Open Innovation: A New Paradigm for Understanding Industrial Innovation

Abstract The Open Innovation paradigm can be understood as the antithesis of the traditional vertical integration model where internal research and development (R&D) activities lead to internally developed products that are then distributed by the firm. If pressed to express its definition in a single sentence, Open Innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. Open Innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology.