| Hagedoorn and Ridder (2012)
|| Open innovation, contracts, and intellectual property rights: an exploratory empirical study
|| Hagedoorn, J., Ridder, A.K.
|| Hagedoorn, J., & Ridder, A. K. (2012). Open innovation, contracts, and intellectual property rights: an exploratory empirical study.
|| Definitive , Open Access
|Key Related Studies:
Our exploratory empirical study, based on a series of in-depth interviews and a survey of firms, searches for answers on a number of questions that deal with the role of formal contracts and intellectual property rights in the context of open innovation. We find that firms active in open innovation have a strong preference for the governance of their open innovation relationships through formal contracts. These contracts are relevant from both a control and a process monitoring perspective. Also, despite the open nature of open innovation, firms still see intellectual property rights as highly relevant to the protection of their innovative capabilities. In a first attempt to explain this preference for intellectual property rights by open innovation firms, we find the degree of openness of firms, their legalistic attitude, and the competitive dynamics of their product market environment to be related to this preference.
Main Results of the Study
- Our findings show that firms active in open innovation see both the legal (control) perspective and the practical (monitoring) perspective as quite relevant. On average, firms in our sample perceive contracts as an important legal mechanism to control their collaboration with open innovation partners, as indicated by an average score of 5.42 on a 7 point Likert scale. The perceived importance of formal contracts as a means to monitor the progress of collaboration is somewhat lower with an average score of 5.10 on a 7 point Likert scale. These different scores for the use of contracts for control or monitoring purposes turned out to be only marginally statistically significant.
- Firms active in open innovation seem to have a very strong preference for (renewable) contracts to govern their relationship with their partners when they engage in joint R&D, joint product and process development, and joint design. Not using contracts is 15 very much rather the exception than the rule. Also, open innovation firms value these contracts from both a legal control perspective as well as a more practical process monitoring perspective.
- These firms indicate that, without IPR, they would be less inclined to cooperate with other firms as, based on their IPR protection, they are willing to invest in innovative activities that they can share with others. Results from our survey show a more detailed perspective on the role of IPR. It turns out that patents and technical and commercial information (trade secrets) are seen as the most important instruments to protect the innovative capabilities of firms from their open innovation partners, as indicated by nearly 90% of the firms in our sample. Trademarks and design rights are also seen as relevant by a substantial share of firms (nearly 75% and over 65%, respectively). Given the industry breakdown of the firms in our sample, it is probably not surprising that a smaller share of firms (about 53%) see the relevance of copyrights for the protection of their innovative capabilities.
Policy Implications as Stated By Author
- The research indicates that in terms of the governance of their collaborative innovative activities, firms active in open innovation appear to follow a somewhat ‘unadventurous’ strategy. This strategy is much more in line with what could be expected according to well accepted organizational economics theory (e.g. Williamson, 1985) that is closer to Chesbrough (2006a,b) than to a more ‘radical’ open innovation approach.
- Rather than engaging in open disclosure and freely revealing their innovative activities to partners, firms seem to use formal contracts to organize their open innovation activities with specific partners. However, given the flexibility required by these innovative activities with a range of partners, where the objectives of collaboration might change over time, these open innovation contracts are probably not to be characterized as discrete, standard contracts but as subject to flexible private ordering. Also, both the control and the monitoring dimension of contracts, the degree to which firms use contracts from a legal or from a practical process perspective, appear to be relevant for open innovation collaboration.
Coverage of Study
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