the benefits and the barriers these but the studies focusing on the risks of open partnerships are scarce.
but also the diversity of risks entailed, raising awareness of this framework of uncertainties. Within the study, our work highlights that open innovation in is impeded by risks related to technology, market place, collaboration among partners, financial sources availability, clients needs, workforce, knowledge and intellectual property rights.
By undertaking this study we aim to contribute to the scarce literature on open innovation risks
and to shed light on the factors that a firm needs to approach in order to foster a culture for open innovation and, in the same time,
open innovation, risk management, innovation performance, collaboration, resource availability. JEL classification: O310 INTRODUCTION AND PURPOSE OF THE RESEARCH We are now in the hype of the knowledge society where information
we found few studies addressing open innovation from the risk management perspective, especially in Central and Eastern europe.
and especially on their potential of efficiently managing the risks this cooperation involves. To our knowledge, there is a limited amount of empirical research on the risk management of open innovation processes.
This paper aims to address these research gaps. This article focuses on open innovation projects, first seeking to elaborate on the benefits
and drawbacks that such partnerships entail and thirdly to define a comprehensive structure of risks residing in open innovation,
by raising awareness on the factors that help mitigate the risks met by companies in their innovation process.
The research results support the importance of risk management in the open innovation environment. Given the overall sparse attention given to the dark side of open innovation form the risk management perspective,
we consider worth addressing this deficiency through the challenge of defining a theoretical framework of risks encountered in external partnerships.
In order to build this, we used the extensive support literature written on open innovation, since Chesbrough (2003) until today and the relatively scant literature affiliated to open innovation risks.
Additional research sources were case studies and media accounts focused on motives, barriers and barriers to such partnerships,
We intend our study to make the path for future researches in the risk management area of open innovation
improving product quality, accessing customer and supplier expertise outside the organization, sharing risk in product and service development,
and the risk involved with the development of new products and services (Chesbrough 2003; Reichwald and Piller 2009.
reduced risk as others put their human capital to work on risky propositions; and accelerated time-to-market as innovation is freed from the shackles of the cumbersome large-company financial,
to effectively exploit diversity and to share risk. Innovation collaboration allows organization to gain needed skills, technologies, assets,
and risks will be reduced by shared partnership. ACTORS ON THE OPEN INNOVATION STAGE In the new models of innovation,
'BARRIERS TO OPEN INNOVATION The scarce literature written about risk management dimension in open innovation projects is focused more on highlighting the barriers for a firm to approach open innovation rather than on depicting the risks which accompany such collaborative arrangements.
Therefore, knowledge sharing is a potential risk because the organization may lose its competitive edge over its competitors.
2009) shows that risks such as loss of knowledge, higher coordination costs, as well as loss of control and higher complexity are mentioned as frequent risks connected to open innovation activities.
In addition, there are significant internal barriers, such as the difficulty in finding the right partner, imbalance between open innovation activities and daily business,
cost reduction, knowledge gain, sharing risks and diversification of resources. We found that knowledge acquisition is perceived both as the highest reason for external partnerships but also as the main advantage of open innovation,
Since innovation is closely related to higher risks, the choice of involvement in external partnerships is a means of sharing the risks of the firm's projects.
However, as later detailed, this open innovation projects may also entails a wide range of risks
which need to raise awareness of. Internal resources are limited often, insufficient and unavailable for large innovation projects.
OPEN INNOVATION THE BAD While an open innovation strategy targets to decrease the risk related to the innovation process,
it may also entail an increase of risk related to collaboration among different partners. However, there is a scarcity of research regarding the costs and barriers of open innovation.
At the same time, collaboration inherently brings along risks and costs. Our research distinctly points out to a paradox:
in these collaborations may also reside threats that distort the initial objective of pursuing innovations and competitive advantage.
An open innovation strategy aims at decreasing the risk inherent to the innovation process but at the same time it may increase the risk inherent to collaboration with different partners (Tantau and Coras, 2013).
