IDEAS home Printed from https://ideas.repec.org/a/eee/techno/v114y2022ics0166497221002182.html
   My bibliography  Save this article

Managing the risks and motivations of technology managers in open innovation: Bringing stakeholder-centric corporate governance into focus

Author

Listed:
  • Shaikh, Ibrahim
  • Randhawa, Krithika

Abstract

Open innovation (OI) has drawn significant attention over the years, and there is considerable evidence documenting the benefits of technology firms opening the R&D process to external stakeholders. Less appreciated, however, are the intra-organizational risks of misaligned managerial motives and asymmetries across different stakeholders that are also invariably associated with OI. In this conceptual paper, we draw on stakeholder theory and use examples from the high-tech industry to underscore the corporate governance practices (rewards and control mechanisms) that incumbent technology firms can implement to minimize these OI risks. We develop a tripartite scheme of OI governance to clarify how senior leaders (primary agents) can be incentivized to generate OI from the top, how project leaders (secondary agents) can be motivated to absorb OI at the backend, and how external stakeholders (tertiary agents) can be engaged to disseminate the benefits of OI to society. We contribute to the discussion on the paradox of OI by demonstrating that despite senior leaders’ enthusiasm to generate OI, their current emphasis on appeasing myopic shareholders unwittingly sabotages the absorption and dissemination of OI at the backend, preventing incumbent companies from institutionalizing OI to benefit society. We highlight the value of holistic stakeholder centric OI governance as a superior alternative to the shareholder primacy model currently adopted by mature technology companies. To institutionalize OI fully, we stress the value of using non-pecuniary rewards and informal controls to ensure OI creates stakeholder value. Several implications follow for managers and scholars to mitigate OI risks and to advance our understanding of OI stakeholder governance to create shared value.

Suggested Citation

  • Shaikh, Ibrahim & Randhawa, Krithika, 2022. "Managing the risks and motivations of technology managers in open innovation: Bringing stakeholder-centric corporate governance into focus," Technovation, Elsevier, vol. 114(C).
  • Handle: RePEc:eee:techno:v:114:y:2022:i:c:s0166497221002182
    DOI: 10.1016/j.technovation.2021.102437
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0166497221002182
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.technovation.2021.102437?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mariana Mazzucato, 2018. "Mission-oriented innovation policies: challenges and opportunities," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(5), pages 803-815.
    2. Hannen, Julian & Antons, David & Piller, Frank & Salge, Torsten Oliver & Coltman, Tim & Devinney, Timothy M., 2019. "Containing the Not-Invented-Here Syndrome in external knowledge absorption and open innovation: The role of indirect countermeasures," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    3. Michael C. Jensen, 2010. "Value Maximization, Stakeholder Theory, and the Corporate Objective Function," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 32-42, January.
    4. David J. TEECE, 2008. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," World Scientific Book Chapters, in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 5, pages 67-87, World Scientific Publishing Co. Pte. Ltd..
    5. Paul A. David, 2004. "Understanding the emergence of 'open science' institutions: functionalist economics in historical context," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 13(4), pages 571-589, August.
    6. Klein, Peter G. & Mahoney, Joseph T. & McGahan, Anita M. & Pitelis, Christos N., 2012. "Who Is in Charge? A Property Rights Perspective on Stakeholder Governance," Working Papers 12-0102, University of Illinois at Urbana-Champaign, College of Business.
    7. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58, January.
    8. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
    9. Anu Wadhwa & Isabel Maria Bodas Freitas & M. B. Sarkar, 2017. "The Paradox of Openness and Value Protection Strategies: Effect of Extramural R&D on Innovative Performance," Organization Science, INFORMS, vol. 28(5), pages 873-896, October.
    10. Lerner, Josh & Tirole, Jean, 2001. "The open source movement: Key research questions," European Economic Review, Elsevier, vol. 45(4-6), pages 819-826, May.
    11. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    12. Luigi Zingales, 2000. "In Search of New Foundations," Journal of Finance, American Finance Association, vol. 55(4), pages 1623-1653, August.
    13. Zobel, Ann-Kristin & Lokshin, Boris & Hagedoorn, John, 2017. "Formal and informal appropriation mechanisms: The role of openness and innovativeness," Technovation, Elsevier, vol. 59(C), pages 44-54.
    14. Bodas Freitas, Isabel Maria & Geuna, Aldo & Rossi, Federica, 2013. "Finding the right partners: Institutional and personal modes of governance of university–industry interactions," Research Policy, Elsevier, vol. 42(1), pages 50-62.
    15. Teece, David J., 2018. "Profiting from innovation in the digital economy: Enabling technologies, standards, and licensing models in the wireless world," Research Policy, Elsevier, vol. 47(8), pages 1367-1387.
    16. Felin, Teppo & Zenger, Todd R., 2014. "Closed or open innovation? Problem solving and the governance choice," Research Policy, Elsevier, vol. 43(5), pages 914-925.
    17. Ann-Kristin Zobel & Benjamin Balsmeier & Henry Chesbrough, 2016. "Does patenting help or hinder open innovation? Evidence from new entrants in the solar industry," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 25(2), pages 307-331.
    18. Ashish Arora & Sharon Belenzon & Andrea Patacconi, 2018. "The decline of science in corporate R&D," Strategic Management Journal, Wiley Blackwell, vol. 39(1), pages 3-32, January.
    19. Jay B. Barney, 2018. "Why resource‐based theory's model of profit appropriation must incorporate a stakeholder perspective," Strategic Management Journal, Wiley Blackwell, vol. 39(13), pages 3305-3325, December.
    20. Henry Chesbrough & Richard S. Rosenbloom, 2002. "The role of the business model in capturing value from innovation: evidence from Xerox Corporation's technology spin-off companies," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 11(3), pages 529-555, June.
    21. Russell W. Coff, 2010. "The coevolution of rent appropriation and capability development," Strategic Management Journal, Wiley Blackwell, vol. 31(7), pages 711-733, July.
    22. Mary J. Benner & Ram Ranganathan, 2013. "Divergent Reactions to Convergent Strategies: Investor Beliefs and Analyst Reactions During Technological Change," Organization Science, INFORMS, vol. 24(2), pages 378-394, April.
    23. Henkel, Joachim & Schöberl, Simone & Alexy, Oliver, 2014. "The emergence of openness: How and why firms adopt selective revealing in open innovation," Research Policy, Elsevier, vol. 43(5), pages 879-890.
    24. Yan†Leung Cheung & Ping Jiang & Piman Limpaphayom & Tong Lu, 2010. "Corporate Governance in China: a Step Forward," European Financial Management, European Financial Management Association, vol. 16(1), pages 94-123, January.
    25. Robert Gibbons & Rebecca Henderson, 2012. "Relational Contracts and Organizational Capabilities," Organization Science, INFORMS, vol. 23(5), pages 1350-1364, October.
    26. Robert A. Burgelman, 1991. "Intraorganizational Ecology of Strategy Making and Organizational Adaptation: Theory and Field Research," Organization Science, INFORMS, vol. 2(3), pages 239-262, August.
    27. Brice Dattée & Oliver Alexy & Erkko Autio, 2018. "Maneuvering in Poor Visibility : How Firms Play the Ecosystem Game when Uncertainty is High," Post-Print hal-02276702, HAL.
