Externalities of openness in innovation

Stephen Roper, Priit Vahter, James H. Love

Research output: Contribution to journalArticle

Abstract

Discussion of open innovation has typically stressed the benefits to the individual enterprise from boundary-spanning linkages and improved internal knowledge sharing. In this paper we explore the potential for wider benefits from openness in innovation and argue that openness may itself generate positive externalities by enabling improved knowledge diffusion. The potential for these (positive) externalities suggests a divergence between the private and social returns to openness and the potential for a sub-optimal level of openness where this is determined purely by firms' private returns. Our analysis is based on Irish plant-level panel data from manufacturing industry over the period 1994-2008. Based on instrumental variables regression models our results suggest that externalities of openness in innovation are significant and that they are positively associated with firms' innovation performance. We find that these externality effects are unlikely to work through their effect on the spread of open innovation practices. Instead, they appear to positively influence innovation outputs by either increasing knowledge diffusion or strengthening competition. Our evidence on the significance of externalities from openness in innovation provides a rationale for public policy aimed at promoting open innovation practices among firms.
Original languageEnglish
Pages (from-to)1544-1554
Number of pages11
JournalResearch policy
Volume42
Issue number9
Early online date19 Jun 2013
DOIs
Publication statusPublished - Nov 2013

Fingerprint

Innovation
Externalities
Openness
Industry
Open innovation
Knowledge diffusion
Positive externalities

Bibliographical note

This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

Funding: The research in this paper was funded by the ESRC under award RES-062-23-2767

Keywords

  • knowledge externalities
  • open innovation
  • externalities of openness
  • Ireland

Cite this

Roper, S., Vahter, P., & Love, J. H. (2013). Externalities of openness in innovation. Research policy, 42(9), 1544-1554. https://doi.org/10.1016/j.respol.2013.05.006
Roper, Stephen ; Vahter, Priit ; Love, James H. / Externalities of openness in innovation. In: Research policy. 2013 ; Vol. 42, No. 9. pp. 1544-1554.
@article{8fa45f79a735459090efe87cadbc1b17,
title = "Externalities of openness in innovation",
abstract = "Discussion of open innovation has typically stressed the benefits to the individual enterprise from boundary-spanning linkages and improved internal knowledge sharing. In this paper we explore the potential for wider benefits from openness in innovation and argue that openness may itself generate positive externalities by enabling improved knowledge diffusion. The potential for these (positive) externalities suggests a divergence between the private and social returns to openness and the potential for a sub-optimal level of openness where this is determined purely by firms' private returns. Our analysis is based on Irish plant-level panel data from manufacturing industry over the period 1994-2008. Based on instrumental variables regression models our results suggest that externalities of openness in innovation are significant and that they are positively associated with firms' innovation performance. We find that these externality effects are unlikely to work through their effect on the spread of open innovation practices. Instead, they appear to positively influence innovation outputs by either increasing knowledge diffusion or strengthening competition. Our evidence on the significance of externalities from openness in innovation provides a rationale for public policy aimed at promoting open innovation practices among firms.",
keywords = "knowledge externalities, open innovation, externalities of openness, Ireland",
author = "Stephen Roper and Priit Vahter and Love, {James H.}",
note = "This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Funding: The research in this paper was funded by the ESRC under award RES-062-23-2767",
year = "2013",
month = "11",
doi = "10.1016/j.respol.2013.05.006",
language = "English",
volume = "42",
pages = "1544--1554",
journal = "Research policy",
issn = "0048-7333",
publisher = "Elsevier",
number = "9",

}

Roper, S, Vahter, P & Love, JH 2013, 'Externalities of openness in innovation', Research policy, vol. 42, no. 9, pp. 1544-1554. https://doi.org/10.1016/j.respol.2013.05.006

Externalities of openness in innovation. / Roper, Stephen; Vahter, Priit; Love, James H.

In: Research policy, Vol. 42, No. 9, 11.2013, p. 1544-1554.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Externalities of openness in innovation

AU - Roper, Stephen

AU - Vahter, Priit

AU - Love, James H.

N1 - This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Funding: The research in this paper was funded by the ESRC under award RES-062-23-2767

PY - 2013/11

Y1 - 2013/11

N2 - Discussion of open innovation has typically stressed the benefits to the individual enterprise from boundary-spanning linkages and improved internal knowledge sharing. In this paper we explore the potential for wider benefits from openness in innovation and argue that openness may itself generate positive externalities by enabling improved knowledge diffusion. The potential for these (positive) externalities suggests a divergence between the private and social returns to openness and the potential for a sub-optimal level of openness where this is determined purely by firms' private returns. Our analysis is based on Irish plant-level panel data from manufacturing industry over the period 1994-2008. Based on instrumental variables regression models our results suggest that externalities of openness in innovation are significant and that they are positively associated with firms' innovation performance. We find that these externality effects are unlikely to work through their effect on the spread of open innovation practices. Instead, they appear to positively influence innovation outputs by either increasing knowledge diffusion or strengthening competition. Our evidence on the significance of externalities from openness in innovation provides a rationale for public policy aimed at promoting open innovation practices among firms.

AB - Discussion of open innovation has typically stressed the benefits to the individual enterprise from boundary-spanning linkages and improved internal knowledge sharing. In this paper we explore the potential for wider benefits from openness in innovation and argue that openness may itself generate positive externalities by enabling improved knowledge diffusion. The potential for these (positive) externalities suggests a divergence between the private and social returns to openness and the potential for a sub-optimal level of openness where this is determined purely by firms' private returns. Our analysis is based on Irish plant-level panel data from manufacturing industry over the period 1994-2008. Based on instrumental variables regression models our results suggest that externalities of openness in innovation are significant and that they are positively associated with firms' innovation performance. We find that these externality effects are unlikely to work through their effect on the spread of open innovation practices. Instead, they appear to positively influence innovation outputs by either increasing knowledge diffusion or strengthening competition. Our evidence on the significance of externalities from openness in innovation provides a rationale for public policy aimed at promoting open innovation practices among firms.

KW - knowledge externalities

KW - open innovation

KW - externalities of openness

KW - Ireland

UR - http://www.scopus.com/inward/record.url?scp=84878961704&partnerID=8YFLogxK

U2 - 10.1016/j.respol.2013.05.006

DO - 10.1016/j.respol.2013.05.006

M3 - Article

AN - SCOPUS:84885666376

VL - 42

SP - 1544

EP - 1554

JO - Research policy

JF - Research policy

SN - 0048-7333

IS - 9

ER -