Horizontal Open Innovation

An study on the Academy of Management site noted that a key contribution of the open innovation literature is the notion that firms need to access outside sources of ideas and complementary assets. A literature has blossomed that details a variety of open innovation modes. But emergent phenomena, including “outward open innovation” in which firms give away valuable intellectual property (IP), defy easy categorization. Moreover, because rivals could benefit, this type of open innovation activity flouts a central concern of the literature, appropriability: other firms might use the IP to compete in the local firm’s market. This raises the question, when can firms co-develop IP with rivals? We term this horizontal open innovation and argue that rivals can co-develop operational inputs, inputs that do not affect the cost or quality of a firm’s output.

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