Understanding the advantages of open innovation practices in corporate venturing in terms of real options

Part of the advantages of using an open innovation (compared to closed innovation) in corporate venturing can be explained by applying the real options approach. Open innovation in risk-laden activities such as corporate venturing has the following advantages: i. benefits from early involvement in n...

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Bibliographic Details
Published in2008 IEEE International Conference on Industrial Engineering and Engineering Management pp. 954 - 958
Main Authors Vanhaverbeke, W.W., Van de Vrande, V.
Format Conference Proceeding
LanguageEnglish
Published IEEE 01.12.2008
Subjects
Companies
Delay
Innovation management
Investments
managing uncertainty
Market opportunities
open innovation
Real options
Research and development
Risk management
subsequent investments in innovations
Technological innovation
Uncertainty
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Summary:Part of the advantages of using an open innovation (compared to closed innovation) in corporate venturing can be explained by applying the real options approach. Open innovation in risk-laden activities such as corporate venturing has the following advantages: i. benefits from early involvement in new technologies or business opportunities, ii. delayed financial commitment, iii. early exits reducing the downward losses, and iv. delayed exit in case it spins off a venture. We furthermore argue that these benefits do not automatically materialize. Innovation firms have to learn new skills and routines to develop the full `real option¿-potential of open innovation practices.
ISBN:9781424426294
1424426294
ISSN:2157-3611
DOI:10.1109/IEEM.2008.4738011