Closed or open innovation? Problem solving and the governance choice

Scholars have recently highlighted the promise of open innovation. In this paper, we treat open innovation—in it's different forms and manifestations—as well as internal or closed innovation, as unique governance forms with different benefits and costs. We discuss how each governance form, whether open or closed, is composed of a set of instruments that access (a) different types of communication channels for knowledge sharing, (b) different types of incentives, and (c) different types of property rights for appropriating value from innovation. We focus on the innovation “problem” as the central unit of analysis, arguing for a match between problem types and governance forms, which vary from open to closed and…