The Role of Public Research - PowerPoint Presentation

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The Role of Public Research Organizations Within Open Innovation

‘A Review of the State of the Art

From

an

Economic

Perspective

’

Adrian Kovacs

Workshop on Open

Innovation

Bucharest

07-10-2013

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My ProfileFunctionResearch Fellow of the Flanders Research Foundation (FWO).Ph.D-candidate at the Department for Managerial Economics, Strategy and Innovation (KU Leuven, Belgium). Affiliated Researcher Department of Business Administration (University of Twente, the Netherlands).Close collaboration with the Centre for Intellectual Property Rights (Leuven, Belgium). Research FocusOpen Innovation/

Markets for

Technology; focus on developing new patent-based and

bibliometrics

-based indicators of open innovation on the firm-level.

The Role of IPRs in Science-Industry Linkages; focus on identifying best practices for the management of IPRs in science-industry settings.

Radical/Breakthrough Innovation; focus on developing indicators for identifying radical inventions ex ante and ex post.

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My Understanding of Open Innovation (1)The Open Innovation paradigm does not suggest that openness in R&D is a new phenomenonInstead…Open Innovation captures the trend towards an increased reliance of firms upon external sources of innovation in recent decades

which is mainly attributable to the increasingly wide diffusion of useful knowledge.

Thereby…

T

he

contribution of the Open Innovation

concept

does not so much come from it describing the observed trend, but from it

addressing the consequences of the observed

trend.

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My Understanding of Open Innovation (2)The Logic of Open InnovationGood ideas are widely distributed; no single individual/institution has a monopoly. Being the first to discover something is neither sufficient nor necessary for commercial success.A superior business model beats a superior technology. IP is a perishable asset; customers and markets don’t wait.

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My Understanding of Open Innovation (3)Closed Innovation

Public Innovation

Private Open Innovation

Open Source Innovation

Innovation Outcome

Innovation Process

Closed

Open

Closed

Open

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My Understanding of Open Innovation (4)From A Theoretical Standpoint...

Linking OI to existing Strategic Management Theories; TCE, RBV, KBV, RV, RO, DC, etc..

Exploring the ‘human side’ of OI – linking OI with corporate culture.

Exploring the ‘social side’ of OI – linking OI with corporate social responsibility.

Exploring the ‘legal side’ of OI – linking OI with legal frameworks.

Conducting large-scale quantitative studies covering OI.

From An Empirical Standpoint…

Exploring OI in the low-tech settings.

Exploring the management of OI in SMEs.

Exploring OI in a ‘systemic’ setting.

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My Definition of PROsA Public Research Organization (PRO) is an organization that performs research activities as part of its mission and receives at least some public funding to support these activities (EC’s Expert Group on Knowledge Transfer Metrics, 2009). As such the label PRO includes;Universities.

Higher Education Institutions.

Non-Profit Research Organizations.

Research Hospitals.

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PROs and the Literature of Open Innovation (1)Key Question;To what extent do academic contributions on Open Innovation refer (explicitly) to PROs?Approach;Identify academic contributions on Open Innovation in Thomson Reuters’ Web of Science Database by entering the keywords ‘open’ and ‘innovation’ in topic field. Filtering out contributions that actually use the combination term ‘open innovation’ by applying a simple machine learning algorithm.

Extracting combinations terms from ‘title’, ‘topic’ and ‘keyword’ sections of remaining contributions.

Mapping a network terms based on co-

occurences

of combination terms.

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PROs and the Literature on Open Innovation (1)

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PROs and the Literature on Open Innovation (2)

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PROs and the Literature on Open Innovation (3)

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PROs and the Literature on Open Innovation (4)

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PROs and the Literature on Open Innovation (5)

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Open Innovation builds on existing economic/management theories…Transaction Cost Economics.Resource Based View of the Firm / Knowledge Based View of the Firm.Relational View of the Firm.Real-Options Theory.PROs and the Literature on Open

Innovation

(6)

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Linkages between science and industry existed long before the term ‘Open Innovation’ has been coined.

