Open Innovation in Practice: Diffusion of knowledge and use in Swedish bio-pharmaceutical firms

Abstract

The concept of open innovation has successfully diffused among academicians and policy makers, framing innovation work in the post-bureaucratic era. Much of its initial theorising is built on single case studies of early adopters, but there is still a lack of quantitative studies in specific industries and geographical contingencies. In this paper, we report the results of a survey on open innovation (N = 114 firms), targeting the Swedish
bio-pharmaceutical industry. The purpose is to shed light on how widespread the knowledge and practical utilisation of open innovation activities actually are in a particular industry. We find that very few respondents were aware of the open innovation concept, but also that open innovation related activities are to a large extent integrated within the ordinary innovation practices. At the same time, the application of open innovation activities relates to whether the firm has an innovation strategy, an own R&D department and has successfully launched innovations.

Full text

Int. J. Business Innovation and Research, Vol. 8, No. 2, 2014 137
Copyright © 2014 Inderscience Enterprises Ltd.
Open innovation in practice: diffusion of knowledge
and use in Swedish bio-pharmaceutical firms
Björn Remneland-Wikhamn* and
Wajda Wikhamn
School of Business, Economics and Law,
University of Gothenburg,
P.O. Box 610, S-405 30 Göteborg, Sweden
E-mail: bjorn.wikhamn@handels.gu.se
E-mail: wajda.wikhamn@handels.gu.se
*Corresponding author
Abstract: The concept of open innovation has successfully diffused among
academicians and policy makers, framing innovation work in the
post-bureaucratic era. Much of its initial theorising is built on single case
studies of early adopters, but there is still a lack of quantitative studies in
specific industries and geographical contingencies. In this paper, we report the
results of a survey on open innovation (N = 114 firms), targeting the Swedish
bio-pharmaceutical industry. The purpose is to shed light on how widespread
the knowledge and practical utilisation of open innovation activities actually
are in a particular industry. We find that very few respondents were aware of
the open innovation concept, and also that open innovation related activities
are, to a large extent, integrated within the ordinary innovation practices. At the
same time, the application of open innovation activities relates to whether the
firm has an innovation strategy, an own R&D department and has successfully
launched innovations.
Keywords: bio-pharmaceutical industry; innovation; open innovation;
quantitative study; Sweden.
Reference to this paper should be made as follows: Remneland-Wikhamn, B.
and Wikhamn, W. (2014) ‘Open innovation in practice: diffusion of knowledge
and use in Swedish bio-pharmaceutical firms’, Int. J. Business Innovation and
Research, Vol. 8, No. 2, pp.137–153.
Biographical notes: Björn Remneland-Wikhamn is a Researcher and Senior
Lecturer in Organisational Theory and Innovation Management at the School of
Business, Economics and Law, University of Gothenburg. His research
interests include innovation management and network organising.
Wajda Wikhamn is a Researcher and Senior Lecturer in Organisational
Behaviour and Human Resource Management at the School of Business,
Economics and Law, University of Gothenburg. Her research interests include
(among other topics) innovation, employee behaviours and attitudes and
quantitative research methods.

