Changes in the competitive environment, globalization and the fast technological
innovation rate of today have called for a shift in the corporate mindset of industrial
firms. The traditional closed model of research and development (R&D) inside the
firms’ boundaries, which optimally ends with a regular commercialization of the
invented product, has increasingly been challenged (Chesbrough, 2003). The
emerged concept of the open innovation paradigm comprises corporate activities of
either acquiring external knowledge or exploiting internal knowledge besides the
traditional ways of product commercialization. The latter refers to knowledge exploitation
or more specifically to external technology commercialization (ETC)
(Lichtenthaler & Ernst, 2007) and represents the core field of this study.
The increased interest in ETC across industries is a trend stemming from industrial
and managerial practice rather than from theory (Lichtenthaler, 2010a). However,
more and more contributions put their focus on the concept of external knowledge
exploitation and its implications (e.g. Fosfuri, 2006; Gassmann & Enkel, 2004;
Lichtenthaler, 2005, 2010b). Most of these studies either generally discuss the ETC
particularities or specifically examine licensing strategies as means of ETC and their
corporate impact. It has been argued that besides the purely financial aspects firms
have different motives for engaging in knowledge exploitation activities, such as the
access to another company’s technology portfolio (Rivette & Kline, 1999), the identification
of intellectual property infringements (Koruna, 2004) or the increase in
speed of the R&D activities by realized learning effects (Lichtenthaler & Ernst,
2007). This case study concentrates on a firm’s surroundings which affect the strategic
ETC decision from two dimensions. First, extrinsic factors which lay beyond
managerial reach, such as the industry in which the organization operates. Second,
intrinsic, strategic factors like the management of R&D activities as well as the steering
of a dedicated ETC unit are investigated.
By scrutinizing contemporary theory on open innovation, external technology commercialization
and firm characteristics, a conceptual framework will be created
which will be later challenged against the findings of a case study analysis in a large
diversified conglomerate.
Table of Contents
1 Introduction
1.1 Problem Statement
1.2 Relevance of the Research Question
1.3 Research Approach
1.4 Outline of the Paper
2 Theory, Working Propositions and Conceptual Framework
2.1 The Open Innovation Paradigm
2.1.1 Summarizing an Approach to a Holistic Open Innovation Framework
2.2 Context of Open Innovation
2.2.1 The Diversified Firm and its Boundaries
2.2.2 Characteristics of the Extrinsic Determinants
2.3 Outside-In versus Inside-Out Innovation
2.3.1 Licensing-Out
2.3.2 Spin-Offs
2.4 Characteristics of the Intrinsic Determinants
2.4.1 R&D Independence
2.4.2 Dedicated ETC Unit
2.5 Conceptual Framework
3 Methodology
3.1 Research Design
3.2 Case Selection
3.3 Data Collection
3.4 Data Analysis
4 Analyzing the Data
4.1 Presenting the Case
4.2 Extrinsic Determinants
4.2.1 Difference among Sectors
4.2.2 Sector Size
4.2.3 Sector Industry
4.2.4 Defining the Final Propositions for Extrinsic Determinants
4.3 Intrinsic Determinants
4.3.1 R&D Independence
4.3.2 Dedicated ETC Unit
4.3.3 ETC Unit and Business Unit Alignment
4.4 Market Strategy
5 Discussion and Conclusion
5.1 Discussing the Results
5.2 Contributions to Theory and Management
5.3 Limitations and Further Research
5.4 Conclusion
Research Objectives and Key Themes
The research investigates the factors that influence external technology commercialization (ETC) in large, laterally diversified firms. The primary research question addresses why and how these organizations engage in inside-out innovation activities and which internal and external determinants guide these strategies.
- Analysis of extrinsic determinants like industry characteristics and sector dynamics.
- Evaluation of intrinsic/strategic levers, including R&D independence and the role of dedicated ETC units.
- Investigation of market strategies, such as licensing-out and corporate spin-offs.
- Examination of the alignment between corporate-level ETC units and individual business units.
- Development of a conceptual framework validated through a single case study of a multinational conglomerate.
