ROYAL INSTITUTE

OF TECHNOLOGY

Exploring Tensions between

Appropriability and Openness

to Collaboration in Innovation

Licentiate thesis by

IOANA STEFAN

Stockholm, Sweden, 2017

A thesis submitted in partial fulfillment of the requirements for the Licentiate degree, to be

presented with due permission for public presentation in room 243, Lindstedtsvägen 30,

Royal Institute of Technology on the 23rd

February 2017 at 10:00.

Discussant: Professor Johan Frishammar, Luleå University of Technology

© Ioana Stefan

Stockholm 2017, Royal Institute of Technology

Department of Industrial Engineering and Management

TRITA-IEO-R 2017:01

ISSN 1100-7982

ISRN KTH/IEO/R-17:01-SE

ISBN 978-91-7729-273-9

i

Abstract

Researchers, policy makers and practitioners alike have in recent years acknowledged a growing

tendency towards opening up the innovation process by combining internal organizational assets with

external actors’ resources in order to develop and bring ideas to the market. However, opening up the

innovation process usually also entails revealing ideas to external parties, which in some cases may

result in misappropriation. Therefore, tensions are likely to occur in the openness-appropriability

relationship. Some even regard these tensions as being of paradoxical nature. The purpose of this

thesis is to investigate tensions related to the openness-appropriability relationship; this is done by

analyzing more specific aspects of these tensions in three studies. The first study concerns a specific

contextual factor that is likely to stress the openness-appropriability tensions: the location of external

partners in innovation (either national or international), which is meant to reflect the territorial

character of certain appropriability mechanisms, such as patents and trade secrets. The second study

relates to the way managing openness-appropriability tensions affects performance, and the third study

involves a theoretical discussion about the nature of the tensions occurring in the openness-

appropriability relationship, i.e. either paradoxical, dilemmatic, or dialectical. The first two studies

apply quantitative methods, using survey data from 415 firms in three European countries, while the

third is a conceptual paper. The findings from the first study indicate that not only does the use of

different groups of appropriability mechanisms vary across various types of openness but also the

location (within or across national boundaries) of external partners in innovation refines these linkages

even more. The second study’s main takeaway is that the higher appropriability intensity, i.e. the

extent to which appropriability mechanisms are put into practice, explains higher performance

outcomes. The third study suggests that the tensions between openness and appropriability are more

likely of paradoxical nature. Combined, the three studies have relevant theoretical contributions and

managerial implications. From a theoretical perspective, findings indicate that paradoxical tensions

between openness and appropriability may have a spatial dimension, and that these tensions should

also be investigated in regards to performance. Managerial implications point out that opening up to

innovation partners located abroad is likely to require more costly appropriability mechanisms, i.e.

formal ones, and might further stress the appropriability-openness tensions. Managers might also

consider the fact that dealing with appropriability-openness in a trade-off manner (implying a

dilemma) will not solve the paradox and might only be a temporary fix.

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Sammanfattning

Forskare, beslutsfattare och praktiker har under de senaste åren sett en ökande tendens mot mer öppna

innovationsprocesser där organisationens interna tillgångar kombineras med externa aktörers resurser

för att utveckla och föra idéer till marknaden. Men öppna innovationsprocesser innebär vanligtvis

också att idéer avslöjas för externa partner som i vissa fall kan missbruka det. Därför kan spänningar

uppstå mellan företagets öppenhet och dess intresse av att samtidigt skydda för att dra nytta av

innovationsinsatserna. Vissa ser sådana spänningar som en paradox. Syftet med denna avhandling är

att undersöka spänningar som uppstår i relationen mellan öppenhet och intresset av att skydda och

exploatera innovationsinsatserna. Detta görs i tre studier. Den första studien avser en specifik

kontextuell faktor som sannolikt understryker spänningarna i mer öppna innovationsprocesser,

nämligen lokaliseringen (antingen nationellt eller internationellt) av de externa partner som medverkar

i innovationsprocessen. Studien speglar den territoriella karaktär som ett antal mekanismer för att

skydda och exploatera innovationer har, såsom patent och affärshemligheter. Den andra studien avser

hur företagens sätt att hantera spänningarna mellan öppenhet och intresset av att skydda och exploatera

innovationsinsatserna påverkar företagets innovationsresultat. Den tredje studien innehåller en

teoretisk diskussion kring karaktären på de spänningar som uppträder i relationen mellan öppenhet och

intresset av att skydda och dra nytta av innovationen: är de paradoxala, dilemmatiska eller dialektiska?

De första två studierna använder kvantitativa metoder, med hjälp av enkätdata från 415 företag i tre

europeiska länder, medan den tredje är konceptuell. Resultaten från den första studien tyder på att inte

bara användningen av olika typer av mekanismer för att skydda och exploatera innovationer varierar

mellan olika typer av öppenhet, men också att lokaliseringen av externa partners i innovation påverkar

dessa kopplingar ännu mer. Den andra studien visar att ju mer olika mekanismer för skydd och

exploatering används, desto högre är företagets innovationsförmåga. Den tredje studien visar att

spänningarna mellan öppenhet och skydd för exploatering är troligtvis paradoxala. Tillsammans ger de

tre studierna flera teoretiska bidrag och praktiska implikationer. Ur ett teoretiskt perspektiv indikerar

avhandlingen att paradoxala spänningar mellan öppenhet och skydd för exploatering av innovationer

kan ha en geografisk dimension, och att dessa spänningar också bör undersökas när det gäller

företagets innovationsförmåga. De praktiska implikationerna är att om företaget involverar

internationella innovationspartner så kommer det sannolikt att kräva mer kostsamma

skyddsmekanismer och kanske innebära ytterligare spänningar. Företagsledningar kan även ta hänsyn

till att om dessa spänningar hanteras med hjälp av en kompromiss (vilket innebär ett dilemma),

kommer detta inte att lösa paradoxen, utan nog bara vara en provisorisk lösning.

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Acknowledgements

The research process could be compared to putting together a puzzle with an infinite number of pieces.

One may put together enough pieces to display a seemingly complete image, yet the whole puzzle is

never really done. And even though it is not possible to mention all those who have contributed to my

own part of the puzzle, in the following paragraphs I will try to mention at least a few.

First of all, I am grateful to my supervisors: prof. Lars Bengtsson and assist. prof. Camilla Niss at

University of Gävle, as well as prof. Mats Engwall at the KTH Royal Institute of Technology, for

guiding me and providing useful comments and support throughout my doctoral studies so far. I am

particularly grateful to my main supervisor, prof. Lars Bengtsson, for introducing me to the academic

world.

I am also thankful to the group of researchers that has designed the questionnaire and collected the

data for the Open Innovation Survey (OIS), data which I have been using as basis for the quantitative

studies included in this thesis: prof. Lars Bengtsson, assoc. prof. Nicolette Lakemond, assoc. prof.

Valentina Lazzarotti, prof. Raffaella Manzini, assoc. prof. Luisa Pellegrini, prof. Fredrik Tell.

The studies in this thesis have also been shaped by external constructive feedback. I am therefore

indebted to the guest editors of the International Journal of Technology Management 2016 special

issue on ‘Perspectives on Inter-Organisational and Collaborative Innovation’ - assoc. prof. Francesco

Paolo Appio, assoc. prof. Antonella Martini, asst. professor Luca Gastaldi and prof. Krisztina

Demeter, as well as two anonymous referees. Constructive comments and suggestions received at

international conferences for previous versions of my studies are also gratefully acknowledged.

Furthermore, I am grateful to those who provided invaluable comments to earlier versions of my thesis

during PhD seminars or workshops. More specifically, I would like to express my appreciation for the

feedback received during: the Open Innovation and Open Business Models PhD Seminar, from prof.

Henry Chesbrough and prof. Wim Vanhaverbeke; the CINet PhD Workshops and Seminar, from prof.

Harry Boer, prof. Mariano Corso, prof. Mats Magnusson, prof. Patricia Wolf, asst. prof. Luca Gastaldi

and asst. prof. Janos Kiss– special thanks to Patricia Wolf for encouraging me to pursue the meanings

and depths of paradox; the R&D Management PhD Colloquium, from assoc. prof. Frank Tietze, prof.

Cornelius Herstatt, asst. prof. Ghita Dragsdahl Lauritzen and Kasper Thams, senior manager at Lego;

the KTH Candidate Day, from prof. Sofia Ritzen. I am also thankful to assoc. prof. Terrence Brown

for accepting the role of advance reviewer for my licentiate thesis.

I have learned a lot from fellow researchers that have contributed to joint research projects that I have

been involved in and would therefore like to express my gratitude to: prof. Lars Bengtsson, prof.

Christian Berggren, assoc. prof. Filiz Solmaz Karabag and Dr. Weihong Wang who participated in the

‘Rapid innovators in emerging markets’ project funded by Vinnova.

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I would also like to express appreciation for the time spent doing my internship at DHL Customer

Solutions and Innovation in Germany, where I got to learn a lot about patent management from a

practitioner’s perspective. This knowledge has further been useful in my research. Therefore I would

like to thank my former colleagues from DHL patent management: Astrid, Björn, Clemens and Janine,

as well as the other interns in the patent management department at the time: Christian, Matthias and

Sebastian.

Moreover, I am thankful to colleagues at the University of Gävle for providing a friendly and

stimulating work environment, so thanks to: Abid, Abo, Alan, Amer, Camilla, Dorith, Gunnar, Ida,

Jessica, Jonas, Kaisu, Katarina, Lars B., Lars L., Malin, Marita, Robin, Rodrigo, Rose-Marie, Tony,

Weihong, Åsa H., Åsa K.,…the list could go on. I am likewise grateful to colleagues at KTH for

creating a friendly atmosphere, providing useful advice and/or for being great teammates in various

course projects and such; my thanks goes therefore to Andrés, Maria, Nidal, Serdar, Yuri. I am also

thankful to Elisabeth Lampén at KTH for substantial help during the licentiate application process. I

would further like to thank friends and fellow colleagues whom I’ve had the pleasure of meeting

during my studies and/or international conferences or other academic events – to name a few: Anja,

Antonio, Bernadette, Brenda, Ghassan, Henry L., Oana-Maria.

But most of all, I am thankful and forever indebted to my immediate family for providing endless

support, good advice, love and friendship. I would therefore like to express my gratitude to my

grandparents, Victoria and Ion, for their support and encouragement. Special thanks goes to both my

parents, Aurelia and Gheorghe, for always providing comfort and support, while at the same time

being analytical thinkers and showing me the logical side of things. I’d like to add here that I am

especially thankful to my dad for being my incentive to pursue this research topic. I am further

grateful beyond words to my husband, Vlad, for always being there, for listening to and caring for me

and for providing feedback for many earlier drafts of my thesis and papers.