Our study reflects that open innovation is hampered commonly by constraints related to technology, market place, collaboration among partners, financial sources availability, clients needs, workforce, knowledge and intellectual property rights,
as graphically reflected in Figure 2. Figure 2. Open innovation risks Source: the authors The USV Annals of Economics and Public Administration Volume 14, Issue 1 (19), 2014 44 Figure 3 depicts in further detail the major risk drivers
(internal and external) for a company collaborating. Since collaborating in joint projects is considered the most economical way to access knowledge form outside the boundaries of one's firm,
Knowledge sharing risks are correlated strictly with the lack of trust in the partner and poor communication among collaborators about common goals and strategies
Opportunism is regarded as high threat. In open partnerships, firms seek skilled and talented external collaborators to work for the firm.
Retention risk acts as a major constrain since turnover among work force can alter the quality of the partnerships and lead to major knowledge loss.
People related risks are regarded as highest threats, since they are the major actors and assets in collaboration projects.
reluctant to change and innovation, acts as a major risk and its impact is even greater
which shows little support for innovation and low awareness of risks. Undertrained workforce is a threat for a small firm
since it builds up a knowledge barrier from the firms it collaborates with. Formally, open innovation bring into light the intellectual property rights protection.
Figure 3. Details of open innovation risks Source: the authors The USV Annals of Economics and Public Administration Volume 14, Issue 1 (19), 2014 45 The constant changing needs of the customers pose a significant challenge on firm
Collaboration among partners, the core process of open innovation, entails a variety of risks that alter the purpose.
Collaboration risks are connected highly with knowledge loss and opportunistic behaviour, if partners allow each other to build skills in area important to their business
The risk of technology leakage to rivals and a loss of control over the innovative process is an ever growing concern.
in order to avoid possible outsourcing risks. Highly specific to emergent countries unethical behaviour is common and acts a major business risk.
Open innovation is impeded also by a high level of bureaucracy and firms find it harder to cover the administrative costs entailed in the external partnerships.
such partnership holds significant risks residing not only in the failure of collaborations but also in potential loss of competitive advantage should the critical internal competencies
and overcoming the risks encountered in the process can become a huge competitive factor for companies.
This paper has explored empirically the risk agenda companies encounter in the process of open innovation. Within the research, our work highlights that companies are allured to enter external partnerships to enrich their knowledge base,
to share risks that go along with their businesses. While collaborating, we conclude that firms are impeded by risks related to workforce
knowledge sharing, complexity of collaboration, market tensions, client pressures, access to finance, technology advances and demands related to intellectual property rights protection.
While generally scholars have focused their research of risks in open innovation on large companies rather than SMES,
and impact of open innovation threats are distinct for smaller firms than for larger companies.
we consider critical for further research the development of risk mitigation models for open innovation risk.
Southwestern Cengage Learning. 2. Brunold, J. and Durst, S. 2012)" Intellectual capital risks and job rotation",Journal of Intellectual Capital, Vol. 13 (2), pp. 178
Tantau, A. And Coras, E. 2013) A risk mitigation model in sme's open innovation projects, Management & Marketing, Vol. 8, No 2 (30), p. 303-328 34.
curiosity, creativity and courage (for calculated risk-taking. It requires the capacity to act. It comes naturally to some people,
Risk taking and risk management are important, but likewise daring to do experiments even with disruptive approaches is the game changer.
Experiments and rapid prototyping reduce the risk to tolerable levels, and they are driving for the new.
where the risk of failure is not that costly. What is also interesting is that the scale up cost is likewise close to zero!
and exploits them for idea brainstorming activities. Then one cross-pollinates the crowd with a different experience landscape by a getting different, unexpected solution 12.
and innovation by risk-taking‘entrepreneurial states'has played a key role in promoting technological innovation,
pull-need driven Closed innovation Open innovation Calculated risk High risk Investment companies are now adapting new processes and business models,
and taking risk for the R & D in order to create competitive advantage for business purposes.
Shifting our attention towards innovation ecosystems highlights the need to open existing innovation structures for communities of practice across the State/non-State divide to fully exploit local innovation potentials.
While investors secure property rights in potentially innovative products and firms at a comparably low financial risk
Providing all public services, especially security, health education and economic services through web portals and applications; Becoming a pilot area for new technologies such as 4g and 5g, Wimax, IPTV, Wi-fi points and Basaksehir mobile applications;
Implementing safety surveillance with networked tracking systems. O P E N I N N O V A t I O N 2. 0:
When it is very busy the system can be geared up to a higher light level, enabling surveillance of the crowd for security reasons.
and to jointly take risks in the uncertain route of innovation. A changing role for knowledge organisations Many relevant aspects in the relationship between open innovation and academia can be found in the context provided by the concept of 3rd Generation Universities.
