Open innovation helps organisations to speed up the innovation process by accessing the external collaborations, but the firm always has the big risk of leaking the its core knowledge and thus the company might lose the differential advantage which it can possess through vertically integrated and established closed innovation process. This is one of the main limitations of open innovation paradigm. Open Innovation: Past Research, Current Debates, and Future Directions. Ulrika and Jonny cited in their article that Rogers's theory of innovation describes that the successful adoption of innovation requires ideas of management, practices and behaviours. The Rogers theory of innovation also describes the aspect of social networks in the adoption of innovation process. Inbound open innovation for enhanced performance: Enablers and opportunities. Stuermer, Matthias, Spaeth, Sebastian and Krogh, Georg Von. Extending Private-Collective Innovation: A Case Study.
One of the potential limitations of open innovation is that when an organisation is dependent on external sources and partners for the innovation, it might encounter with the additional cost of communication to control and deal with its external partners and stake holders. The IBM then manages to have collaboration between the researchers in the company and professors in the universities and IBM changed the way of hiring its employees and it has taken steps towards recruiting graduates from universities and other research centres.
In the process of exploiting the external knowledge through its external partners and collaborations the firms lose the control over the knowledge. IBM had started seeking knowledge outside its boundaries through by using this open innovation paradigm. It was very difficult for an established company like IBM to move towards open innovation from an established and vertically integrated process, but due to increase in competition the company had to shift towards the open innovation paradigm as it had single largest annual lost in the American corporate history in 1992.
According to sahin (2006), Rogers theory of diffusion of innovation claims that the communication is one of the processes through which participants transfer information to one another so that they can reach to a point where they can understand each other. (2013), Leveraging External Sources of Innovation: A Review of Research on Open Innovation.
The open innovation paradigm has changed the role of utilising and accessing the external knowledge and incorporates this knowledge with internal research and development process of an organisation.
Rogers theory of innovation defines that the successful adoption of innovation requires the management of ideas, practices, behaviours and structures with the aim of bringing these different aspects of organisational and program structures with alignment (Ulrika H. According to Westergren and Holmstrom (2012) the researchers have highlighted that the social networks and technologies structure need to be changed if a firm has to move from the closed innovation to open innovation paradigm.
Limitations of existing theories The open innovation paradigm provides the external contacts and connections to access the external knowledge which accelerates the internal innovation process; however there are certain limitations which needs to be considered before accessing the external contacts and connections to access the external knowledge. Detailed view of Rogers' diffusion of innovations theory and educational technology-related studies based on Rogers' theory. This capitalist is now known as venture capitalist or venture investor in the new paradigm of open innovation. The Rogers (2003) theory of innovation defines that the communication channel is one of the ways through which the individuals or institutions can create or share their valuable ideas. This theory of sharing ideas through communication channels between individuals or institution might help organisations to move from closed innovation paradigm to the more open innovation era. The open innovation can also be used to broaden the markets in order to gain the access of external innovation capabilities. Chesbrough (2008) suggest that the 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. Backer and Cervante (2008) claims that the idea of open innovation does not focus only on the knowledge sourcing but also the integration of internal innovation with the exploitation of external knowledge with a firm's partners.Open innovation is the practice of precious knowledge gained either from inside or outside the organisation which gives significant boost to the internal research and innovation process of an organisation.The prominence and the recognition of the openness in the process of innovation across the boundaries of organisation has been realised to utilise the external knowledge in order to sustain its competitive advantage by balancing its internal and external sources.The open innovation process has become the integral part of the innovation and business strategy of an organisation.These ideas can be commercialised through internal or external channels of an organisation.According to Chesbrough (2006) open innovation means that the valuable idea can come from inside or outside the company and can go to market from inside or outside the company as well.