1. The document discusses open innovation in the context of networks, including ecosystems, platforms, communities, and consortia. 2. These network forms are understudied in open innovation research despite their natural fit with open innovation concepts. 3. There is an opportunity for more research on how open innovation relates to and is impacted by different network structures and forms of organization.

1. Network Forms of Open
Innovation: Ecosystems, Platforms,
Communities and Consortia
Joel West
KGI – Keck Graduate Institute
The Claremont Colleges
R&D Management Conference 2019
20 Juin 2019

2. Today’s agenda
• Les publicités
• Open innovation
• OI and networks
• Need for research
• Examples of possible linkages
• Conclusions

3. • Founded 1997
• Interdisciplinary graduate school
• Industry-focused, professional
orientation
• Prepare students for biotech
industry
• One of 7 Claremont Colleges
• East Los Angeles County
• 6,200 undergrad, 2,800 grad
• 7 schools: 7 presidents, budgets…
• Swiss cantons, not US university
KGI: Keck Graduate Institute
† Funded by the Keck Foundation, which funded two 10m telescopes in Hawai‘i

4. Research strategy: related diversification
Software engineer/manager/entrepreneur
Research Program
Platforms: Standards+Ecosystems
Personal computers: Japan, Macintosh
Wireless voice: 1G, 2G, 3G
Smartphones: iPhone, Symbian
Open Source Software
Open source platforms
Open source communities, ecosystems
Open Innovation
OI platforms
OI communities, crowds
OI alliances, consortia
Entrepreneurial Commercialization
Digital communications
Photovoltaic solar power
3D printing & communities

5. 1. The concepts of open innovation have a natural fit
to the many network forms of organizations
2. These forms are understudied by OI researchers
3. Thus, there is a research opportunity
Today’s Message

6. Open Innovation

7. “Open innovation is the use of purposive inflows
and outflows of knowledge to accelerate internal
innovation, and expand the markets for external
use of innovation, respectively.”
Henry Chesbrough, Open Innovation:
Researching a New Paradigm (2006)
Definition of OI

8. • Coined by Chesbrough (2003)
• 3 managerial books (2003, 2006, 2011)
• 2 edited volumes (Chesbrough
Vanhaverbeke, West, 2006, 2014)
• Google Scholar
• Publications: 8,600 (in title)
• Chesbrough: 65,000 citations
• Special issues: Research Policy (2014),
Industrial & Corporate Change (2016), California
Management Review (2017), R&D Management
(2006, 2009, 2010, 2019)
“Open Innovation” Concept

9. OI is distinguished by “The centrality of the business
model in converting R&D into commercial value.”
“A business model has two important functions. It must
create value within the value chain; and it must capture a
piece of value for the focal firm in that chain.”
— Chesbrough et al (2006: 11, 31)
Centrality of the Business Model

10. Networks and OI

11. “[R]esearch on organizational practices and arrangements
that are network-like … shares a common focus on lateral
or horizontal patterns of exchange, interdependent flows
of resources, and reciprocal lines of communication.”
(Powell, 1990: 296)
What is a Network?

12. • Original emphasis of OI
• Pair of organizations (West et al, 2006)
• Firms not individuals (Piller & West, 2014)
• Transactional views
• Today network forms of interfirm relations are
increasingly common
• More relational than market/transactional (Powell, 1990)
• OI needs more network research (Vanhaverbeke,
2006; West, 2014a)
Gap: Not enough OI network research

13. “[F]irms have engaged in a range of strategies for
managing relationships with external counterparts,
including alliances, networks, communities, consortia,
ecosystems, and platforms. In each case, … [they] reflect a
pattern of recurrent relationships rather than a single
market transaction, demonstrating an interdependency of
reciprocity and repeated interactions that helps mitigate
the risks of opportunism (Powell, 1990; Jones et al., 1997).”
(West 2014a: 72)
Linking OI to networks

14. • Alliances and Networks of Alliances (West, 2014b)
• Communities & crowds (West & Lakhani, 2008, West
& Sims, 2018)
• Consortia (West & Gallagher, 2006; Olk & West,
2019)
• Ecosystems (West & Wood, 2013; Bogers et al 2019)
• Platforms (West, 2014a)
My Own OI Network Research

15. Alliances

16. • Normally about partnering to pool knowledge and
competencies (Sarkar et al, 2001)
• Nominal goal is complementarity in value creation
(e.g. Deeds & Hill, 1996; Rothaermel, 2001)
• One issue is how firms find complementary partners
(Hitt et al, 2000, 2004; Li et al, 2008; Shah &
Swaminathan, 2008)
• Focus on alliance success (e.g. Doz, 1996; Olk, 2002)
Prior Research: Strategic Alliances