Ioana Stefan

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Table of contents

1. Introduction ......................................................................................................................... 1

1.1. Tensions between appropriability and openness to collaboration ............................... 1

1.2. Purpose and research questions ................................................................................... 4

1.3. Limitations ................................................................................................................... 6

2. Theoretical framework ........................................................................................................ 7

2.1. Openness to collaboration ........................................................................................... 7

2.1.1. Open innovation ................................................................................................... 7

2.1.2. Conceptual ambiguity regarding ‘openness’ ........................................................ 8

2.2. Appropriability .......................................................................................................... 10

2.3. Tensions between openness and appropriability ....................................................... 12

2.4. Openness-appropriability tensions and theories of the firm ...................................... 14

3. Method .............................................................................................................................. 16

3.1. Quantitative research ................................................................................................. 17

3.1.1. Survey data collection ........................................................................................ 17

3.1.2. Constructs ........................................................................................................... 18

3.1.3. Patent portfolio data ........................................................................................... 20

3.2. Conceptual paper (theoretical analysis) ..................................................................... 21

3.3. Quality of the study ................................................................................................... 21

3.3.1. Internal validity .................................................................................................. 22

3.3.2. External validity ................................................................................................. 23

3.3.3. Construct validity ............................................................................................... 23

3.3.4. Reliability ........................................................................................................... 24

4. Summary of papers ........................................................................................................... 24

4.1. P1: A quantitative study on the moderating effects of partners’ location on the

relationship between appropriability and openness .............................................................. 24

4.1.1. Purpose and research questions .......................................................................... 25

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4.1.2. Results ................................................................................................................ 25

4.2. P2: A quantitative study of the moderating effects on the relationship between

external search (openness) and performance ........................................................................ 25

4.2.1. Purpose and research questions .......................................................................... 26

4.2.2. Results ................................................................................................................ 26

4.3. P3: A conceptual study on disentangling openness-appropriability tensions ............ 27

4.3.1. Purpose and research questions .......................................................................... 27

4.3.2. Results ................................................................................................................ 27

5. Discussion ......................................................................................................................... 28

5.1. The appropriability-openness relationship and the moderating effects of partner

location on this linkage ......................................................................................................... 28

5.2. The moderating effects of appropriability intensity on the association between

openness and performance .................................................................................................... 29

5.3. Distinguishing among paradoxical, dilemmatic, and dialectical tensions in the

appropriability-openness relationship ................................................................................... 30

6. Conclusions, contributions, and implications ................................................................... 31

6.1. Main findings and contributions ................................................................................ 31

6.2. Further theoretical implications ................................................................................. 32

6.3. Managerial implications ............................................................................................ 33

6.4. Future research .......................................................................................................... 34

7. References ......................................................................................................................... 35

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List of appended documents

1. Stefan, I., & Bengtsson, L. (2016). Appropriability: A key to opening innovation

internationally? International Journal of Technology Management, 71(3/4), 232–252.

2. Stefan, I., & Bengtsson, L. (2016). The whole nine yards: The moderating effects of

appropriability intensity on the relationship between external search and performance.

Manuscript submitted for publication. Paper based on a previous version presented at

the World Open Innovation Conference 2014, Napa, California, USA, December 4-5,

2014.

3. Stefan, I. (2016). If it looks like a paradox and walks like a paradox…An attempt to

disentangle openness-appropriability tensions. World Open Innovation Conference

2016, Barcelona, Spain, December 15-16, 2016.

4. Open Innovation Survey instrument.

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1

1. Introduction

1.1. Tensions between appropriability and openness to collaboration

Novel ideas are thought to fuel technological progress and growth. Yet developing and

commercializing ideas sometimes requires substantial resources, which an inventor (whether

an individual or a firm) may not have available. Therefore, inventors often turn to external

parties that possess necessary and/or complementary resources. Particularly during the past

decade and a half, practitioners, researchers, and policy makers have recognized an increased

tendency to open up the innovation process (Chesbrough, 2003; OECD, 2008; Rigby and

Zook, 2002). This trend is also due to the fact that even larger organizations are no longer able

to innovate by relying exclusively on their own internal resources (Cassiman and Veugelers,

2006).

However, things are usually not as simple as to assume that innovation happens by merely

opening up towards external partners with complementary resources. Opening up for

collaboration in innovation usually entails disclosing (part of) an idea or other sensitive

proprietary knowledge to external parties. This act of disclosure may hinder the rightful

owner (inventor) of the idea from appropriating rents from said idea. In other words, revealing

an idea to potential partners in innovation may hinder the inventor’s ability to attain profits

from the idea’s commercialization. This brings into question tensions between openness and

appropriability; the latter is defined as the ability to seize benefits from innovation endeavors.

Arrow (1962) described such tensions as a “fundamental paradox” (p. 615), arguing that while

the seller of an idea is required to reveal information about said idea in order for a potential

buyer to better estimate its value, disclosing information about the idea could enable the

potential buyer to misappropriate it without having to actually buy it. Arrow (1962) further

suggests that intellectual property protection mechanisms (IPPMs) such as patents should

solve this potential hazard; however, given “incomplete appropriability” (Arrow, 1962; p.

615), this is not always the case.

Therefore, many scholars have attempted to solve this puzzle by investigating the tensions

described by Arrow (1962). In particular, emerging research streams on open innovation have

pointed out that the tendency to open up the innovation process is likely to stress these

potentially paradoxical tensions and that this goes beyond the selling of ideas and applies

even to other external interactions among innovative firms (Laursen and Salter, 2014).

Previous studies thus suggest more research is needed in order to clarify (1) the association

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between openness and appropriability (Laursen and Salter, 2014), and (2) the way managing

these tensions affects organizational performance (Laursen and Salter, 2014; Laursen, Salter,

and Li, 2013). Furthermore, prior studies are not unanimous about a third point: (3) the nature

of tensions between openness and appropriability. Some studies point to a dilemma (e.g.

Anton and Yao, 2002), others suggest a paradox (Arrow, 1962; Laursen and Salter, 2014) and

some merely refer to the tensions as a ‘hazard’ (Buss and Peukert, 2015) or ‘problem’ (Anton

and Yao, 1994). However, studies investigating organizational tensions point out that

dilemmatic, paradoxical and dialectical tensions, though overlapping, have distinct

characteristics (Smith and Lewis, 2011). These three aspects require further investigation

from both a theoretical and a managerial perspective, and they are explored in the three

studies included in this thesis.

The tensions between openness and appropriability are not just theoretical – they also occur in

practice. For instance, an article published in the New York Times in 2010 describes a failed

collaboration between two companies: Infoflows and Corbis (Lohr, 2010). The two firms

signed a multimillion-dollar development agreement in June 2006. Although Infoflows came

up with a novel idea for recognizing and tracking digital objects on the Internet, it had not

applied for a patent for this, as they were keen to start working with Corbis and develop the

idea further. In October 2006 Corbis notified Infoflows about terminating the agreement and

the two companies parted ways. However, in early 2007, when Infoflows set up their website,

Corbis sued and alleged that Infoflows was illegally using their technology. In the meantime

Corbis had applied for a patent for the idea the two parties were supposed to develop in

collaboration. After several years in court and millions in legal costs, Corbis was found guilty

of fraud, breach of contract, and misappropriating trade secrets. Infoflows was awarded

damages of more than $20 million.

This example illustrates how an idea could be misappropriated despite an initial collaboration

agreement signed by both parties, i.e. in spite of using certain types of IPPMs. As hinted by

Arrow (1962), it is likely that a patent application by Infoflows might have eased the tensions

in this situation. However, according to the article, the contractual agreement signed by the

two parties stipulated that neither of the two would submit any patent applications (Lohr,

2010). Moreover, formal IPPMs such as patents are costly mechanisms that often take a long

time to enforce. Therefore, as predicted by Arrow (1962), the “incomplete” (p. 615) character

of appropriability often fails to solve tensions between openness and appropriability.

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Indeed, policy makers also acknowledge that “theft of intellectual property is seen as the most

important risk to global innovation networks” (OECD, 2008; p. 11) and that “companies …

may need to share IP with foreign subsidiaries/partners or to commercialize it in foreign

markets, but may be constrained by national regulations” (p. 12). This further confirms that

appropriating returns from joint innovation endeavors is even more challenging in

international collaborations.

While collaboration is increasingly becoming global, intellectual property rights (IPR) have a

territorial character and often vary between national territories (Bititci et al., 2012; Dussauge

and Garrette, 1995). Furthermore, the formal IPPMs available may not be suitable for all

types of knowledge involved in an idea. However, other types of IPPMs, such as trade secrets,

may be easier to misappropriate once they have been revealed to a partner, such as in the

Infoflows-Corbis case.

Abundant previous research has investigated the tensions described by Arrow (1962) as

“fundamental paradox” (p. 615) and named by many others paradox of disclosure. Yet

discussion about paradoxical tensions between appropriability and openness to collaborating

in innovation has been rekindled in recent management studies (cf. Arora, Athreye, and

Huang, 2016; Buss and Peukert, 2015; Laursen and Salter, 2014). Laursen and Salter (2014)

even suggest a new concept, the paradox of openness, “paraphrasing Arrow (1962),” (Laursen

and Salter, 2014; p. 868). However, it is unclear whether the recently dubbed paradox of

openness is more related to Arrow’s (1962) so-called paradox of disclosure or to the

contradictory research streams that suggest that either openness requires strong IP protection

or overprotectiveness might hinder openness.

While there is ample research on the so-called paradox of disclosure, several issues are still up

for further investigation. In the first place, prior studies do not clarify whether the nature of

appropriability-openness tensions is indeed paradoxical. As pointed out by Smith and Lewis

(2011), tensions in organizations could also take the form of dilemmas or dialectics, not

necessarily leading to paradox. Hence, the concepts of paradox of disclosure and paradox of

openness require a theoretical discussion, as does the extent of the analogy between them.

Another gap in the literature concerns the contextual factors that might stress tensions

between appropriability and openness to collaborating in innovation. As previously

mentioned, this thesis investigates only one of these contextual factors, i.e. the location of

external partners in innovation in either national or international territories. Law literature, for

instance, emphasizes the drawbacks brought up by the territorial character of formal IPPMs

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(Trimble, 2015). At the same time, management literature points to the increasingly global

nature of collaboration networks, yet pays less attention to how the “patchwork” (of

territories) interacts with the globalization of networks (see, e.g., Bititci et al., 2012). Thus,

for instance, the location of partners in international innovation collaborations could be an

important contextual factor affecting appropriability-openness tensions. However, this matter

is scarcely investigated in previous management studies. Additionally, appropriability

literature has been biased towards investigating patents, but has neglected other IPPMs (see,

e.g., Hall et al., 2014). Nevertheless, studies suggest that companies increasingly tend to rely

on bundles of – rather than on singular – appropriability mechanisms (Comino, Manenti, and

Thumm, 2015). Thus, when investigating appropriability-openness tensions, a wider variety

of IPPMs should be taken into consideration. Few previous studies take this into account.

