Role of open innovation and patents on strategic decision making

• Published date: 01 November 2023
• Author: Soumya P. Patra
• Date: 01 November 2023
• DOI: http://doi.org/10.1111/jwip.12277

Received: 12 October 2022

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Accepted: 25 March 2023

DOI: 10.1111/jwip.12277

ORIGINAL ARTICLE

Role of open innovation and patents on strategic

decision making

Soumya P. Patra

General Management, Indian Institute of

Management Bodh Gaya, Bodh Gaya, India

Correspondence

Soumya P. Patra, General Management,

Indian Institute of Management Bodh Gaya,

Uruvela, Bodh Gaya, Bihar 824234, India.

Email: infinitesom@gmail.com

Abstract

The fourth industrial revolution, as it is popularly known, is

transforming the overall ecosystem of business and is

swiftly affecting the structure of organizations with respect

to their working strategy. It is leading to enhanced

collaboration and cross‐application of center‐specific fun-

damentals across various industries. As a result, collabora-

tion and cross‐licensing of technologies have become the

norm rather than an exception. Open innovation, therefore,

plays a critical role in various horizontal applications of

industry‐specific concepts. As a result, choices such as

“keep or sell”or “make or buy”research and development

(R&D) supplies have become extremely critical and signifi-

cant. Therefore, patent‐based research is required as an

enabling tool for assisting research on an open innovation‐

based approach. This article projects an in‐depth review of

the research articles related to various aspects of open

innovation and patents and their overall impact on firm

performance. This article also suggests an open innovation

model that cumulates the role of patents and institutional

participation with a focus on firm performance. The impact

of open innovation on firm performance is evaluated with

respect to variables on market positioning, R&D capacity

building with respect to technology lifecycle, the impact of

intellectual property, for instance, the existence of valid

patents and know‐how, and the process of acquisition of

technologies by such organizations.

KEYWORDS

firm performance, industry, open‐innovation, patents, R&D

J World Intellect Prop. 2023;26:381–413. wileyonlinelibrary.com/journal/jwip © 2023 John Wiley & Sons Ltd.

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1|INTRODUCTION

The fourth industrial revolution as it is popularly known, is transforming the overall ecosystem of business and is

swiftly affecting the structure of organizations with respect to their working strategy. Industry 4.0 is rapidly driving

society towards hyperconnectivity and innovation focussed society heavily relying on expertise, information, and the

Internet of Things (IoT).

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Organizations' decision‐making processes have grown more automated, autonomous, and

intelligent, accelerating the speed of local and global innovation among peers.

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This newest industrial revolution

offers businesses numerous options for effectiveness and flexibility, but it also introduces new rivals, poses a

challenge to traditional business models, introduces new security threats, and intensifies the competition for

innovation.

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For securing various stages of innovation, there is fierce competition for obtaining more intellectual

property (IP) protection in that particular technical domain, particularly patents. As the competition to secure more

patents and more exclusivity increases, it leads to further escalation of litigation among various participants. The

patents are being increasingly used as strategic weapons among the new age innovators.

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Therefore, it is extremely

important to understand how various organizations are protecting their innovations against competition and secure

competitiveness, especially on patent‐based threats of competition and consequent litigations.

Globalization and the oncoming of Industry 4.0 have changed the facets of innovation and its consequent

management. For instance, fast and disruptive environmental changes have blurred industry borders and

competitive landscapes, causing enterprises that are not immediate competitors in the relevant product market to

participate in resource marketplaces with one another.

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This type of supercompetitive environment improves the

creation of new market opportunities that were not existing earlier and sometimes shifted to litigation with

noncompetitive participants for securing new business opportunities. For example, IBM initiated litigation against

Airbnb for infringement of patents related to short‐term online stays.

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Now, in this case, Airbnb and IBM were

earlier noncompeting organizations; however, innovation, securing patent landscapes, and so on, have made their

potential rivals in a newer technical area.

However, with the study of the prior art and the concerned literature review, recognizing the shift of

organizations toward open innovations, there are three specific areas of concern that need enhanced focus by the

researchers. This can be viewed in Figure 1.

First, there are competitive dynamics. Researchers have made significant progress in gaining a better

understanding of how organizations engage in competitive activities to gain or maintain a competitive edge.

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The

majority of competitive dynamics research has concentrated on product marketplace rivalry, where competitors

fight for the same customers through price reductions, advertising campaigns, and new product debuts,

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resulting in

fierce competition in the resource markets receiving relatively less attention. Although various researchers have

FIGURE 1 Relative areas of concern for researchers studying open innovation and action on patents.

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emphasized that focusing on fierce competition or rivalry in the product market leads to ignorance of oncoming

competition from unexpected corners, there are extremely few studies highlighting them.

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Second, detailed research was conducted on fundamental patenting techniques such as defensive, offensive,

leveraging, and others that are used by various companies in terms of patent rights, enforcement, and

commercialization through licensing.

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While most of these strategies advocate the use of a multipronged approach

to following different patent strategies, their application is either restricted to a particular domain only or follows a

unitary strategy. This gap of lack of basic empirical research on multiple technology domain products constitutes a

major limitation since organizations competing in various overly competition‐intensive product markets use

multipatents that complicate the environment once a lawsuit is initiated.

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As a consequence, a corporation can act

as a plaintiff to advance its patent claims while concurrently acting as a defendant to reduce its competitive

disadvantage. There is a shortage of empirical research on how institutions manage these three elements (i.e.,

patent portfolios), licensing (i.e., open innovation), and prosecution (i.e., patent litigation), as well as the commercial

outcomes of these decisions when acting (i.e., offensive and defensive roles).

Third, recent research has focused on antecedent variables (i.e., infringed patent attributes), the probability of

becoming engaged in patent lawsuits, the focus leading to nonsettlements, nonfinancial approaches (i.e., lobbying), the

planning of resolutions, organizational factors (i.e., industry), and legal consequences of patent litigation.

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The network

infrastructure in which a corporation is ensconced, on the other hand, has been largely ignored. Despite the fact that

scholars have acknowledged that well‐positioned enterprises may be better placed to exploit their internal capabilities,

we do not know how much better patent‐based activities will help organizations with network positions.

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2|A SYSTEMATIC REVIEW OF THE LITERATURE

A systematic literature review (SLR) is a method for examining prior and current research on a certain topic in

depth.

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SLR's goal is to look at what is out there and examine the present state of affairs on a certain issue. The

SLR technique aids reviewers in identifying research gaps and providing insight into possible future initiatives. The

SLR approach has been employed by several writers in a variety of fields, including

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approach to identify hurdles in

patent generation

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assessed frameworks for sustainable human resource management

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used SLR to evaluate the

relationship between performance and innovation,

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used to evaluate open innovation in Small and Medium

Enterprises and Sangwan

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studied leanness assessment of an organization. Figure 2shows the SLR approach

utilized by the authors of this work.

2.1 |Selection of databases

The selection of publications from credible databases is the initial stage in a literature review. The SCOPUS

database was used in this investigation to discover relevant papers in open innovation and patent areas. One of the

most extensive and widely used databases is SCOPUS, which contains millions of peer‐reviewed papers on a variety

of subjects.

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Publications from the years 2009 through 2022 were chosen for this study.

2.1.1 |Assortment of keywords

One of the motives of this study was to learn more about how two new research themes (open innovation and

patents) were integrated in articles published between 2009 and 2022. One of the most difficult aspects of the

project was deciding on keywords/phrases to use to find appropriate subject articles. In this research article, the

following listed keywords were utilized to find appropriate articles in the field of open innovation and patents:

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