Apparently, Open innovation creates a higher level of dynamicity in specific industries. Hence, if firms decide to participate in this turbulent environment they need to tighten their belts beforehand.
Open innovation blurs firm’s boundaries and makes the organization more transparent and vulnerable to external entities. This is particularly threatening for the firms IP rights and for the protection of the company’s technological competitive advantage. Firms need to mitigate those issues and legal risks by adopting a business model, which includes a clear strategy for IP management. It’s vital that a company assesses its core IP, which is to be protected by all means from re-appropriation, and in contrast - the knowledge, it is willing to share with potential partners. Secondly, the appropriate knowledge-protecting legal instruments must be in place, depending on the type of firm IP itself, including patents, copyrights, trade secrets, etc. This would lower risks of re-appropriation, considerably ease the negotiation in the OI process and avoid potential litigation, the cost and timeliness of which is of considerable importance, when concerning IP.
Absorptive capacity is another key term, when talking about prerequisites for effective OI collaboration. Absorptive capacity is the company’s ability to assimilate, evaluate and above all disseminate external knowledge internally in a way that that knowledge effectively flows into the development and innovation mechanism. If a company does not assess and consider the limits of its absorptive capacity the majority of its OI initiatives would constitute a waste of resources and would be nothing more than cost drivers. Absorptive capacity largely depends on the knowledge the firm already has generated in the past (not limiting down to previous R&D, but comprising also employee capacity, quality of the working process, etc.). This is the reason why absorptive capacity is also seen as a company’s knowledge stock.
In order to know what you need, you need to be on clear terms with what you already have and what you don’t. Hence, firms need to draw an objective picture of their absorptive capacity before engaging in the hasty world of OI.