP

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1 www.nifustep.no NIFU STEP studies in In
www.nifustep.no NIFU STEP studies in Innovation, Research and Education Open innovation and firm innovation performance Preliminary findings, Norway OECD business symposium, February 26th Sverre J. Herstad NIFU STEP NIFU STEP studies in Innovation, Research and Education openING project  Funded by Eranet Vision  Complementary to OECD work on OI  Purposes 1. Link ”open innovation” concept to established innovation system approaches and theory 2.

2 Explore the use of Community Innovation
Explore the use of Community Innovation Survey microdata to map and analyze open innovation  Develop indicators and descriptive statistics  Investigate openness and innovation performance 3. Policy implications NIFU STEP studies in Innovation, Research and Education Participants  Norway  NIFU STEP Studies in innovation, research and education  Sverre J. Herstad  Austria  MCI Management Centre Innsbruck  Bernd Ebersberger  Denmark 

3 CFA Danish Centre for Studies in Resear
CFA Danish Centre for Studies in Research and Research Policy  Carter Bloch  Belgium  Tanaka Business School, Imperial College  Els van De Velde and Bart Clarysse NIFU STEP studies in Innovation, Research and Education Open innovation operationalised  Chesbrough as point of departure….  “… the purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectiv

4 ely” (Chesbrough et al 2005:1)  Fi
ely” (Chesbrough et al 2005:1)  Five dimensions  Search: where to look for ideas and information  Outside - in: purchases of R&D, patents, knowledge embodied in machinery, components, etc  Collaboration: interactive knowledge development  Protection : Use of IPR measures  Commercialization: means of generating returns  Breadth and depth (Laursen and Salter 2006)  Breadth: Range of available sources/means used  Depth: Intensity o

5 f use NIFU STEP studies in Innovation,
f use NIFU STEP studies in Innovation, Research and Education Innovation survey data allows us to construct OI indicators  Dimensional  Search breadth and depth  Outside - in breadth and depth  Collaboration breadth and depth  IPR breadth  Composites  Composite breadth and depth indicators  Composite OI indicator  Scaled 1 - 10  A breadth score of 10 = the full range of sources/means are used  A depth score of 10 = all stated or

6 measured as important  Alternative m
measured as important  Alternative means of commercialization is not covered by CIS  Licensing revenues  Sales of patents, know - how  Spin - off firms NIFU STEP studies in Innovation, Research and Education System of OI indicators NIFU STEP studies in Innovation, Research and Education Overall indicator scores, Norway NIFU STEP studies in Innovation, Research and Education Performance analysis  Probit regressions  Dependent variable: Like

7 lihood of being among top innovation pe
lihood of being among top innovation performers in own sector  Explanatory variables  Intramural R&D  Open innovation indicators  Control variables  International market orientation  Part of corporate group?  Number of employees  Sector  Stepwise analysis, four models  from impact of composite OI only to impact of all individual dimensional indicators NIFU STEP studies in Innovation, Research and Education Overall relationship to

8 performance, Norway (N=1404)  Overall
performance, Norway (N=1404)  Overall OI practices have a positive and significant impact on innovation performance  This stems from overall breadth of OI practices  Positive impacts from increase in  Range of available information sources used  Range of collaboration partners used  Range of sources for external technology used  Range of IPR measures used  No impact from depth of OI practices, except  Negative impact from collaborati

9 on depth  Strong, positive impact fro
on depth  Strong, positive impact from intramural R&D NIFU STEP studies in Innovation, Research and Education Danger of collapsing differences across activities  Laursen and Salter (2006): No clear - cut relationship between innovativeness and search  ”…may be related to the complexity of technological knowledge bases in different industries”  Canadian/US MINE project (Miller 2004)  No “best” innovation practice/strategy can be identif

10 ied by correlation with performance 
ied by correlation with performance  Firms are set within different structured contexts which constrain and orient their innovation strategies, creating different “games”  What strategies and competencies which lead firms to succeed depends on the demands of the games in which they compete  Structured contexts - technological regimes • Regime approach as “intellectual framework” for understanding heterogeneity in industry contexts and h

11 ence innovation behavior across firms (N
ence innovation behavior across firms (Nelson and Winter 1977, Marsili and Verspagen 2002, Castellacci fortc) NIFU STEP studies in Innovation, Research and Education Technological regimes and open innovation  Implied by Chesbroughs own definition of OI:  Modes and intensity of open innovation will vary across sectors  Different degrees and modes could be related differently to performance  Diversity in availability of knowledge externally, and th

12 e form in which it can be sourced  C
e form in which it can be sourced  Cumulativeness, complexity and geography (Malerba and Orsenigo 1993) of knowledge bases  …the rate of technological change supported by the market  i.e. “opportunity conditions” (ibid)  …and the degree to which knowledge can be protected from imitation  i.e. appropriablity conditions (ibid) NIFU STEP studies in Innovation, Research and Education Marsili and Verspagen (2002) taxonomy  Derived from a

