ROYAL INSTITUTE
OF TECHNOLOGY
Exploring Tensions between
Appropriability and Openness
to Collaboration in Innovation
Licentiate thesis by
IOANA STEFAN
Stockholm, Sweden, 2017
A thesis submitted in partial fulfillment of the requirements for the Licentiate degree, to be
presented with due permission for public presentation in room 243, Lindstedtsvägen 30,
Royal Institute of Technology on the 23rd
February 2017 at 10:00.
Discussant: Professor Johan Frishammar, Luleå University of Technology
© Ioana Stefan
Stockholm 2017, Royal Institute of Technology
Department of Industrial Engineering and Management
TRITA-IEO-R 2017:01
ISSN 1100-7982
ISRN KTH/IEO/R-17:01-SE
ISBN 978-91-7729-273-9
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Abstract
Researchers, policy makers and practitioners alike have in recent years acknowledged a growing
tendency towards opening up the innovation process by combining internal organizational assets with
external actors’ resources in order to develop and bring ideas to the market. However, opening up the
innovation process usually also entails revealing ideas to external parties, which in some cases may
result in misappropriation. Therefore, tensions are likely to occur in the openness-appropriability
relationship. Some even regard these tensions as being of paradoxical nature. The purpose of this
thesis is to investigate tensions related to the openness-appropriability relationship; this is done by
analyzing more specific aspects of these tensions in three studies. The first study concerns a specific
contextual factor that is likely to stress the openness-appropriability tensions: the location of external
partners in innovation (either national or international), which is meant to reflect the territorial
character of certain appropriability mechanisms, such as patents and trade secrets. The second study
relates to the way managing openness-appropriability tensions affects performance, and the third study
involves a theoretical discussion about the nature of the tensions occurring in the openness-
appropriability relationship, i.e. either paradoxical, dilemmatic, or dialectical. The first two studies
apply quantitative methods, using survey data from 415 firms in three European countries, while the
third is a conceptual paper. The findings from the first study indicate that not only does the use of
different groups of appropriability mechanisms vary across various types of openness but also the
location (within or across national boundaries) of external partners in innovation refines these linkages
even more. The second study’s main takeaway is that the higher appropriability intensity, i.e. the
extent to which appropriability mechanisms are put into practice, explains higher performance
outcomes. The third study suggests that the tensions between openness and appropriability are more
likely of paradoxical nature. Combined, the three studies have relevant theoretical contributions and
managerial implications. From a theoretical perspective, findings indicate that paradoxical tensions
between openness and appropriability may have a spatial dimension, and that these tensions should
also be investigated in regards to performance. Managerial implications point out that opening up to
innovation partners located abroad is likely to require more costly appropriability mechanisms, i.e.
formal ones, and might further stress the appropriability-openness tensions. Managers might also
consider the fact that dealing with appropriability-openness in a trade-off manner (implying a
dilemma) will not solve the paradox and might only be a temporary fix.
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Sammanfattning
Forskare, beslutsfattare och praktiker har under de senaste åren sett en ökande tendens mot mer öppna
innovationsprocesser där organisationens interna tillgångar kombineras med externa aktörers resurser
för att utveckla och föra idéer till marknaden. Men öppna innovationsprocesser innebär vanligtvis
också att idéer avslöjas för externa partner som i vissa fall kan missbruka det. Därför kan spänningar
uppstå mellan företagets öppenhet och dess intresse av att samtidigt skydda för att dra nytta av
innovationsinsatserna. Vissa ser sådana spänningar som en paradox. Syftet med denna avhandling är
att undersöka spänningar som uppstår i relationen mellan öppenhet och intresset av att skydda och
exploatera innovationsinsatserna. Detta görs i tre studier. Den första studien avser en specifik
kontextuell faktor som sannolikt understryker spänningarna i mer öppna innovationsprocesser,
nämligen lokaliseringen (antingen nationellt eller internationellt) av de externa partner som medverkar
i innovationsprocessen. Studien speglar den territoriella karaktär som ett antal mekanismer för att
skydda och exploatera innovationer har, såsom patent och affärshemligheter. Den andra studien avser
hur företagens sätt att hantera spänningarna mellan öppenhet och intresset av att skydda och exploatera
innovationsinsatserna påverkar företagets innovationsresultat. Den tredje studien innehåller en
teoretisk diskussion kring karaktären på de spänningar som uppträder i relationen mellan öppenhet och
intresset av att skydda och dra nytta av innovationen: är de paradoxala, dilemmatiska eller dialektiska?
De första två studierna använder kvantitativa metoder, med hjälp av enkätdata från 415 företag i tre
europeiska länder, medan den tredje är konceptuell. Resultaten från den första studien tyder på att inte
bara användningen av olika typer av mekanismer för att skydda och exploatera innovationer varierar
mellan olika typer av öppenhet, men också att lokaliseringen av externa partners i innovation påverkar
dessa kopplingar ännu mer. Den andra studien visar att ju mer olika mekanismer för skydd och
exploatering används, desto högre är företagets innovationsförmåga. Den tredje studien visar att
spänningarna mellan öppenhet och skydd för exploatering är troligtvis paradoxala. Tillsammans ger de
tre studierna flera teoretiska bidrag och praktiska implikationer. Ur ett teoretiskt perspektiv indikerar
avhandlingen att paradoxala spänningar mellan öppenhet och skydd för exploatering av innovationer
kan ha en geografisk dimension, och att dessa spänningar också bör undersökas när det gäller
företagets innovationsförmåga. De praktiska implikationerna är att om företaget involverar
internationella innovationspartner så kommer det sannolikt att kräva mer kostsamma
skyddsmekanismer och kanske innebära ytterligare spänningar. Företagsledningar kan även ta hänsyn
till att om dessa spänningar hanteras med hjälp av en kompromiss (vilket innebär ett dilemma),
kommer detta inte att lösa paradoxen, utan nog bara vara en provisorisk lösning.
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Acknowledgements
The research process could be compared to putting together a puzzle with an infinite number of pieces.
One may put together enough pieces to display a seemingly complete image, yet the whole puzzle is
never really done. And even though it is not possible to mention all those who have contributed to my
own part of the puzzle, in the following paragraphs I will try to mention at least a few.
First of all, I am grateful to my supervisors: prof. Lars Bengtsson and assist. prof. Camilla Niss at
University of Gävle, as well as prof. Mats Engwall at the KTH Royal Institute of Technology, for
guiding me and providing useful comments and support throughout my doctoral studies so far. I am
particularly grateful to my main supervisor, prof. Lars Bengtsson, for introducing me to the academic
world.
I am also thankful to the group of researchers that has designed the questionnaire and collected the
data for the Open Innovation Survey (OIS), data which I have been using as basis for the quantitative
studies included in this thesis: prof. Lars Bengtsson, assoc. prof. Nicolette Lakemond, assoc. prof.
Valentina Lazzarotti, prof. Raffaella Manzini, assoc. prof. Luisa Pellegrini, prof. Fredrik Tell.
The studies in this thesis have also been shaped by external constructive feedback. I am therefore
indebted to the guest editors of the International Journal of Technology Management 2016 special
issue on ‘Perspectives on Inter-Organisational and Collaborative Innovation’ - assoc. prof. Francesco
Paolo Appio, assoc. prof. Antonella Martini, asst. professor Luca Gastaldi and prof. Krisztina
Demeter, as well as two anonymous referees. Constructive comments and suggestions received at
international conferences for previous versions of my studies are also gratefully acknowledged.
Furthermore, I am grateful to those who provided invaluable comments to earlier versions of my thesis
during PhD seminars or workshops. More specifically, I would like to express my appreciation for the
feedback received during: the Open Innovation and Open Business Models PhD Seminar, from prof.
Henry Chesbrough and prof. Wim Vanhaverbeke; the CINet PhD Workshops and Seminar, from prof.
Harry Boer, prof. Mariano Corso, prof. Mats Magnusson, prof. Patricia Wolf, asst. prof. Luca Gastaldi
and asst. prof. Janos Kiss– special thanks to Patricia Wolf for encouraging me to pursue the meanings
and depths of paradox; the R&D Management PhD Colloquium, from assoc. prof. Frank Tietze, prof.
Cornelius Herstatt, asst. prof. Ghita Dragsdahl Lauritzen and Kasper Thams, senior manager at Lego;
the KTH Candidate Day, from prof. Sofia Ritzen. I am also thankful to assoc. prof. Terrence Brown
for accepting the role of advance reviewer for my licentiate thesis.
I have learned a lot from fellow researchers that have contributed to joint research projects that I have
been involved in and would therefore like to express my gratitude to: prof. Lars Bengtsson, prof.
Christian Berggren, assoc. prof. Filiz Solmaz Karabag and Dr. Weihong Wang who participated in the
‘Rapid innovators in emerging markets’ project funded by Vinnova.
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I would also like to express appreciation for the time spent doing my internship at DHL Customer
Solutions and Innovation in Germany, where I got to learn a lot about patent management from a
practitioner’s perspective. This knowledge has further been useful in my research. Therefore I would
like to thank my former colleagues from DHL patent management: Astrid, Björn, Clemens and Janine,
as well as the other interns in the patent management department at the time: Christian, Matthias and
Sebastian.
Moreover, I am thankful to colleagues at the University of Gävle for providing a friendly and
stimulating work environment, so thanks to: Abid, Abo, Alan, Amer, Camilla, Dorith, Gunnar, Ida,
Jessica, Jonas, Kaisu, Katarina, Lars B., Lars L., Malin, Marita, Robin, Rodrigo, Rose-Marie, Tony,
Weihong, Åsa H., Åsa K.,…the list could go on. I am likewise grateful to colleagues at KTH for
creating a friendly atmosphere, providing useful advice and/or for being great teammates in various
course projects and such; my thanks goes therefore to Andrés, Maria, Nidal, Serdar, Yuri. I am also
thankful to Elisabeth Lampén at KTH for substantial help during the licentiate application process. I
would further like to thank friends and fellow colleagues whom I’ve had the pleasure of meeting
during my studies and/or international conferences or other academic events – to name a few: Anja,
Antonio, Bernadette, Brenda, Ghassan, Henry L., Oana-Maria.
But most of all, I am thankful and forever indebted to my immediate family for providing endless
support, good advice, love and friendship. I would therefore like to express my gratitude to my
grandparents, Victoria and Ion, for their support and encouragement. Special thanks goes to both my
parents, Aurelia and Gheorghe, for always providing comfort and support, while at the same time
being analytical thinkers and showing me the logical side of things. I’d like to add here that I am
especially thankful to my dad for being my incentive to pursue this research topic. I am further
grateful beyond words to my husband, Vlad, for always being there, for listening to and caring for me
and for providing feedback for many earlier drafts of my thesis and papers.
