Open vs. closed innovation: A model of discovery and divergence

Esteve Almirall Mezquita, Ramon Casadesus Masanell

Research output: Indexed journal article Articlepeer-review

Abstract

When is open innovation superior to closed innovation? Through a formal simulation model, we show that an open approach to innovation allows the firm to discover combinations of product features that would be hard to envision under integration. However, when partners have divergent goals, open innovation restricts the firm's ability to establish the product's technological trajectory. The resolution of the trade-off between the benefits of discovery and the costs of divergence determines the best approach to innovation.
Original languageEnglish
Pages (from-to)27-47
JournalAcademy of Management Review
Volume35
Publication statusPublished - 1 Jan 2010

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