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use (Zahay, Griffin, & Fredericks, 2003) - all of which cause delays during the
innovation process.
At the project level, innovation teams are challenged by meeting budget param-
eters, integrating knowledge, communicating with each other, and finding ways of
decreasing time-to-market. Joint reward systems, collocation of team members, and
job rotation have been espoused as alternatives for alleviating cross-functional con-
flict. Further, closed innovation teams' success in product development is often
limited by the extent of internal expertise they possess.
7.3 The Open Innovation Paradigm
In open models of innovation, the boundary between a firm and its environment
is permeable, as companies work both individually and collectively throughout the
innovation process. According to Simard and West (2006), “a crucial goal of open
innovation is to capture external knowledge that flows between organizations, allow-
ing firms to be more successful at innovation than firms that close off such flows.”
Open models often induce collaboration, co-development, strategic and informal
alliances, innovation networks, and joint ventures.
Many firms acknowledge the benefits of linking internal investments with exter-
nal resources and are moving from a R&D model toward a connect and develop
model (Huston & Sakkab, 2006). Chesbrough (2003) conceptualizes this trend
as open innovation with access to and exploitation of external knowledge. This
approach reflects the increasing availability of outside expertise from universities,
research consortia, lead users, producers, entrepreneurs, specialized suppliers, and a
host of other externals willing to accept the risks and rewards of innovation as they
collaborate with each other.
Such a movement is fuelled by increasing competitive pressures from substantial
investments in innovation projects, a growing number of international competitors,
and technological opportunities residing outside firms' traditional fields of exper-
tise. This impetus is forcing firms to search for outside opportunities to increase
effectiveness and efficiency. This openness materializes as a heightened demand for
external knowledge, the release of internal resources, and other external inputs key
to innovation success (Fagerberg & Mowery, 2005; Monjon & Waelbroeck, 2003;
Peters, 2003).
Instead of developing a new technology, open innovators may acquire or merge
with externals to achieve innovation success. These collaborative environments
with seamless boundaries are not just a way to enhance or improve innovation.
This mindset unleashes vast reservoirs of skills, knowledge, and abilities housed
in collective sets of innovators and materialize as more creative, customer-oriented
products. The firm capitalizes on its strengths and seeks external partners with
complementary assets and resources. The result is shared risks, costs, and rewards
as collaborators engage in knowledge creation and application. Firms produce
stronger and enhanced internally developed capabilities, form new alliances and
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