Open Innovation

Open innovation is a management theory holding that a firm can and should draw on external ideas and external paths to market, alongside its own internal research, rather than relying solely on innovation generated and developed inside its own walls. The concept was framed as a departure from the secrecy and siloed structure of traditional corporate research labs, reframing innovation as a distributed process that purposively manages the flow of knowledge across a firm's boundaries, using both paid and unpaid mechanisms consistent with the firm's own business model. The approach commonly runs in two directions: inbound, where a firm acquires external innovations through licensing or purchase, and outbound, where a firm externalizes its own unused internal inventions through licensing, joint ventures, or spin-offs. Discussion of increased openness in interfirm research and development cooperation dates back to the 1960s, but the modern promotion of the term is attributed to Henry Chesbrough, an academic who has served as adjunct professor and faculty director of the Center for Open Innovation at the University of California, Berkeley's Haas School of Business.