Finally, it is unclear how managing tensions between openness to collaboration and

appropriability influence performance. The potentially paradoxical tensions between opening

up to external partners in innovation and reaping benefits from innovation endeavors are

likely to affect the performance outcomes that organizations are able to extract from

innovation collaborations.

1.2. Purpose and research questions

The purpose of this thesis is to explore tensions that may occur between openness towards

external partners in innovation collaborations and the ability to appropriate benefits from said

innovation endeavors. More specifically, three aspects of the tensions are investigated in three

different studies. One aspect concerns contextual factors that may affect the tensions between

appropriability and openness. Therefore, the first study (presented in paper 1, P1) investigates

the potentially moderating effect of one specific contextual factor (partner location – national

or international) on the appropriability-openness relationship. This is further meant to reflect

the territorial character of certain types of IPPMs. Another aspect of the appropriability-

openness tensions is that the way they are managed could affect performance. The second

study included in this thesis, paper 2 (P2), explores the way appropriability moderates the

association between openness and performance. One final aspect investigated in this thesis

relates to the nature of the appropriability-openness tensions. The third study (paper 3, P3)

explores whether the openness-appropriability tensions are paradoxical, dilemmatic, or

dialectical and even discusses the demarcation (if any) between the paradox of disclosure and

the paradox of openness. The purpose of this thesis can be further concretized in three

research questions, each of which corresponds to one of the three above-mentioned studies.

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RQ1: What is the association between different types of appropriability mechanisms

(specifically formal, semiformal, and informal IPPMs) and various kinds of openness (depth

of collaboration with different kinds of partners and variety of types of partners), and what are

the potentially moderating effects of partner location on this relationship?

RQ2: What are the potentially moderating effects of appropriability (mechanisms) on the

relationship between openness and performance?

RQ3: What is the nature of tensions between appropriability and openness, i.e. are they

paradoxical, dilemmatic, or dialectical?

The correspondence between this thesis’s research questions and the research questions in

each of the three studies can be seen in Figure 1.

Figure 1. Linking the thesis research questions with those from the three studies

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The corresponding analysis model is illustrated in Figure 2. RQ1, which is linked to P1,

explores the association between various types of appropriability mechanisms and different

types of openness, and investigates the potentially moderating effect of partner location on

this relationship. RQ2, linked to P2, analyzes the possible moderation effects displayed by

appropriability mechanisms on the association between openness and performance. RQ3

explores the nature of tensions between appropriability and openness, and is therefore

represented by a bidirectional arrow in the analysis model.

Figure 2. Analysis model

1.3. Limitations

This thesis is not without limitations. In the following some of the main limitations of the

three studies included in the thesis will be enumerated. Regarding the first study, one

limitation relates to the investigation of one specific contextual factor that moderates the

appropriability-openness relationship. Future research might explore other factors that

influence the tensions between openness and appropriability. Another limitation in P1

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concerns the causality of the appropriability-openness liaison. As suggested by Laursen and

Salter (2014), this relationship may have dual causality; therefore, future studies could take

this matter into account. The second study is limited by the method of analysis. More

specifically, the survey data used only allows testing for moderation via one method (thought

to be less reliable according to recent studies – Helm and Mark, 2012). One further limitation

that extends to both P1 and P2 is related to some restraints of the data sample used. For

instance, the survey data is limited to manufacturing firms, and a construct specifically

measuring absorptive capacity was not included in the questionnaire. While proxy measures

for absorptive capacity have been used in the two studies, future studies should also take into

account the effects of absorptive capacity when investigating appropriability-openness

tensions. The third study is limited by the fact that, while it discusses the nature of tensions

between opening up in the innovation process and appropriating benefits from said

innovation, it does not perform a more in-depth analysis of the previous studies that claim

different types of tensions (e.g. either dilemmatic or paradoxical) between disclosure and

appropriability. While this thesis focuses on exploring tensions between openness towards

external partners in innovation and the ability to appropriate benefits from those innovation

endeavors, it does not aim to review nor to demarcate various streams of research that have

dealt with investigation of different types of inter-firm relationships.

2. Theoretical framework

This section will highlight the main theoretical concepts analyzed in this thesis and describe

the gaps in the literature related to these concepts. The theoretical framework further

discusses potential links between the analyzed topic and certain theories of the firm, which

might act as lenses for analysis.

2.1. Openness to collaboration

2.1.1. Open innovation

In recent years researchers, practitioners, and policy makers have acknowledged an increased

tendency to open up the innovation process (Chesbrough, 2003; OECD, 2008; Rigby and

Zook, 2002). A little over a decade ago, Chesbrough (2003) introduced the new concept of

open innovation, which has attracted a great deal of research (see Dahlander and Gann, 2010,

or Huizingh, 2011 for reviews) and attention from practitioners (Chesbrough and Bogers,

2014), but also criticism (see, e.g., Trott and Hartman, 2009). Some of the critique concerning

open innovation is that it is a new concept that describes something that already existed.

8

Indeed open innovation has been compared to old wine in new bottles (Trott and Hartmann,

2009) and criticized for being a hindrance in developing theory (Groen and Linton, 2010).

Many studies prior to the introduction of the open innovation term in 2003 use different words

or expressions alternatively when referring to inter-firm linkages or collaborations. For

instance, Eisenhardt and Schoonhoven (1996) use terms such as strategic alliances,

cooperative partnerships, cooperative relationships, and alliance relationships. Dussauge et

al. (2000) also use several concepts interchangeably, e.g. strategic alliances, collaborations,

interfirm partnerships. Furthermore, Dussauge et al. (2000) suggest a rather broad definition

of strategic alliances: “arrangements between two or more independent companies that choose

to carry out a project or operate in a specific business area by coordinating the necessary skills

and resources jointly rather than either operating on their own or merging their operations.

This definition of alliances includes joint ventures as well as partnerships that did not entail

the creation of a separate legal entity. ” (p. 99) Other studies review and refer to prior research

that does not use precisely the same terminology – for instance, Cassiman and Veugelers

(2002) investigate R&D cooperation, but refer to a “joint venture information-sharing

scenario” (p. 1170) from a previous study in their literature review.

The brief overview presented in the above paragraph is meant to demonstrate that previous

studies use a wide variety of terms to describe interorganizational collaborations of different

kinds – at times interchangeably and other times separately. The two quantitative studies P1

and P2 build on an open innovation survey, which investigated manufacturing firms’

innovation collaboration practices. The third study in this thesis, P3, discusses conceptual

ambiguity surrounding the paradox suggested by Arrow (1962), yet it also debates the newly

minted paradox of openness, proposed in recent studies on open innovation (see Laursen and

Salter, 2014; Arora et al., 2016), and thus all three studies contribute to open innovation

research streams, but also relate to other literature, e.g. appropriability literature or

management studies on theory development, theory of paradox, etc.

2.1.2. Conceptual ambiguity regarding ‘openness’

Openness as a concept in innovation management literature, coined along with open

innovation by Chesbrough (2003), has received more attention during the last decade, in the

sense that while it is increasingly used, it is often poorly defined. Some suggested

clarifications include:

9

“A starting point for the idea of openness is that a single organization cannot innovate

in isolation” (Dahlander and Gann, 2010; p. 699).

[Open innovation is] “a distributed innovation process based on purposively managed

knowledge flows across organizational boundaries, using pecuniary and nonpecuniary

mechanisms in line with the organization’s business model” (Chesbrough and Bogers,

2014; p. 17).

While many studies even outside the open innovation literature recognize the opening up of

the innovation process (see, e.g., Cassiman and Veugelers, 2006), the concept of openness is

not clearly defined (Bengtsson et al., 2015). Indeed, as pointed out by Dahlander and Gann

(2010) in their review on openness, scholars have used different measures to capture

openness: “The extant literature presents the concept of openness in quite different ways;

Laursen and Salter (2006a) equate openness with the number of external sources of

innovation, whereas Henkel (2006) focuses on openness as revealing ideas previously hidden

inside organizations” (p. 700).

In their literature review, Dahlander and Gann (2010) further emphasize the conceptual

ambiguity surrounding the term openness, as well as the lack of focus on the disadvantages of

openness in previous studies. In an attempt to clarify the term, Dahlander and Gann (2010)

suggest a framework distinguishing between inbound and outbound openness (similarly to

e.g. Gassmann and Enkel, 2004), and further categorizing each of these as either pecuniary or

nonpecuniary.

Dahlander and Gann (2010) associate the outbound nonpecuniary innovation with revealing

ideas and secrets, and they define it as the way “firms reveal internal resources without

immediate financial rewards, seeking indirect benefits to the focal firm” (p. 703). In relation

to this type of openness, Dahlander and Gann (2010) mention the potential challenge of

appropriating benefits from revealed internal resources but also the possible dangers of

overprotectiveness, which might hinder sharing ideas and/or bringing ideas to market.

The other type of outbound openness that they pinpoint is said to have a pecuniary character

and relates to the act of selling, i.e. “how firms commercialize their inventions and

technologies through selling or licensing out resources developed in other organizations.”

(Dahlander and Gann, 2010, p. 704). The advantages they suggest refer to commercializing

the so-called Rembrandts in the attic (also see Rivette and Kline, 2000). However, Dahlander

10

and Gann (2010) link the disadvantages of outbound pecuniary openness to the previously

mentioned “fundamental paradox” proposed by Arrow (1962).

The nonpecuniary inbound openness is related to sourcing, i.e. using external knowledge

sources (Dahlander and Gann, 2010). This can be positive; firms might benefit from

combining internal knowledge or other resources with external ideas. However, as signaled by

some previous studies, an overemphasis on external search may prove to be disadvantageous

(e.g. Laursen and Salter, 2006).

The pecuniary inbound openness is linked to acquiring external knowledge (Dahlander and

Gann, 2010). The potential benefits are similar to those of nonpecuniary inbound openness,

yet acquiring knowledge also requires adequate internal mechanisms to assimilate and

integrate it. This relates to the concepts of absorptive capacity (see Cohen and Levinthal,

1990) and knowledge integration (Berggren et al., 2011; Lakemond et al., 2016).

