Part of the advantages of using an open innovation (compared to closed innovation) in corporate venturing can be explained by applying the real options approach. Open innovation in risk-laden activities such as corporate venturing has the following advantages: i. benefits from early involvement in new technologies or business opportunities, ii. delayed financial commitment, iii. early exits reducing the downward losses, and iv. delayed exit in case it spins off a venture. We furthermore argue that these benefits do not automatically materialize. Innovation firms have to learn new skills and routines to develop the full 'real option'-potential of open innovation practices.

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ERIM (Electronic) Books and Chapters
2008 IEEE International Conference on Industrial Engineering and Engineering Management, IEEM 2008
Erasmus Research Institute of Management

Vanhaverbeke, W., & van de Vrande, V. (2008). Understanding the advantages of open innovation practices in corporate venturing in terms of real options. In ERIM (Electronic) Books and Chapters. doi:10.1109/IEEM.2008.4738011