Broadcast search: applying the idea of open innovation for university-industry technology transfer.

• Author: Hilgers, Dennis
• Position: Report

1. INTRODUCTION

   The economic strength of nations worldwide is increasingly dependent on its science systems to sustain innovation and R&D efforts. As research, education and innovation are seen as core factors to promote a dynamic and competitive economy, nearly all governments in the world pursue research and technological development programs to fund research activities especially at universities, research laboratories and companies intending to innovate. The current Seventh Research Framework Program of the European Union (FP 7) with a volume of nearly 50 billion euros is a good example for such a strategically approach even at a multinational level to promote and encourage the creation of (European) poles of scientific excellence and solve research tasks by sharing budgets (depending on different reimbursement rates) to specific research programs.

   The allocation of these public expenditures, however, is entrusted in the classical way of announcing funding or subsidy (work) programs by public authorities in the fields of key technologies and basic research. Interested researchers can answer these "call for proposals" by drafting research applications which are evaluated and granted by members of the scientific community itself. This availability of public third-party funded research strongly incited especially the European universities and stimulates a competition for finance, configuration and research output in the public science sector.

   As an alternative approach to promote innovation governments (as well private parties) are increasingly accomplishing innovation contests. Beside the well know recognition of original scientific achievements to honor a certain researcher or research group (Nobel Prize etc.), recently especially solutions of a predefined scientific or technological problem or demonstrations of the feasibility of specified unprecedented accomplishments are awarded by prizes. Although "inducement prices" are not fitting all research and innovation objectives they may be an imperious alternative just by articulating and broadcasting a certain technological problem and offering a reward to the solution. In this context, inducement prices contest (IPC) may have under many circumstances the virtue of focusing multiple group and individual efforts and resources on a scientifically or socially worthwhile goal, despite not specifying how the goal is going to be accomplished and by paying a fixed purse only to the contestant with the best or first solution. The US National Research Council, for example, recommended that the National Science Foundation, the major US government financing agency for science research, offers prizes of $200,000 to $2 million "in diverse areas" as a first step in a major program "to encourage more complex innovations" addressing economic, social and other challenges (NRC 2007).

   This paper will discuss the mechanisms and consequences of a new kind of innovation contests. By public broadcasting relevant problems linked with a monetary reward in a broad network of external actors within the scientific community and beyond, principles of the open innovation theory (Chesbrough 2003) and the principle of broadcast search (Lakhani et al 2007) can be analyzed and adopted to this field. In this context an open call to contribute to the solution of a specific (technical) problem using new principles of coordination and motivation may be considered to be an advantageous method of technology transfer. In contrast to traditional research, where research results were either stored in scientific databases and publications or were directly transferred by human capital knowledge (when researchers shifted from laboratories to companies or to other research institutions) now the researches identify themselves as being capable of solving a challenge (self-selection) and offering a relevant solution (self-integration). Open innovation platforms hosted by private companies illustrate the success of this approach (Terwiesch and Xu 2008). In contrast to the traditional way of placing a research project by application, where substantial and defined research results of the project are not certain but only a promise to the funding party at the end of the projects life span, with price and innovation contest in its broadest meaning the transfer of knowledge can be much more effective as a solution of an broadcasted problem can be achieved straight away. This paper offers a conceptional framework concerning these new arrangements of research and technology diffusion with consequences for a public strategy of enforcing technology transfer. If it is policy to foster innovation in general, public research agencies have to make efforts to adopt these methods and facilitate technology transfer between scientists, university and firms.

2. THE IDEA OF OPEN INNOVATION

   The successful management of innovations poses a vital challenge for enterprises to be prosperous in the long-run taking the conditions of global competition, increasing market dynamics and short technical product life cycles into consideration. However, the awareness of innovation playing a central role for entrepreneurial performance is not all new: at the beginning of the 20th century the economist Josef Schumpeter has already propagated innovation as a driver for economic growth and success in his theory of economic development and defines the nature of an innovation as an "enforcement of new factor combinations", which does not occur permanently but discontinuously (Schumpeter 1934). In this respect, the factor "knowledge" becomes increasingly important. Knowledge constitutes, to an increasing extent, the fundamental resource for production and innovation and serves as a prerequisite for the value added of an enterprise. Especially the integration of external knowledge beyond entrepreneurial limits (such as customers, users, supplier, universities, etc.) is of crucial relevance.

   The management of open innovation processes in the context of inter-organizational technology transfer contributes as a source of new innovations to the development of products being successful on the market and, at the same time, constitutes the required condition for sustainable competitive advantages.

   It is scientifically proven and accepted that not only the manufacturer of a product but also external actors play a vital role within the innovation process. The contribution of users to the innovation process has particularly been postulated by the innovation researcher Eric von Hippel (von Hippel 2005). Depending on the line of business between 20 percent and 80 percent of all new product developments can be traced back to an idea of the users. In this context a development or an alteration, respectively, in the innovation process from customer orientation towards customer integration is principally observed (Reichwald and Piller 2009; Ogawa and Piller 2006). Accordingly, selected and particularly progressive users of a product ("Lead User") have, among information concerning requirements, also information concerning application and solution at their disposal. At exactly that point, the concept of open innovation adds to the obtainment of information for solutions to technical/creative problem cases in the development phase. Open innovation characterizes the innovation process as being an interactive, distributed and open innovation system. The notion of "open innovation" has been coined by Henry Chesbrough contrasting an open innovation process with the classical closed innovation process in which enterprises only make use of the ideas and technical competences either present in their own domain or by means of a network of closely integrated and well-known partners. The aim of open innovation is to gain access to information for arriving at solutions under consideration of external actors, thereby extending the range of finding ideas and solutions (Lakhani 2005; Laursen and Slater 2006; Piller 2003; Reichwald and Piller 2009). In contrast to "open innovation", "closed innovation" processes are limited to the creative input and the knowledge of a relatively small group of engineers, product managers and other members of the product development team. Therefore, ideas, creativity and knowledge are sourced from a much larger basis and, consequently, input factors are made accessible which beforehand have not been available or have not been taken into consideration due to a local search bias.

   The problem of the local search bias is due to the tendency of enterprises and individuals to ignore external information sources when working on problems and to use exclusively skills and methods in close relation to their existing spectrum of knowledge. Only existing experience and information known from existing geographical proximity, established technological views or disciplinary connotation seeming easily reachable are reverted to for solving a particular task (Katila and Ahuja 2002; Stuart and Podolny 1996). Different persons solving problems possess different local knowledge and routines of problem solution (Hayek 1945; von Hippel 1994) and use that local knowledge even if it...