Excerpt from the Book
Competitive Environment
While analyzing the data of the extrinsic environment which either stimulates or obstructs external technology commercialization processes, it becomes obvious that the competitive surroundings of a firm are highly germane. As it was shown in a previous example, the fear to lose a technological advantage to competitors while transferring knowledge has a high impact on the decision making process. However, fierce competition does not always manifest a barrier for external knowledge transfer. One major non-monetary goal of ETC, which has been described in the theory part of this study, is the establishment of industry standards. This is of particular interest if the established standard allows the firm to generate additional revenues with consecutive products or even maintenance services.
In the specific case of REPERTUS, the Healthcare sector with its product portfolio increasingly profits from licensing out parts of its technologies. On the one hand, it generates revenues from licensing fees. On the other hand, the customer must buy additional products to carry out the needed operations (e.g. specific inspections). In 2001, REPERTUS designed a system for Immunoassay analyses for scientific research labs with facing a variety of testing demands. This system was coupled with the REPERTUS database connecting research inquiries worldwide. If clients need fast tests (240 tests/hour) or if they want to reduce their administrative tasks by using the data archive, the client had to pay individuallycalculated fees. The technology itself, the hardware system for the analysis, was licensed out to a third party which then sold the package. “With this process we could reach a much broader market than before. Even small and independent labs could use this technology… For our industry, this is a completely new business model and I heard rumors that XX [Competitor] is currently planning to launch a similar concept” (Healthcare engineer).
Summary of Chapters
1 Introduction: Introduces the shift from closed to open innovation and identifies the research gap regarding external technology commercialization in diversified firms.
2 Theory, Working Propositions and Conceptual Framework: Reviews existing literature on open innovation and develops working propositions based on extrinsic and intrinsic determinants of ETC.
3 Methodology: Details the qualitative research design, the selection of the single case study (REPERTUS AG), and the approach to data collection and analysis.
4 Analyzing the Data: Presents empirical findings, challenges the working propositions, and derives the final framework based on observed industry and strategic factors.
5 Discussion and Conclusion: Synthesizes the results, highlights contributions to theory and management, and provides limitations and outlook for further research.
Keywords
Open Innovation, External Technology Commercialization, ETC, Diversified Firms, Inside-Out Innovation, Licensing-Out, Spin-Offs, R&D Independence, Desorptive Capacity, Knowledge Exploitation, Technology Transfer, Business Unit Alignment, Conglomerate, Competitive Environment, Intellectual Property Rights.
Frequently Asked Questions
What is the core focus of this research?
The research focuses on the determinants of external technology commercialization (ETC) in large, laterally diversified industrial firms within the context of the open innovation paradigm.
What are the primary themes discussed in the work?
Key themes include the distinction between extrinsic (industry-related) and intrinsic (strategic) determinants, the role of dedicated ETC units, the impact of R&D independence, and the choice between different market strategies like licensing and spin-offs.
What is the primary research objective?
The primary objective is to investigate why and how diversified technology firms engage in specific external technology commercialization activities, aiming to develop a validated conceptual framework.
Which scientific method is utilized?
The study employs a qualitative research design, specifically a single case study approach, to gain a deep understanding of organizational processes and environmental factors.
What topics are covered in the main body of the work?
The main body covers the development of a theoretical framework, the methodology of the empirical investigation, and a detailed analysis of the case company, REPERTUS AG, regarding its sector-specific ETC activities.
Which keywords best characterize this work?
Key terms include Open Innovation, External Technology Commercialization (ETC), Knowledge Exploitation, Diversified Firms, and Desorptive Capacity.
How does the author define the role of a dedicated ETC unit?
A dedicated ETC unit acts as a centralized body responsible for the identification, evaluation, and commercialization of non-core technologies, serving as a mediator between corporate targets and business unit needs.
What is the "Not-Sold-Here" syndrome as mentioned in the study?
It refers to the phenomenon where business units or R&D teams show resistance to licensing out their technologies, often due to a personal attachment to the products or a feeling of being ignored by corporate strategy.
What impact does R&D independence have on ETC?
The study concludes that a certain degree of R&D independence promotes an "innovative habitat," which increases the emergence of non-core technologies that can subsequently be commercialized externally.
Why was the "Sector Size" proposition rejected?
Empirical analysis revealed that the frequency and intensity of ETC are independent of the sector's absolute size; rather, industry-specific characteristics like legal environment and product life cycle are the true drivers.
- Quote paper
- David Heider (Author), 2011, External Technology Commercialization in Diversified Firms in the Context of the Open Innovation Paradigm, Munich, GRIN Verlag, https://www.grin.com/document/190974