Ioana Stefan
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Table of contents
1. Introduction ......................................................................................................................... 1
1.1. Tensions between appropriability and openness to collaboration ............................... 1
1.2. Purpose and research questions ................................................................................... 4
1.3. Limitations ................................................................................................................... 6
2. Theoretical framework ........................................................................................................ 7
2.1. Openness to collaboration ........................................................................................... 7
2.1.1. Open innovation ................................................................................................... 7
2.1.2. Conceptual ambiguity regarding ‘openness’ ........................................................ 8
2.2. Appropriability .......................................................................................................... 10
2.3. Tensions between openness and appropriability ....................................................... 12
2.4. Openness-appropriability tensions and theories of the firm ...................................... 14
3. Method .............................................................................................................................. 16
3.1. Quantitative research ................................................................................................. 17
3.1.1. Survey data collection ........................................................................................ 17
3.1.2. Constructs ........................................................................................................... 18
3.1.3. Patent portfolio data ........................................................................................... 20
3.2. Conceptual paper (theoretical analysis) ..................................................................... 21
3.3. Quality of the study ................................................................................................... 21
3.3.1. Internal validity .................................................................................................. 22
3.3.2. External validity ................................................................................................. 23
3.3.3. Construct validity ............................................................................................... 23
3.3.4. Reliability ........................................................................................................... 24
4. Summary of papers ........................................................................................................... 24
4.1. P1: A quantitative study on the moderating effects of partners’ location on the
relationship between appropriability and openness .............................................................. 24
4.1.1. Purpose and research questions .......................................................................... 25
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4.1.2. Results ................................................................................................................ 25
4.2. P2: A quantitative study of the moderating effects on the relationship between
external search (openness) and performance ........................................................................ 25
4.2.1. Purpose and research questions .......................................................................... 26
4.2.2. Results ................................................................................................................ 26
4.3. P3: A conceptual study on disentangling openness-appropriability tensions ............ 27
4.3.1. Purpose and research questions .......................................................................... 27
4.3.2. Results ................................................................................................................ 27
5. Discussion ......................................................................................................................... 28
5.1. The appropriability-openness relationship and the moderating effects of partner
location on this linkage ......................................................................................................... 28
5.2. The moderating effects of appropriability intensity on the association between
openness and performance .................................................................................................... 29
5.3. Distinguishing among paradoxical, dilemmatic, and dialectical tensions in the
appropriability-openness relationship ................................................................................... 30
6. Conclusions, contributions, and implications ................................................................... 31
6.1. Main findings and contributions ................................................................................ 31
6.2. Further theoretical implications ................................................................................. 32
6.3. Managerial implications ............................................................................................ 33
6.4. Future research .......................................................................................................... 34
7. References ......................................................................................................................... 35
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List of appended documents
1. Stefan, I., & Bengtsson, L. (2016). Appropriability: A key to opening innovation
internationally? International Journal of Technology Management, 71(3/4), 232–252.
2. Stefan, I., & Bengtsson, L. (2016). The whole nine yards: The moderating effects of
appropriability intensity on the relationship between external search and performance.
Manuscript submitted for publication. Paper based on a previous version presented at
the World Open Innovation Conference 2014, Napa, California, USA, December 4-5,
2014.
3. Stefan, I. (2016). If it looks like a paradox and walks like a paradox…An attempt to
disentangle openness-appropriability tensions. World Open Innovation Conference
2016, Barcelona, Spain, December 15-16, 2016.
4. Open Innovation Survey instrument.
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1
1. Introduction
1.1. Tensions between appropriability and openness to collaboration
Novel ideas are thought to fuel technological progress and growth. Yet developing and
commercializing ideas sometimes requires substantial resources, which an inventor (whether
an individual or a firm) may not have available. Therefore, inventors often turn to external
parties that possess necessary and/or complementary resources. Particularly during the past
decade and a half, practitioners, researchers, and policy makers have recognized an increased
tendency to open up the innovation process (Chesbrough, 2003; OECD, 2008; Rigby and
Zook, 2002). This trend is also due to the fact that even larger organizations are no longer able
to innovate by relying exclusively on their own internal resources (Cassiman and Veugelers,
2006).
However, things are usually not as simple as to assume that innovation happens by merely
opening up towards external partners with complementary resources. Opening up for
collaboration in innovation usually entails disclosing (part of) an idea or other sensitive
proprietary knowledge to external parties. This act of disclosure may hinder the rightful
owner (inventor) of the idea from appropriating rents from said idea. In other words, revealing
an idea to potential partners in innovation may hinder the inventor’s ability to attain profits
from the idea’s commercialization. This brings into question tensions between openness and
appropriability; the latter is defined as the ability to seize benefits from innovation endeavors.
Arrow (1962) described such tensions as a “fundamental paradox” (p. 615), arguing that while
the seller of an idea is required to reveal information about said idea in order for a potential
buyer to better estimate its value, disclosing information about the idea could enable the
potential buyer to misappropriate it without having to actually buy it. Arrow (1962) further
suggests that intellectual property protection mechanisms (IPPMs) such as patents should
solve this potential hazard; however, given “incomplete appropriability” (Arrow, 1962; p.
615), this is not always the case.
Therefore, many scholars have attempted to solve this puzzle by investigating the tensions
described by Arrow (1962). In particular, emerging research streams on open innovation have
pointed out that the tendency to open up the innovation process is likely to stress these
potentially paradoxical tensions and that this goes beyond the selling of ideas and applies
even to other external interactions among innovative firms (Laursen and Salter, 2014).
Previous studies thus suggest more research is needed in order to clarify (1) the association
2
between openness and appropriability (Laursen and Salter, 2014), and (2) the way managing
these tensions affects organizational performance (Laursen and Salter, 2014; Laursen, Salter,
and Li, 2013). Furthermore, prior studies are not unanimous about a third point: (3) the nature
of tensions between openness and appropriability. Some studies point to a dilemma (e.g.
Anton and Yao, 2002), others suggest a paradox (Arrow, 1962; Laursen and Salter, 2014) and
some merely refer to the tensions as a ‘hazard’ (Buss and Peukert, 2015) or ‘problem’ (Anton
and Yao, 1994). However, studies investigating organizational tensions point out that
dilemmatic, paradoxical and dialectical tensions, though overlapping, have distinct
characteristics (Smith and Lewis, 2011). These three aspects require further investigation
from both a theoretical and a managerial perspective, and they are explored in the three
studies included in this thesis.
The tensions between openness and appropriability are not just theoretical – they also occur in
practice. For instance, an article published in the New York Times in 2010 describes a failed
collaboration between two companies: Infoflows and Corbis (Lohr, 2010). The two firms
signed a multimillion-dollar development agreement in June 2006. Although Infoflows came
up with a novel idea for recognizing and tracking digital objects on the Internet, it had not
applied for a patent for this, as they were keen to start working with Corbis and develop the
idea further. In October 2006 Corbis notified Infoflows about terminating the agreement and
the two companies parted ways. However, in early 2007, when Infoflows set up their website,
Corbis sued and alleged that Infoflows was illegally using their technology. In the meantime
Corbis had applied for a patent for the idea the two parties were supposed to develop in
collaboration. After several years in court and millions in legal costs, Corbis was found guilty
of fraud, breach of contract, and misappropriating trade secrets. Infoflows was awarded
damages of more than $20 million.
This example illustrates how an idea could be misappropriated despite an initial collaboration
agreement signed by both parties, i.e. in spite of using certain types of IPPMs. As hinted by
Arrow (1962), it is likely that a patent application by Infoflows might have eased the tensions
in this situation. However, according to the article, the contractual agreement signed by the
two parties stipulated that neither of the two would submit any patent applications (Lohr,
2010). Moreover, formal IPPMs such as patents are costly mechanisms that often take a long
time to enforce. Therefore, as predicted by Arrow (1962), the “incomplete” (p. 615) character
of appropriability often fails to solve tensions between openness and appropriability.
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Indeed, policy makers also acknowledge that “theft of intellectual property is seen as the most
important risk to global innovation networks” (OECD, 2008; p. 11) and that “companies …
may need to share IP with foreign subsidiaries/partners or to commercialize it in foreign
markets, but may be constrained by national regulations” (p. 12). This further confirms that
appropriating returns from joint innovation endeavors is even more challenging in
international collaborations.
While collaboration is increasingly becoming global, intellectual property rights (IPR) have a
territorial character and often vary between national territories (Bititci et al., 2012; Dussauge
and Garrette, 1995). Furthermore, the formal IPPMs available may not be suitable for all
types of knowledge involved in an idea. However, other types of IPPMs, such as trade secrets,
may be easier to misappropriate once they have been revealed to a partner, such as in the
Infoflows-Corbis case.
Abundant previous research has investigated the tensions described by Arrow (1962) as
“fundamental paradox” (p. 615) and named by many others paradox of disclosure. Yet
discussion about paradoxical tensions between appropriability and openness to collaborating
in innovation has been rekindled in recent management studies (cf. Arora, Athreye, and
Huang, 2016; Buss and Peukert, 2015; Laursen and Salter, 2014). Laursen and Salter (2014)
even suggest a new concept, the paradox of openness, “paraphrasing Arrow (1962),” (Laursen
and Salter, 2014; p. 868). However, it is unclear whether the recently dubbed paradox of
openness is more related to Arrow’s (1962) so-called paradox of disclosure or to the
contradictory research streams that suggest that either openness requires strong IP protection
or overprotectiveness might hinder openness.
While there is ample research on the so-called paradox of disclosure, several issues are still up
for further investigation. In the first place, prior studies do not clarify whether the nature of
appropriability-openness tensions is indeed paradoxical. As pointed out by Smith and Lewis
(2011), tensions in organizations could also take the form of dilemmas or dialectics, not
necessarily leading to paradox. Hence, the concepts of paradox of disclosure and paradox of
openness require a theoretical discussion, as does the extent of the analogy between them.
Another gap in the literature concerns the contextual factors that might stress tensions
between appropriability and openness to collaborating in innovation. As previously
mentioned, this thesis investigates only one of these contextual factors, i.e. the location of
external partners in innovation in either national or international territories. Law literature, for
instance, emphasizes the drawbacks brought up by the territorial character of formal IPPMs
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(Trimble, 2015). At the same time, management literature points to the increasingly global
nature of collaboration networks, yet pays less attention to how the “patchwork” (of
territories) interacts with the globalization of networks (see, e.g., Bititci et al., 2012). Thus,
for instance, the location of partners in international innovation collaborations could be an
important contextual factor affecting appropriability-openness tensions. However, this matter
is scarcely investigated in previous management studies. Additionally, appropriability
literature has been biased towards investigating patents, but has neglected other IPPMs (see,
e.g., Hall et al., 2014). Nevertheless, studies suggest that companies increasingly tend to rely
on bundles of – rather than on singular – appropriability mechanisms (Comino, Manenti, and
Thumm, 2015). Thus, when investigating appropriability-openness tensions, a wider variety
of IPPMs should be taken into consideration. Few previous studies take this into account.