Tendering processes emphasise risk management, based on rational problem-solving, stating that all information will be available in advance to support decision-making.
But it will also inevitably raise questions of privacy and security. Dealing with the ownership of the data is an important aspect,
and join the internal discussion or as a manager to take the huge risk to not listen to Silicon valley?
This programme should encourage more Europeans to take measured risks and reap the benefits of new higherexpectation businesses.
Joint Pathfinding occurs where research laboratories and business groups share resources, risks, and decisions jointly.
'When speaking at the opening of a newly expanded innovation facility in May of 2013, Obama added,‘We are seeing the pooling of research, of risk,
To make this work earlier in the innovation process the Commission is covering the risk in selected areas by precommercial procurement tools.
These procurements taking some risk can be very transformative by nature when looking at future services of public interest becoming more user-centric.
If this co-creativity and prototyping in real world settings would not take place there would be a real risk that the development work would lead to a win-lose setting between the existing players in the market,
the reduction of technology and business risks, as well as decreasing investment needs for SME, micro-organisations and start-ups,
) The main goal of the use-case is to create a service that identifies risk situations along an intra-logistics process chain
0 1 4 security for operators and goods; by increase safety and security, intra-logistics processes will
thus be improved. The Wellbeing Services Use Case The City of the Future Living Lab is involved in the ELLIOT Project within several use case scenarios (23.
The first Bulgarian prototype (TEMEO) of the cardio belt monitored online 24 hours per day was developed three years ago by Security Solutions Institute.
and completeness of the UX model avoided the risk of overlooking some UX types, elements and properties,
security is becoming a large concern for the consumer. While users are great lovers of integrated devices,
the security issues enhance the need of combining devices to ensure fighting cybercrime. One way to avoid the need of two electronic devices to ensure security is checking from the payment device itself that is actually using it.
This means being able to recognise some significant properties of the human being, such as fingerprints, iris, DNA,
Integrating a wallet into a smart phone needs a high level of security to protect from cybercrime.
Still, a smartphone has to be kept simple for consumers to avoid wrong usage leading to intrusion from a cybercriminals.
or providing for public security and safety at the local and national levels), the provision of public venture capital a traditional task for the industrial sphere.
and Security across the world'(8), 9.)‘Technology, innovation and entrepreneurship as drivers of knowledge societies'(9).(1) The area of‘Financial and Economic system'refers to financial and economic aspects of the effects of climate change.
Tilly 2007).(8) The area‘equity and security across the world'refers to equity and security as being basic prerequisites to foster
and support sustainable development (see, for example: UNDP 2011; Barth 2011a. 9) The area of‘technology, innovation and entrepreneurship as drivers of knowledge societies'emphasises the fact that a sustainable development in knowledge societies can only be achieved
At the same time, it is recognised that there is a missing element in this Triangle that is linked to the underlying limited ability to better exploit knowledge assets in Europe.
Examples are environmental destruction and pollution, climate changes, infectious diseases still a key threat to human life, untreatable neurodegenerative and malignant diseases, overpopulation and dramatic demographic imbalances,
that risk taking is a key step towards innovation; that building networks is instrumental, such as converting a blacksmith and pharmacist to supply chain providers;
then taking the risk of free floating information is worthwhile since there is always competition and somebody may pick up an idea before it is protected formally.
Ownership, accountability and personal risk taking are positioned at the centre of the innovation process (10.
and took risks. They created business ventures but also democratic civil society institutions. This entrepreneurial talent should be integrated within the most advanced KICS to bring fresh blood, a different sort of thinking and a‘hungry'immigrant mentality that remains the critical driver of Silicon valley's success (13.
and imagination to take calculated risks, fail, learn from the mistakes and resiliently continue on the chosen path. 70 O P E N I N N O V A t
Probably we need to think more in terms of risk and rewards sharing than in conditions for access.
and various levels or risk bearing abilities. Typically in the ecosystems the parties are in different stages of development and maturity
and government defaults on international and domestic debts (1). The source of the problem generally includes improper rules and policies, ineffective governance, failed surveillance systems,
albeit intangible, can provide valuable insights for searching a national benchmark as well as for future risk control.
and entities participating in the Chilean securities and insurance markets. Such mechanism enforces compliance with all laws
and has the power to impose sanctions (3). Pension fund investments are ruled also by risk criteria
and does not pose an immediate threat. Australia managed to avoid sharp downturns even amid the crisis due to booming demand for its raw materials from industrialising Asia, especially China.
and their potential future threat may raise some topics for further contemplation. Events Australia Chile Financial rescue-Cut interest rates by 100 basis points in October 2008.