From the above, it appears that pecuniary, i.e. selling, and nonpecuniary, i.e. revealing

outbound openness relate at some level to the seller’s perspective in the so-called paradox of

disclosure suggested by Arrow (1962). However, Dahlander and Gann (2010) further

emphasize that the previously described four categories of openness are not mutually

exclusive; in fact, they can be combined. Yet this is a research area that has been little

investigated. Moreover, Gassmann and Enkel (2004) have coined the term coupled process in

open innovation, defined as “linking outside-in and inside-out by working in alliances with

complementary companies during which give and take are crucial for success” (p. 1).

Therefore, the risks of revealing and selling might not apply exclusively to one of the partners

involved in an innovation collaboration, i.e. the so-called seller, but could in fact concern both

or several parties that engage in open innovation endeavors.

In the two quantitative studies (P1 and P2) in this thesis, openness is measured in a similar

manner to Laursen and Salter (2006). For instance, openness can be measured as the variety

of types of partners in innovation or as the depth of collaboration with different types of

partners (e.g. universities, suppliers, customers). These constructs and more will be described

in greater detail in section 3.1.

2.2. Appropriability

Appropriability means the ability to reap benefits from a commodity (e.g. a product, an idea,

etc.) and has been, in theory, equated with providing a monopoly on an idea (see Levin et al.,

1987). Appropriability is thought to be provided by various so-called appropriability

11

mechanisms such as patents, trade secrets, and many others (see Cohen, Nelson, & Walsh,

2000; Hertzfeld, Link, & Vonortas, 2006; Laursen and Salter, 2014; Levin et al., 1987).

The appropriability regime was described by Teece (1986) as “the environmental factors …

that govern an innovator’s ability to capture the profits generated by an innovation.”

According to Teece (1986), an appropriability regime is composed of several important

dimensions, of which the “nature of technology” and “the efficacy of the legal mechanisms of

protection” are two essential ones p. 287). In later studies appropriability was measured by

constructs that captured the use of various IPPMs (see Hurmelinna-Laukkanen, 2011; Laursen

and Salter, 2014). As in previous research, in this thesis the concept of appropriability is

defined as the ability to seize benefits from innovation endeavors.

Appropriability mechanisms (or IPPMs) are often divided in the literature into formal and

informal categories. While the former includes patents, designs, trademarks, and copyrights,

the latter usually includes trade secrets, lead times, etc., as suggested by such researchers as

Hall et al. (2014). In the case of formal IPPMs, literature has suggested other roles besides

that of ensuring protection for the purpose of appropriating benefits. For instance, roles of

signaling or coordinating (Penin, 2005) or acting as codes for knowledge (Burk, 2008), have

been suggested in previous articles. While such additional roles are taken into account in this

thesis, the main concern is linked to the way IPPMs act as appropriability mechanisms, as

suggested by recent studies, e.g. Laursen and Salter (2014).

The taxonomy of appropriability mechanisms is furthermore not stringently defined. For

example, some scholars make finer categorizations by differentiating between registrable and

nonregistrable formal IPPMs (Kitching and Blackburn, 1998). The categorization of informal

IPPMs is also up for debate. Previous studies view confidentiality agreements and secrecy as

informal appropriability mechanisms (see e.g. Hall et al., 2014), while the Agreement on

Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) states that

confidentiality agreements or similar contractual agreements are required in order for a trade

secret to be regarded as valid from a legal perspective. This might suggest that nondisclosure

agreements and trade secrets could form a separate category of appropriability mechanisms.

Prior literature is not unanimous regarding the propensity to which different types of

appropriability mechanisms are used. For instance, Hertzfeld et al. (2006) point to patents as

being the most often used IPPMs, while Cohen et al. (2002) claim that companies tend to

apply appropriability mechanisms other than patents. This debate further relates to differences

in appropriability strategies across firm size, industry sector, and other contextual factors (see,

12

e.g., Neuhäusler, 2012). For instance, in industries involving higher knowledge complexity,

patents are found to be of greater importance as IPPMs, according to Peeters and Sofka

(2014). Nevertheless, one fact scholars do agree on is that managing IP is crucial for

sustaining competitive advantage (Appio et al., 2014; Di Minin and Faems, 2013), though at

the same time numerous studies signal IP management and appropriability challenges,

particularly linked to innovation collaboration (Eppinger and Vladova, 2013; Frishammar et

al., 2015; Granstrand and Holgersson, 2014; Veer et al., 2016; Zobel et al., 2016; 2017).

Thus, the intricate linkages between appropriability and openness are still up for further

discussion as indicated by e.g. Laursen and Salter (2014) or Arora et al. (2016).

2.3. Tensions between openness and appropriability

In his seminal work Arrow (1962) described a “fundamental paradox” (p. 615). This paradox

has subsequently been referred to as a dilemma (Anton and Yao, 2002; Bogers, 2011), hazard

(Buss and Peukert, 2015), problem (Anton and Yao, 1994), or paradox (Alexy et al., 2013).

The third study included in this thesis attempts a clarification of these different concepts in

relation to Arrow (1962) but, for the time being, the “fundamental paradox” he proposed will

be referred to as the paradox of disclosure, which is one of the more popular labels it has been

given (see, e.g., Gans and Stern, 2003; Laursen and Salter, 2014). The so-called paradox of

disclosure suggests tensions arise when a seller reveals information about a novel idea

(regarded as a commodity) and a potential buyer’s willingness to purchase said commodity:

on the one hand, without any disclosure the potential buyer is unaware what the idea entails

and is thus unable to appreciate its value; on the other hand, once information about the idea

has been disclosed, this may result in the potential buyer losing interest in the purchase,

because he or she has already, without any cost, obtained the information needed to develop

and commercialize said idea independently from the seller.

There is a fundamental paradox in the determination of demand for information; its

value for the purchaser is not known until he has the information, but then he has in

effect acquired it without cost. Of course, if the seller can retain property rights in the

use of the information, this would be no problem, but given incomplete

appropriability, the potential buyer will base his decision to purchase information on

less than optimal criteria. (Arrow 1962; p. 615)

While many previous studies refer to the paradox described by Arrow (1962), fewer

investigate it per se. Notable exceptions are, for instance, the studies by Anton and Yao (e.g.

13

1994; 2002), who have explored the tensions suggested by Arrow (1962) in the absence of

intellectual property rights. In a nutshell, Anton and Yao (1994) suggest that an inventor

might disclose an idea to a firm and then threaten to disclose it to another competing firm, in

order to appropriate benefits from the idea; Anton and Yao (2002) suggest that an inventor

could also reveal part of the idea, thereby signaling its value to a potential buyer – this also

relates to the concept of selective revealing, suggested by Alexy et al. (2013) and others.

Nevertheless, discussion surrounding the tensions described by Arrow (1962) has recently

been rekindled by literature streams that mention an increased propensity for

interorganizational collaboration (or openness) (see Natalicchio, Petruzzelli, and Garavelli,

2014; Laursen and Salter, 2014).

When negotiating contracts in the market for ideas, disclosure can increase the

bargaining power of the buyer and reduce the power of the innovator, especially in the

absence of credible threats and IP rights protection. This paradox of disclosure applies

also to a range of external interactions between the innovating firm and the external

environment, beyond the commercial transaction of selling the idea. (Laursen and

Salter, 2014; p. 869)

The above quote points out that the fundamental paradox described by Arrow (1962) is likely

to occur in various open innovation contexts. However, it is unclear whether their own

suggested paradox of openness builds on Arrow’s (1962) paradox or rather focuses on the

contradictory claims in two different research streams: one that suggests that IP

overprotectiveness is hindering openness and the other that argues that strong IP protection

enables openness.

As mentioned earlier in this section, previous studies do not seem to be in consensus

regarding the nature of the tensions described by Arrow (1962). Arrow (1962) calls this a

fundamental paradox, yet other scholars view it as just a dilemma. Lado et al. (2006)

paraphrase Wittgenstein (1953) in pointing out that:

The term paradox has been conceptualized in different ways, including formal/logical,

informal/ordinary language, and rhetorical. These conceptualizations might reflect the

different “language games” that people play when they perceive complex and

incongruous phenomena. (Lado et al., 2006; p. 116)

While terms such as paradox and dilemma might be used synonymously in common

language, management studies (e.g. Smith and Lewis, 2011) point out that dilemmatic,

14

paradoxical and dialectical tensions are different, though they also present similarities in

nature and often overlap. Smith and Lewis (2011) define paradox as ”contradictory yet

interrelated elements that exist simultaneously and persist over time” (p. 386). Such elements

make sense when considered separately, yet their adjacency becomes illogical, thus

emphasizing underlying tension. Most often tensions are considered to be dilemmas, thus

necessitating a choice of one element over the other, yet antinomies tend to reappear, thus

reinforcing the linkages between them (Cameron and Quinn, 1988; Smith and Lewis, 2011).

Other scholars define paradox as e.g. “a re-entry” of a contrast (Luhmann, 1993; p. 485) and

argue that noticing two opposing elements at the same time makes a choice between the two

impossible (Luhmann, 1993; Lauritzen, 2017). From this perspective, seemingly dilemmatic

(in the sense of trade-off) and paradoxical tensions are also thought to be distinct: while an

either/or choice between opposing elements is not as difficult, the contradictory elements of

paradox also complement each other, thus making the choice more intricate (Lauritzen, 2017).

Under more recent research trends, which emphasize the need for collaboration in order to

ensure firm survival (Cassiman and Veugelers, 2002; Chesbrough, 2003), tensions between

openness and appropriability have become more evident (Laursen and Salter, 2014). Though

scholars use the notion of paradox when investigating the openness-appropriability tensions,

they seem to regard this as a trade-off situation (see, e.g., Arora et al., 2016), thus hinting

towards a dilemma. As pointed out by Smith and Lewis (2011), when organizational tensions

are treated as a case of trade-off, it often turns out that the tensions reappear, or create new

tensions. Smith and Lewis (2011) argue that organizational tensions can be both latent and

salient, and that they become salient due to environmental factors such as plurality, change, or

scarcity. In a similar manner, it is suggested that the tensions shaping the paradox of

disclosure might be exacerbated by certain contextual factors.

2.4. Openness-appropriability tensions and theories of the firm

The focus of this thesis lies in exploring the tensions that may arise between openness towards

external partners in innovation (which generally entails disclosure of proprietary knowledge

to such partners) and appropriating benefits from the innovation endeavor. The openness to

collaborate with other actors draws primarily on the scarcity of a firm’s own resources (see,

e.g., Cassiman and Veugelers, 2006). This could also be regarded in terms of complementary

assets possessed by other firms (see, e.g., Teece, 1986; Dyer and Singh, 1998). Likewise, the

need for openness that triggers Arrow’s (1962) paradox draws from insufficient resources: it

is fair to assume that if the seller had enough resources to develop and commercialize the idea

15

on his/her own, there would not be any need for disclosing the idea to potential buyers or

partners before releasing the final product, process or service on the market. Therefore, one

possible way to investigate the openness-appropriability relationship could be from a resource

perspective.