138 B. Remneland-Wikhamn and W. Wikhamn
1 Introduction
Open innovation is an increasingly popular notion to describe (and often prescribe)
innovation activities in today’s society. Broadly defined as the firms’ ability to generate
inflow and outflow of knowledge in order to accelerate innovation (e.g., Chesbrough,
2003b) much of the debate within the innovation management domain directly or
indirectly falls under the ‘open innovation’ umbrella (Huizingh, 2011). Although
criticised for being vaguely defined (Dahlander and Gann, 2010; di Benedetto, 2010) and
not necessarily a new phenomenon (Mowery, 2009; Trott and Hartmann, 2009), open
innovation has been argued to alter strategies (Chesbrough and Appleyard, 2007) and
business models (Chesbrough, 2007) to enhance creativity (Antikainen et al., 2010), instil
dynamic capabilities (Cooke, 2005), produce radical innovations (Gemünden et al.,
2007), increase speed to market (Chesbrough, 2004) and build network positions
(Jeppesen and Lakhani, 2010) linked to corporate brandings (Füller et al., 2008).
Theoretically, the benefits of open innovation rest on plausible argumentations, in that
transaction costs have been reduced (Benkler, 2006) to make it possible to harness the
cognitive surplus (Shirky, 2010) and diverse perspectives (Page, 2007) external to the
firm. Collaboration with other parties makes possible generative innovation flows
(Remneland-Wikhamn et al., 2011) and escalating value creation (Jacobides et al., 2006).
The diffusion of open innovation as a new management innovation has evoked interest in
academic communities (e.g., increased publications, conference themes, workshops,
special issues in journals) as well as in the rhetoric of politicians (e.g., the Obama
administration) and national policy makers (c.f., the Swedish national innovation strategy
from 2012). Hence, many talk about open innovation, but how is the status in practice?
Have firms and industries on a large scale started to embrace open innovation principles
in the daily innovation work? Gassmann et al. (2010) suggest that open innovation
activities have moved from, for example, pioneers to mainstream, high-tech to low-tech,
large firms to SMEs and amateurs to professionals. In reviewing the research on open
innovation (c.f., Dahlander and Gann, 2010; Elmquist et al., 2009; Huizingh, 2011) this is
surely a conclusion easily inferred. But, as, for instance, Dahlander and Gann (2010)
state, “large-scale quantitative studies were until recently relatively rare”. There are of
course noteworthy exceptions (e.g., Laursen and Salter, 2006; Van de Vrande et al.,
2009) but to date, much of the building blocks of open innovation theorising stems from
case studies, or more precisely, retrospective narratives of successful implementations.
Huizingh (2011) concludes, and we concur, that “as with any new concept, initial studies
tend to focus on successful and early adopters, are based on case studies, and descriptive
in nature […] Such studies should be followed by quantitative studies involving large
samples in various industries and countries”. In this paper, we aim to do just this.
We agree with Hsieh and Tidd (2012) that much of theorising on open innovation
aims to be general rather than specific to particular contexts and contingencies. In this
paper we will therefore be specific in that we target one industry, namely the
bio-pharmaceutical industry, and one country, namely Sweden, in a quantitative study of
open innovation in practice. We chose the bio-pharmaceutical industry because it is well
suited for exploring open innovation in practice for a number of reasons. Gassmann and
Reepmeyer (2005) specifically point to open innovation as an organisational trend for
pharmaceutical innovation in order to meet up with the challenges of high R&D costs,
lack of genuinely innovative drugs and the high risk of market failure. Several of the ‘Big
Pharma’ firms have also openly stated that they have or will move toward embracing

Open innovation in practice 139
open innovation principles (Hunter and Stephens, 2010; Munos, 2009b). We chose
Sweden as a geographical area because the country has a large developed base of firms
within this industry compared to its population size. Sweden is also often portrayed as
highly innovative. For instance, the UNU-MERIT (2012) recently published the report
‘Innovation Union Scoreboard 2011’ where Sweden (together with Denmark, Germany
and Finland) was qualified as one of the top-ranked ‘innovation leaders’, well above
average of the 27 EU member countries. Sweden is also suggested to have national
cultural values which would be considered positive for an open innovation climate, such
as low power distance, masculinity and uncertainty avoidance (Hofstede, 1991).
The Swedish bio-pharmaceutical industry is dominated by three regional clusters,
with Stockholm/Uppsala region as the largest, followed by Malmö/Lund and Gothenburg.
A report by VINNOVA (Sandström et al., 2011) mapped out the Life Science companies
in Sweden, by classifying companies into sectors of medical technology, biotechnology,
and pharmaceuticals. The report concluded that firms working with manufacturing,
consultancy, product development and/or R&D within these sectors consisted of about
700 firms and about 32,000 employees in 2009. The Swedish bio-pharmaceutical
industry is still highly dominated by AstraZeneca with about 25% of the total number of
employees within the Swedish life science industry and about 50% of the pharmaceutical
sector. However, recent downsizing announcements will lead to several thousands of
layoffs in the coming years. Among other changes, a research centre in Södertälje will be
closed down completely. At the same time, AstraZeneca declared in 2012 its intention to
focus on open innovation and a formation of a new function within R&D – Science and
Technology Integration Office – with the purpose of collaborating with external public
and private partners in drug development, mainly in so called ‘pre-competitive
collaboration’ (i.e., in areas of industry methods and techniques).
For the study, the following two essential questions arise:
1 to what extent do Swedish bio-pharmaceutical firms know about the notion of open
innovation
2 to what extent do Swedish bio-pharmaceutical firms practice open innovation-related
activities in their innovation work.
2 Literature review
2.1 The formation of the open innovation field
When Chesbrough (2003b) coined the notion open innovation in his seminal management
book with the same name, he put a lens on innovation activities that have arguably been
present for a long time (Mowery, 2009; Trott and Hartmann, 2009), but are said to be
intensified and transformed in contemporary industry settings. Societal driving forces
such as (information) technological escalation, intersections between different knowledge
disciplines and geographical areas, and shifts in people’s values and behaviours are
proclaimed to go hand in hand with the movement towards increased ‘openness’.
In such contexts, traditional organisational boundaries are said to become porous
(e.g., Benkler, 2006) where innovation work moves away from traditional step-wise
supply chains and stage-gate processes towards more complex and dynamic ecosystems
(Remneland-Wikhamn et al., 2011).

