Management Strategy for Open Innovation in Korean Biochip Industry

Abstract

Due to the need to access external knowledge for new product development (NPD), open innovation has been widely used in the biochip industry. Since current resources owned by single firm do not have all the capabilities, NPD in biochip requires strong interdisciplinarity, wide diversity of technological knowledge, and integration capabilities. In the present study, management strategy for open innovation is investigated for NPD in the Korean biochip industry. Open innovation is classified in three steps: (1) switching phase about starting open innovation in the NPD initial stage; (2) implementation phase about open innovation management in the NPD middle stage; and (3) transition phase about change to close innovation in the NPD final stage. Three models for three phases are developed and then tested by carrying out surveys in the Korean biochip firms. In addition, the transition phase model is evaluated in the Korean bio-pharmaceutical firms.
The switching phase model suggests that research capability and external trust are the main variables that affect switching cost, which relates to the perception of advantage of open innovation. The implementation phase model suggests that technological novelty affects degree of openness, which, in turn, relates to technological capability and firm performance. Furthermore, institutional-, environmental-, and firm characteristics affect the depth- and breadth of open innovation activity. The transition phase model suggests that knowledge connected with product innovation has an impact on the open-close transition tendency, which relates to perception of advantage of close innovation. Based on the results for three phases of open innovation, we propose the management strategy for open innovation during NPD. Therefore, based on the results of analyses of the proposed model, we can evaluate the factors that affect open innovation activity and develop an appropriate management strategy of open innovation for NPD of biochip.