A Multi-Level Framework for Selecting and Implementing Innovation Modes

Abstract

Abstract At its heart, open innovation has been about how firms can improve their use of internal and external paths for the creation and commercialization of innovations. From these possible paths for creation and commercialization, four distinct innovation modes are identified: inside-in, inside-out, outside-in, and outside-out. Through a multi-level framework, prior research is used to explain how firms select one of these modes on an innovation-by-innovation basis. From this, the importance of ambidexterity and other capabilities for managing the selection and implementation of these modes is highlighted—whether focused on innovation creation or commercialization but also appreciating commercialization failure. The chapter concludes by offering opportunities for research on capabilities and mode selection, complementarity in outside-out innovation, and explains a more nuanced understanding of why innovations are not commercialized.