140 B. Remneland-Wikhamn and W. Wikhamn
When Chesbrough (2003a, 2033b) initially explained the term, he applied a
firm-based view, putting his main focus on transaction-based exchanges (e.g., acquiring,
selling, licensing) of intellectual property rights. Viewing knowledge as valuable and
tradable goods calls upon firms to open their boundaries for “purposive inflow and
outflow of knowledge to accelerate internal innovation, and expand the markets for
external use of innovation, respectively” (Chesbrough, 2003b), and hence to build more
open business models (Chesbrough, 2006). The view of open innovation as exchange of
knowledge, packaged as tradable goods on a market, would not be seen as a radical
change in many industries (e.g., the pharmaceutical industry is built upon this
foundation). It can however be argued that the transaction costs (Williamson, 1985) have
been reduced in light of new mediators between supply and demand (e.g., patent
auctions, intermediary markets, technological platforms, Web 2.0, and crowdsourcing
initiatives). Parallel to this view, a more relational and community-based view has
emerged, focusing on ongoing and generative interactions. Much of this perspective has
its roots in nearby field of studies, such as user innovation (von Hippel, 2005), open
source (Henkel, 2006; Koch, 2011), innovation communities (West and Lakhani, 2008)
and innovation systems (Cooke, 2005). Here, the unit of analysis is normally the network
(e.g., community, crowd, or ecosystem) rather than on one particular firm.
A number of conceptual overviews have been published on the growing field of open
innovation. For instance, Elmquist et al. (2009) identified seven key themes in open
innovation research; the notion of open innovation, business models, organisational
design, leadership and culture, tools and technologies, IP, and industrial dynamics.
Gassmann et al. (2010) organised the research streams of open innovation into nine
different perspectives; spatial, structure, user, supplier, leverage, process, tool,
institutional, and cultural. Dahlander and Gann (2010) provided an analytical framework
of open innovation research based on the two dimensions of inbound vs. outbound and
pecuniary vs. non-pecuniary innovation focus (providing four categorisations of open
innovation approaches; revealing, selling, sourcing and acquiring).
What is common for all these conceptual papers is that they highlight a broad,
multi-disciplinary and somewhat fragmented field of study. From this, it can be argued
that the open innovation research is inclusive and easily related to, but can also be viewed
as a too broad and vague field of study (Dahlander and Gann, 2010; Huizingh, 2011). For
instance, Dahlander and Gann (2010) state that the different uses of open innovation have
led to a conceptual ambiguity which inhibits the ability to build a coherent body of
knowledge. Groen and Linton (2010) highlighted this as they ask whether the open
innovation term produces communication barriers to theory development. What is
possibly even more problematic is that although the movement toward open innovation
can rather easily be explained by overall societal drivers (e.g., globalisation,
technological escalation, shifts in values), the empirical foundation for its theoretical base
comes to a large extent from case studies (often based on analysing retrospective success
stories) and conceptual argumentations. Open innovation case studies (c.f., Chiaroni
et al., 2011; Di Minin et al., 2010; Huston and Sakkab, 2006; Remneland-Wikhamn,
2011) are interesting and thought-provoking, but we still know very little about what is
happening on an industry level to proclaim that these examples are early adopters of a
general trend, rather than outliers and amusing exceptions.

