ABSTRACT
In his book Open Innovation, Henry Chesbrough sheds new light upon the importance of external knowledge sourcing and the shift from ‘closed innovation’ to ‘open innovation’. In essence, Chesbrough discusses the management of what we term network capital and the means by which it can be utilized to acquire knowledge. The management of network capital is becoming increasingly important, as the locus of innovation in knowledge-based industries moves beyond the closed environment of the R&D laboratories of large corporations and spreads to small, technology-based start-ups, universities, and other players. Chesbrough sees this shift as arising from a number of factors, such as the increased supply of highly skilled workers who have received higher education, the growth of start-ups based on new ideas generated in universities and large corporations, and the mobility of highly skilled workers between start-ups, large corporations, and universities.1 Large corporations have lost their ability to keep in-house knowledge by encircling their scientists and engineers, as opportunities for knowledge commercialization rapidly grow outside their R&D laboratories. This has resulted in large corporations developing an increased number of knowledge sources outside their R&D laboratories through collaborations and alliances with other parties. A symbolic event surrounding this shift is, as Chesbrough writes, Proctor & Gamble’s decision in 1999 to extend internal R&D to the outside world through an initiative called ‘Connect and Develop’ and the creation of a position entitled Director of External Innovation.2