Open

Innovation

&

Science

-

Industry

Linkages

(1)

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Science-industry linkages comprise all types of interactions between the science

and

industry

sectors

that

involve

the exchange of

knowledge

and

technology (Debackere & Veugelers, 2005). Formal science-industry linkages are based on a formal agreement or contract

and typically involve; (1) entrepreneurial academic spin-off organizations, (2) contract research, (3) collaborative research arrangements and (4) the licensing of

IPRs owned by scientific actors. Informal science-industry linkages on the other hand relate to all sorts

of informal personal contact between individual scientists and their industrial counterparts and human capital flows that facilitate the

knowledge between public research organizations and industrial firms. Open

Innovation & Science-Industry Linkages (2)

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Intensifying Science-Industry Linkages (1)However, several indicators of science-industry linkages show a positive trend towards the intensification of these linkages in terms of scale and scope in the past decade(s). Commonly used indicators of industry-science links include;Science-originated patents (e.g. co-assignments of scientific and industrial actors on patent documents, company citations to scientific patents, references to scientific publications in company patents, company licensing of ‘scientific patents’, company acquisitions of ‘scientific patents’). Cooperative agreements

between public research organizations and industrial actors (relates to all kinds of contract-based agreements).

Labour

mobility

(migration of graduates/researchers from public research organizations to industry and visa versa)

Science-originated entrepreneurship

(relates mostly to spin-offs).

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Intensifying Science-Industry Linkages (2)

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References to Scientific Contributions in Patent Documents

Intensifying Science-Industry Linkages (3)

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There is an increased ‘industrial/societal’ demand for scientific knowledge.

New

and

upcoming

technology

sectors are

increasingly

knowledge-intensive (e.g. Biotechnology, Nanotechnology, ICT, etc.).PROs are essentially ‘knowledge

factories’ and as such linkages with them have become an important knowledge sourcing

strategy for industrial firms in knowlegde-intensive industries (Rosenberg, 1990; Zucker et. al., 1998). As PROs advance the frontier of technology

and often operate in multiple technological fields, they enable industrial firms to broaden their search for new knowledge

recombinations (Rosenkopf & Nerkar, 2001; Fleming, 2001). These new knowledge recombinations often lie at the heart of innovations with the highest

economical impact – radical/breakthrough innovations (Fleming, 2001).

Explanations for the Intensification of ISLs (1)

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There is an increased number of public policy initiatives aimed at stimulating and facilitating science-industry

linkages

.

There

is

an

increased

realization

that the fruits of investments in public research can only

be fully grasped when its results are relevant for the private sector as well (Debackere & Veugelers, 2005). Due to

an increased budgetary stringency of public funding, PROs can no longer justify their existence

solely by their epistemological purpose. They are increasingly forced to initiate contacts with industry

as a means of securing additional funding for their research (Debackere & Veugelers, 2005). Explanations for the Intensification of ISLs (2)

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Why Are Industrial Firms Relevant For PROs? By becoming better connected with the industry, public research organizations are able to…

Access

additional

sources

for

securing

funds

for

research

projects and activities. Share the risk of developing costly

technologies which have a market potential. Provide additional labour market opportunities for graduates.

Get new impulses for research and education.

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Why Are PROs Relevant From the Industry POV? (1)By becoming better connected with the scientific community, firms are better able

to

…

A

ccess

complementary

assets

that they need to create innovations (Cockburn & Henderson, 1998;

Gittelman & Kogut, 2003).Traditionally complementary assets are defined as assets, infrastructure or capabilities needed to support the successful commercialization and marketing of a technological innovation, other than those assets fundamentally associated with that innovation (Teece, 1986).As

such, within the frame of ISLs complementary assets may refer to PROs’ capability to

develop knowledge, technology, infrastructure and facilities. Obviously knowledge is the most important complementary asset and is

carried in patents, publications and most importantly people (knowhow).

