outbound innovation

1. Outbound open innovation & its
effect on firm performance:
examining environmental
influences-by Ulrich Lichtenthaler.
PRESENTER: DANIEL LAMECK
12 TH NOV.2013

2. Outline
Introduction
Segment of innovation
Outbound & inbound open innovation
Open innovation
Theories of outbound open innovation
Theories of environmental moderators
Hypotheses of the theories
 out licensing
Corporate strategies
Methodology
Discussion and conclusion .

3. Introduction
There are two dimensions firms opt for innovation
Inbound innovation and
Outbound innovation
Author of this article discusses the relationship between outbound
open R&D strategies and firm performance

4. Segment of innovation
Tradition(closed innovation)
Focus on internal development of new tech.& apply to their own
products
Open innovation
Large volume of technologies acquired from external source
Coupled innovation
Involves internal and external technology sources and external
technology commercialization channels

5. Outbound & inbound open innovation
Outbound
Its an outward technology transfer where by firms can seek for
external organizations with business models suitable to commercialize a
technology or addition to its internal application
Inbound
Its an inward technology transfer which leverage the discoveries of
others because firms need not to rely on their own r&d.

6. Open innovation
(A)outbound open innovation
Outward technology transfer whereby firms can look for external
organizations with business models that’s suits to commercialize a
technology exclusively or adds to its internal application.
(B) Inbound open innovation
Inward technology transfer which describes the practice of leveraging
the discoveries of others because firms need not to rely exclusively own
their own R&D.

7. Theories -0utbound open innovation
Outbound open innovation and firm performance
Refers to systematically relying on firm`s dynamic capabilities of
internally and externally carrying out the major technology
management tasks along the innovation process.
Although outwards technology its not the core activity of most
companies, some pioneering firms have achieved major benefits.
Closed innovation strategies limit the return on firm`s R&D
expenditures because they lead to lower licensing revenues, which
often carry high profit margins.

8. Theories-Environmental moderators
Patent
protection
Competitive
intensity
Environmental
Transaction
rate
Technological
turbulence

9. Hypothesis-01
Patent protection
Moderates relationship between outbound open innovation and firm
performance
Regarded as an essential facilitator of successful outbound open
innovation
Strong patent protection affects a firm`s possibilities of profiting from
outbound open innovation

10. Hypothesis - 02
Technological turbulence
Moderates the relationship between outbound open innovation and
firm performance
Technological turbulence which describes the rate of technological
change reduces a firms' possibilities of capturing value from its
technologies.
As consequence, higher technological turbulence increases a firms`
benefits from pursuing an outbound open innovation strategy

11. Hypothesis-03
Transaction rate
Moderates the relationship between outbound open innovation and
firm performance.
A higher degree of market perfection based on frequent transactions
seems to constitute a facilitator of additional interfirm technology
transfers.
A high rate of technology transactions helps firms to capture the
benefits from outbound open innovation strategies.

12. Hypothesis-04
Competitive intensity
Moderates relationship between outbound open innovation and
performance
Competitive intensity in technology markets may affect the outcome of
open innovation strategies
Firms may achieve higher performance increases from outbound
innovation despite additional competition that they face in technology
market.

13. Out licensing- e.g. Texas instruments
By means of outbound open strategies: Firms attempt to achieve monetary & strategic opportunities
 Firms are reluctant to transfer technologies, reasons can be;
Fear to strengthen competitors by selling “corporate crown jewels”
pioneering firms like Texas instruments -annual licensing revenues
Texas Instruments Inc. is an American company that designs and makes
semiconductors, which it sells to electronics designers and
manufacturers globally

14. Corporate strategy
Outbound open innovation regarded as
Part of corporate strategy where by;
Firms simultaneously exploit technology inside and outside
For instance IBM –achieved benefit by relying on open innovation strategic decision.
IBM-licensing revenue of more than $ 1.2 billion in 2004(corporate strategy)
Involves major risks:
•weakens firms competitive position based on transferring relevant knowledge.
•Firms focuses on their products business rather than transfer technology
As the results firms experience difficulties.

15. Suggestion
 formulate an open innovation strategy which guides firms` individual
“keep or sell” decision in addition to “make or buy”
Methodology
Scholars used two data set-survey from Lichtenthaler &
Ernst`s(2007)study and combined with performance data from financial
database and annual reports.
155 firms participated, response rate 37.6%
Used linear regression models then
Test for moderating effects, moderated multiple regression analyses
Shown on table 1&2

16. Analytical procedures

17. Results of regression

18. Cont. methodology
Outbound innovation strategy
Measurements comprised four items on firms` willingness to commercialize all
technological knowledge.
Firm performance
Used a popular financial indicator of profitability,(ROS),to measure firm
performance.
Environmental moderators
Which includes construct of patent protection, importance of technological
change, transaction rate and competitive intensity
Control variables
Firm size ,R&D intensity, cross industry approach and country of origin

21. Discussion
Firms should not focus on established closed innovation strategies
Study provides reasons to managers to open up the innovation
processes of their companies
Results emphasize the importance of outbound open innovation
because open strategies significantly contribute to firm performance.

22. Conclusion
This studies expressed the importance and positive effect of outbound
open innovation strategies on firm performance.
Its among the first rare quantitative empirical studies that
demonstrates a positive relationship between outbound open
innovation and firm performance.

23. c.