Finally, it is unclear how managing tensions between openness to collaboration and
appropriability influence performance. The potentially paradoxical tensions between opening
up to external partners in innovation and reaping benefits from innovation endeavors are
likely to affect the performance outcomes that organizations are able to extract from
innovation collaborations.
1.2. Purpose and research questions
The purpose of this thesis is to explore tensions that may occur between openness towards
external partners in innovation collaborations and the ability to appropriate benefits from said
innovation endeavors. More specifically, three aspects of the tensions are investigated in three
different studies. One aspect concerns contextual factors that may affect the tensions between
appropriability and openness. Therefore, the first study (presented in paper 1, P1) investigates
the potentially moderating effect of one specific contextual factor (partner location – national
or international) on the appropriability-openness relationship. This is further meant to reflect
the territorial character of certain types of IPPMs. Another aspect of the appropriability-
openness tensions is that the way they are managed could affect performance. The second
study included in this thesis, paper 2 (P2), explores the way appropriability moderates the
association between openness and performance. One final aspect investigated in this thesis
relates to the nature of the appropriability-openness tensions. The third study (paper 3, P3)
explores whether the openness-appropriability tensions are paradoxical, dilemmatic, or
dialectical and even discusses the demarcation (if any) between the paradox of disclosure and
the paradox of openness. The purpose of this thesis can be further concretized in three
research questions, each of which corresponds to one of the three above-mentioned studies.
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RQ1: What is the association between different types of appropriability mechanisms
(specifically formal, semiformal, and informal IPPMs) and various kinds of openness (depth
of collaboration with different kinds of partners and variety of types of partners), and what are
the potentially moderating effects of partner location on this relationship?
RQ2: What are the potentially moderating effects of appropriability (mechanisms) on the
relationship between openness and performance?
RQ3: What is the nature of tensions between appropriability and openness, i.e. are they
paradoxical, dilemmatic, or dialectical?
The correspondence between this thesis’s research questions and the research questions in
each of the three studies can be seen in Figure 1.
Figure 1. Linking the thesis research questions with those from the three studies
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The corresponding analysis model is illustrated in Figure 2. RQ1, which is linked to P1,
explores the association between various types of appropriability mechanisms and different
types of openness, and investigates the potentially moderating effect of partner location on
this relationship. RQ2, linked to P2, analyzes the possible moderation effects displayed by
appropriability mechanisms on the association between openness and performance. RQ3
explores the nature of tensions between appropriability and openness, and is therefore
represented by a bidirectional arrow in the analysis model.
Figure 2. Analysis model
1.3. Limitations
This thesis is not without limitations. In the following some of the main limitations of the
three studies included in the thesis will be enumerated. Regarding the first study, one
limitation relates to the investigation of one specific contextual factor that moderates the
appropriability-openness relationship. Future research might explore other factors that
influence the tensions between openness and appropriability. Another limitation in P1
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concerns the causality of the appropriability-openness liaison. As suggested by Laursen and
Salter (2014), this relationship may have dual causality; therefore, future studies could take
this matter into account. The second study is limited by the method of analysis. More
specifically, the survey data used only allows testing for moderation via one method (thought
to be less reliable according to recent studies – Helm and Mark, 2012). One further limitation
that extends to both P1 and P2 is related to some restraints of the data sample used. For
instance, the survey data is limited to manufacturing firms, and a construct specifically
measuring absorptive capacity was not included in the questionnaire. While proxy measures
for absorptive capacity have been used in the two studies, future studies should also take into
account the effects of absorptive capacity when investigating appropriability-openness
tensions. The third study is limited by the fact that, while it discusses the nature of tensions
between opening up in the innovation process and appropriating benefits from said
innovation, it does not perform a more in-depth analysis of the previous studies that claim
different types of tensions (e.g. either dilemmatic or paradoxical) between disclosure and
appropriability. While this thesis focuses on exploring tensions between openness towards
external partners in innovation and the ability to appropriate benefits from those innovation
endeavors, it does not aim to review nor to demarcate various streams of research that have
dealt with investigation of different types of inter-firm relationships.
2. Theoretical framework
This section will highlight the main theoretical concepts analyzed in this thesis and describe
the gaps in the literature related to these concepts. The theoretical framework further
discusses potential links between the analyzed topic and certain theories of the firm, which
might act as lenses for analysis.
2.1. Openness to collaboration
2.1.1. Open innovation
In recent years researchers, practitioners, and policy makers have acknowledged an increased
tendency to open up the innovation process (Chesbrough, 2003; OECD, 2008; Rigby and
Zook, 2002). A little over a decade ago, Chesbrough (2003) introduced the new concept of
open innovation, which has attracted a great deal of research (see Dahlander and Gann, 2010,
or Huizingh, 2011 for reviews) and attention from practitioners (Chesbrough and Bogers,
2014), but also criticism (see, e.g., Trott and Hartman, 2009). Some of the critique concerning
open innovation is that it is a new concept that describes something that already existed.
8
Indeed open innovation has been compared to old wine in new bottles (Trott and Hartmann,
2009) and criticized for being a hindrance in developing theory (Groen and Linton, 2010).
Many studies prior to the introduction of the open innovation term in 2003 use different words
or expressions alternatively when referring to inter-firm linkages or collaborations. For
instance, Eisenhardt and Schoonhoven (1996) use terms such as strategic alliances,
cooperative partnerships, cooperative relationships, and alliance relationships. Dussauge et
al. (2000) also use several concepts interchangeably, e.g. strategic alliances, collaborations,
interfirm partnerships. Furthermore, Dussauge et al. (2000) suggest a rather broad definition
of strategic alliances: “arrangements between two or more independent companies that choose
to carry out a project or operate in a specific business area by coordinating the necessary skills
and resources jointly rather than either operating on their own or merging their operations.
This definition of alliances includes joint ventures as well as partnerships that did not entail
the creation of a separate legal entity. ” (p. 99) Other studies review and refer to prior research
that does not use precisely the same terminology – for instance, Cassiman and Veugelers
(2002) investigate R&D cooperation, but refer to a “joint venture information-sharing
scenario” (p. 1170) from a previous study in their literature review.
The brief overview presented in the above paragraph is meant to demonstrate that previous
studies use a wide variety of terms to describe interorganizational collaborations of different
kinds – at times interchangeably and other times separately. The two quantitative studies P1
and P2 build on an open innovation survey, which investigated manufacturing firms’
innovation collaboration practices. The third study in this thesis, P3, discusses conceptual
ambiguity surrounding the paradox suggested by Arrow (1962), yet it also debates the newly
minted paradox of openness, proposed in recent studies on open innovation (see Laursen and
Salter, 2014; Arora et al., 2016), and thus all three studies contribute to open innovation
research streams, but also relate to other literature, e.g. appropriability literature or
management studies on theory development, theory of paradox, etc.
2.1.2. Conceptual ambiguity regarding ‘openness’
Openness as a concept in innovation management literature, coined along with open
innovation by Chesbrough (2003), has received more attention during the last decade, in the
sense that while it is increasingly used, it is often poorly defined. Some suggested
clarifications include:
9
“A starting point for the idea of openness is that a single organization cannot innovate
in isolation” (Dahlander and Gann, 2010; p. 699).
[Open innovation is] “a distributed innovation process based on purposively managed
knowledge flows across organizational boundaries, using pecuniary and nonpecuniary
mechanisms in line with the organization’s business model” (Chesbrough and Bogers,
2014; p. 17).
While many studies even outside the open innovation literature recognize the opening up of
the innovation process (see, e.g., Cassiman and Veugelers, 2006), the concept of openness is
not clearly defined (Bengtsson et al., 2015). Indeed, as pointed out by Dahlander and Gann
(2010) in their review on openness, scholars have used different measures to capture
openness: “The extant literature presents the concept of openness in quite different ways;
Laursen and Salter (2006a) equate openness with the number of external sources of
innovation, whereas Henkel (2006) focuses on openness as revealing ideas previously hidden
inside organizations” (p. 700).
In their literature review, Dahlander and Gann (2010) further emphasize the conceptual
ambiguity surrounding the term openness, as well as the lack of focus on the disadvantages of
openness in previous studies. In an attempt to clarify the term, Dahlander and Gann (2010)
suggest a framework distinguishing between inbound and outbound openness (similarly to
e.g. Gassmann and Enkel, 2004), and further categorizing each of these as either pecuniary or
nonpecuniary.
Dahlander and Gann (2010) associate the outbound nonpecuniary innovation with revealing
ideas and secrets, and they define it as the way “firms reveal internal resources without
immediate financial rewards, seeking indirect benefits to the focal firm” (p. 703). In relation
to this type of openness, Dahlander and Gann (2010) mention the potential challenge of
appropriating benefits from revealed internal resources but also the possible dangers of
overprotectiveness, which might hinder sharing ideas and/or bringing ideas to market.
The other type of outbound openness that they pinpoint is said to have a pecuniary character
and relates to the act of selling, i.e. “how firms commercialize their inventions and
technologies through selling or licensing out resources developed in other organizations.”
(Dahlander and Gann, 2010, p. 704). The advantages they suggest refer to commercializing
the so-called Rembrandts in the attic (also see Rivette and Kline, 2000). However, Dahlander
10
and Gann (2010) link the disadvantages of outbound pecuniary openness to the previously
mentioned “fundamental paradox” proposed by Arrow (1962).
The nonpecuniary inbound openness is related to sourcing, i.e. using external knowledge
sources (Dahlander and Gann, 2010). This can be positive; firms might benefit from
combining internal knowledge or other resources with external ideas. However, as signaled by
some previous studies, an overemphasis on external search may prove to be disadvantageous
(e.g. Laursen and Salter, 2006).
The pecuniary inbound openness is linked to acquiring external knowledge (Dahlander and
Gann, 2010). The potential benefits are similar to those of nonpecuniary inbound openness,
yet acquiring knowledge also requires adequate internal mechanisms to assimilate and
integrate it. This relates to the concepts of absorptive capacity (see Cohen and Levinthal,
1990) and knowledge integration (Berggren et al., 2011; Lakemond et al., 2016).
