Does competition increase search and innovation? An experimental study of open vs. closed innovation for private vs. public goods
Presenter
Professor
Department of Economics
Hanken School of Economics, HECER
Time and location
North Quad 4330, Thursday (1:00-2:00) pm
Abstract
Search and exploration play a key role for the innovative success of societies & corporations. Key questions for the success are whether inputs for exploration can be promoted by means of competition (say, by innovation races for private rights to intellectual property) and /or by collaboration (by opening up the information flows in innovation). Open innovation paradigm (Chesbrough, 2006) has received a lot of attention in the management literature and among business leaders and it typically favors opening up the process. Yet, extensive systematic empirical, let alone causal evidence is scarce (Vanhaverbeke et al., 2012) and there is also fairly little systematic economic theory on the theme.
According to Huizingh (2011), an innovation process can be either closed or open (open information flows) and the outcome of the process can be either closed or open as well (private or public good). Both of these instruments shape the incentives for providing inputs to the innovative process. This study proposes a novel experimental design to identify causal effects of variation in openness of the process and openness of the outcome on provided inputs and innovation outcomes, and derives predictions using the toolkit of economic theory. We also vary the nature of inputs from generic monetary to those typical for innovation processes, i.e. ideation and verbal, logical other cognitively-demanding forms of inputs to study the robustness of the incentive effects to more externally valid and potentially intrinsically motivated inputs.