Open innovation in practice 141
2.2 Quantitative studies of open innovation
Although much of the research on open innovation is conducted using qualitative
methodologies, a few large-scale quantitative studies have been published in recent years.
One of the first, and also one of the most cited, is a study by Laursen and Salter (2006) in
which they analyse a sample of 2,707 manufacturing firms in the UK. They conclude that
firms that are more open to external sources or search channels tend to have a higher
level of innovation performance, but also that the benefits of external search are subject
to decreasing returns (taking an inverted U-shape).
Teirlinck and Spithoven (2008) showed a significant association between the business
model of open innovation (‘in-house’, ‘outsourcing’, or ‘co-developing’) and urban
structure (‘urban areas’, ‘suburban areas’, ‘commuter areas’ and ‘other areas’). Based on
the Community Innovation Survey (CIS) for Belgium 2002, the authors report that firms
in less urbanised areas have more open business models for innovation in that they utilise
to larger extent outsourcing as well as co-developing. Hinkkanen et al. (2012)
investigates R&D cooperation in 206 Russian companies and report that these firms tend
to use their collaboration activities to absorb external knowledge in order to amend own
competences and skills.
Van de Vrande et al. (2009) investigate open innovation in small and medium-sized
enterprises (SMEs) by drawing on a survey database of 605 SMEs in the Netherlands.
They state that SMEs are extensively and increasingly practicing open innovation
activities but that middle-sized enterprises adopt open innovation more often than small
enterprises. Their results indicate that open innovation in SMEs is mainly motivated by
market-related targets such as new revenues and growth and that open innovation is
relevant for manufacturing firms as well for service firms.
Summarising the quantitative studies on open innovation to date, they each tend to
focus on a few specific issues of open innovation, such as spatial location (Teirlinck and
Spithoven, 2008), size of the firm (Van de Vrande et al., 2009) or external search breadth
and depth (Laursen and Salter, 2006). Several of the studies are based on survey data
intended for broader innovation research, such as the CIS or national databases. Not
many are based on surveys specifically designed to investigate open innovation, why the
measurements of open innovation tend to become rather general and broad (c.f., Van de
Vrande et al., 2009). To our knowledge, our study is the first to look at open innovation
practices in Sweden, or even in the Nordic region, and it is one of only a few
contributions that target one specific industry (bio-pharmaceutical industry) in depth with
a survey designed specifically to measure open innovation in practice.
2.3 Open innovation in the bio-pharmaceutical industry
High complexity, costs and risks involved in the new drug development process, together
with increased demands from influential stakeholder groups (such as users, regulatory
authorities, funders, media, etc.) have contributed to a decline in the number of approved
drugs in recent years (Gassmann and Reepmeyer, 2005; Munos, 2009; Subramanian
et al., 2011). On rational grounds, for-profit firms tend to avoid risky and radical projects
with high failure rates, and when the cost for development is escalating (Adams and
Brantner, 2006) the domains for a single corporation’s interest in innovation become
increasingly narrowed (Paul et al., 2010).