Chile, Economic commission for latin america and the Caribbean (ECLAC), accessed from http://www. cepal. org/publicaciones/xml/4/40254/Chile. pdf 2013.11.12 (5) Central intelligence agency (CIA)( 2012) The World
Factbook, U s a. Central intelligence agency. Retrieved from https://www. cia. gov/library/publications/the-worldfactbook/index. html (6) International Labour Office (ILO)( April 2010) G20 Country Briefs Australia
*Abstract The economic downturn hit young people especially hard, limiting their opportunities to success. High unemployment, job insecurity,
Government Creating policies to avoid penalising the failure of entrepreneurship and foster taking risks. It is known only a small percentage of all startups will succeed.
and encourage him to take risks. Easy funding and tax breaks policies, among other activities to help start companies are very welcome.
in some states, existing databases of the Public Distribution System, the Indian food security system, exist only in the form of offline document files.
and risks of the initiative. Some have argued that most of the poor get deprived of what they need because of corruption and not lack of identity.
security, storage, and privacy are addressed. This requires a focus on transparency from the citizen's perspective.
discussing benefits, costs, and risks; and fostering active discussions and experience sharing and consensus building among stakeholders,
but it also raises the security risk of large withdrawals, notwithstanding privacy concerns. This is an instance where open ideation of the design challenge can generate new potential solutions.
however, comes with the risk of ignoring the diversity of the community itself, as well as opportunities to leverage ideas and solutions from communities outside the local.
Education, Health, Security, Citizenship, Agribusiness, Regional Development, Public Management, Logistic Infrastructure, Innovation and Technology, Environment, Energy Infrastructure,
that will mitigate the risks of failure and increase the chances of technological and business success and thus ensure a sustainable longer-term innovation ecosystem.
risk finance. Stage 3: Adopt & Promote projects, products, start-ups will continue to receive post-incubation support on the technology,
Open Incubation for Success EYIF Openeyif's approach of providing full incubation for the awarded grantees mitigates the risk of their potential failure and the subsequent loss of risk capital.
This approach is unique in comparison to other Open Innovation mechanisms in that it proactively mitigates risks instead of reactively managing risk of failure post-facto,
thereby inspiring young Europeans to take the risk to innovate, and inducing policy-makers and business leaders to share the risk by actively supporting youth innovation The network of business incubators across Europe will provide the grantees their choice of geographic location and specialisation.
The programme offered by the incubators will consist of several topics like Needs Filtering and Business plans, Brainstorming and Prototyping, Business models and Finance, Concept Development & Implementation,
enabling surveillance and emergency officials to keep an eye on the crowd or provide help when needed. A side effect might be that
including the municipality of Eindhoven, Polyground, the Dutch Institute for Technology Security and Safety, the association Crimi-Nee, Philips Lighting, Vinotion and the TU/e Intelligent Lighting Institute.
whether there is a risk for escalating behaviour. In the living lab a‘base camp'has been opened recently where data from various sources is collected
and combined to determine the real time level of the risk of escalation. Openremote provides an open platform that integrates different devices
when there is a higher risk for escalation. Historical data from past incidents is used now to find such correlations.
Based on the determined risk level, lighting scenarios are activated. For this purpose different lighting scenarios will be designed that aim to diffuse the escalation
or threats might be found. We contend that in a crowd empowered, open and collaborative economy,
ultimately mitigating the risk associated with a new product because the mass of customers already exist.
Why‘Low Risk'Innovation Is Costly Overcoming the Perils of Renovation and Invention, Accenture 2013 (3) Abernathy WJ. 1978.
These kinds of situations require flexibility and imagination and the knowledge of legal risk-zones.
