Policy Brief: Open Innovation in Global Networks

Innovation has become a key factor for the economic success of OECD countries and a prerequisite for sustainable development. In a complex and highly competitive global market, companies have to innovate and develop commercially viable products and services faster than ever. To meet these new challenges, companies adopt new approaches to their innovation strategies and processes.

Confronted with increasing global competition and rising research and development (R&D) costs, companies can no longer survive on their own R&D efforts but look for new, more open, modes of innovation. Companies’ innovation activities are increasingly international, and they are embracing “open innovation” – collaborating with external partners, whether suppliers, customers or universities, to keep ahead of the game and get new products or services to market before their competitors. At the same time, innovation is being “democratised” as users of products and services, both firms and individual consumers, increasingly become involved in innovation themselves.

Multinational enterprises (MNEs), in particular, have increasingly shifted R&D activities across borders within their global value chain and rely on outside innovation for new products and processes. Companies are also found to be more active in licensing and selling results of their own innovation to third parties.

But what drives these global innovation networks across different industries? And how do they relate to companies’ overall strategies? This Policy Brief looks at the increasing importance of open innovation in companies’ innovation strategies and business models and how policy makers can help ensure it strengthens growth, employment and productivity.