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The Two Faces of Open Innovation: NetworkExternalities and Learning

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  • Muge Ozman

Abstract

In this paper I differentiate between two types of benefits of open innova- tion. Network externalities e¤ect happens when open innovation increases the participation of one group of users which increases the value of adoption for another group of users. Learning e¤ect happens when economic actors increase their knowledge through access to external sources of knowledge. I investigate how each effect can be dominant depending on nature of products, by drawing upon previous research in product modularity. In addition I discuss the fac- tors which will strengthen or weaken the e¤ects of each dimension. The main variables which influence learning are, tacitness of knowledge, technological op- portunities, appropriability of knowledge and turbulence. Network externalities e¤ect can be strengthened by increased user innovation.

Suggested Citation

  • Muge Ozman, 2008. "The Two Faces of Open Innovation: NetworkExternalities and Learning," Working Papers of BETA 2008-24, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    • Handle: RePEc:ulp:sbbeta:2008-24
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    1. Pellegrini Luisa & Lazzarotti Valentina & Manzini Raffaella, 2014. "Open Innovation in the Food and Drink Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 12(1), pages 75-94, January.
    2. Hagedoorn, John & Ridder, Ann-Kristin, 2012. "Open innovation, contracts, and intellectual property rights: an exploratory empirical study," MERIT Working Papers 2012-025, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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