From the above, it appears that pecuniary, i.e. selling, and nonpecuniary, i.e. revealing
outbound openness relate at some level to the seller’s perspective in the so-called paradox of
disclosure suggested by Arrow (1962). However, Dahlander and Gann (2010) further
emphasize that the previously described four categories of openness are not mutually
exclusive; in fact, they can be combined. Yet this is a research area that has been little
investigated. Moreover, Gassmann and Enkel (2004) have coined the term coupled process in
open innovation, defined as “linking outside-in and inside-out by working in alliances with
complementary companies during which give and take are crucial for success” (p. 1).
Therefore, the risks of revealing and selling might not apply exclusively to one of the partners
involved in an innovation collaboration, i.e. the so-called seller, but could in fact concern both
or several parties that engage in open innovation endeavors.
In the two quantitative studies (P1 and P2) in this thesis, openness is measured in a similar
manner to Laursen and Salter (2006). For instance, openness can be measured as the variety
of types of partners in innovation or as the depth of collaboration with different types of
partners (e.g. universities, suppliers, customers). These constructs and more will be described
in greater detail in section 3.1.
2.2. Appropriability
Appropriability means the ability to reap benefits from a commodity (e.g. a product, an idea,
etc.) and has been, in theory, equated with providing a monopoly on an idea (see Levin et al.,
1987). Appropriability is thought to be provided by various so-called appropriability
11
mechanisms such as patents, trade secrets, and many others (see Cohen, Nelson, & Walsh,
2000; Hertzfeld, Link, & Vonortas, 2006; Laursen and Salter, 2014; Levin et al., 1987).
The appropriability regime was described by Teece (1986) as “the environmental factors …
that govern an innovator’s ability to capture the profits generated by an innovation.”
According to Teece (1986), an appropriability regime is composed of several important
dimensions, of which the “nature of technology” and “the efficacy of the legal mechanisms of
protection” are two essential ones p. 287). In later studies appropriability was measured by
constructs that captured the use of various IPPMs (see Hurmelinna-Laukkanen, 2011; Laursen
and Salter, 2014). As in previous research, in this thesis the concept of appropriability is
defined as the ability to seize benefits from innovation endeavors.
Appropriability mechanisms (or IPPMs) are often divided in the literature into formal and
informal categories. While the former includes patents, designs, trademarks, and copyrights,
the latter usually includes trade secrets, lead times, etc., as suggested by such researchers as
Hall et al. (2014). In the case of formal IPPMs, literature has suggested other roles besides
that of ensuring protection for the purpose of appropriating benefits. For instance, roles of
signaling or coordinating (Penin, 2005) or acting as codes for knowledge (Burk, 2008), have
been suggested in previous articles. While such additional roles are taken into account in this
thesis, the main concern is linked to the way IPPMs act as appropriability mechanisms, as
suggested by recent studies, e.g. Laursen and Salter (2014).
The taxonomy of appropriability mechanisms is furthermore not stringently defined. For
example, some scholars make finer categorizations by differentiating between registrable and
nonregistrable formal IPPMs (Kitching and Blackburn, 1998). The categorization of informal
IPPMs is also up for debate. Previous studies view confidentiality agreements and secrecy as
informal appropriability mechanisms (see e.g. Hall et al., 2014), while the Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) states that
confidentiality agreements or similar contractual agreements are required in order for a trade
secret to be regarded as valid from a legal perspective. This might suggest that nondisclosure
agreements and trade secrets could form a separate category of appropriability mechanisms.
Prior literature is not unanimous regarding the propensity to which different types of
appropriability mechanisms are used. For instance, Hertzfeld et al. (2006) point to patents as
being the most often used IPPMs, while Cohen et al. (2002) claim that companies tend to
apply appropriability mechanisms other than patents. This debate further relates to differences
in appropriability strategies across firm size, industry sector, and other contextual factors (see,
12
e.g., Neuhäusler, 2012). For instance, in industries involving higher knowledge complexity,
patents are found to be of greater importance as IPPMs, according to Peeters and Sofka
(2014). Nevertheless, one fact scholars do agree on is that managing IP is crucial for
sustaining competitive advantage (Appio et al., 2014; Di Minin and Faems, 2013), though at
the same time numerous studies signal IP management and appropriability challenges,
particularly linked to innovation collaboration (Eppinger and Vladova, 2013; Frishammar et
al., 2015; Granstrand and Holgersson, 2014; Veer et al., 2016; Zobel et al., 2016; 2017).
Thus, the intricate linkages between appropriability and openness are still up for further
discussion as indicated by e.g. Laursen and Salter (2014) or Arora et al. (2016).
2.3. Tensions between openness and appropriability
In his seminal work Arrow (1962) described a “fundamental paradox” (p. 615). This paradox
has subsequently been referred to as a dilemma (Anton and Yao, 2002; Bogers, 2011), hazard
(Buss and Peukert, 2015), problem (Anton and Yao, 1994), or paradox (Alexy et al., 2013).
The third study included in this thesis attempts a clarification of these different concepts in
relation to Arrow (1962) but, for the time being, the “fundamental paradox” he proposed will
be referred to as the paradox of disclosure, which is one of the more popular labels it has been
given (see, e.g., Gans and Stern, 2003; Laursen and Salter, 2014). The so-called paradox of
disclosure suggests tensions arise when a seller reveals information about a novel idea
(regarded as a commodity) and a potential buyer’s willingness to purchase said commodity:
on the one hand, without any disclosure the potential buyer is unaware what the idea entails
and is thus unable to appreciate its value; on the other hand, once information about the idea
has been disclosed, this may result in the potential buyer losing interest in the purchase,
because he or she has already, without any cost, obtained the information needed to develop
and commercialize said idea independently from the seller.
There is a fundamental paradox in the determination of demand for information; its
value for the purchaser is not known until he has the information, but then he has in
effect acquired it without cost. Of course, if the seller can retain property rights in the
use of the information, this would be no problem, but given incomplete
appropriability, the potential buyer will base his decision to purchase information on
less than optimal criteria. (Arrow 1962; p. 615)
While many previous studies refer to the paradox described by Arrow (1962), fewer
investigate it per se. Notable exceptions are, for instance, the studies by Anton and Yao (e.g.
13
1994; 2002), who have explored the tensions suggested by Arrow (1962) in the absence of
intellectual property rights. In a nutshell, Anton and Yao (1994) suggest that an inventor
might disclose an idea to a firm and then threaten to disclose it to another competing firm, in
order to appropriate benefits from the idea; Anton and Yao (2002) suggest that an inventor
could also reveal part of the idea, thereby signaling its value to a potential buyer – this also
relates to the concept of selective revealing, suggested by Alexy et al. (2013) and others.
Nevertheless, discussion surrounding the tensions described by Arrow (1962) has recently
been rekindled by literature streams that mention an increased propensity for
interorganizational collaboration (or openness) (see Natalicchio, Petruzzelli, and Garavelli,
2014; Laursen and Salter, 2014).
When negotiating contracts in the market for ideas, disclosure can increase the
bargaining power of the buyer and reduce the power of the innovator, especially in the
absence of credible threats and IP rights protection. This paradox of disclosure applies
also to a range of external interactions between the innovating firm and the external
environment, beyond the commercial transaction of selling the idea. (Laursen and
Salter, 2014; p. 869)
The above quote points out that the fundamental paradox described by Arrow (1962) is likely
to occur in various open innovation contexts. However, it is unclear whether their own
suggested paradox of openness builds on Arrow’s (1962) paradox or rather focuses on the
contradictory claims in two different research streams: one that suggests that IP
overprotectiveness is hindering openness and the other that argues that strong IP protection
enables openness.
As mentioned earlier in this section, previous studies do not seem to be in consensus
regarding the nature of the tensions described by Arrow (1962). Arrow (1962) calls this a
fundamental paradox, yet other scholars view it as just a dilemma. Lado et al. (2006)
paraphrase Wittgenstein (1953) in pointing out that:
The term paradox has been conceptualized in different ways, including formal/logical,
informal/ordinary language, and rhetorical. These conceptualizations might reflect the
different “language games” that people play when they perceive complex and
incongruous phenomena. (Lado et al., 2006; p. 116)
While terms such as paradox and dilemma might be used synonymously in common
language, management studies (e.g. Smith and Lewis, 2011) point out that dilemmatic,
14
paradoxical and dialectical tensions are different, though they also present similarities in
nature and often overlap. Smith and Lewis (2011) define paradox as ”contradictory yet
interrelated elements that exist simultaneously and persist over time” (p. 386). Such elements
make sense when considered separately, yet their adjacency becomes illogical, thus
emphasizing underlying tension. Most often tensions are considered to be dilemmas, thus
necessitating a choice of one element over the other, yet antinomies tend to reappear, thus
reinforcing the linkages between them (Cameron and Quinn, 1988; Smith and Lewis, 2011).
Other scholars define paradox as e.g. “a re-entry” of a contrast (Luhmann, 1993; p. 485) and
argue that noticing two opposing elements at the same time makes a choice between the two
impossible (Luhmann, 1993; Lauritzen, 2017). From this perspective, seemingly dilemmatic
(in the sense of trade-off) and paradoxical tensions are also thought to be distinct: while an
either/or choice between opposing elements is not as difficult, the contradictory elements of
paradox also complement each other, thus making the choice more intricate (Lauritzen, 2017).
Under more recent research trends, which emphasize the need for collaboration in order to
ensure firm survival (Cassiman and Veugelers, 2002; Chesbrough, 2003), tensions between
openness and appropriability have become more evident (Laursen and Salter, 2014). Though
scholars use the notion of paradox when investigating the openness-appropriability tensions,
they seem to regard this as a trade-off situation (see, e.g., Arora et al., 2016), thus hinting
towards a dilemma. As pointed out by Smith and Lewis (2011), when organizational tensions
are treated as a case of trade-off, it often turns out that the tensions reappear, or create new
tensions. Smith and Lewis (2011) argue that organizational tensions can be both latent and
salient, and that they become salient due to environmental factors such as plurality, change, or
scarcity. In a similar manner, it is suggested that the tensions shaping the paradox of
disclosure might be exacerbated by certain contextual factors.
2.4. Openness-appropriability tensions and theories of the firm
The focus of this thesis lies in exploring the tensions that may arise between openness towards
external partners in innovation (which generally entails disclosure of proprietary knowledge
to such partners) and appropriating benefits from the innovation endeavor. The openness to
collaborate with other actors draws primarily on the scarcity of a firm’s own resources (see,
e.g., Cassiman and Veugelers, 2006). This could also be regarded in terms of complementary
assets possessed by other firms (see, e.g., Teece, 1986; Dyer and Singh, 1998). Likewise, the
need for openness that triggers Arrow’s (1962) paradox draws from insufficient resources: it
is fair to assume that if the seller had enough resources to develop and commercialize the idea
15
on his/her own, there would not be any need for disclosing the idea to potential buyers or
partners before releasing the final product, process or service on the market. Therefore, one
possible way to investigate the openness-appropriability relationship could be from a resource
perspective.
