Timing and the Product Life Cycle

Another unanswered question and a promising field for further research is the topic of the appropriate timing for participation in OI. This includes both the timing in terms of firm size and maturity and the product life cycle. As mentioned above, firms tend to capture value from OI only when they have created some value in the form of absorptive capacity, despite the size and maturity of the entity. On the other hand, in terms of product lifecycle, OI proves to be beneficial in both the R&D phase before the deployment of a product and in the post-deployment phase of maintaining and further advancing the quality of a product.

Open source, for example, has been accused of focusing on the re-implementation and commoditization of prior technologies rather than creating new and disruptive innovation. To defend the aforesaid, claimants turn to examples like Linux as a low-cost Unix, as well as MySQL and OpenOffice. This undermines the statement that open source as OI is an appropriate approach when conducting R&D, prior the deployment of a highly-beneficial and disruptive product. Nonetheless, open-source has proven to be a low-cost source for innovative ideas and knowledge, which could not have been produced with solely internal firm resources.

Feasibility of the Organizational Form

Another research terra incognita and a pending OI challenge remain the various organizational forms and their feasibility in supporting specific OI initiatives. Often OI involves a heterogeneous network of contributors, which are rebuttably presumed to follow a shared organizational culture, facilitating a productive joint-effort. However, this multitude of actors, including corporate entities, sometimes individuals and often governmental institutions, and the variety of interests those subjects pursue, elevate the importance of the question which is the most appropriate organizational form, which will align those disparate interests and channel them into a productive collaborative effort.

Modularization and Externalization of the Production of Components and Complements

The continuous modularization of technologies and products, allowing the external production of components in the software industry, remains to be identified as either beneficial for Open Innovation or a characteristic, which might become a hurdle to the future development of the trend. Accepting donations from a wide community of unknown external contributors can pose threats in the form of potential IP rights infringement. Some authors have speculated that the famous SCO/Linux public and legal disputes were the product of a deliberate infringing “stealth” IP donation to the project, in order to sabotage its success. The software company “SCO Group” claimed that IBM, a licensee of SCO at the time, violated the license contractual terms by contributing to Linux such source code, which allegedly constituted SCO trade secret. Furthermore, in August, 2003 SCO made an attempt to issue invoices to companies using Linux, thus causing a stir amongst the Linux community and bringing uncertainty in the future of the until then successful open-source project.

Limitations of the Firm

While some firms increasingly participate in virtual teams, R&D consortia, join-ventures, etc. a general cause behind this trend remains to be deducted. Do firms leverage external knowledge since they belong to low-tech industries, in which goods have been commoditized and R&D produces little competitive advantage? Or can a more general conclusion be made, that R&D is no longer necessary to be performed exclusively within the boundaries of the firm, regardless of its parameters, such as its size or the characteristics of the market? On the other hand, which is the prevailing moment for a company in which the costs of openness start to exceed the benefits of it? Can too much openness be negative for the company’s health and which are the indicators for that?

Threats to Profitability and External Spillovers

Open innovation doesn’t always mean profitability. Not carefully planned OI initiatives have the potential to result in decreased control of firm-essential IP and thus loss of technological competitive advantage. In fiercely competitive environments a spillover can easily become more of a re-appropriation and transform into free-riding. Hence, Open Innovation is a double-edged sword if not managed carefully. Compiling best practices and advices into OI guidelines and conducting experience-sharing initiatives can become an effective method in avoiding such negative results, which stifle participation in OI initiatives.

Failure and Abandonment of OI Projects

Many OI project and initiatives fail to meet their intended goals, while others manage to succeed. There is no extensive research on the question why some of these projects terminate and others don’t. Is it a product of fierce rivalry between participants or a manifestation of the ephemeral nature of technology in todays’ turbulent economy? The economic, social and technological processes and interdependencies, which can be observed in a specific OI initiative can give insights on the answer, thus providing highly-valuable information for both academic and business practice purposes. The issue of sustainability over time is of utmost importance in terms of open-source communities, functioning mainly on the basis of voluntary participation.