Early stage bio-pharmaceutical companies gain enhanced patenting performance through Open Innovation in contrast to the established companies, which experienced challenges. This is one of the findings by Despoina Filiou looking at OI and performance, in a paper “A new perspective on open innovation: established and new technology firms in UK bio-pharmaceuticals” published in R&D Management.

The author cites research in the US bio-pharmaceuticals sectors that showed established technology companies enhanced their new product development and financial performance when they formed alliances with newcomers.

They acquired new core knowledge on product discovery, while leveraging their complementary resources.

When analysis the UK bio-pharmaceutical sector (1991-2001) Filiou found this was not the case in Britain.

The study looked the role of inbound, outbound and coupled OI on upstream and downstream activities and the impact on innovation performance :-

• Inbound OI – this includes licensing and technology acquisition that enriches a corporate knowledge-base by bringing in ideas from outside.
• Outbound OI – this includes licensing out a corporate’s technology, it can improve time to market and create a stream of profit but there is also the risk of creating competition from licensees.
• Coupled OI and Innovation performance – this the the ability to leverage assets. It would be expected that established companies with a large resource-base would gain access to new markets.

The study found that contrary to expectations, established technology company innovation performance is negatively associated with downstream inbound and outbound OI. However for the newcomers downstream inbound OI enhances innovation, but only when this is in combination with upstream coupled OI.

The author concludes: “Our findings show that a deeper understanding is needed on the interplay between internal innovation processes, OI and firm processes to build internal capabilities and reconfigure competences in light of technological change.”

To read the full paper: “A new perspective on open innovation: established and new technology firms in UK bio-pharmaceuticals” Despoina Filiou. Department of Strategy and Marketing, The Open University Business School, R&D Management Volume51, Issue1, January 2021, Pages 73-86