Previous literature has both acclaimed and critiqued the resource-based view (RBV). The
resource-based view (RBV) defines a resource as “anything which could be thought of as a
strength or weakness of a given firm” (Wernerfelt, 1984; p. 172). According to Barney
(1991), firms’ resources are heterogeneous and immobile, and may be used to create and
enforce strategies. Furthermore, the RBV suggests that firms are unable to buy competitive
advantage but instead find advantage within the resources already owned by the firm (Barney,
1991). Later studies have also pointed to shortcomings of the RBV, and some have even
attempted to classify the critiques. In a systematic review Kraaijenbrink et al. (2009) identify
a total of eight categories of critiques to the RBV, three of which emphasize some (real)
limitations in this theory of the firm and require further investigation. According to
Kraaijenbrink et al. (2009), these three critique categories relate to the “inappropriately
narrow neoclassical economic rationality” (of the RBV) (p. 349). Prior studies that attempt to
analyze interfirm relationships from an RBV perspective have suggested combining the RBV
with e.g. the social network theory (Lavie, 2006; Yang, Lin, and Lin, 2010).
For instance, Lavie (2006) observes that, in contrast with the recent research on interfirm
alliances, the RBV envisages the firm to be a self-sufficient entity. Lavie (2006) points out
that the emphasis on alliances in recent management studies reveals gaps between established
theories of the firm and the growing interest researchers show for alliance formation and
performance. Furthermore, studies on the RBV “do not focus on appropriability problems and
latently assume that the appropriability of rents requires ownership, or at least complete
control of the rent-generating resources” (Lavie, 2006; p. 640). Therefore, Lavie (2006)
proposes an extension of the RBV by combining the resource-based perspective with social
network theory (see, e.g., Wasserman and Faust, 1994). Such an extension should, for
instance, account for the fact that a firm’s worth should not only be determined by the firm’s
own resources but also include those of its partners (Lavie, 2006).
Yang et al. (2010) review established theories of the firm in relation to tensions between risks
and opportunities. They conclude that most theories are biased towards one of the two,
emphasizing either risks and costs or opportunities. Moreover, Yang et al. (2010) call for a
“balanced view” that encompasses both risks and opportunities. Yang et al. (2010) find
16
support for the suggested framework, which would combine the RBV and social network
theories. Drawing a parallel to Arrow’s (1962) disclosure paradox, the possible opportunities
may be regarded as reasons for the disclosure, while risks of misappropriation by the potential
buyer/partner may also be present.
Another suggestion for expanding the RBV relates to the benefits of adopting a paradoxical
perspective for advancing RBV theory (Lado et al., 2006). In their study, Lado et al. (2006)
discuss several paradoxes present in RBV theory and propose that conflict should be used in
future research investigations related to RBV. They further note that regarding the firm as a
“cooperative system” (Lado et al., 2006; p. 126) instead of viewing it as a landscape
consisting of contradictory elements would obscure researchers’ perceptions and expectations
about organizations. Lado et al. (2006) also link their discussion to the studies contributing to
the theory of paradox (e.g. Poole and Van de Ven, 1989; Lewis, 2000).
There are, of course, other established theories of the firm, aside the RBV, which might be
used as lenses to analyze openness-appropriability tensions. One example is the property
rights theory (PRT), which relates to the rights of owners to block others from utilizing their
proprietary assets (see e.g. Alchian and Demsetz, 1972). This extends also to intellectual
property rights and recent studies draw attention that PRT could be used to investigate
innovation collaboration with e.g. users (see Tietze et al., 2015).
The above has shown how this thesis might be linked to theories of the firm, namely referring
to two extensions of the RBV suggested by Lavie (2006) and Lado et al. (2006), respectively,
as well as to the PRT, as suggested by Alchian and Demsetz (1972) and more recently linked
to innovation collaboration studies by Tietze et al. (2015). The implications of these potential
linkages will be further discussed in section 6 of this thesis.
3. Method
This thesis includes three studies that investigate different aspects of appropriability-
openness-related tensions. The aspects of the tensions are also linked to three research
questions, illustrated in Figure 2. As suggested by previous research on methodologies (e.g.
Yin, 2014) the choice of a certain research methodology should be matched to providing an
answer to the given research question(s). Answering the three research questions addressed in
this thesis requires different methodological approaches. The first two research questions are
of a quantitative nature, indicated by the word ‘what’ (Yin, 2014) and also by the suggestion
of moderating effects. Therefore, the two corresponding studies, P1 and P2, use quantitative
17
methods and build on an international survey, to be described in the next subsection. While
the third research question also contains the word ‘what’, it is of a theoretical nature and
therefore cannot be answered by applying quantitative methods. The third study, P3, is thus a
conceptual paper discussing the nature of tensions between appropriability and openness, as
well as the demarcation between the two so-called paradoxes suggested in previous literature,
namely the paradox of disclosure and the paradox of openness.
3.1. Quantitative research
The quantitative data used in papers P1 and P2 was partly collected by other researchers (the
Open Innovation Survey) and partly by the thesis author (the corresponding patent data). In
the following, both data collection processes will be described.
3.1.1. Survey data collection
The international online survey was conducted during 2013 by groups of researchers from
three European countries, namely Finland, Italy, and Sweden. The survey is called and will
henceforth be referred to as the Open Innovation Survey (OIS). Several studies based on the
OIS and developed by the researchers who took part in the data collection have already been
published in internationally acclaimed journals, including Lakemond et al. (2016), Lazzarotti
et al. (2016), and Bengtsson et al. (2015).
The respondents to the OIS were manufacturing companies (codes 10-32 and 98 in NACE
Rev. 2) from the three above-mentioned countries (Finland, Italy, and Sweden). The research
groups developing the OIS followed survey design guidelines according to Forza (2002). The
research group in each country picked out a randomized stratified sample of 1000
manufacturing industry firms, and the companies were contacted via telephone. Next the
questionnaires were sent via e-mail to R&D managers or other personnel with similar
knowledge about R&D collaboration (and open innovation) routines/practices. After three
reminders, a total of 415 full answers were collected – 87 from Finland, 152 from Italy, and
176 from Sweden – corresponding to a response rate of approximately 14%. No significant
differences regarding company size or industry resulted from an analysis of respondents and
nonrespondents, nor did early and late responses differ concerning key questions on
collaboration or performance. Questionnaire quality validation was achieved via a pilot test of
two groups (colleagues and targeted respondents). The respondents answered a questionnaire
translated into their native language to gather feedback on anything that might affect the
answers.
18
The survey largely consists of closed questions, except for the questions regarding company
name, firm size (number of employees), and turnover. The answers were measured on a
seven-point Likert scale from 1 = “not at all” to 7 = “to a very high extent”; the response
alternative “do not know” was also provided.
The questions concern strategy, context (size, industry, etc.), openness, relational factors
(collaboration modes), and performance. The focus in this thesis is on constructs capturing
openness, in terms of depth of collaboration and variety of partners, intellectual property
protection mechanisms (IPPMs), performance, and company characteristics (e.g. size).
3.1.2. Constructs
This subsection of the Method section describes the main constructs used in the three papers
that have been completed to date, as well as the way these constructs link to previous
research.
Dependent variables
In P1, openness was analyzed considering the dimensions of partner breadth and partner
depth, introduced by Laursen and Salter (2006). The partner constructs capture which kind of
partner the firm collaborates with in open innovation (partner variety or breadth) and how
intensive (deep) the collaboration is with each of these partners. The approach follows
Laursen and Salter (2006) but uses a more fine-grained scale to measure depth. The
respondents were asked to rate the extent to which the firms collaborated with eight specified
stakeholders in innovation activities over the previous five years. Furthermore, the depth of
partners has been condensed (in P1) from eight types of partners into three factors:
academic/public institutional partners, value chain partners (customer, suppliers, and
consumers), and competitors.
The performance construct used in P2 as dependent variable was measured in terms of
novelty and efficiency, following Alegre et al. (2006). The construct has six items in total,
three of which relate to the cost side of performance, i.e. having reduced risks, costs, and time
to market (as a result of innovation collaboration with external partners); the other three are
concerned with innovation performance, i.e. introducing new or significantly improved
products or processes, and opening up new markets.
Independent variables
The IPPMs were captured via a question asking: “Please indicate the extent to which your
company uses the following intellectual property protection mechanisms when collaborating
19
with external partners in innovation activities.” Eight different mechanisms were suggested as
highlighted in previous studies on IP appropriability strategies (e.g. Hertzfeld et al., 2006).
In P1 the eight IPPMs included in the survey were split into three factors, while in P2 they
were used to create a new measure called appropriability intensity.
In P2, openness was investigated in terms of three different external search modes. These
modes further relate to types of boundaries that need to be spanned in interfirm collaborations,
e.g. as suggested by Knoben and Oerlemans (2006): organizational, geographical, and
technological. Thus the three external search modes included in the analysis of P2 are as
follows: partner type-related (partner variety and depth of collaboration), i.e. organizational,
location-related (partner location, either national or international), i.e. spatial, absorptive-
capacity-related (patent portfolio dummy and innovation ambition).
Concerning boundaries and proximity, the localization of the partners in innovations was
learned from the question: “Please estimate how much of the total R&D activities in your
development project is done by external partners located abroad,” using a perceptive seven-
point Likert scale. Thus, a variable illustrating the extent of international partners was created.
The emphasis of geographical boundaries is particularly important when taking into account
the different national IPR regimes.
A dummy variable for the patent data collected was introduced and used in the study P2. (For
more information about the patent data collection, see subsection 3.1.3.) The dummy receives
the value of 1 if the firm owned patents that were valid during the specified search period and
the value 0 if they did not.
