Strategic Management Review > Vol 1 > Issue 2

Who Captures Value from Open Innovation — The Firm or Its Employees?

Keld Laursen, Department of Strategy and Innovation, Copenhagen Business School, Denmark, kl.si@cbs.dk Ammon Salter, School of Management, University of Bath, UK, A.J.Salter@bath.ac.uk
 
Suggested Citation
Keld Laursen and Ammon Salter (2020), "Who Captures Value from Open Innovation — The Firm or Its Employees?", Strategic Management Review: Vol. 1: No. 2, pp 255-276. http://dx.doi.org/10.1561/111.00000009

Publication Date: 16 Jun 2020
© 2020 now Publishers, Inc.
 
Subjects
Knowledge, innovation, and technology,  Micro-foundations of strategy,  Stakeholder strategy
 
Keywords
Open innovationemployee bargaining powerappropriation of rent
 

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In this article:
Introduction 
Individuals in Inbound Open Innovation Roles 
Determinants of The Bargaining Power of Individuals in Open Innovation Jobs 
Managing Appropriation Risks Related to Employees Involved in Inbound Open Innovation 
Conclusions 
References 

Abstract

We apply the bargaining power lens on strategic management to analyze the risk related to potential extraction of value by company employees working on open innovation (OI) in the firm. OI exposes individuals to various opportunities, provides a better awareness of the value of their knowledge in other contexts, and makes them more visible externally. OI activity allows access to critical firm knowledge enabling negotiation and engagement with external parties. All of these factors increase the likelihood that these individuals will exit the firm, taking with them valuable proprietary knowledge, while these attractive exit options endow them with significant bargaining power internally. The firm may try to counter this by the imposition of contractual obligations and intellectual property protection using mechanisms which often are only partly effective. This can result in a trade-off between staffing positions related only to OI tasks with individuals that are the best fit from a value creation point of view, thus giving more weight to value capture. We argue that the choices involved in balancing this trade-off will depend on the specific appropriation regime combined with the generality of the knowledge involved. We posit that that in some cases firms may appoint employees with high levels of probity rather than the greatest OI competences.

DOI:10.1561/111.00000009

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Strategic Management Review, Volume 1, Issue 2 Special issue on Open Innovation
See the other articles that are part of this special issue.