Previous literature has both acclaimed and critiqued the resource-based view (RBV). The

resource-based view (RBV) defines a resource as “anything which could be thought of as a

strength or weakness of a given firm” (Wernerfelt, 1984; p. 172). According to Barney

(1991), firms’ resources are heterogeneous and immobile, and may be used to create and

enforce strategies. Furthermore, the RBV suggests that firms are unable to buy competitive

advantage but instead find advantage within the resources already owned by the firm (Barney,

1991). Later studies have also pointed to shortcomings of the RBV, and some have even

attempted to classify the critiques. In a systematic review Kraaijenbrink et al. (2009) identify

a total of eight categories of critiques to the RBV, three of which emphasize some (real)

limitations in this theory of the firm and require further investigation. According to

Kraaijenbrink et al. (2009), these three critique categories relate to the “inappropriately

narrow neoclassical economic rationality” (of the RBV) (p. 349). Prior studies that attempt to

analyze interfirm relationships from an RBV perspective have suggested combining the RBV

with e.g. the social network theory (Lavie, 2006; Yang, Lin, and Lin, 2010).

For instance, Lavie (2006) observes that, in contrast with the recent research on interfirm

alliances, the RBV envisages the firm to be a self-sufficient entity. Lavie (2006) points out

that the emphasis on alliances in recent management studies reveals gaps between established

theories of the firm and the growing interest researchers show for alliance formation and

performance. Furthermore, studies on the RBV “do not focus on appropriability problems and

latently assume that the appropriability of rents requires ownership, or at least complete

control of the rent-generating resources” (Lavie, 2006; p. 640). Therefore, Lavie (2006)

proposes an extension of the RBV by combining the resource-based perspective with social

network theory (see, e.g., Wasserman and Faust, 1994). Such an extension should, for

instance, account for the fact that a firm’s worth should not only be determined by the firm’s

own resources but also include those of its partners (Lavie, 2006).

Yang et al. (2010) review established theories of the firm in relation to tensions between risks

and opportunities. They conclude that most theories are biased towards one of the two,

emphasizing either risks and costs or opportunities. Moreover, Yang et al. (2010) call for a

“balanced view” that encompasses both risks and opportunities. Yang et al. (2010) find

16

support for the suggested framework, which would combine the RBV and social network

theories. Drawing a parallel to Arrow’s (1962) disclosure paradox, the possible opportunities

may be regarded as reasons for the disclosure, while risks of misappropriation by the potential

buyer/partner may also be present.

Another suggestion for expanding the RBV relates to the benefits of adopting a paradoxical

perspective for advancing RBV theory (Lado et al., 2006). In their study, Lado et al. (2006)

discuss several paradoxes present in RBV theory and propose that conflict should be used in

future research investigations related to RBV. They further note that regarding the firm as a

“cooperative system” (Lado et al., 2006; p. 126) instead of viewing it as a landscape

consisting of contradictory elements would obscure researchers’ perceptions and expectations

about organizations. Lado et al. (2006) also link their discussion to the studies contributing to

the theory of paradox (e.g. Poole and Van de Ven, 1989; Lewis, 2000).

There are, of course, other established theories of the firm, aside the RBV, which might be

used as lenses to analyze openness-appropriability tensions. One example is the property

rights theory (PRT), which relates to the rights of owners to block others from utilizing their

proprietary assets (see e.g. Alchian and Demsetz, 1972). This extends also to intellectual

property rights and recent studies draw attention that PRT could be used to investigate

innovation collaboration with e.g. users (see Tietze et al., 2015).

The above has shown how this thesis might be linked to theories of the firm, namely referring

to two extensions of the RBV suggested by Lavie (2006) and Lado et al. (2006), respectively,

as well as to the PRT, as suggested by Alchian and Demsetz (1972) and more recently linked

to innovation collaboration studies by Tietze et al. (2015). The implications of these potential

linkages will be further discussed in section 6 of this thesis.

3. Method

This thesis includes three studies that investigate different aspects of appropriability-

openness-related tensions. The aspects of the tensions are also linked to three research

questions, illustrated in Figure 2. As suggested by previous research on methodologies (e.g.

Yin, 2014) the choice of a certain research methodology should be matched to providing an

answer to the given research question(s). Answering the three research questions addressed in

this thesis requires different methodological approaches. The first two research questions are

of a quantitative nature, indicated by the word ‘what’ (Yin, 2014) and also by the suggestion

of moderating effects. Therefore, the two corresponding studies, P1 and P2, use quantitative

17

methods and build on an international survey, to be described in the next subsection. While

the third research question also contains the word ‘what’, it is of a theoretical nature and

therefore cannot be answered by applying quantitative methods. The third study, P3, is thus a

conceptual paper discussing the nature of tensions between appropriability and openness, as

well as the demarcation between the two so-called paradoxes suggested in previous literature,

namely the paradox of disclosure and the paradox of openness.

3.1. Quantitative research

The quantitative data used in papers P1 and P2 was partly collected by other researchers (the

Open Innovation Survey) and partly by the thesis author (the corresponding patent data). In

the following, both data collection processes will be described.

3.1.1. Survey data collection

The international online survey was conducted during 2013 by groups of researchers from

three European countries, namely Finland, Italy, and Sweden. The survey is called and will

henceforth be referred to as the Open Innovation Survey (OIS). Several studies based on the

OIS and developed by the researchers who took part in the data collection have already been

published in internationally acclaimed journals, including Lakemond et al. (2016), Lazzarotti

et al. (2016), and Bengtsson et al. (2015).

The respondents to the OIS were manufacturing companies (codes 10-32 and 98 in NACE

Rev. 2) from the three above-mentioned countries (Finland, Italy, and Sweden). The research

groups developing the OIS followed survey design guidelines according to Forza (2002). The

research group in each country picked out a randomized stratified sample of 1000

manufacturing industry firms, and the companies were contacted via telephone. Next the

questionnaires were sent via e-mail to R&D managers or other personnel with similar

knowledge about R&D collaboration (and open innovation) routines/practices. After three

reminders, a total of 415 full answers were collected – 87 from Finland, 152 from Italy, and

176 from Sweden – corresponding to a response rate of approximately 14%. No significant

differences regarding company size or industry resulted from an analysis of respondents and

nonrespondents, nor did early and late responses differ concerning key questions on

collaboration or performance. Questionnaire quality validation was achieved via a pilot test of

two groups (colleagues and targeted respondents). The respondents answered a questionnaire

translated into their native language to gather feedback on anything that might affect the

answers.

18

The survey largely consists of closed questions, except for the questions regarding company

name, firm size (number of employees), and turnover. The answers were measured on a

seven-point Likert scale from 1 = “not at all” to 7 = “to a very high extent”; the response

alternative “do not know” was also provided.

The questions concern strategy, context (size, industry, etc.), openness, relational factors

(collaboration modes), and performance. The focus in this thesis is on constructs capturing

openness, in terms of depth of collaboration and variety of partners, intellectual property

protection mechanisms (IPPMs), performance, and company characteristics (e.g. size).

3.1.2. Constructs

This subsection of the Method section describes the main constructs used in the three papers

that have been completed to date, as well as the way these constructs link to previous

research.

Dependent variables

In P1, openness was analyzed considering the dimensions of partner breadth and partner

depth, introduced by Laursen and Salter (2006). The partner constructs capture which kind of

partner the firm collaborates with in open innovation (partner variety or breadth) and how

intensive (deep) the collaboration is with each of these partners. The approach follows

Laursen and Salter (2006) but uses a more fine-grained scale to measure depth. The

respondents were asked to rate the extent to which the firms collaborated with eight specified

stakeholders in innovation activities over the previous five years. Furthermore, the depth of

partners has been condensed (in P1) from eight types of partners into three factors:

academic/public institutional partners, value chain partners (customer, suppliers, and

consumers), and competitors.

The performance construct used in P2 as dependent variable was measured in terms of

novelty and efficiency, following Alegre et al. (2006). The construct has six items in total,

three of which relate to the cost side of performance, i.e. having reduced risks, costs, and time

to market (as a result of innovation collaboration with external partners); the other three are

concerned with innovation performance, i.e. introducing new or significantly improved

products or processes, and opening up new markets.

Independent variables

The IPPMs were captured via a question asking: “Please indicate the extent to which your

company uses the following intellectual property protection mechanisms when collaborating

19

with external partners in innovation activities.” Eight different mechanisms were suggested as

highlighted in previous studies on IP appropriability strategies (e.g. Hertzfeld et al., 2006).

In P1 the eight IPPMs included in the survey were split into three factors, while in P2 they

were used to create a new measure called appropriability intensity.

In P2, openness was investigated in terms of three different external search modes. These

modes further relate to types of boundaries that need to be spanned in interfirm collaborations,

e.g. as suggested by Knoben and Oerlemans (2006): organizational, geographical, and

technological. Thus the three external search modes included in the analysis of P2 are as

follows: partner type-related (partner variety and depth of collaboration), i.e. organizational,

location-related (partner location, either national or international), i.e. spatial, absorptive-

capacity-related (patent portfolio dummy and innovation ambition).

Concerning boundaries and proximity, the localization of the partners in innovations was

learned from the question: “Please estimate how much of the total R&D activities in your

development project is done by external partners located abroad,” using a perceptive seven-

point Likert scale. Thus, a variable illustrating the extent of international partners was created.

The emphasis of geographical boundaries is particularly important when taking into account

the different national IPR regimes.

A dummy variable for the patent data collected was introduced and used in the study P2. (For

more information about the patent data collection, see subsection 3.1.3.) The dummy receives

the value of 1 if the firm owned patents that were valid during the specified search period and

the value 0 if they did not.