Controls
As control variables in the regression analyses, the following four variables were included:
firm size, industry dummies, country dummies, and innovation ambition. These control
variables will be described in further detail below. Previous studies suggest that smaller and
larger companies display differences in appropriability mechanisms used (e.g. Neuhäusler,
2012). In line with these studies, firm size was used as control and measured by the number of
employees (natural logarithm). Following SCB (2014), the companies in the OIS sample were
divided into four groups according to industry sector, i.e. low-tech (NACE 10-18 and 31-32),
medium low-tech (NACE 19, 22-25), medium high-tech (NACE 20, 27-30), and high-tech
(NACE 21 and 26). For 68 firms in the sample the industry was unknown, which created a
fourth group. The low-tech industry group was used as reference group, and thus four industry
20
dummies were created. Including industry-related controls in the regression analysis is
recommended by prior studies, since appropriability strategies and practices have been found
to be sector-contingent, as suggested by Hall et al. (2014) and others. Since the OIS was
conducted in three different European countries, country dummies were also introduced, using
one of the countries (Sweden) as baseline. Previous literature further indicates that
appropriability is likely to vary across country borders (see Hagedoorn, Cloodt, and Van
Kranenburg, 2005). Another control used was the so-called innovation ambition, which
relates to the strategic priority of product development. Even though this construct is merely a
distant proxy of absorptive capacity, the items selected to include in innovation ambition were
inspired by Berchicci et al. (2015).
3.1.3. Patent portfolio data
Previous studies have stressed the importance of absorptive capacity when firms engage in
search for external sources of knowledge (Cohen and Levinthal, 1990). However, in the data
sample used in papers P1 and P2 included in this thesis, the concept of absorptive capacity
was not captured as an individual construct. With the help of previously suggested
subdimensions of absorptive capacity, two variables were created as proxies for the concept
of absorptive capacity. Specifically, the study by George et al. (2001) introduces two distinct
subdimensions for absorptive capacity: R&D intensity and number of patents. The reason
behind including number of patents as a subdimension is that this measure would capture a
company’s ability to implement and apply knowledge, as well as functioning as a
development of the firm’s knowledge base.
Of the 415 anonymous OIS respondents, 358 provided contact details for researchers’ use,
including the name of the company they worked for. I conducted a subsequent patent search
by searching on various combinations of keywords based on each company’s name and
introducing those keywords in the “applicant name” search field in the Thomson Innovation
international database. In parallel to the patent database search, I visited each company’s
website to check that the specified industry sector matched (in case of similar names of
companies active in different industries/countries) and also to verify if the company name
each respondent provided was correct (in order to make sure that all possible keyword
combinations were used in the patent search). I used Boolean operators when companies’
names were formed of more than one word. Once results were retrieved for patents belonging
to a specific respondent company, the corresponding patent data from Thomson Innovation
patent database was exported into an individual Excel spreadsheet. The time period used for
21
the patent search was 1993–2013, since the OIS data was collected during 2013 and patents
have a maximum 20-year validity. One hundred ninety-six of the OIS respondents were found
to have owned patents during the above specified period, 162 companies were found to not
have owned any patents during that time period, and 57 were appointed as missing cases,
representing the firms that did not provide the company name nor other contact information
that might hint at it. Patent data was collected during the time period November 2015 -
January 2016.
3.2. Conceptual paper (theoretical analysis)
The third study, P3, suggests a theoretical analysis of the tensions that may arise between
appropriability and openness. P3 is a discussion paper and does not claim to be a
comprehensive literature review. As mentioned earlier, there is conceptual ambiguity
surrounding the paradox suggested by Arrow (1962) and the plethora of studies referring to
this as paradox, dilemma, or some other kind of tension or problem. Therefore, I sought
conceptual articles that define the concepts of paradox and dilemma and specify the
differences between them. One article that stood out was a theoretical framework
distinguishing between the paradoxical, dilemmatic, and dialectical tensions proposed by
Smith and Lewis (2011). By using the study of Smith and Lewis (2011) as a framework, P3
initiates a theoretical discussion regarding the nature of tensions between openness and
appropriability. First, a distinction is made between the meaning of paradox in logic and
philosophy versus that in management studies. Second, the overlapping yet distinct
characteristics of paradoxical, dilemmatic and dialectical tensions are described, by using the
framework by Smith and Lewis (2011). Third, the elements tensions arise between are
identified in the so-called “fundamental paradox” suggested by Arrow (1962), and a
discussion follows in order to establish the nature of these tensions, according to the
definitions proposed by Smith and Lewis (2011). Finally, the tensions described by Arrow
(1962) are compared with those suggested by Laursen and Salter (2014) to determine
common and distinguishing points between the two potential paradoxes.
3.3. Quality of the study
The overall choice of method to pursue the purpose of exploring appropriability-openness
tensions by applying mainly quantitative methods has both advantages and disadvantages.
The benefits of analyzing this topic quantitatively include the fact that such methods illustrate
general linkages between appropriability and openness, allow the analysis of moderating
22
effects of contextual factors (as in P1), and also delineate the ways in which appropriability-
openness tensions affect performance outcomes from open innovation endeavors. Three of the
downsides in focusing on mostly quantitative methods are (1) a deeper understanding of how
to manage paradoxical tensions between appropriability and openness is lacking; (2)
quantitative methods provide insufficient evidence regarding what factors make the
appropriability-openness tensions salient (as pointed out by Smith and Lewis, 2011); and (3)
quantitative analysis provides an incomplete picture of the dimensions displayed by the
paradoxical tensions between appropriability and openness. In spite of the noted advantages
of the quantitative studies in this thesis, these drawbacks signal the need for a theoretical
discussion paper that would attempt to clarify the nature of the appropriability-openness
tensions and provide further conceptual clarity.
The general quality of this thesis is further discussed in more detail in the following
subsections in terms of internal, external, and construct validity, as well as reliability. Validity
and reliability are important indicators of potential bias, inferences, generalizability, and
possibility to reproduce research results, thus providing indications of the overall quality of a
study.
3.3.1. Internal validity
Internal validity is linked to causal relationships and the inferences that are made based on the
assumptions of causality (see Yin, 2014). In this thesis, a main concern is the causality in the
relationship between appropriability and openness. While a majority of studies on the topic
assume that appropriability determines openness, some recent studies also suggest the
possibility of a dual causality (Laursen and Salter, 2014). Given the previously described
tensions that may occur between openness and appropriability, it seems reasonable to assume
that the causality in this relationship depends partly on the context. P1 analyzes the specific
context in which appropriability affects (causes) openness and also acknowledges the
limitations of this analysis by referring to the potential dual causality suggested by such
researchers as Laursen and Salter (2014). P2 regards appropriability intensity as a moderating
factor in the relationship between openness and performance. Although in these two
quantitative studies dual causality has not been thoroughly investigated, internal validity is not
breached, because previous literature acknowledges both directions of causality between
appropriability and openness. P3 implicitly takes into account the dual causality in the
appropriability-openness liaison, investigating the nature of tensions in this relationship
without assuming that one of the elements represents the cause and the other the effect. As a
23
matter of fact, the theoretical discussion in P3 is partly based on the notion that openness and
appropriability trigger each other back and forth, in turn increasing the tensions between
them.
3.3.2. External validity
External validity concerns the extent to which the results are generalizable. For the two
quantitative studies included in this thesis, the external validity is rather high. This is
motivated by the fact that the OIS (the basis for two of three studies in this thesis) had 415
respondents (manufacturing firms) from three European countries; while the response rate
was approximately 14%, when performing an analysis of respondents and nonrespondents no
significant differences were identified relating to firm size or industry sector. However, the
analysis in both P1 and P2 is related to some restraints on the data sample used. For instance,
the survey data is limited to manufacturing firms. Also, a construct specifically measuring
absorptive capacity was not included in the questionnaire. While proxy measures for
absorptive capacity were used in the two studies, future studies should also take into account
the effects of absorptive capacity when investigating appropriability-openness tensions. One
further limitation extends to P2’s method of analysis. More specifically, the survey only
allowed testing for moderation via one method, which is thought to be less reliable by recent
studies (Helm and Mark, 2012).
While it is rather difficult to discuss or assess generalizability in a conceptual study with no
empirical data, the external validity of P3 could be supported by the ambition of P3 to validate
the concept of paradox in relation to appropriability-openness tensions, regardless of the
context. Nevertheless, in order to fulfill stricter external validity conditions, the findings of P3
ought to be checked by testing the theoretical inferences from this study in practice.
3.3.3. Construct validity
Construct validity concerns reducing bias and the concurrence between items in a construct.
In quantitative studies, this can be tested by the use of various types of factor analysis (see
Forza, 2002). In P1 a Harman single-factor test (Podsakoff et al., 2003) was conducted to test
for common method variance. This resulted in seven factors, each with eigenvalues higher
than 1. The greatest variance accounted for by one of these factors was 13%. Together, the
factors accounted for roughly 67% of the variance. The result of this test indicates that the
quantitative analysis in P1 does not suffer from common method variance. A similar test
conducted for the variables included in P2 also indicated low risks of common method
variance. The conceptual demarcation between paradoxical, dilemmatic, and dialectical
24
tensions concerning the so-called paradox of disclosure suggested by Arrow (1962) further
represents an effort towards attaining construct validity, specifically from a theoretical
perspective.
3.3.4. Reliability
The concept of reliability concerns the possibility that other researchers can reproduce the
results using the same data set and theory (Hammersley, 1987). Again, in the two quantitative
studies, P1 and P2, reliability is achieved by using established statistical techniques and tools
and theoretically based constructs. The reliability of P3 is not a great concern either, as any
other researcher could use the same theoretical framework and go through the steps in the
theoretical discussion.
4. Summary of papers
4.1. P1: A quantitative study on the moderating effects of partners’
location on the relationship between appropriability and openness
The first paper included in this thesis explores the openness-appropriability relationship with
the help of an international survey (the previously described OIS). More specifically, P1
draws from two issues that have been central to prior studies. The first issue relates to the re-
kindling of the so-called disclosure paradox (Arrow, 1962) by Laursen and Salter (2014),
under the umbrella of recent inclinations to open up the innovation process (see Chesbrough,
2003). The second issue is the tensions between increasingly globalized networks and the
patchwork of national intellectual property (IP) (Geller, 1998; Peukert, 2012). While law
articles have investigated the territoriality nature of IPPMs (see Trimble, 2015), strategic
management studies have paid little attention to this matter when investigating appropriability
issues. P1 aims, therefore, to investigate the relationship between openness and
appropriability (with both concepts measured on a more finely grained scale than in previous
studies) and to test the potentially moderating effect of the territorial nature of IPPMs
(measured as the extent of collaboration with international partners – which would require
cross-border IP protection). The analysis is performed in two steps. The first step entails
testing the associations among three different types of IPPMs (formal, semiformal, and
informal, as described in section 5.1) and openness in terms of partner variety and depth of
collaboration with different types of partners (here the partners were divided into three
groups: academic partners, value chain partners, and competitors). In the second step, we
25
investigate the potentially moderating effects of partner location on the appropriability-
openness relationship.
4.1.1. Purpose and research questions
The purpose of P1 is to explore the association between appropriability and openness while
taking into account partner location (national or international). The purpose is further clarified
in two research questions:
RQ1a: How does the use of different IPPMs influence firms’ openness in terms of variety of
partners and depth of collaboration with each type of partner?