13 summary of empirical evidence on  Te
summary of empirical evidence on  Technological ”distance” between activities  Technological opportunities  Technological entry barriers  Initially only manufacturing 1. Science - based 2. Fundamental processes 3. Product engineering 4. Complex (knowledge) systems 5. Continuous process  Extended with a subset of services 6. Knowledge intensive services NIFU STEP studies in Innovation, Research and Education Science - based regimes  High l

14 evels of technological opportunity  S
evels of technological opportunity  Scientific knowledge enables a continuous stream of new products  Scientific research results may be directly integrated into knowledge base to sustain product innovations  High cumulativeness, high barriers to entry  Large companies, relying on a broad set of complementary capabilities, specialized ”core” knowledge bases  Examples: Pharmaceuticals, electronics, life sciences NIFU STEP studies in Innovati

15 on, Research and Education OI Profile, S
on, Research and Education OI Profile, Science based regimes in Norway (N=102) NIFU STEP studies in Innovation, Research and Education OI and performance, Science - based regimes in Norway  Overall OI practices increase innovative performance  Stemming from depth of OI practices  No innovation performance effect of OI breadth, except  Negative performance effect of external technology sourcing (outside - in breadth)  Intramural R&D increase inn

16 ovation performance strongly NIFU STEP
ovation performance strongly NIFU STEP studies in Innovation, Research and Education Product engineering  Predominance of mechanical engineering technologies  Medium to high levels of technological opportunity  Diversity of technological trajectories explored by firms  Examples: Shipbuilding, machinery and instruments, weapons and ammunition NIFU STEP studies in Innovation, Research and Education OI Profile, product engineering, Norway (N=434) NIFU

17 STEP studies in Innovation, Research a
STEP studies in Innovation, Research and Education OI and performance, product engineering, Norway  Overall OI practices increase innovative performance  Stemming primarily from breadth of OI practices  Search  Collaboration  Outside - in  IPRs  Intramural R&D has no significant effect on innovation performance  A strong, positive correlation with international market orientation NIFU STEP studies in Innovation, Research and Educa

18 tion Knowledge intensive services (Asles
tion Knowledge intensive services (Aslesen 2006)  Services concerned with the supply and management of knowledge assets  ”Point of fusion” (den Hertog 2002) between 1. General scientific and technical knowledge 2. Experiences acquired by KIBS firms in interaction with clients, and refined 3. Tacit knowledge of client firms  Norwegian sample dominated by  Hardware/software consultancy firms  Architectural and engineering activities NIFU STEP

19 studies in Innovation, Research and Educ
studies in Innovation, Research and Education OI profile, KIBS excl. financial services (N=381) NIFU STEP studies in Innovation, Research and Education Open innovation and performance, KIBS  Overall OI practices increase innovation performance  Stemming from impact of OI breadth  Search breadth  Outside - in breadth  Collaboration breadth  Searching too deeply effects performance negatively  Very strong impact of intramural R&D  No imp

20 act from IPR breadth NIFU STEP studies
act from IPR breadth NIFU STEP studies in Innovation, Research and Education By way of concluding….  Impact of intramural R&D on performance is generally strong  There may be “weakness in strong ties” (Grabher)  Broad, by implication international, innovation search is important  “Deep” dependence on external collaboration partners appear to depress own innovation performance  Diversity in external sources of inputs + intramural R&D a

21 s schematic ”best practice”?  D
s schematic ”best practice”?  Don’t rely excessively on single means for sourcing knowledge externally  Remain focused on intramural R&D, with awareness as to how it is organized  Use available IPR measures  But this takes on numerous empirical forms  OI strategies will by their very nature be specific to industries and their contexts  Policies need to be sensitive to this diversity NIFU STEP studies in Innovation, Research and Educa

22 tion Food for policy thought – Norway
tion Food for policy thought – Norway  A well - developed system of policy tools emphasizing external sourcing and collaboration  Strong emphasis on involvement of research institutes  Clustering and networking  Organizational cultures sustain ”openness” – knowledge sharing – and learning within organizations (European Working Conditions Survey)  Nordic countries score high above EU averages on indicators for inter - and intra - or

23 ganizational interaction and learning
ganizational interaction and learning  But are there sufficient public incentives for build - up of internal R&D capacity?  Danger of over - emphasis on tools targeting national collaboration and sourcing? NIFU STEP studies in Innovation, Research and Education Issues for future research  Open innovation understood within broader theoretical perspectives on dynamics in economies  Distinguish more clearly between private and social returns  Th

24 e sum of individual (private) rational a
e sum of individual (private) rational action does not necessarily create the best collective action (social) outcome  Substitution or complementarity between open innovation and intramural R&D?  OI leveraging impact of intramural R&D at both firm and economy levels?  Ongoing production, diffusion and recombination of knowledge increases economy performance  OI substituting intramural R&D?  Collective free - riding – let somebody else do