Controls

As control variables in the regression analyses, the following four variables were included:

firm size, industry dummies, country dummies, and innovation ambition. These control

variables will be described in further detail below. Previous studies suggest that smaller and

larger companies display differences in appropriability mechanisms used (e.g. Neuhäusler,

2012). In line with these studies, firm size was used as control and measured by the number of

employees (natural logarithm). Following SCB (2014), the companies in the OIS sample were

divided into four groups according to industry sector, i.e. low-tech (NACE 10-18 and 31-32),

medium low-tech (NACE 19, 22-25), medium high-tech (NACE 20, 27-30), and high-tech

(NACE 21 and 26). For 68 firms in the sample the industry was unknown, which created a

fourth group. The low-tech industry group was used as reference group, and thus four industry

20

dummies were created. Including industry-related controls in the regression analysis is

recommended by prior studies, since appropriability strategies and practices have been found

to be sector-contingent, as suggested by Hall et al. (2014) and others. Since the OIS was

conducted in three different European countries, country dummies were also introduced, using

one of the countries (Sweden) as baseline. Previous literature further indicates that

appropriability is likely to vary across country borders (see Hagedoorn, Cloodt, and Van

Kranenburg, 2005). Another control used was the so-called innovation ambition, which

relates to the strategic priority of product development. Even though this construct is merely a

distant proxy of absorptive capacity, the items selected to include in innovation ambition were

inspired by Berchicci et al. (2015).

3.1.3. Patent portfolio data

Previous studies have stressed the importance of absorptive capacity when firms engage in

search for external sources of knowledge (Cohen and Levinthal, 1990). However, in the data

sample used in papers P1 and P2 included in this thesis, the concept of absorptive capacity

was not captured as an individual construct. With the help of previously suggested

subdimensions of absorptive capacity, two variables were created as proxies for the concept

of absorptive capacity. Specifically, the study by George et al. (2001) introduces two distinct

subdimensions for absorptive capacity: R&D intensity and number of patents. The reason

behind including number of patents as a subdimension is that this measure would capture a

company’s ability to implement and apply knowledge, as well as functioning as a

development of the firm’s knowledge base.

Of the 415 anonymous OIS respondents, 358 provided contact details for researchers’ use,

including the name of the company they worked for. I conducted a subsequent patent search

by searching on various combinations of keywords based on each company’s name and

introducing those keywords in the “applicant name” search field in the Thomson Innovation

international database. In parallel to the patent database search, I visited each company’s

website to check that the specified industry sector matched (in case of similar names of

companies active in different industries/countries) and also to verify if the company name

each respondent provided was correct (in order to make sure that all possible keyword

combinations were used in the patent search). I used Boolean operators when companies’

names were formed of more than one word. Once results were retrieved for patents belonging

to a specific respondent company, the corresponding patent data from Thomson Innovation

patent database was exported into an individual Excel spreadsheet. The time period used for

21

the patent search was 1993–2013, since the OIS data was collected during 2013 and patents

have a maximum 20-year validity. One hundred ninety-six of the OIS respondents were found

to have owned patents during the above specified period, 162 companies were found to not

have owned any patents during that time period, and 57 were appointed as missing cases,

representing the firms that did not provide the company name nor other contact information

that might hint at it. Patent data was collected during the time period November 2015 -

January 2016.

3.2. Conceptual paper (theoretical analysis)

The third study, P3, suggests a theoretical analysis of the tensions that may arise between

appropriability and openness. P3 is a discussion paper and does not claim to be a

comprehensive literature review. As mentioned earlier, there is conceptual ambiguity

surrounding the paradox suggested by Arrow (1962) and the plethora of studies referring to

this as paradox, dilemma, or some other kind of tension or problem. Therefore, I sought

conceptual articles that define the concepts of paradox and dilemma and specify the

differences between them. One article that stood out was a theoretical framework

distinguishing between the paradoxical, dilemmatic, and dialectical tensions proposed by

Smith and Lewis (2011). By using the study of Smith and Lewis (2011) as a framework, P3

initiates a theoretical discussion regarding the nature of tensions between openness and

appropriability. First, a distinction is made between the meaning of paradox in logic and

philosophy versus that in management studies. Second, the overlapping yet distinct

characteristics of paradoxical, dilemmatic and dialectical tensions are described, by using the

framework by Smith and Lewis (2011). Third, the elements tensions arise between are

identified in the so-called “fundamental paradox” suggested by Arrow (1962), and a

discussion follows in order to establish the nature of these tensions, according to the

definitions proposed by Smith and Lewis (2011). Finally, the tensions described by Arrow

(1962) are compared with those suggested by Laursen and Salter (2014) to determine

common and distinguishing points between the two potential paradoxes.

3.3. Quality of the study

The overall choice of method to pursue the purpose of exploring appropriability-openness

tensions by applying mainly quantitative methods has both advantages and disadvantages.

The benefits of analyzing this topic quantitatively include the fact that such methods illustrate

general linkages between appropriability and openness, allow the analysis of moderating

22

effects of contextual factors (as in P1), and also delineate the ways in which appropriability-

openness tensions affect performance outcomes from open innovation endeavors. Three of the

downsides in focusing on mostly quantitative methods are (1) a deeper understanding of how

to manage paradoxical tensions between appropriability and openness is lacking; (2)

quantitative methods provide insufficient evidence regarding what factors make the

appropriability-openness tensions salient (as pointed out by Smith and Lewis, 2011); and (3)

quantitative analysis provides an incomplete picture of the dimensions displayed by the

paradoxical tensions between appropriability and openness. In spite of the noted advantages

of the quantitative studies in this thesis, these drawbacks signal the need for a theoretical

discussion paper that would attempt to clarify the nature of the appropriability-openness

tensions and provide further conceptual clarity.

The general quality of this thesis is further discussed in more detail in the following

subsections in terms of internal, external, and construct validity, as well as reliability. Validity

and reliability are important indicators of potential bias, inferences, generalizability, and

possibility to reproduce research results, thus providing indications of the overall quality of a

study.

3.3.1. Internal validity

Internal validity is linked to causal relationships and the inferences that are made based on the

assumptions of causality (see Yin, 2014). In this thesis, a main concern is the causality in the

relationship between appropriability and openness. While a majority of studies on the topic

assume that appropriability determines openness, some recent studies also suggest the

possibility of a dual causality (Laursen and Salter, 2014). Given the previously described

tensions that may occur between openness and appropriability, it seems reasonable to assume

that the causality in this relationship depends partly on the context. P1 analyzes the specific

context in which appropriability affects (causes) openness and also acknowledges the

limitations of this analysis by referring to the potential dual causality suggested by such

researchers as Laursen and Salter (2014). P2 regards appropriability intensity as a moderating

factor in the relationship between openness and performance. Although in these two

quantitative studies dual causality has not been thoroughly investigated, internal validity is not

breached, because previous literature acknowledges both directions of causality between

appropriability and openness. P3 implicitly takes into account the dual causality in the

appropriability-openness liaison, investigating the nature of tensions in this relationship

without assuming that one of the elements represents the cause and the other the effect. As a

23

matter of fact, the theoretical discussion in P3 is partly based on the notion that openness and

appropriability trigger each other back and forth, in turn increasing the tensions between

them.

3.3.2. External validity

External validity concerns the extent to which the results are generalizable. For the two

quantitative studies included in this thesis, the external validity is rather high. This is

motivated by the fact that the OIS (the basis for two of three studies in this thesis) had 415

respondents (manufacturing firms) from three European countries; while the response rate

was approximately 14%, when performing an analysis of respondents and nonrespondents no

significant differences were identified relating to firm size or industry sector. However, the

analysis in both P1 and P2 is related to some restraints on the data sample used. For instance,

the survey data is limited to manufacturing firms. Also, a construct specifically measuring

absorptive capacity was not included in the questionnaire. While proxy measures for

absorptive capacity were used in the two studies, future studies should also take into account

the effects of absorptive capacity when investigating appropriability-openness tensions. One

further limitation extends to P2’s method of analysis. More specifically, the survey only

allowed testing for moderation via one method, which is thought to be less reliable by recent

studies (Helm and Mark, 2012).

While it is rather difficult to discuss or assess generalizability in a conceptual study with no

empirical data, the external validity of P3 could be supported by the ambition of P3 to validate

the concept of paradox in relation to appropriability-openness tensions, regardless of the

context. Nevertheless, in order to fulfill stricter external validity conditions, the findings of P3

ought to be checked by testing the theoretical inferences from this study in practice.

3.3.3. Construct validity

Construct validity concerns reducing bias and the concurrence between items in a construct.

In quantitative studies, this can be tested by the use of various types of factor analysis (see

Forza, 2002). In P1 a Harman single-factor test (Podsakoff et al., 2003) was conducted to test

for common method variance. This resulted in seven factors, each with eigenvalues higher

than 1. The greatest variance accounted for by one of these factors was 13%. Together, the

factors accounted for roughly 67% of the variance. The result of this test indicates that the

quantitative analysis in P1 does not suffer from common method variance. A similar test

conducted for the variables included in P2 also indicated low risks of common method

variance. The conceptual demarcation between paradoxical, dilemmatic, and dialectical

24

tensions concerning the so-called paradox of disclosure suggested by Arrow (1962) further

represents an effort towards attaining construct validity, specifically from a theoretical

perspective.

3.3.4. Reliability

The concept of reliability concerns the possibility that other researchers can reproduce the

results using the same data set and theory (Hammersley, 1987). Again, in the two quantitative

studies, P1 and P2, reliability is achieved by using established statistical techniques and tools

and theoretically based constructs. The reliability of P3 is not a great concern either, as any

other researcher could use the same theoretical framework and go through the steps in the

theoretical discussion.

4. Summary of papers

4.1. P1: A quantitative study on the moderating effects of partners’

location on the relationship between appropriability and openness

The first paper included in this thesis explores the openness-appropriability relationship with

the help of an international survey (the previously described OIS). More specifically, P1

draws from two issues that have been central to prior studies. The first issue relates to the re-

kindling of the so-called disclosure paradox (Arrow, 1962) by Laursen and Salter (2014),

under the umbrella of recent inclinations to open up the innovation process (see Chesbrough,

2003). The second issue is the tensions between increasingly globalized networks and the

patchwork of national intellectual property (IP) (Geller, 1998; Peukert, 2012). While law

articles have investigated the territoriality nature of IPPMs (see Trimble, 2015), strategic

management studies have paid little attention to this matter when investigating appropriability

issues. P1 aims, therefore, to investigate the relationship between openness and

appropriability (with both concepts measured on a more finely grained scale than in previous

studies) and to test the potentially moderating effect of the territorial nature of IPPMs

(measured as the extent of collaboration with international partners – which would require

cross-border IP protection). The analysis is performed in two steps. The first step entails

testing the associations among three different types of IPPMs (formal, semiformal, and

informal, as described in section 5.1) and openness in terms of partner variety and depth of

collaboration with different types of partners (here the partners were divided into three

groups: academic partners, value chain partners, and competitors). In the second step, we

25

investigate the potentially moderating effects of partner location on the appropriability-

openness relationship.

4.1.1. Purpose and research questions

The purpose of P1 is to explore the association between appropriability and openness while

taking into account partner location (national or international). The purpose is further clarified

in two research questions:

RQ1a: How does the use of different IPPMs influence firms’ openness in terms of variety of

partners and depth of collaboration with each type of partner?