The nature of the work evolves from legal compliance towards risk management. In a dynamic world, a 100%certainty may kill the business,
New Types of Risks In a fast-moving, very innovative business landscape, the risks involved maybe of a different kind compared to the more traditional and familiar ways of running businesses.
illustrates a new kind of technology related-risk the risk of not seeing the value of participating in the processes of developing new tech-related businesses.
A senior business executive once expressed to me, that even though a planned cooperation between two companies involved many risks,
These types of risks the risks of keeping out are usually outside the legal equation
Businesses are increasingly operating in hive-minds of strategic alliances and partnerships to share risks,
Data driven firms like Facebook, Amazon and Google, on the other hand, take the hacker way. They run experiments thousands upon thousands of them.
stimulating risk-taking, a focus on achieving results and support from management. Based upon earlier research.
of risk and the potential for breakthrough in manufacturing technology that only happen when we bring everyone together (2). In the core of the policy makers is to make the citizens happy in their ways of living,
) At the same time, innovation usually also bears risks and substantial challenges for SMES because of their structural disadvantages based on their liability of smallness (Chesbrough, 2010.
Carpenter and Petersen, 2002) and opportunities to spread risk among their small portfolios are limited often (van de Vrande et al.
increased willingness to take risks, and faster ability to react to changing environments. However, van de Vrande et al.
Due to their restricted abilities to spread risk, SMES cannot afford to experiment with open innovation activities (Parida et al.
Previous studies have found that the reduction of time-to-market and costs and risk,
A direct transfer of knowhow and certain skills between us and a direct competitor bears too much risk.
and risk avoidance. 3. 2. 1. Time. The majority of survey participants identified a lack of time as one of the main barriers to successful innovation.
often have difficulty analyzing project-related risks and the realization of future-related investments. These problems lead to a high level of insecurity and skepticism.
Interviewee 2: The financial part is a huge problem for us. Up to now, we have raised all financial means by our own
With their bureaucracy, the local policy and the state leave little or no scope for new ideas. 3. 2. 6. Risk avoidance.
which may increase the risk of innovation failure dramatically. According to existing literature also structural disadvantages (van de Vrande et al.
, sharing costs, sharing risks, faster product introduction, etc. to small firms in low-and medium-tech industries.
White space represents the business opportunities outside a company's current businesses that require a different business model to exploit.
Facing the risk of bankruptcy, reinventing the barometer was the only way out. With the help of a few innovation partners and subsidies from IWT (the Agency for Innovation by Science and Technology in Flanders) the open innovation journey started.
Turning businesses under the threat of commoditization into genuine experiences for customers is a difficult target for SMES
Accell took the commercial risk to buy the B lite at a predetermined price if Curana and its partners succeeded in producing the product before a particular deadline.
Lighting, for instance, is regulated highly on security issues, and a company such as Curana has no idea how to cope with these challenges.
and small innovation portfolios such that risks associated with innovation cannot be spread. SMES must rely on their innovation networks to find missing innovation resources.
It is about sharing risks, investing time and money together in new concepts. A company that engages in open innovation, therefore
Open innovation is not only about sharing costs and risks but also about sharing profits equitably. 71 6. Developing an open innovation network also requires that partners manage the balance between internal management of the company and external management of the network.
sharing costs, sharing risks, faster product introduction, etc. to small firms in low-and medium-tech industries does not make sense.
or risks they take. 3. Innovation networks need to be activated continuously. Inactivity is deadly for the network strength and partner commitment.
Furthermore, large firms that license technologies risk knowledge leaks with adverse competitive effects as a consequence.
In this way, the business unit can balance the risk of increased competition in the market with the royalty income it receives from licensing the technology.
because the venture needed considerable investments which were too big a risk for VCFS 80 in an early investment stage42.
because the risk of misappropriating the technology is very real. Philips'extensive evaluation of the technology did not pose a risk for the small engineering company,
however, because Philips'was reputed as a reliable innovation partner. Philips relies recurrently on new technologies from universities, specialized research labs,
Partners may have to bear considerable risks or investments in dedicated complementary assets. In open business models,
Building strong ties to cope with environmental and relational risks. The biggest challenge in an open innovation network is the market and technological risk on the one hand and the relational risk on the other hand.
Business model innovations are high-risk ventures because a firm must search for new technologies and develop new products.
Each entrepreneur we met took risks, sometimes considerable, and made investments. Imagining a new product is one thing,
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