Title - Open Innovative Ecosystem- Building an edge in competitive scenario

Name of the First Author & Corresponding Author – Dr. Priyanka Sharma, Assistant
Professor, Manipal University Jaipur.
Affiliation - Manipal University Jaipur.
Co-Author – Mr. Lagan Mahipal, Ex-Student, Manipal University Jaipur.
E-mail Address - priyankachotia1604@gmail.com
Phone Numbers – 9828269407

Open Innovative Ecosystem- Building an edge in competitive scenario

Abstract
Innovation is very essential for the organization to stay relevant and competitive in the market.
Without being innovative the survival becomes a big question. Open innovation is antithesis to the
traditional method, it gains the inputs from external sources, there is an inflow and outflow of
information and knowledge to boost the innovation ecosystem within the organization in
competitive environment. Based on systematic content analysis of the literature, the study focuses
on understanding the ecosystem building an edge in comparison to competitors.

Open innovation fosters the integrated and collaborative approach for value creation in the
ecosystem to develop and nurture the organization by building competitive advantage, the study
depicts that there is still a need to explore different perspective and applications of open innovation
in present context that can help the firms understand the ecosystem to create value system for
various stakeholders of the firm.

Keywords: Open Innovation, Ecosystem, Value Creation, Competitive Advantage

Introduction
Open Innovation is a means for solving problems and seeking solutions with the internal as well
as external sources for a holistic approach integrating various channels. It initiates a wider scope
for people to be involved for problem-solving which nurtures product and service development. It
is not just one way communication concept, but also a process where companies share and collect
information and resources, with communities and various stakeholders. Open innovations (OI)
start from companies inviting customers, public and other players in ecosystem to give their
valuable contributions.

On the other hand, closed innovation is a restricted approach where companies focus more on
research and development activities with an inside out mentality. Capital expenditure on this
technique is usually on higher side and results are focused on the inputs from within the
organization. It restricts business to challenge itself and prohibits for suggestions. Companies
leverage internal sources of ideas, it tends to have a full control on project operations, the result is
generally fabricated, as the approach is too restricted, which hardly leaves space for ideas and
innovations. Vanhaverbeke, W. (2013); mentioned the broadened role of open innovation, which
includes not only the new product development but also strengthen the business models and create
a competitive strength thereof. This approach looks for within the organization dimension, thus
may not be commercially valuable in some respect. Bigliardi et al; (2021), discussed the past,
present and future of OI, identified the thematic areas by reviewing the literature available
including collaborative frameworks, organizational context including that of performance,
external search, which were investigated since the beginning. Study identified how it evolved and
grew over the time, role of technology, understanding the importance of IPRs and development of
concerted structures in the organization that emerged over the years. Literature focused on
understanding OI and its importance with respect to specific industries like SMEs and
pharmaceuticals. The research in present scenario is linked and connected with various factors that
lead to understanding the developing role of OI. With globalization, R& D processes needs to be
developed and structured along with external sources in consideration. Human resources practices
need to be designed strategically and human capital management across the borders is an important
perspective and lastly the technological development and enhancement leads to understanding not
only the internal sources of information and ideas but also the contribution of external sources
which depicts the necessity of huge research effort.

Objective

With constant change in demand for product and services, innovation is an integral means to
stay relevant in the market. Meeting and managing the needs of the market require collaborative
and integrated effort which is not possible taking only internal sources into account. The study
thus focusses on how open innovation encompasses various interconnected ecosystem and the
strategic role it plays in co-creation, to gain competitive advantage.

Methodology
The study reviewed the literature on open innovation available from secondary sources including
various research papers and cases.

Building Ecosystem for Competitive Advantage

Traitler, H., et al; (2011) discussed that without innovation in the dynamic environment, the
organizational development is irrelevant, open innovation ecosystem helps in building synergy
and creating a competitive edge. Costa et al., (2020), revealed the role of open innovation to
develop sustainable ecosystem, which is important for the success of business, and is also a
contributor to digital transformation. Open innovation creates more of knowledge and value-based
processes. The study focused on role of human capital development by universities and how OI
strategies boost systems, to develop models, to cater to the dynamic environment by focusing on
internal and external sources. The research combining internal and external sources are integral
contributors in fostering sustainable development leading to co-creation dynamics in the
environment.

Curley et al; (2013), focused on the expanded role of OI not only to the corporate performance but
also to social conditions. It focused on the new paradigm shift towards value creation through
shared value sustainable development and overall human prosperity.

It is the user who are the adopter of new technologies ideas and services, it creates value for the
individuals or groups adapting it. Value creation is the prime focus that needs to be generated from
ecosystem of integrated collaboration and co-creation of various stakeholders. Market gap is
always present in some or the other way but not every person has the chance to identify it, open
innovation solves this problem by making people open for suggestions, it increases the chances of
creating a new product, which might not have been created by traditional means. New product
development creates a new market opportunity which is unexplored and is a pool of cash waiting
to be utilized.

Skordoulis et al; (2020) studied the process and product-based innovation in environmental
perspective aligned in association with open innovation. Firms taking care of environmental
concerns tend to build a competitive advantage. Study revealed that environmentally conscious
consumers tend to develop the affinity for such firms and are also ready to pay premium price for
the same. With firms innovating to improve the efficient and effective methods and processes in
the organization, it helps in economic benefit. Open innovation plays a significant role in giving
the direction for understanding external environment giving the firms a competitive edge.