17. • Key issue often knowledge races/spillovers
• Partners have complementary knowledge
• Firms want to learn from each other — and block
partners from learning from them (Hamel, 1991;
Mowery et al, 1996; Kale et al, 2000)
• Such zero-sum efforts undercut the alliance
• In response, alliances seek to build trust and restrict
opportunism (Das & Teng, 1998, 2001)
Prior Research: Strategic Alliances

18. • At the level of the alliance
• Challenges of R&D alliances (Roijakkers et al, 2014)
• Relational drivers of successful cooperation
(Wubben et al, 2014)
• Does openness lead to more internationalization?
(Moreno-Menéndez & Casillas, 2014)
• Analyzing a network of alliances
• Using networks to support inbound OI (Mooty & Kedia , 2014)
• Network embeddedness as barrier to opening innovation
(Nakazono et al, 2014)
OI Research on Alliances

19. Communities & Crowds

20. • Traditionally, “community” referred to local
geographic communities (Putnam, 1995)
• Today, management researchers are interested in
studying online communities (West & Lakhani, 2008;
Dahlander et al, 2008; O’Mahony & Lakhani, 2011;
Dahlander & Frederiksen, 2012)
• Most often studied: Open source software
communities (Dahlander & Wallin, 2006; West &
O’Mahony, 2008)
Communities

21. Definition of Community (1)
Communities are “aggregates of people who share
common activities and/or beliefs and who are bound
together principally by relations of affect, loyalty, common
values, and/or personal concern (i.e., interest in the
personalities and life events of one another).”
Brint (2001: 8)

22. Definition of Community (2)
Communities are “networks of interpersonal ties
that provide sociability, support, information, a sense
of belonging, and social identity.”
Wellman (2002: 4)

23. Definition of Community (3)
“[W]e define community as ‘a voluntary collection of
actors whose interests overlap and whose actions are
partially influenced by this perception.’ ”
O’Mahony & Lakhani (2011: 7)
O’M&L: Communities can help or hurt firms

24. Open Innovation & Community (1)
“[W]e are only interested in those involved in creating
innovation outside the boundaries of the firm.… First, …
we consider a community to be a voluntary association of
actors. … Secondly, [here] we focus on innovations that are
explicitly brought to market”
West & Lakhani (2008: 225)

25. Open Innovation & Community (2)
“We define virtual communities as voluntary associations
of individuals or organizations united by a common goal
regardless of geographic proximity…we are interested in
virtual communities … that are external to the firm, even if
… they may include employees of the focal firm.”
West & Sims (2018:62)

26. Various forms and phenomena
• Open source software (West & Gallagher, 2006; West
& O’Mahony, 2008
• Other software (Fichter, 2009)
• Other digital goods (Jeppesen & Frederiksen, 2006)
• Open source hardware (Raasch et al, 2009; Greul et
al, 2018)
OI Research on Communities

27. • Communities have many potential benefits for firm OI
strategies (West & Sims, 2018)
• They can source inventions, ideas, knowledge (West &
Bogers, 2014)
• Increase customer loyalty (Algesheimer et al., 2005)
• Provide complements (Jeppesen & Frederiksen, 2006)
• Spur adoption (West & O’Mahony, 2008)
• Enable entrepreneurial entry (Gruber & Henkel, 2006;
Dahlander, 2007; Greul, West & Bock, 2018)
How Communities Impact OI

28. Communities Overlap with Crowds
West & Sims (2018)Boudreau & Lakhani (2009)

29. • Large network
• Unknown potential contributors
• Self-identifed/selected participants
• Usually (not always) competing
• To solve a particular organizational problem
What is a Crowd?
Surowiecki (2005), Benkler (2006), Howe (2006), Estellés-Arolas & González (2012), Poetz &
Schreier (2012), Afuah & Tucci (2012), Brabham (2013)

30. • Ways to form crowd
• Open, closed, reconfigurable closed (Viscusi & Tucci, 2018)
• Use of crowd
• Contests (Brabham, 2008; Jeppesen & Lakhani, 2010)
• Gated contest (Diener & Piller, 2013; Piller & West, 2014)
• Labor market (Howe, 2006)
• Grand challenge (Scotchmer, 2004; Murray et al, 2012)
• Crowd-community hybrids
• Cooperative crowdsourcing, social production, user generated
content, crowd scince (West & Sims, 2018)
Different Types of Crowds

