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Does IP Strategy Have to Cripple Open Innovation?

October 1, 2009 | Oliver Alexy, Paola Criscuolo, Ammon Salter | Workplace, Teams, & Culture
While the protection of intellectual property, or IP, seems to be at odds with a company's pursuit of
open innovation, or OI--the selective use of research carried out elsewhere--businesses in the know
can align these two approaches. An appropriate IP strategy can actually be an enabler of OI activities. In
fact, an increasing number of companies, such as International Business Machines Corp., are involved
in interconnected "ecosystems"--critically dependent on cooperating with other parties to generate
innovations and profits.
The authors' research has found that the enabling function of IP depends on the specific circumstances
under which companies engage in OI. Two variables in particular have emerged as critical determinants:
the technological environment in which the business is active, and the knowledge distribution
among potential collaborators.
Each variable is presented as having two possible values. The technological environment, for instance, is
either calm or turbulent. Concerning the nature of innovative knowledge distribution, external knowledge
can be thought of as residing either with the few (in puddles) or with the many (in oceans).
By combining these two dimension sets, and thus creating four possible scenarios, we provide a better
sense of a firm's most appropriate IP/IO strategy. Depending on the category into which the company
falls, IP plays a different role as an enabler of OI.
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