RQ1b: What are the effects of IPPMs on firms’ openness (variety of partners and depth of
collaboration) when taking into account the location (national or international) of partners?
4.1.2. Results
The analysis is based on multiple linear regressions to explore the effects of the choice of
IPPMs on the two dimensions of openness, with and without taking into account the location
of partner as moderating factor. In regard to the first research question, the findings show that
semiformal IPPMs are associated with both partner variety and depth of collaboration with
academic partners. Formal IPPMs associate with openness towards academic partners,
whereas informal IPPMs affect the depth of collaboration with value chain partners.
When taking location into account, findings show that formal IPPMs explain both openness in
terms of partner variety and in terms of depth (academic partners and competitors).
Furthermore, semiformal IPPMs affect the partner variety and depth of collaboration
(academic and value chain partners) in national contexts. Informal IPPMs explain openness
towards national value chain partners and competitors.
4.2. P2: A quantitative study of the moderating effects on the relationship
between external search (openness) and performance
The second paper (P2) explores the association between external search modes and firm
performance. The external search modes relate to different types of measures of openness, and
also to various kinds of boundaries that interorganizational collaborations must span. In
previous studies, external search modes have often been investigated separately, for instance
studies concerned with geographic boundaries (see, e.g., Boschma, 2004) or where to search
(see, e.g. Lopez-Vega et al., 2016), types of partners chosen in innovation collaborations (see,
e.g., Laursen and Salter, 2006), or mechanisms that enable effective integration of external
knowledge (see, e.g., George et al., 2001). Prior research also tends to overlook the likelihood
26
of misappropriation (Katila et al., 2008). While some previous studies signal beneficial effects
of open innovation practices on performance (see e.g. Ramirez-Portilla, 2016), literature also
signals tensions between openness and appropriability and calls for further research to
investigate these (see, e.g., Laursen and Salter, 2014), prior studies provide scarce evidence
concerning the way performance is influenced by openness-appropriability tensions.
Therefore, P2 analyzes whether and how the choice and intensity of appropriability affect the
association between external search modes and firm performance.
P2 proposes a new measure called appropriability intensity and investigates the moderating
effects this measure might have on the association between external search and performance.
The appropriability intensity is calculated as a weighted average for the use of eight different
types of IPPMs. The decision to introduce this new measure was partly based on the fact that
descriptive statistics show that appropriability breadth is rather extensive among the firms in
the OIS sample. More specifically, about 45% of the firms use all eight IPPMs included in the
survey questionnaire to some extent.
4.2.1. Purpose and research questions
The purpose of this paper is to investigate external search strategies’ effects on performance
and to test for potentially moderating effects of appropriability intensity on the relationship
between external search modes and firm performance.
RQ2a: What are the effects of external search modes (in terms of spatial search, variety of
partners and depth of collaboration, as well as absorptive capacity) on firm performance in
terms of efficiency and novelty?
RQ2b: How does appropriability intensity moderate the relationship between external search
and firm performance?
4.2.2. Results
The findings of this paper indicate that different search modes could have divergent effects on
firm performance across various boundaries, i.e. organizational, technological, and spatial
boundaries. Moreover, the results of P2 show that the appropriability intensity does have
moderating effects on the external search-performance association. Findings also point out
that the firms with higher appropriability intensity secure superior performance outcomes
from their external search efforts (the overall degree of openness notwithstanding).
27
4.3. P3: A conceptual study on disentangling openness-appropriability
tensions
During the past half century many scholars in various fields of research have approached
Arrow’s (1962) so-called paradox of disclosure from different perspectives. However, prior
studies do not appear to be unanimous about the nature of the tensions described by Arrow
(1962), despite the fact that in the original study the wording used is “fundamental paradox”
(p. 615). Thus, later studies have come to investigate the supposed paradox of disclosure by
claiming at times that the underlying tensions have a different character. For instance, some
regard it as a dilemma or trade-off (see, e.g., Anton and Yao, 2002), others as a paradox
(Laursen and Salter, 2014). At the same time, management studies point out that paradoxical
and dilemmatic tensions could overlap and are easily mistaken for one another (see Smith and
Lewis, 2011). While the tensions signaled by Arrow (1962) as paradoxical have been
investigated as different phenomena (e.g. paradox, dilemma) and under various names or
labels, a theoretical discussion is lacking regarding whether or not the paradox of openness (or
disclosure) is indeed a paradox, a dilemma, or something different, and under which
circumstances the appropriability-openness tensions could become paradoxical.
4.3.1. Purpose and research questions
The purpose of P3 is twofold. First, to initiate a discussion about the so-called paradox of
disclosure (Arrow, 1962) in order to identify the nature of the underlying tensions – according
to Smith and Lewis (2011) the tensions could be paradoxical, dilemmatic or dialectical.
Second, P3 aims to demarcate the so-called paradox of disclosure described by Arrow (1962)
from the more recently dubbed paradox of openness (Laursen and Salter, 2014). The purpose
is further specified in two research questions:
RQ3a: What is the nature of tensions described in the so-called paradox of disclosure – is it
paradoxical, dilemmatic, or dialectical?
RQ3b: What demarcates the so-called paradox of disclosure from the recently suggested
paradox of openness?
4.3.2. Results
By applying the framework suggested by Smith and Lewis (2011), this study shows that the
tensions between openness and appropriability are neither dilemmatic nor dialectical. The
seller in Arrow’s (1962) supposed paradox is required to reveal information about an idea in
order to appropriate benefits from it, yet the act of disclosure might challenge the rightful
28
appropriation of rents from said idea. Therefore, tensions between openness and
appropriability are not of a dilemmatic nature, as they do not represent a trade-off. Dialectical
tensions, on the other hand, could be solved through integration, but in the potentially
hazardous situation described by Arrow (1962) the integration is likely to be temporary, and
new tensions could arise from the challenges the seller would face to appropriate benefits
from the idea (possibly misappropriated by the potential buyer). As a result, the tensions
suggested by Arrow (1962) seem to be of a paradoxical nature.
Moreover, P3 attempts to demarcate the paradox of disclosure from the paradox of openness.
Laursen and Salter (2014) build on the paradox of disclosure suggested by Arrow (1962), yet
they propose a new concept under a different name (paradox of openness) and call it an
“apparent paradox” (p. 869). While recent research streams concerning the opening up of the
innovation process (see Chesbrough, 2003; Cassiman and Veugelers, 2006) seem to rekindle
the discussion on the paradox of disclosure, Laursen and Salter (2014) provide unclear
coordinates when describing the paradox of openness. P3 goes only so far as to identify some
ambiguity relating to the paradox of openness.
5. Discussion
The Discussion section will attempt to answer the three main research questions introduced in
section 1.2 by summarizing the main results and analysis of the three papers included in this
thesis.
5.1. The appropriability-openness relationship and the moderating effects
of partner location on this linkage
The first research question, RQ1, was formulated as follows: What is the association between
different types of appropriability mechanisms and various kinds of openness, and what are the
potentially moderating effects of partner location on this relationship?
First, P1 brings to light new evidence concerning how specific types of openness (partner
variety and depth of collaboration) are linked to certain types of appropriability mechanisms
or IPPMs, namely formal (patents, trademarks, designs, and copyrights), semiformal (trade
secrets and contractual agreements) and informal (lead times and product complexity).
Furthermore, P1 illuminates the fact that linkages between different types of appropriability
and openness become clearer once location is factored in. Distinguishing between external
partners in innovation located either within national borders or abroad, P1 reflects the
29
territorial aspect of certain appropriability mechanisms, which represents a challenge in
increasingly global networks (Bititci et al., 2012; Dussauge and Garrette, 1995). As
mentioned in section 4.1.2, the first sets of regressions in P1 concerning RQ1a point out that
more than one group of IPPMs, i.e. both formal and semiformal, associate at times with one
type of openness, openness towards academic partners. However, when testing for the
potentially moderating effects of partner location, the linkages become more clearly
delineated. Semiformal IPPMs associate with openness in terms of national partners, while
formal appropriability mechanisms are linked to collaboration with a wide variety of partners
in international settings. Prior studies have identified formal IPPMs such as patents as
prerequisites for entering global markets (see Neuhäusler, 2012), which might explain the
latter result. For openness in terms of partner depth, semiformal and informal IPPMs relate to
depth of collaboration with all three groups of partners in national settings. In turn, formal
appropriability mechanisms are associated with depth of collaboration (particularly with
academic partners and competitors). These results tend to indicate that previously outlined
positive effects of contracts (e.g. Belderbos et al., 2014) appear to be mainly valid in national
settings, at least for the firms in the OIS sample. Formal appropriability mechanisms gaining
importance in international settings of collaboration with academic partners may have to do
with the suggested roles of patents as codes for knowledge (Burk, 2008). In the case of co-
opetition, P1’s results appear to confirm previous studies that also find formal IPPMs such as
patents to be more relevant in collaborations with international competitors (see Schmiele and
Sofka, 2007). One further theoretical perspective to be considered here is that the location of
partners could be regarded as a dimension of the potential paradox of disclosure. Another
interesting takeaway from P1 is that the ‘in-between’ cluster, which collaborates with both
national and international partners to similar extents, does not display any significant
associations between groups of IPPMs and types of openness. One interpretation here could
be that this cluster enforces a different range of appropriability mechanisms for collaborations
with partners located both locally and across national boundaries.
5.2. The moderating effects of appropriability intensity on the association
between openness and performance
The second research question, RQ2, concerns the moderating effects that appropriability
intensity might have on the openness-performance liaison: What are the potentially
moderating effects of appropriability (mechanisms) on the relationship between openness and
performance?
30
P2 answers this research question by investigating the linkages between external search
modes and performance, and also by exploring the potential moderating effect of
appropriability intensity on these linkages. The main contribution of P2 is showing that
appropriability intensity moderates the relationship between different types of openness and
performance. Existing literature provides scarce evidence on the interplay between
appropriability, openness and performance, even though the previously signaled tensions
between appropriability and openness clearly have the potential to affect the outcomes of
innovation endeavors. The analysis of P2 indicates that firms with higher appropriability
intensity, i.e. firms that use a wide variety of IPPMs to a higher extent, also perform better
than the rest of the companies in the OIS sample. This result confirms the assumption that the
use of IPPMs may alleviate the tensions between openness and appropriability (see Arrow,
1962; Laursen and Salter, 2014). The regression results of P2 reveal distinct associations
between different types of openness and performance. One example is the positive association
between collaboration with universities (in the first appropriability intensity cluster) and
innovation performance, which indicates the technological advantages of collaborating with
universities (Laursen and Salter, 2006; Fabrizio, 2009). In the second cluster of
appropriability intensity, which is more reliant on trademarks and patents than the other two
clusters, positive associations were observed between openness to government agencies and
cost performance, and collaboration with competitors and innovation performance. Some
evidence to sustain these results is found in previous studies, such as for advantages of the use
of trademarks in customer collaborations (see Landes and Posner, 1987) and the use of patents
in co-opetition positively affecting novelty (see, e.g., Cohen et al., 2000). In the third cluster,
cost performance is explained by openness towards suppliers, while innovation performance
is linked to collaboration with intermediaries and companies in other industries. The former
result might be explained by previous studies’ results implying that supplier collaboration
reduces costs in new product development, as suggested by Argyres and Bigelow (2010).
