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The Two Faces of Open Innovation: NetworkExternalities and Learning

  • Muge Ozman

In this paper I differentiate between two types of benefits of open innova- tion. Network externalities e¤ect happens when open innovation increases the participation of one group of users which increases the value of adoption for another group of users. Learning e¤ect happens when economic actors increase their knowledge through access to external sources of knowledge. I investigate how each effect can be dominant depending on nature of products, by drawing upon previous research in product modularity. In addition I discuss the fac- tors which will strengthen or weaken the e¤ects of each dimension. The main variables which influence learning are, tacitness of knowledge, technological op- portunities, appropriability of knowledge and turbulence. Network externalities e¤ect can be strengthened by increased user innovation.

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Paper provided by Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg in its series Working Papers of BETA with number 2008-24.

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Date of creation: 2008
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Handle: RePEc:ulp:sbbeta:2008-24
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  1. Rochet, Jean-Charles & Tirole, Jean, 2003. "Platform Competition in Two-Sided Markets," IDEI Working Papers 152, Institut d'Économie Industrielle (IDEI), Toulouse.
  2. Cowan, Robin & David, Paul A & Foray, Dominique, 2000. "The Explicit Economics of Knowledge Codification and Tacitness," Industrial and Corporate Change, Oxford University Press, vol. 9(2), pages 211-53, June.
  3. Baldwin, Carliss & Hienerth, Christoph & von Hippel, Eric, 2006. "How user innovations become commercial products: A theoretical investigation and case study," Research Policy, Elsevier, vol. 35(9), pages 1291-1313, November.
  4. Malerba, Franco, et al, 1999. "'History-Friendly' Models of Industry Evolution: The Computer Industry," Industrial and Corporate Change, Oxford University Press, vol. 8(1), pages 3-40, March.
  5. David S. Evans & Andrei Hagiu & Richard Schmalensee, 2006. "Invisible Engines: How Software Platforms Drive Innovation and Transform Industries," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262050854, June.
  6. Allen, Robert C., 1983. "Collective invention," Journal of Economic Behavior & Organization, Elsevier, vol. 4(1), pages 1-24, March.
  7. repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
  8. Kevin J. Boudreau & Andrei Hagiu, 2008. "Platform Rules: Multi-Sided Platforms as Regulators," Harvard Business School Working Papers 09-061, Harvard Business School.
  9. Langlois, Richard N. & Robertson, Paul L., 1992. "Networks and innovation in a modular system: Lessons from the microcomputer and stereo component industries," Research Policy, Elsevier, vol. 21(4), pages 297-313, August.
  10. Malerba, Franco, 1992. "Learning by Firms and Incremental Technical Change," Economic Journal, Royal Economic Society, vol. 102(413), pages 845-59, July.
  11. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-31, March.
  12. Brusoni, Stefano & Prencipe, Andrea, 2001. "Unpacking the Black Box of Modularity: Technologies, Products and Organizations," Industrial and Corporate Change, Oxford University Press, vol. 10(1), pages 179-205, March.
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