RQ1b: What are the effects of IPPMs on firms’ openness (variety of partners and depth of

collaboration) when taking into account the location (national or international) of partners?

4.1.2. Results

The analysis is based on multiple linear regressions to explore the effects of the choice of

IPPMs on the two dimensions of openness, with and without taking into account the location

of partner as moderating factor. In regard to the first research question, the findings show that

semiformal IPPMs are associated with both partner variety and depth of collaboration with

academic partners. Formal IPPMs associate with openness towards academic partners,

whereas informal IPPMs affect the depth of collaboration with value chain partners.

When taking location into account, findings show that formal IPPMs explain both openness in

terms of partner variety and in terms of depth (academic partners and competitors).

Furthermore, semiformal IPPMs affect the partner variety and depth of collaboration

(academic and value chain partners) in national contexts. Informal IPPMs explain openness

towards national value chain partners and competitors.

4.2. P2: A quantitative study of the moderating effects on the relationship

between external search (openness) and performance

The second paper (P2) explores the association between external search modes and firm

performance. The external search modes relate to different types of measures of openness, and

also to various kinds of boundaries that interorganizational collaborations must span. In

previous studies, external search modes have often been investigated separately, for instance

studies concerned with geographic boundaries (see, e.g., Boschma, 2004) or where to search

(see, e.g. Lopez-Vega et al., 2016), types of partners chosen in innovation collaborations (see,

e.g., Laursen and Salter, 2006), or mechanisms that enable effective integration of external

knowledge (see, e.g., George et al., 2001). Prior research also tends to overlook the likelihood

26

of misappropriation (Katila et al., 2008). While some previous studies signal beneficial effects

of open innovation practices on performance (see e.g. Ramirez-Portilla, 2016), literature also

signals tensions between openness and appropriability and calls for further research to

investigate these (see, e.g., Laursen and Salter, 2014), prior studies provide scarce evidence

concerning the way performance is influenced by openness-appropriability tensions.

Therefore, P2 analyzes whether and how the choice and intensity of appropriability affect the

association between external search modes and firm performance.

P2 proposes a new measure called appropriability intensity and investigates the moderating

effects this measure might have on the association between external search and performance.

The appropriability intensity is calculated as a weighted average for the use of eight different

types of IPPMs. The decision to introduce this new measure was partly based on the fact that

descriptive statistics show that appropriability breadth is rather extensive among the firms in

the OIS sample. More specifically, about 45% of the firms use all eight IPPMs included in the

survey questionnaire to some extent.

4.2.1. Purpose and research questions

The purpose of this paper is to investigate external search strategies’ effects on performance

and to test for potentially moderating effects of appropriability intensity on the relationship

between external search modes and firm performance.

RQ2a: What are the effects of external search modes (in terms of spatial search, variety of

partners and depth of collaboration, as well as absorptive capacity) on firm performance in

terms of efficiency and novelty?

RQ2b: How does appropriability intensity moderate the relationship between external search

and firm performance?

4.2.2. Results

The findings of this paper indicate that different search modes could have divergent effects on

firm performance across various boundaries, i.e. organizational, technological, and spatial

boundaries. Moreover, the results of P2 show that the appropriability intensity does have

moderating effects on the external search-performance association. Findings also point out

that the firms with higher appropriability intensity secure superior performance outcomes

from their external search efforts (the overall degree of openness notwithstanding).

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4.3. P3: A conceptual study on disentangling openness-appropriability

tensions

During the past half century many scholars in various fields of research have approached

Arrow’s (1962) so-called paradox of disclosure from different perspectives. However, prior

studies do not appear to be unanimous about the nature of the tensions described by Arrow

(1962), despite the fact that in the original study the wording used is “fundamental paradox”

(p. 615). Thus, later studies have come to investigate the supposed paradox of disclosure by

claiming at times that the underlying tensions have a different character. For instance, some

regard it as a dilemma or trade-off (see, e.g., Anton and Yao, 2002), others as a paradox

(Laursen and Salter, 2014). At the same time, management studies point out that paradoxical

and dilemmatic tensions could overlap and are easily mistaken for one another (see Smith and

Lewis, 2011). While the tensions signaled by Arrow (1962) as paradoxical have been

investigated as different phenomena (e.g. paradox, dilemma) and under various names or

labels, a theoretical discussion is lacking regarding whether or not the paradox of openness (or

disclosure) is indeed a paradox, a dilemma, or something different, and under which

circumstances the appropriability-openness tensions could become paradoxical.

4.3.1. Purpose and research questions

The purpose of P3 is twofold. First, to initiate a discussion about the so-called paradox of

disclosure (Arrow, 1962) in order to identify the nature of the underlying tensions – according

to Smith and Lewis (2011) the tensions could be paradoxical, dilemmatic or dialectical.

Second, P3 aims to demarcate the so-called paradox of disclosure described by Arrow (1962)

from the more recently dubbed paradox of openness (Laursen and Salter, 2014). The purpose

is further specified in two research questions:

RQ3a: What is the nature of tensions described in the so-called paradox of disclosure – is it

paradoxical, dilemmatic, or dialectical?

RQ3b: What demarcates the so-called paradox of disclosure from the recently suggested

paradox of openness?

4.3.2. Results

By applying the framework suggested by Smith and Lewis (2011), this study shows that the

tensions between openness and appropriability are neither dilemmatic nor dialectical. The

seller in Arrow’s (1962) supposed paradox is required to reveal information about an idea in

order to appropriate benefits from it, yet the act of disclosure might challenge the rightful

28

appropriation of rents from said idea. Therefore, tensions between openness and

appropriability are not of a dilemmatic nature, as they do not represent a trade-off. Dialectical

tensions, on the other hand, could be solved through integration, but in the potentially

hazardous situation described by Arrow (1962) the integration is likely to be temporary, and

new tensions could arise from the challenges the seller would face to appropriate benefits

from the idea (possibly misappropriated by the potential buyer). As a result, the tensions

suggested by Arrow (1962) seem to be of a paradoxical nature.

Moreover, P3 attempts to demarcate the paradox of disclosure from the paradox of openness.

Laursen and Salter (2014) build on the paradox of disclosure suggested by Arrow (1962), yet

they propose a new concept under a different name (paradox of openness) and call it an

“apparent paradox” (p. 869). While recent research streams concerning the opening up of the

innovation process (see Chesbrough, 2003; Cassiman and Veugelers, 2006) seem to rekindle

the discussion on the paradox of disclosure, Laursen and Salter (2014) provide unclear

coordinates when describing the paradox of openness. P3 goes only so far as to identify some

ambiguity relating to the paradox of openness.

5. Discussion

The Discussion section will attempt to answer the three main research questions introduced in

section 1.2 by summarizing the main results and analysis of the three papers included in this

thesis.

5.1. The appropriability-openness relationship and the moderating effects

of partner location on this linkage

The first research question, RQ1, was formulated as follows: What is the association between

different types of appropriability mechanisms and various kinds of openness, and what are the

potentially moderating effects of partner location on this relationship?

First, P1 brings to light new evidence concerning how specific types of openness (partner

variety and depth of collaboration) are linked to certain types of appropriability mechanisms

or IPPMs, namely formal (patents, trademarks, designs, and copyrights), semiformal (trade

secrets and contractual agreements) and informal (lead times and product complexity).

Furthermore, P1 illuminates the fact that linkages between different types of appropriability

and openness become clearer once location is factored in. Distinguishing between external

partners in innovation located either within national borders or abroad, P1 reflects the

29

territorial aspect of certain appropriability mechanisms, which represents a challenge in

increasingly global networks (Bititci et al., 2012; Dussauge and Garrette, 1995). As

mentioned in section 4.1.2, the first sets of regressions in P1 concerning RQ1a point out that

more than one group of IPPMs, i.e. both formal and semiformal, associate at times with one

type of openness, openness towards academic partners. However, when testing for the

potentially moderating effects of partner location, the linkages become more clearly

delineated. Semiformal IPPMs associate with openness in terms of national partners, while

formal appropriability mechanisms are linked to collaboration with a wide variety of partners

in international settings. Prior studies have identified formal IPPMs such as patents as

prerequisites for entering global markets (see Neuhäusler, 2012), which might explain the

latter result. For openness in terms of partner depth, semiformal and informal IPPMs relate to

depth of collaboration with all three groups of partners in national settings. In turn, formal

appropriability mechanisms are associated with depth of collaboration (particularly with

academic partners and competitors). These results tend to indicate that previously outlined

positive effects of contracts (e.g. Belderbos et al., 2014) appear to be mainly valid in national

settings, at least for the firms in the OIS sample. Formal appropriability mechanisms gaining

importance in international settings of collaboration with academic partners may have to do

with the suggested roles of patents as codes for knowledge (Burk, 2008). In the case of co-

opetition, P1’s results appear to confirm previous studies that also find formal IPPMs such as

patents to be more relevant in collaborations with international competitors (see Schmiele and

Sofka, 2007). One further theoretical perspective to be considered here is that the location of

partners could be regarded as a dimension of the potential paradox of disclosure. Another

interesting takeaway from P1 is that the ‘in-between’ cluster, which collaborates with both

national and international partners to similar extents, does not display any significant

associations between groups of IPPMs and types of openness. One interpretation here could

be that this cluster enforces a different range of appropriability mechanisms for collaborations

with partners located both locally and across national boundaries.

5.2. The moderating effects of appropriability intensity on the association

between openness and performance

The second research question, RQ2, concerns the moderating effects that appropriability

intensity might have on the openness-performance liaison: What are the potentially

moderating effects of appropriability (mechanisms) on the relationship between openness and

performance?

30

P2 answers this research question by investigating the linkages between external search

modes and performance, and also by exploring the potential moderating effect of

appropriability intensity on these linkages. The main contribution of P2 is showing that

appropriability intensity moderates the relationship between different types of openness and

performance. Existing literature provides scarce evidence on the interplay between

appropriability, openness and performance, even though the previously signaled tensions

between appropriability and openness clearly have the potential to affect the outcomes of

innovation endeavors. The analysis of P2 indicates that firms with higher appropriability

intensity, i.e. firms that use a wide variety of IPPMs to a higher extent, also perform better

than the rest of the companies in the OIS sample. This result confirms the assumption that the

use of IPPMs may alleviate the tensions between openness and appropriability (see Arrow,

1962; Laursen and Salter, 2014). The regression results of P2 reveal distinct associations

between different types of openness and performance. One example is the positive association

between collaboration with universities (in the first appropriability intensity cluster) and

innovation performance, which indicates the technological advantages of collaborating with

universities (Laursen and Salter, 2006; Fabrizio, 2009). In the second cluster of

appropriability intensity, which is more reliant on trademarks and patents than the other two

clusters, positive associations were observed between openness to government agencies and

cost performance, and collaboration with competitors and innovation performance. Some

evidence to sustain these results is found in previous studies, such as for advantages of the use

of trademarks in customer collaborations (see Landes and Posner, 1987) and the use of patents

in co-opetition positively affecting novelty (see, e.g., Cohen et al., 2000). In the third cluster,

cost performance is explained by openness towards suppliers, while innovation performance

is linked to collaboration with intermediaries and companies in other industries. The former

result might be explained by previous studies’ results implying that supplier collaboration

reduces costs in new product development, as suggested by Argyres and Bigelow (2010).