    28. Granstrand, Ove & Holgersson, Marcus, 2020. "Innovation ecosystems: A conceptual review and a new definition," Technovation, Elsevier, vol. 90.
    29. Randhawa, Krithika & Wilden, Ralf & Gudergan, Siegfried, 2021. "How to innovate toward an ambidextrous business model? The role of dynamic capabilities and market orientation," Journal of Business Research, Elsevier, vol. 130(C), pages 618-634.
    30. Graham, John R. & Harvey, Campbell R. & Rajgopal, Shiva, 2005. "The economic implications of corporate financial reporting," Journal of Accounting and Economics, Elsevier, vol. 40(1-3), pages 3-73, December.
    31. Toru Yoshikawa & Lai Si Tsui-Auch & Jean McGuire, 2007. "Corporate Governance Reform as Institutional Innovation: The Case of Japan," Organization Science, INFORMS, vol. 18(6), pages 973-988, December.
    32. Mary J. Benner & Todd Zenger, 2016. "The Lemons Problem in Markets for Strategy," Strategy Science, INFORMS, vol. 1(2), pages 71-89, June.
    33. William Lazonick, 2007. "The US stock market and the governance of innovative enterprise ," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 16(6), pages 983-1035, December.
    34. William Lazonick & Mariana Mazzucato, 2013. "The risk-reward nexus in the innovation-inequality relationship: who takes the risks? Who gets the rewards ?," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(4), pages 1093-1128, August.
    35. Chesbrough, Henry & Tucci, Christopher L., 2020. "The Interplay Between Open Innovation and Lean Startup, or, Why Large Companies Are Not Large Versions of Startups," Strategic Management Review, now publishers, vol. 1(2), pages 277-303, June.
    36. Dahlander, Linus & Gann, David M., 2010. "How open is innovation?," Research Policy, Elsevier, vol. 39(6), pages 699-709, July.
    37. Mary J. Benner & Mary Tripsas, 2012. "The influence of prior industry affiliation on framing in nascent industries: the evolution of digital cameras," Strategic Management Journal, Wiley Blackwell, vol. 33(3), pages 277-302, March.
    38. Gautam Ahuja & Russell W. Coff & Peggy M. Lee, 2005. "Managerial foresight and attempted rent appropriation: insider trading on knowledge of imminent breakthroughs," Strategic Management Journal, Wiley Blackwell, vol. 26(9), pages 791-808, September.
    39. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    40. Margit Osterloh & Bruno S. Frey, 2000. "Motivation, Knowledge Transfer, and Organizational Forms," Organization Science, INFORMS, vol. 11(5), pages 538-550, October.
    41. Carliss Baldwin & Eric von Hippel, 2011. "Modeling a Paradigm Shift: From Producer Innovation to User and Open Collaborative Innovation," Organization Science, INFORMS, vol. 22(6), pages 1399-1417, December.
    42. Michael G. Jacobides & Carmelo Cennamo & Annabelle Gawer, 2018. "Towards a theory of ecosystems," Strategic Management Journal, Wiley Blackwell, vol. 39(8), pages 2255-2276, August.
    43. Mudambi, Ram & Swift, Tim, 2011. "Proactive R&D management and firm growth: A punctuated equilibrium model," Research Policy, Elsevier, vol. 40(3), pages 429-440, April.
    44. von Hippel, Eric, 2010. "Open User Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 411-427, Elsevier.
    45. Brice Dattée & Oliver Alexy & Erkko Autio, 2018. "Maneuvering in Poor Visibility : How Firms Play the Ecosystem Game when Uncertainty is High," Post-Print hal-02312003, HAL.
    46. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    47. O'Sullivan, Mary, 2000. "The Innovative Enterprise and Corporate Governance," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 24(4), pages 393-416, July.
    48. Tim Swift, 2016. "The perilous leap between exploration and exploitation," Strategic Management Journal, Wiley Blackwell, vol. 37(8), pages 1688-1698, August.
    49. Joel West, 2020. "Localized Knowledge Flows and Asymmetric Motivations in Open Innovation," Journal of Innovation Economics, De Boeck Université, vol. 0(2), pages 181-196.
    50. Miozzo, Marcela & Dewick, Paul, 2002. "Building competitive advantage: innovation and corporate governance in European construction," Research Policy, Elsevier, vol. 31(6), pages 989-1008, August.
    51. Mary J. Benner, 2010. "Securities Analysts and Incumbent Response to Radical Technological Change: Evidence from Digital Photography and Internet Telephony," Organization Science, INFORMS, vol. 21(1), pages 42-62, February.
    52. Greco, Marco & Grimaldi, Michele & Cricelli, Livio, 2016. "An analysis of the open innovation effect on firm performance," European Management Journal, Elsevier, vol. 34(5), pages 501-516.
    53. Laursen, Keld & Salter, Ammon J., 2014. "The paradox of openness: Appropriability, external search and collaboration," Research Policy, Elsevier, vol. 43(5), pages 867-878.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Samuel Adomako & Nguyen Phong Nguyen, 2024. "Digitalization, inter-organizational collaboration, and technology transfer," The Journal of Technology Transfer, Springer, vol. 49(4), pages 1176-1202, August.
    2. Mariusz Salwin & Ilona Jacyna-Gołda & Andrzej Kraslawski & Aneta Ewa Waszkiewicz, 2022. "The Use of Business Model Canvas in the Design and Classification of Product-Service Systems Design Methods," Sustainability, MDPI, vol. 14(7), pages 1-23, April.
    3. Adams, Kweku & Attah-Boakye, Rexford & Yu, Honglan & Johansson, Jeaneth & Njoya, Eric Tchouamou, 2023. "Female board representation and coupled open innovation: Evidence from emerging market multinational enterprises," Technovation, Elsevier, vol. 124(C).
