Open innovation for services: Exploring knowledge frontiers in the cultural heritage industry

Open innovation – the use of inflows and outflows of knowledge to accelerate internal innovation and expand the external market for innovation – is typically advocated as a way for manufacturing firms to avoid... [ view full abstract ]

Open innovation – the use of inflows and outflows of knowledge to accelerate internal innovation and expand the external market for innovation – is typically advocated as a way for manufacturing firms to avoid commoditization and achieve sustained competitiveness (Chesbrough, 2011). While open innovation is spreading across industries at an increasing pace (http://openinnovation.net), two knowledge frontiers are emerging. The first is the need to go beyond manufacturing contexts, where open innovation first originated and where the majority of conceptual and practice-oriented developments have concentrated, to generate greater understanding of open innovation in services. Services form a significant part of the economy in developed countries and are expected to dominate future economic and job growth (Papastathopoulou & Hultink, 2012; Pilat, 2000). The second frontier concerns the articulation and systematization of managerial knowledge for successful open innovation in services. The objective here is to advance managerial theory in the wider area of new services development and open innovation in services while simultaneously informing best practice.

The need to redirect research on open innovation from its original birthplace of manufacturing industries - that is, the first knowledge frontier addressed by our research – is justifiable on the basis of two concurring developments. On the one hand, pressure is building for manufacturing firms to embrace servitization (Baines et al., 2009; Lightfoot et al., 2013; Vandemerwe & Rada, 1988) and differentiate through explicit service innovation strategies (Froehle & Roth, 2007; Kahn et al., 2006) to improve overall performance. Manufacturing firms that servitize operations can benefit from extending open innovation principles and practices to their ancillary services and engaging in what Chesbrough labelled ‘service open innovation’ (Chesbrough, 2011).

On the other hand, there is growing recognition that open innovation is critical for ‘pure’ service firms, i.e. firms without a manufacturing core. These are, in fact, even more dependent on service innovation for successful differentiation and sustainable profitability than manufacturing firms – a strategic realisation that is reflected in the recent emergence of the study of innovation in services as a distinct and growing research field (DeJong & Vermeulen, 2003; Menor & Roth, 2007). There is, however, still little systematic understanding of the specificities of open innovation in services. Current knowledge is limited to generic characterizations of the differences between product and service innovation (Droege et al., 2009; Ettlie & Rosenthal, 2011) based on a number of commonly acknowledged and recognisably distinctive features of services – e.g. intangibility, inseparability, heterogeneity, and perishability (Zeithaml et al., 1985) – or to very specific issues such as, for example, client-coproduction (Mattsson, 2010; Menor & Roth, 2008). This constitutes an important research gap that our project aims to address.

The second knowledge frontier in open innovation for services is the need for service firms to develop an ‘open innovation capability’ to support the development of successful innovation strategies and the adoption of appropriate business models. Service firms that engage in open innovation projects and activities are, in fact, faced with the major challenge of becoming ‘ambidextrous’ (O’Reilly & Tushman, 2004) – that is, successfully adapting to a radically new service innovation environment while, at the same time, maintaining traditional innovation activities. While it is increasingly acknowledged that managing open innovation requires significant professional expertise, empirical evidence suggests that the ‘variance between a best practice in open innovation and the average is huge’ (Gassmann et al., 2010: 216) even in the manufacturing industries where open innovation first originated and where one might expect greater degrees of managerial expertise. The development of managerial competence for open innovation in services remains, therefore, highly problematic: understanding what constitutes an ‘open innovation capability’ in services and how service firms can develop it to secure sustainable competitiveness is important for both theory development and managerial practice. Moreover, by articulating in conceptual terms what constitutes an ‘open innovation capability’, our research links together different disciplines – including strategy, organisation, and knowledge management – thereby answering recent calls (Randhawa, Wilden & Hohberger, 2016) to adopt an interdisciplinary stance to generate a more holistic and in-depth understanding of open innovation issues.

Our research project aims to address both these knowledge frontiers and contribute to greater understanding of the dynamics and management of open innovation in services. It does so by using qualitative research methods that combine diverse data sources (including observations, documentary data and interviews) to develop in-depth case studies (Yin, 2009) of open innovation in the cultural heritage industry. This constitutes, in fact, a particularly suitable context for our investigation for two main reasons. First, it provides useful empirical diversity in a field that has so far been concentrated on a small sample of service industries – most typically the financial services industry and high-tech services (Papastathopoulou & Hultink, 2012). Second, recent developments in the heritage industry and, more particularly, the push to design exhibitions that provide more immersive, sensorial and affective visiting experiences in museums (Dudley, 2010), has paved the way for the adoption of co-design and co-creation approaches in collaborative projects that combine curatorial, technical and design competences (Petrelli et al., 2016).

By comparing and contrasting in-depth case studies of open innovation in the heritage industry, our research project aims to contribute to both theoretical debates and organisational practices in two fundamental ways. First, the development of distinct conceptual models of open innovation for service industries provides the basis for further theorisation in the open innovation research field as well as for the identification and dissemination of managerial ‘best practices’ across different industries. Second, the notion of ‘open innovation capability’ in services conceptualised from the in-depth case studies contributes to the open innovation literature and links it with other disciplines (strategy, organisation theory and knowledge management) while also providing useful guidance for firms explicitly engaging in service innovation strategies. Access to a number of projects in the heritage industry in the UK/European context has been secured and by August 2016 a more in-depth understanding of the actual projects, their organisational settings and background will be developed as a basis for further rounds of data collection.