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Understanding the Advantages of Open Innovation Practices in Corporate Venturing in Terms of Real Options
Author(s) -
Vanhaverbeke Wim,
Van de Vrande Vareska,
Chesbrough Henry
Publication year - 2008
Publication title -
creativity and innovation management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.148
H-Index - 60
eISSN - 1467-8691
pISSN - 0963-1690
DOI - 10.1111/j.1467-8691.2008.00499.x
Subject(s) - corporate venture capital , open innovation , business , industrial organization , marketing , venture capital , finance
Part of the advantages of using open innovation (compared to closed innovation) in corporate venturing can be explained by applying the real options approach. Open innovation in risk‐laden activities such as corporate venturing has the following advantages: (i) benefits from early involvement in new technologies or business opportunities; (ii) delayed financial commitment; (iii) early exits reducing the downward losses; and (iv) delayed exit in case it spins off a venture. We furthermore argue that these benefits do not automatically materialize. Innovative firms have to learn new skills and routines to develop the full ‘real option’ potential of open innovation practices.