    4. Madanaguli, Arun & Dhir, Amandeep & Talwar, Shalini & Clauss, Thomas & Kraus, Sascha & Kaur, Puneet, 2023. "Diving into the uncertainties of open innovation: A systematic review of risks to uncover pertinent typologies and unexplored horizons," Technovation, Elsevier, vol. 119(C).
    5. Liu, Zhixue & Ding, Ronggui & Wang, Lei & Song, Rui & Song, Xinyi, 2023. "Cooperation in an uncertain environment: The impact of stakeholders' concerted action on collaborative innovation projects risk management," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    6. Mark Anthony Camilleri & Ciro Troise & Serena Strazzullo & Stefano Bresciani, 2023. "Creating shared value through open innovation approaches: Opportunities and challenges for corporate sustainability," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4485-4502, November.
    7. Eleni N. Arvaniti & Agapi Dima & Chrysostomos D. Stylios & Vagelis G. Papadakis, 2022. "A New Step-by-Step Model for Implementing Open Innovation," Sustainability, MDPI, vol. 14(10), pages 1-17, May.
    8. Talaei-Khoei, Amir & Yang, Alan T. & Masialeti, Masialeti, 2024. "How does incorporating ChatGPT within a firm reinforce agility-mediated performance? The moderating role of innovation infusion and firms’ ethical identity," Technovation, Elsevier, vol. 132(C).
    9. Cricelli, Livio & Mauriello, Roberto & Strazzullo, Serena, 2023. "Preventing open innovation failures: A managerial framework," Technovation, Elsevier, vol. 127(C).
    10. Ogink, Ruben H.A.J. & Goossen, Martin C. & Romme, A. Georges L. & Akkermans, Henk, 2023. "Mechanisms in open innovation: A review and synthesis of the literature," Technovation, Elsevier, vol. 119(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hurmelinna-Laukkanen, Pia & Yang, Jialei, 2022. "Distinguishing between appropriability and appropriation: A systematic review and a renewed conceptual framing," Research Policy, Elsevier, vol. 51(1).
    2. Shi, Xianwei & Liang, Xingkun & Luo, Yining, 2023. "Unpacking the intellectual structure of ecosystem research in innovation studies," Research Policy, Elsevier, vol. 52(6).
    3. Baldwin, Carliss Y. & Bogers, Marcel L.A.M. & Kapoor, Rahul & West, Joel, 2024. "Focusing the ecosystem lens on innovation studies," Research Policy, Elsevier, vol. 53(3).
    4. Hou, Hong & Shi, Yongjiang, 2021. "Ecosystem-as-structure and ecosystem-as-coevolution: A constructive examination," Technovation, Elsevier, vol. 100(C).
    5. Dahlander, Linus & Gann, David M. & Wallin, Martin W., 2021. "How open is innovation? A retrospective and ideas forward," Research Policy, Elsevier, vol. 50(4).
    6. Patricio Duran & Nadine Kammerlander & Marc van Essen & Thomas Zellweger, 2016. "Doing More with Less : Innovation Input and Output in Family Firms," Post-Print hal-02276703, HAL.
    7. Cenamor, Javier & Frishammar, Johan, 2021. "Openness in platform ecosystems: Innovation strategies for complementary products," Research Policy, Elsevier, vol. 50(1).
    8. Foege, J. Nils & Lauritzen, Ghita Dragsdahl & Tietze, Frank & Salge, Torsten Oliver, 2019. "Reconceptualizing the paradox of openness: How solvers navigate sharing-protecting tensions in crowdsourcing," Research Policy, Elsevier, vol. 48(6), pages 1323-1339.
    9. ATM Adnan & Nisar Ahmed, 2019. "The Transformation Of The Corporate Governance Model: A Literature Review," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 8(3), pages 7-47.
    10. Reiter, Andreas & Stonig, Joachim & Frankenberger, Karolin, 2024. "Managing multi-tiered innovation ecosystems," Research Policy, Elsevier, vol. 53(1).
    11. Munari, Federico & Oriani, Raffaele & Sobrero, Maurizio, 2010. "The effects of owner identity and external governance systems on R&D investments: A study of Western European firms," Research Policy, Elsevier, vol. 39(8), pages 1093-1104, October.
    12. Pinar Ozcan & Douglas Hannah, 2020. "Social Origins of Great Strategies Advertising Suppliers to Realize Disruptive Social Media Technology," Strategy Science, INFORMS, vol. 5(3), pages 193-217, September.
    13. Uzunca, Bilgehan & Sharapov, Dmitry & Tee, Richard, 2022. "Governance rigidity, industry evolution, and value capture in platform ecosystems," Research Policy, Elsevier, vol. 51(7).
    14. Margit Osterloh & Bruno Frey, 2006. "Shareholders Should Welcome Knowledge Workers as Directors," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 10(3), pages 325-345, September.
    15. Hanene Ezzine, 2018. "Corporate governance and social norms during financial crisis: evidence from France and Saudi Arabia," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 22(3), pages 707-748, September.
    16. Gomes, Leonardo Augusto de Vasconcelos & Flechas, Ximena Alejandra & Facin, Ana Lucia Figueiredo & Borini, Felipe Mendes, 2021. "Ecosystem management: Past achievements and future promises," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    17. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, January.
    18. Torres de Oliveira, Rui & Verreynne, Martie-Louise & Steen, John & Indulska, Marta, 2021. "Creating value by giving away: A typology of different innovation revealing strategies," Journal of Business Research, Elsevier, vol. 127(C), pages 137-150.
    19. Attiya Y. Javed & Robina Iqbal, 2007. "The Relationship between Corporate Governance Indicators and Firm Value: A Case Study of Karachi Stock Exchange," PIDE-Working Papers 2007:14, Pakistan Institute of Development Economics.
    20. Ikram, Atif & Li, Zhichuan (Frank) & Minor, Dylan, 2023. "CSR-contingent executive compensation contracts," Journal of Banking & Finance, Elsevier, vol. 151(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:techno:v:114:y:2022:i:c:s0166497221002182. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.sciencedirect.com/science/journal/01664972 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.