Marketing of any product or service is one such aspect which companies take into consideration
and spend a huge amount of capital in doing so. With the help of open innovation ideology, the
potential people who might have not come across the brand will become more attached as they
become the contributors in OI. Masucci, et al; (2020) discussed that outbound open innovation
fosters technological advancement by building strategic business ecosystems that removes
bottlenecks. Streamlining of the ecosystems tends to create innovation that leads to value creation.
With collaborative and integrative systems building co-creation in the ecosystem, better innovative
products and services are developed.

Collaborative Approaches
A collaborative approach to develop a new product alongside customers, employees and other
stakeholders. It creates an open environment where pool of ideas is shared. An external
environment is involved in order to improve productivity and inculcate suggestions from the users.
It leads to better product advancement and product hits the declining stage very late and gives the
product a position to be the cash cows for a longer run. Battisti, E., et al; (2020), in an empirical
study investigated that the listed companies in Italian market had performed well by adapting to
open innovation in one or the other form. Adding more to the value creation for the shareholders
involving external collaborations like hackathons, startup collaborations, partnership and
association with external entities etc. achieved a competitive edge.

Hackathons is a basically a similar approach to open innovation. It focusses on minor details of

the product. It is generally adapted where time constrain is a big challenge. It creates a momentum
in a very short span of time. It also gives a company an opportunity to spot potential talent and
consider them for future hires.

Startup Acquisitions is also a common approach that the businesses adopt to acquire a startup. It
is usually done when company lack resources, time and required manpower. It increases the
innovative approach of the company and gives an opportunity to explore new market with no
barriers to build an empire from the start. It also gives the brand, a competitive advantage which
may lead to company expansion in various markets.

A strategic partnership enables brands to establish a joint identity which enables them to have a
better perceived value in eyes of customers. A premium price is charged to sell products. For
example, Puma and Mercedes-Benz are strategic partners, both operating in a different market
segment and sell products with both the brand logos.

Aquilani, B, et al; (2020) discussed about the challenging move from industry 4.0 to society 5.0
which includes the technological advancements, new business models that increases the efficiency
and effectiveness, the role of open innovation and that of value co-creation are important
contributors for such transitions. Economic advancement is the part of the society, in present
scenario, a holistic approach towards the overall development of the society is preferable, OI
becomes essential part for value creation, gaining competitive advantage and promoting social
welfare.

Importance of open innovation in the modern-day business practices

Huizingh, E. K, (2011) mentioned the concept of OI, when it is required, and the process related
to it. Recent developments due to globalization, agile environment, rise in technologies etc. led to
the adoption of the concept of OI and proved that the concept of doing it only within the
organization, is not that relevant as discussed by Gassmann, O. (2006). Modern day business
practices are majorly focused upon the customer value fulfillment. Open innovation would be
focused on providing a wider access pool of ideas and talent and would help the organizations in
tapping the untapped resources and ideas from a broader range of highly skilled and expert
personnel leading to the diverse opportunities.

Earlier a small majority of high-net-worth companies focused on OI but now the scenario has
changed even the small and medium sized companies are exploiting this option. They are
expanding by collaborating and integrating the ecosystem, which has ultimately increased the rate
of innovation in the economy pushing the economy to grow further. Greco, M., et al; (2017)
studied how the efficiency of OI is associated with the funds provided by local, national and
European authorities. The public authorities are trying to incentivize the firms for collaborating
with external sources i.e. promoting open innovation. It discussed the efficiency associated with
OI mentioning it’s theoretical and policy-based significance. The figure below clearly depicts the
companies using such innovation models and its importance:

Conclusion
Organizations with the support of open innovation have been able to utilize their resources where
they are required and have been able to increase the efficiency, as they are able to leverage the
external partners expertise and infrastructure which would help the organizations to stay ahead in
the game and get the competitive edge. They also get a better understanding of the customers
through the insights that are provided by the collaboration with multiple entities. Organizations in
overall have benefitted from the open innovation in terms of customer satisfaction by delivering
high quality products to them thus increasing their profits which leads to value creation.

Businesses are further able to retain and attract bright minds in the organization as the open
innovation concept is carried further. Surveys conducted have shown that millennials and Gen Z
employees look for a work culture that boosts the innovation in them. Cost spend on research and
development is huge even some companies spend their majority on developing new products, for
instance, Apple inc. spends approximately 78% of its product revenue on research, but on the other
hand adapting open innovation ecosystem companies can collaborate with various stakeholders on
doing the same task without spending huge amount of money on maintaining heavy duty resources.
Multiple brains will be operating on the same project making the chances of error negligible.
Thereby delivering the product faster and taking the first-movers advantage in the industry.
Government, policymakers should make the laws and regulations to foster OI which can create
well being for the society and world at large.

Limitations and Future Scope of Study

Understanding the variables affecting the innovation becomes necessary to foster the system in the
organizational setting. Environmental factors also play a key role in building the ecosystem to
innovative practices and processes which was not considered in the study. Innovation ecosystem
co-create the synergy combining various stakeholders and objects for movement of information
for value creation. The size and nature of organization are also limitations, it becomes easy and
aligned for organizations with large resources to adapt to OI.

The future research can focus on various variables and contribution from stakeholders. With the
agility in the environment, the study can focus on the ecosystem and the tools fostering open
innovation. There is still a need to explore different perspective and applications of open
innovation in present context that can help the firms understand the ecosystem to create value
system for various stakeholders of the firm. In future study, focus on the technological
advancement, business models encompassing societal, technological, economic, environmental
perspective can be developed.

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