142 B. Remneland-Wikhamn and W. Wikhamn
Open innovation – or what, for instance, Munos (2006) initially coined open source
drug discovery (OSDD), and Hessel (2005) called open source biology – has been
highlighted as a saviour for the more or less stalling bio-pharmaceutical industry (e.g.,
Hedner, 2012; Hunter and Stephens, 2010). Voices from researchers within the Life
Sciences have proclaimed that open innovation can be an answer for neglected diseases
(Kar, 2010), a semantic harmonisation of public and private data (Ecker and Williams-
Jones, 2012) and leveraging pre-competitive research (Hunter and Stephens, 2010).
To some extent, the bio-pharmaceutical industry has a long history of ‘openness’
(Chiaroni et al., 2008; Powell, 1998). Barbanti et al. (2004) describes the partnership
agreements between 1983 and 1991 as structured and hierarchical networks linked
together by a relatively small number of key agents. As pointed out, for instance, by
Powell (1998), these collaborative networks also include partners outside of the
bio-pharmaceutical industry itself, such as universities, public funders and laboratories. A
wide spectrum of organisational modes have been used over the years for strategic R&D
collaboration in the bio-pharmaceutical industry such as mergers, joint ventures,
alliances, outsourcing and licensing agreements (Chiaroni et al., 2008). As the drug
development process is inevitably tied to ‘GO or NO-GO decisions’ (Cowlrick et al.,
2011), closely linked to regulatory concerns, the innovation process tends to be structured
in a stage-gate process (Cooper, 2008). Grönlund et al. (2010) suggest that open
innovation principles can be integrated into, and by so enhancing, the stage-gate process
while still maintaining efficiency and systematisation.
Besides the more customary co-creating modes of innovation work in the drug
development process, a few more avant-garde applications of open innovation have
recently emerged in the bio-pharmaceutical industry, highly facilitated by (information)
technology advancements. Innovation intermediaries such InnoCentive and
InnovationXchange, public-private partnerships such as Medicine for Malaria Venture
(MMV) and Innovative Medicines Initiative (IMI), and community-based open
research ventures such as Pink Army Cooperative and OSDD are just a few of reoccurring
success-story examples. In addition to this discourse, big pharmaceutical companies, such
as Eli Lilly, Johnson & Johnson, Novartis, GlaxoSmithKline and AstraZeneca, have
specifically announced strategies, polices and structures for open innovation (Hunter and
Stephens, 2010; Munos, 2009).
As this literature review has shown, open innovation is a ‘hot topic’ closely linked to
many trends in the broader management arena (Huizingh, 2011). However, due to its
rather vague and imprecise definition, open innovation is not easily separated from other
forms of collaborative work which have preoccupied innovation work for decades. Also,
since a majority of research studies on open innovation take the form of qualitative
case-studies, it is not easy to grasp how much impact the concept of open innovation has
on what companies actually do, rather than what they announce in public press releases.
Hence, our study builds on previous open innovation literature in that we will provide a
quantitative survey specifically designed to investigate the level of knowledge about, and
utilisation of, open innovation activities of for-profit firms within the contemporary
Swedish bio-pharmaceutical industry.

Open innovation in practice 143
3 Method
To locate the various firms working in the Swedish bio-pharmaceutical industry, we used
the database Retriever and its classification of three industries: Biotechnical R&D,
Pharmaceutical manufacturing and Pharmaceutical base products. In total, we received a
list of 1,421 firms. To restrict our selection we excluded firms with no employees and we
added search words (e.g., health* OR medi* OR pharma* OR biomedi*) to limit the
population further. In total, we ended up with 562 firms (we also removed companies that
closed down, moved abroad or had undisclosed addresses). A questionnaire was
developed, inspired by the CIS and the Oslo Manual (3rd ed.) for collecting and
interpreting innovation data. We modified and developed the questions to directly capture
and fit the context of open innovation-related issues. The questionnaire consisted of 30
questions, covering:
1 background information about the firm
2 general knowledge and perceptions about open innovation
3 specific information about the firm’s innovation work.
The specific open innovation-related questions were formulated based on state-of-the art
research for conceptualising open innovation (e.g., Chesbrough et al., 2006; Dahlander
and Gann, 2010; Gassmann et al., 2010; Huizingh, 2011; Van de Vrande et al., 2009).
Given the fact that open innovation is a rather non-precise concept (Dahlander and Gann,
2010) we are aware of the difficulties surrounding the development of a comprehensive
and exhaustive set of open innovation-related activities, but we have made an effort to
incorporate the most frequently referred activities into the survey.
The questionnaire was sent out by mail in late spring 2012, addressed to the CEO or
Head of the firm. This was followed up by a reminder in the late summer. The
respondents had the opportunity to answer directly on the paper questionnaire but also
through the web via a link (which 22 respondents did). In total, 114 firms participated,
which gave a response rate of 20.3%. We analysed the sizes of the responding firms and
compared them to the overall structure of the industry. We found that the sample had a
distribution that is similar to that of the industry.
4 Results
Among the 114 responding firms in the survey, only 19% have an own R&D department.
This can partly be explained by the fact that several of the respondents come from very
small companies (72% have less than 10 employees). 42% of the firms have an official
innovation strategy and 41% reported that they introduced at least one innovation
(product, service and/or process innovation) between 2009 and 2011. 23% of the
responding firms more specifically introduced product innovations and in absolute
numbers many of these product innovations come from smaller firms (60% come from
firms with less than 20 employees). Taking into consideration the number of firms within
each category, the propensity to be innovative increases with size (only 12% of the
responding firms with less than 5 employees launched innovations, compared to 57% of
the firms with more than 10 employees).

