Open innovation and business model dynamics

Early work on open innovation recognized that open innovation should be viewed in light of a firm's business model and related to value creation and appropriation. However, the intricacies of how open innovation enables business model innovation have received relatively little attention. In this paper we examine how inbound, coupled, and outbound open innovation activities are related to business model innovation. We used a case-study research design in which we charted how open innovation activities were incorporated in, and affected, a configuration of business model elements. We found, first, that open innovation activities are used to either open up existing business models or develop novel open business models. Second, we identified multiple benefits of applying open innovation. Some of these are discussed in previous literature, others, such as unlocking cross-business synergies have gained far less attention. Third, over time we found differences between expected and realized value creation and appropriation: some expected benefits were not realized, and new unexpected benefits emerged. Such differences resulted in changes in the openness of the business model.