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Linkages with PROs can help firms to improve the productivity of applied research and ultimately

their

innovative

performance…

PROs

are

able

to identify the most promising technological opportunities at an

earlier stage than industrial firms.Therefore linking up with PROs can prevent

industrial firms from engaging in costly and wasteful experimentation. Although the basic

scientific knowledge developped by PROs is often project-specific at first, it has the potential to ‘fertilize’ multiple projects, which

enables industrial firms to achieve synergy effects. Why Are PROs Relevant From the Industry POV? (2)

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Empirical studies confirm the importance of science for industry…At least 15% of new products and 11% of new processes

in a sample of major

firms

in the US

would

not

have

come

to existence without input from the scientific community (Mansfield, 1998). Collaborating with public research

organizations has a positive effect on the share of new-to-the-market innovations (Monjon & Waelbroeck, 2003). Linkages with public research organizations (as

measured by co-authorships between industrial employees and academics) have a positive effect on the research productivity of pharmaceutical firms

(Henderson & Cockburn, 1998). Recruiting scientists, especially ‘star scientists’, has a positive effect on the research productivity of firms in biotechnology and nanotechnology

(Zucker et. al., 1998:2005). Why Are PROs Relevant From the Industry POV? (3)

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Empirical studies confirm that…Size matters; larger firms are more likely to engage in science-industry

linkages

than

small

and

medium

sized

entreprises. Collaborating with public research organizations is complementary to

collaborations with other partners (e.g. suppliers and customers/users). Therefore firms that collaborate more in general

are also more likely to collaborate with PROs. Collaborating with public research organizations is complementary

to internal innovation activities. Therefore more R&D-intensive companies are more likely to partner with PROs. These companies tend to operate in industries

like pharmaceuticals and chemicals. Which Firms Are Likely To Link Up With PROs?

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An Interesting Perspective; Procurement & OI (1)PROs procurement activity is certainly a mechanism that facilitates knowledge

flows

between

PROs

and

industry (Autio et. al., 2003).The magnitude of these knowledge flows is

determined by…Absorptive Capacity; the ability of industrial actors (suppliers) to acquire and

capture knowledge from PROs. Social Capital; the ability of industrial actors (

suppliers) to identify relevant knowledge.

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The amount of social capital that is built into relationships between PROs and industry is

determined

by

…

The

willingness

of

both

parties to provide each other access to

their contact networks. This determines the amount and diversity of the knowledge that is potentially available

to both parties. The level of trust between both parties. This determines the amount of

knowledge that will be disclosed by parties. The degree of complementarities (knowledge overlaps, goal overlaps)

between both parties. This determines the efficience of knowledge flows.

An Interesting Perspective; Procurement & OI (2)

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The results of a 2003 survey on CERN procurement clearly highlights the positive effects of procurement on knowledge flows;

528 new

industrial

products

and

services,

developed

by 38% of supplier firms can be attributed to

CERN procurement. 44% of supplier firms indicated that CERN procurement induced technological learning on

their part. 36% of supplier firms indicated that CERN procurement induced market learning on their part.

An Interesting Perspective; Procurement & OI (3)

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The results also show that knowledge flows are facilitated by;The frequency of interactions

between

CERN

and

the

supplier

firm

in question.

Relational

social capital; the total amount of trust, respect, personal contacts

and reciprocity built into a given supplier relationship with CERN.Structural social capital; the

ability of CERN to link its supplier company with its internal and external networks and

resources. The supplier firms’ investment in its CERN relationship. An Interesting Perspective; Procurement & OI (4)

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Conclusion

: The

Role

of

PROs

in OI (1)

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Conclusion

: The

Role

of

PROs

in OI (2)

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For More Information on OIOpen Innovation Communityhttp://www.openinnovation.nethttps://www.facebook.com/groups/open.innovation.community/The Network of Excellence on Open & Collaborative

Innovation

http://www.exnovate.org

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My Contact DetailsAdrian Kovacs  FWO Research Fellow / PhD-Candidate in Applied EconomicsKatholieke Universiteit Leuven, Faculty of Business and Economics (FEB)

Department of Managerial Economics, Strategy and Innovation (MSI)

Hogenheuvelcollege

, Room 03.107

Naamsestraat

69, P.O. Box 3535

3000 Leuven, Belgium

T: +32 16 32 68 62

M: +32 4 91 36 29 37

E: Adrian.Kovacs@econ.kuleuven.be W: http://www.econ.kuleuven.be/eng/fetew/medewerker/userpage.aspx?PID=1820

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Thank you for your attention.