31. • Firms sponsor crowds
• Crowdsourcing contests (Dodgson et al, 2006; King &
Lakhani, 2009)
• Crowdsourcing business models (Alio, 2004)
• Firms work with existing crowds (Felin et al, 2017)
• Some inputs are innovation, some are not (West &
Sims, 2018)
OI & Crowds

32. Consortia

33. Definition of R&D Consortium
“[T]wo or more companies sharing resources to
create a new legal entity in order to conduct
cooperative research and development activities”
Olk & Young (1997: 856)
Focus on R&D and firm success is natural
(but understudied) fit to open innovation

34. • Firms trade off private interests against collective
benefits (Ring et al, 2005)
• Firms have high heterogeneity of interest, influence and
expectations (Olk, 1999, 2002)
• Key issues of creating (Doz et al, 2000) and maintaining
alignment of interests (Olk & Young, 1997)
• While most consortia limit benefits to members,
open consortia allow spillovers more broadly (West
& Gallagher, 2006; Olk & West, 2019)
Prior Research on Consortia

35. Simcoe (2006)
• The central issue of OI consortia is tradeoff between
shared value creation and private value capture
• Firms need consortium to create value
• Often engage in rivalry to capture value
• Central issue for consortium, members, policymakers
is managing this tension
Central OI Issue: Private vs. Shared

36. • Standardization consortia (Simcoe, 2006; Dittrich &
Duysters, 2007)
• Open source software (West & Gallagher, 2006)
• Pharmaceutical consortia (Olk & West, 2019)
But generally, limited research on how OI relates to
consortia (Vanhaverbeke et al, 2014)
OI Research on Consortia

37. Ecosystems/Platforms

38. “Ecosystems allow firms to create value that no single
firm could have created alone”
Adner (2006)
Ecosystems are “an interdependent network of self-
interested actors jointly creating value”
Bogers et al (2019)
Definition: Ecosystem

39. Definition: Platform
“[A]n evolving technological system, when it is strongly
functionally interdependent with most of the other
components of this system, and when end- user demand is
for the overall system, so that there is no demand for
components when they are isolated from the overall
system”
Gawer & Henderson (2007: 4)

40. Platforms & Ecosystems
Platforms combine two constructs
• Interfaces: define interoperability and integration of
separately created modular components (Baldwin &
Clark, 2000; Baldwin, 2008, 2012; Baldwin & Woodard,
2009; West, 2006)
• Ecosystem: third parties contribute complements that
make the core offering more valuable (West& Wood,
2013; Gawer & Cusumano, 2014; Jacobides et al, 2018)

41. OI Focuses on Sponsor Benefits
• OI is about firms managing external innovation for their
benefit (Chesbrough, 2006; Chesbrough & Bogers, 2014)
• Sponsors are organization that control/influence
network for their benefit (O’Mahony, 2007)
• Platform sponsor (Eisenmann et al, 2009; Parker & Eisenmann,
2017)
• Ecosystem sponsor (Bogers et al, 2019)
• But OI should also consider success of member firms
(West & Wood, 2013)

42. Many natural overlaps of OI with
ecosystem/platforms:
• Complementarity (Teece, 1986; West, 2006;
Jacobides et al, 2018)
• Shared value creation (Vanhaverbeke & Cloodt,
2006; Bogers et al, 2019)
• Coordination (West & Gallagher, 2006; Chesbrough,
2007)
Natural Affinity of Ecosystems & OI

43. Conclusions

44. • Creating, organizing, forming, joining
• Value creation vs. value capture tradeoff
• Coordinating joint value creation
• Managing/mitigating opportunism for private value capture
• Contracting/institution building
• Measures of private and shared success
• Does shared success accrue to participants?
Common Issues

45. • Membership
• Alliances are about firms
• Many communities include individual members
• As do some platforms (think iPhone apps…)
• Consortia, regional ecosystems have university/nonprofits
• Governance
• Consortia (& alliances) have most formal governance
• Ecosystems/platforms often controlled by sponsor firm
• Communities vary in degree of formalization
Important Differences

46. • Networks have inherent trade-off of collective value
creation and private value capture (Simcoe, 2006)
• Some firms seek to advantage their value capture
(Bekkers et al, 2002, 2011)
• Other firms accept cooperative value creation as
commodity inputs to private value capture (West &
Gallagher, 2006)
• Firms with strong value capture fund consortia solely for
value creation (Olk & West, 2019)
Value Creation vs. Value Capture

47. • Similarities/differences of these or hybrid forms
• Linking business model to network choices and
design
• Participation/motivation/strategies of new (and
small) firms
• Link (disconnect) of success at network & firm level
Research Opportunities

48. Thank You…