5.3. Distinguishing among paradoxical, dilemmatic, and dialectical
tensions in the appropriability-openness relationship
The third research question, RQ3, is: What is the nature of tensions between appropriability
and openness, i.e. are they paradoxical, dilemmatic, or dialectical?
P3 discusses the potential nature of tensions between appropriability and openness by relying
on the framework suggested by Smith and Lewis (2011). According to the definitions in this
31
framework, the theoretical analysis in P3 suggests that openness-appropriability tensions are
neither dilemmatic nor dialectical, but rather paradoxical in nature. Moreover, P3 discusses
common points and differences between the so-called paradox of disclosure suggested by
Arrow (1962) and the “apparent paradox” of openness (Laursen and Salter, 2014). While it is
difficult to pinpoint a clear demarcation or a complete overlap between the two, P3 identifies
some key points where the description of the paradox of openness lacks clarity. Therefore,
clarifications concerning the definition of paradox, the explanation of what constitutes an
“apparent paradox” (Laursen and Salter, 2014; p. 869), or the opposite yet interrelated
elements that form the so-called paradox of openness are all suggested as topics for further
analysis.
6. Conclusions, contributions, and implications
6.1. Main findings and contributions
The purpose of this thesis was to investigate tensions related to the openness-appropriability
relationship. In the following, some overall conclusions are described by summing up the
findings of the three studies included in this thesis.
One takeaway from this thesis is that location matters when it comes to appropriability-
openness tensions. More specifically, it has been shown that partner location (national or
international) has moderating effects on the association between appropriability mechanisms
and openness, i.e. that the use of formal IPPMs prevails in international settings, regardless of
the types or variety of partners, while informal and semiformal IPPMs are mainly enforced in
national collaboration settings. These results, highlighted by the study P1, reflect the
territorial character of IPR, an oft-neglected aspect/variable in innovation management
studies, and show the importance of location, i.e. national or international settings for
collaboration, in analyses that include appropriability and openness. The finding contributes
by adding clarification to the relationship between appropriability and openness (Laursen and
Salter, 2014) and by suggesting a spatial dimension to the potential paradox of disclosure.
A second conclusion relates to responding to recent calls for researching the interplay of
openness, appropriability, and performance, as requested by such researchers as Laursen and
Salter (2014). The findings revealed that the way openness associates with performance is
partly shaped by appropriability intensity, and that companies displaying higher degrees of
appropriability intensity are also more successful in reaping benefits from open innovation
endeavors. While scholars generally acknowledge tensions between appropriability and
32
openness, previous studies provide scarce evidence on how managing such tensions affects
performance outcomes from open innovation endeavors. One contribution here is analyzing
the interplay between appropriability, openness, and performance, thereby responding to
research gaps signaled in recent studies.
A third takeaway concerns investigating the concepts of appropriability and openness and
looking back to the “fundamental paradox” suggested by Arrow (1962). The presence of
Arrow’s (1962) paradox in open innovation contexts (Laursen and Salter, 2014) has also
brought to light the need to clarify the conceptual ambiguity present in subsequent studies
drawing from Arrow (1962). The findings presented in this thesis suggest that, according to
paradox theory (see, e.g., Smith and Lewis, 2011), the so-called paradox of disclosure
proposed by Arrow (1962), which also has ramifications in the recently emerging streams of
literature on open innovation (Laursen and Salter, 2014), is more of a paradox than a
dilemma, as implied by several recent studies, such as e.g. Anton and Yao (2002) or Arora et
al. (2016). While, some questions regarding the paradox of disclosure may still exist, this
thesis adds some conceptual clarity to previous research. A further clarification is that
Arrow’s (1962) paradox of disclosure, rekindled by increasing attention on open innovation
research, should not be confused with the conflicting streams of literature that alternatively
suggest that either too little or too much IP protection would be beneficial in open innovation
settings. The findings thus contribute by providing a theoretical discussion concerning the
nature of tensions in the so-called paradox of disclosure (Arrow, 1962). A further contribution
relates to the demarcation between the paradox of disclosure and the newly suggested paradox
by Laursen and Salter (2014).
6.2. Further theoretical implications
The discussion concerning theoretical implications could start by linking the implications of
this thesis to section 2.4 about the possible theories of the firm. One potential linkage has
been to the RBV. As pointed out by e.g. Dahlander and Gann (2010) – see section 2.1.2 – the
propensity to open up the innovation process is primarily related to a firm’s own lack of
internal resources to invent and commercialize new products. Furthermore, the emerging
literature streams on open innovation stress the tensions concerning appropriability and
openness, relating to the paradox described by Arrow (1962), as suggested by Laursen and
Salter (2014). According to Lavie (2006), RBV theory must be extended by integrating RBV
with social network theory, therefore accounting for the fact that the worth of an organization
is determined not solely by its own internal resources but also by the resources of the external
33
partners of the firm. The two quantitative studies included in this thesis have resource-based
implications. Their results partly indicate that, on the one hand, international collaboration
requires additional resources, reflected in the emphasized use of formal appropriability
mechanisms. On the other hand, stronger appropriability intensity also explains the
performance resulting from open innovation endeavors, meaning that in order to benefit from
innovation collaboration with external partners, firms must not only apply a wide range of
IPPMs but also to use them extensively. This latter implication also stresses the investment
that companies need to put into appropriability strategies in order to reap benefits from open
innovation.
The theoretical discussion concerning the nature of appropriability-openness tensions also
provides implications for the theory of paradox (Smith and Lewis, 2011) and for the paradox
perspective in the RBV (Lado et al., 2006). By discussing the potential nature of tensions in
the paradox of disclosure suggested by Arrow (1962) and, furthermore, by suggesting that the
tensions described by Arrow (1962) tend to be paradoxical, future research avenues that
integrate RBV and paradox theory are pinpointed.
The findings in this thesis might also be linked to other (extended versions of) theories of the
firm, for instance there could be linkages to the property rights theory (PRT). The ability of
firms to reap benefits from open innovation endeavors may at times be directly related to the
ability to block other actors from using their own proprietary assets, as suggested by e.g.
Alchian and Demsetz, 1972. However, only the quantitative analysis including performance
outcomes obtained from innovation collaboration might give an indication of the focal firm’s
ability to maintain control over proprietary intangible assets (see P2). Said findings indicated
that the companies in the OIS sample that were able to maintain control over their proprietary
assets by using bundles of appropriability mechanisms were also the ones that were able to
reap most benefits from opening up the innovation process. Further implications for the PRT
could be discussed in similar future analyses where control and ownership are more clearly
defined and measured.
6.3. Managerial implications
As far as managerial implications are concerned, some results highlighted in P1 imply that
opening up the innovation process internationally might require more formal appropriability
mechanisms, which in turn could entail additional costs (required by formal IP protection).
34
Managers should further be advised that when collaborating with both national and foreign
partners, the appropriability mechanisms alone do not seem to suffice for enabling openness.
When opening up to external partners, the findings of this thesis indicate that firms should
have not only a wide variety of appropriability mechanisms at their disposal but also employ
these mechanisms sufficiently to influence the performance results. Another noteworthy
implication of P2 is that different external search modes have contrasting effects on
performance, which indicates that managers should be careful in weighing the benefits and
disadvantages of crossing multiple types of boundaries in search of external sources of
knowledge (as also suggested by Bengtsson et al., 2015).
Although based on a theoretical discussion, the conceptual part of this thesis also provides
some managerial insights. One key takeaway is that tensions between openness and
appropriability should not be too quickly dismissed as either-or choices; nor can tensions
easily be resolved by integrating the two elements. It is further suggested that managing
potentially paradoxical tensions requires careful consideration and represents more challenges
than are readily apparent.
6.4. Future research
One avenue for further research would be to explore the openness-appropriability tensions
using qualitative methods. While quantitative studies can provide general overviews and
indicate trends regarding the use of e.g. appropriability mechanisms in open innovation
processes, qualitative analysis would allow for a deeper and more nuanced understanding of
the tensions underlying appropriability-openness associations, and would possibly allow
identifying factors that make such tensions salient, as suggested by Smith and Lewis (2011).
It might further be useful to take into account and distinguish between different phases of the
innovation process when investigation appropriability and openness, as pointed out by e.g.
Veer et al. (2016) or between incremental and radical innovation, as suggested by Zobel et al.
(2017). Further studies investigating openness-appropriability tensions in innovation
collaborations might also take into account ownership and control issues and adopt a property
rights theory lens as suggested by e.g. Tietze et al. (2015).
The paradox of disclosure could also be linked to the multiple roles of IPPMs (particularly
patents, which have received more attention in previous research). While recent studies
address such issues by e.g. investigating the either positive or negative role of patents in open
innovation (see Zobel et al., 2016), this remains a largely unexplored area. Furthermore,
35
besides the role of protecting knowledge in order to appropriate benefits from innovation (see
Teece, 1986), it is likely that additional roles of patents to coordinate (Penin, 2005) or act as
codes for knowledge (Burk, 2008) enable firms’ openness, particularly in international
settings.
Another avenue for future research is investigating the appropriability mechanisms used by
companies that combine national and international partners in a balanced way (see the
balanced group in P1). While no particularly significant associations between different types
of IPPMs and various types of openness were found among companies in the OIS sample in
this balanced group, it would be interesting to further investigate what kinds of appropriability
strategies such companies employ in order to balance both national and international partners
in innovation. A further topic of research would also be whether there are any particular
benefits related to such a geographically balanced open innovation approach.
7. References
Alchian, A. A., & Demsetz, H. (1972). Production, information costs, and economic
organization. The American economic review, 62(5), 777-795.
Alegre, J., Lapiedra, R., & Chiva, R. (2006). A measurement scale for product innovation
performance. European Journal of Innovation Management, 9(4), 333–346.
Alexy, O., George, G., and Salter, A. J. (2013). Cui bono? The selective revealing of
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