5.3. Distinguishing among paradoxical, dilemmatic, and dialectical

tensions in the appropriability-openness relationship

The third research question, RQ3, is: What is the nature of tensions between appropriability

and openness, i.e. are they paradoxical, dilemmatic, or dialectical?

P3 discusses the potential nature of tensions between appropriability and openness by relying

on the framework suggested by Smith and Lewis (2011). According to the definitions in this

31

framework, the theoretical analysis in P3 suggests that openness-appropriability tensions are

neither dilemmatic nor dialectical, but rather paradoxical in nature. Moreover, P3 discusses

common points and differences between the so-called paradox of disclosure suggested by

Arrow (1962) and the “apparent paradox” of openness (Laursen and Salter, 2014). While it is

difficult to pinpoint a clear demarcation or a complete overlap between the two, P3 identifies

some key points where the description of the paradox of openness lacks clarity. Therefore,

clarifications concerning the definition of paradox, the explanation of what constitutes an

“apparent paradox” (Laursen and Salter, 2014; p. 869), or the opposite yet interrelated

elements that form the so-called paradox of openness are all suggested as topics for further

analysis.

6. Conclusions, contributions, and implications

6.1. Main findings and contributions

The purpose of this thesis was to investigate tensions related to the openness-appropriability

relationship. In the following, some overall conclusions are described by summing up the

findings of the three studies included in this thesis.

One takeaway from this thesis is that location matters when it comes to appropriability-

openness tensions. More specifically, it has been shown that partner location (national or

international) has moderating effects on the association between appropriability mechanisms

and openness, i.e. that the use of formal IPPMs prevails in international settings, regardless of

the types or variety of partners, while informal and semiformal IPPMs are mainly enforced in

national collaboration settings. These results, highlighted by the study P1, reflect the

territorial character of IPR, an oft-neglected aspect/variable in innovation management

studies, and show the importance of location, i.e. national or international settings for

collaboration, in analyses that include appropriability and openness. The finding contributes

by adding clarification to the relationship between appropriability and openness (Laursen and

Salter, 2014) and by suggesting a spatial dimension to the potential paradox of disclosure.

A second conclusion relates to responding to recent calls for researching the interplay of

openness, appropriability, and performance, as requested by such researchers as Laursen and

Salter (2014). The findings revealed that the way openness associates with performance is

partly shaped by appropriability intensity, and that companies displaying higher degrees of

appropriability intensity are also more successful in reaping benefits from open innovation

endeavors. While scholars generally acknowledge tensions between appropriability and

32

openness, previous studies provide scarce evidence on how managing such tensions affects

performance outcomes from open innovation endeavors. One contribution here is analyzing

the interplay between appropriability, openness, and performance, thereby responding to

research gaps signaled in recent studies.

A third takeaway concerns investigating the concepts of appropriability and openness and

looking back to the “fundamental paradox” suggested by Arrow (1962). The presence of

Arrow’s (1962) paradox in open innovation contexts (Laursen and Salter, 2014) has also

brought to light the need to clarify the conceptual ambiguity present in subsequent studies

drawing from Arrow (1962). The findings presented in this thesis suggest that, according to

paradox theory (see, e.g., Smith and Lewis, 2011), the so-called paradox of disclosure

proposed by Arrow (1962), which also has ramifications in the recently emerging streams of

literature on open innovation (Laursen and Salter, 2014), is more of a paradox than a

dilemma, as implied by several recent studies, such as e.g. Anton and Yao (2002) or Arora et

al. (2016). While, some questions regarding the paradox of disclosure may still exist, this

thesis adds some conceptual clarity to previous research. A further clarification is that

Arrow’s (1962) paradox of disclosure, rekindled by increasing attention on open innovation

research, should not be confused with the conflicting streams of literature that alternatively

suggest that either too little or too much IP protection would be beneficial in open innovation

settings. The findings thus contribute by providing a theoretical discussion concerning the

nature of tensions in the so-called paradox of disclosure (Arrow, 1962). A further contribution

relates to the demarcation between the paradox of disclosure and the newly suggested paradox

by Laursen and Salter (2014).

6.2. Further theoretical implications

The discussion concerning theoretical implications could start by linking the implications of

this thesis to section 2.4 about the possible theories of the firm. One potential linkage has

been to the RBV. As pointed out by e.g. Dahlander and Gann (2010) – see section 2.1.2 – the

propensity to open up the innovation process is primarily related to a firm’s own lack of

internal resources to invent and commercialize new products. Furthermore, the emerging

literature streams on open innovation stress the tensions concerning appropriability and

openness, relating to the paradox described by Arrow (1962), as suggested by Laursen and

Salter (2014). According to Lavie (2006), RBV theory must be extended by integrating RBV

with social network theory, therefore accounting for the fact that the worth of an organization

is determined not solely by its own internal resources but also by the resources of the external

33

partners of the firm. The two quantitative studies included in this thesis have resource-based

implications. Their results partly indicate that, on the one hand, international collaboration

requires additional resources, reflected in the emphasized use of formal appropriability

mechanisms. On the other hand, stronger appropriability intensity also explains the

performance resulting from open innovation endeavors, meaning that in order to benefit from

innovation collaboration with external partners, firms must not only apply a wide range of

IPPMs but also to use them extensively. This latter implication also stresses the investment

that companies need to put into appropriability strategies in order to reap benefits from open

innovation.

The theoretical discussion concerning the nature of appropriability-openness tensions also

provides implications for the theory of paradox (Smith and Lewis, 2011) and for the paradox

perspective in the RBV (Lado et al., 2006). By discussing the potential nature of tensions in

the paradox of disclosure suggested by Arrow (1962) and, furthermore, by suggesting that the

tensions described by Arrow (1962) tend to be paradoxical, future research avenues that

integrate RBV and paradox theory are pinpointed.

The findings in this thesis might also be linked to other (extended versions of) theories of the

firm, for instance there could be linkages to the property rights theory (PRT). The ability of

firms to reap benefits from open innovation endeavors may at times be directly related to the

ability to block other actors from using their own proprietary assets, as suggested by e.g.

Alchian and Demsetz, 1972. However, only the quantitative analysis including performance

outcomes obtained from innovation collaboration might give an indication of the focal firm’s

ability to maintain control over proprietary intangible assets (see P2). Said findings indicated

that the companies in the OIS sample that were able to maintain control over their proprietary

assets by using bundles of appropriability mechanisms were also the ones that were able to

reap most benefits from opening up the innovation process. Further implications for the PRT

could be discussed in similar future analyses where control and ownership are more clearly

defined and measured.

6.3. Managerial implications

As far as managerial implications are concerned, some results highlighted in P1 imply that

opening up the innovation process internationally might require more formal appropriability

mechanisms, which in turn could entail additional costs (required by formal IP protection).

34

Managers should further be advised that when collaborating with both national and foreign

partners, the appropriability mechanisms alone do not seem to suffice for enabling openness.

When opening up to external partners, the findings of this thesis indicate that firms should

have not only a wide variety of appropriability mechanisms at their disposal but also employ

these mechanisms sufficiently to influence the performance results. Another noteworthy

implication of P2 is that different external search modes have contrasting effects on

performance, which indicates that managers should be careful in weighing the benefits and

disadvantages of crossing multiple types of boundaries in search of external sources of

knowledge (as also suggested by Bengtsson et al., 2015).

Although based on a theoretical discussion, the conceptual part of this thesis also provides

some managerial insights. One key takeaway is that tensions between openness and

appropriability should not be too quickly dismissed as either-or choices; nor can tensions

easily be resolved by integrating the two elements. It is further suggested that managing

potentially paradoxical tensions requires careful consideration and represents more challenges

than are readily apparent.

6.4. Future research

One avenue for further research would be to explore the openness-appropriability tensions

using qualitative methods. While quantitative studies can provide general overviews and

indicate trends regarding the use of e.g. appropriability mechanisms in open innovation

processes, qualitative analysis would allow for a deeper and more nuanced understanding of

the tensions underlying appropriability-openness associations, and would possibly allow

identifying factors that make such tensions salient, as suggested by Smith and Lewis (2011).

It might further be useful to take into account and distinguish between different phases of the

innovation process when investigation appropriability and openness, as pointed out by e.g.

Veer et al. (2016) or between incremental and radical innovation, as suggested by Zobel et al.

(2017). Further studies investigating openness-appropriability tensions in innovation

collaborations might also take into account ownership and control issues and adopt a property

rights theory lens as suggested by e.g. Tietze et al. (2015).

The paradox of disclosure could also be linked to the multiple roles of IPPMs (particularly

patents, which have received more attention in previous research). While recent studies

address such issues by e.g. investigating the either positive or negative role of patents in open

innovation (see Zobel et al., 2016), this remains a largely unexplored area. Furthermore,

35

besides the role of protecting knowledge in order to appropriate benefits from innovation (see

Teece, 1986), it is likely that additional roles of patents to coordinate (Penin, 2005) or act as

codes for knowledge (Burk, 2008) enable firms’ openness, particularly in international

settings.

Another avenue for future research is investigating the appropriability mechanisms used by

companies that combine national and international partners in a balanced way (see the

balanced group in P1). While no particularly significant associations between different types

of IPPMs and various types of openness were found among companies in the OIS sample in

this balanced group, it would be interesting to further investigate what kinds of appropriability

strategies such companies employ in order to balance both national and international partners

in innovation. A further topic of research would also be whether there are any particular

benefits related to such a geographically balanced open innovation approach.

7. References

Alchian, A. A., & Demsetz, H. (1972). Production, information costs, and economic

organization. The American economic review, 62(5), 777-795.

Alegre, J., Lapiedra, R., & Chiva, R. (2006). A measurement scale for product innovation

performance. European Journal of Innovation Management, 9(4), 333–346.

Alexy, O., George, G., and Salter, A. J. (2013). Cui bono? The selective revealing of

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