144 B. Remneland-Wikhamn and W. Wikhamn
About 60% of the firms reported that they developed at least one innovation by
themselves. In the product innovation process, 52% of the firms said they had worked
with institutions (such as universities, research institutes or public authorities), 44% said
that they had worked with customers, 32% with suppliers, and 20% with business
partners. For the service innovations, a higher percentage is reported for business partners
(29%) but lower percentage for institutions (24%), suppliers (18%) and users (0%).
Figure 1 Which stakeholders have been involved in the product innovation process? (see online
version for colours)
When asking more directly about open innovation, only 12% (14 out of 112 responses)
state that they have heard of the term ‘open innovation’. Moreover, only 2.6% of the
respondents have an official strategy for open innovation, including 21% of those
reported that they have heard of the term. None (0%) of the firms measured and followed
up open innovation activities specifically. Among the eight respondents who answered
that they utilise open innovation, all stated that the CEO is a main driver of open
innovation activities. Three respondents (37%) also refer to the R&D department and
three respondents (37%) to the business units/areas as important vehicles for driving open
innovation. None of the respondents said that external consultants or customers are
drivers for open innovation in the firm. The most frequent reasons for why firms would
implement open innovation are:
a to solve business problems (six responses)
b to decrease the time to market (six responses).
The least selected reasons for adopting open innovation were:
a to attract new employees (one response)
b to change the internal culture (one response)
c because it is a hot trend (zero response).
The 14 respondents who had heard about open innovation where asked to define the
notion in more detail by rating (on a five-point scale where 1 is strongly disagree and 5 is
strongly agree) the extent to which some specific activities can be said to fall under the
umbrella of open innovation (see Table 1). The low response rate on this question can of

Open innovation in practice 145
course just give indications, but the respondents show quite consistent patterns in that
they rate external network activities and relations as more open innovation than
transactional activities of buying, selling and licensing IP.
Table 1 Proposed open innovation activities (N = 14)
To what extent do you agree that the following activities can be labelled
open innovation? (1 = strongly disagree; 5 = strongly agree)
Average
score
Standard
deviation
Open source programme development 4.43 0.51
Problem solver networks (i.e., intermediary platforms or communities –
often online – where problems can be posted and whomever in the
network can give suggestions for solutions)
4.36 0.50
External partner networks (e.g., with research organisations, academic
partners, governmental agencies, and research programmes).
4.07 1,00
External idea competitions/programmes (e.g., crowdsourcing,
innovation jams)
4.00 0.96
Innovation work together with customers 4.00 0.88
Triple helix initiatives (i.e., collaboration between industry, universities
and public authorities)
3.64 1.08
Social meetings for collaboration across organisational borders 3.57 0.85
Internal idea competitions/programmes (i.e., initiatives to facilitate and
implement ideas and suggestions from employees)
3.36 1.39
Standardisation activities (e.g., working with open standards) 3.21 1.42
Social media and Web 2.0 activities 3.21 1.12
Joint ventures and formal partnerships 2.93 1.14
Corporate venture programme (e.g., incubators, funding in startups, and
risk portfolios)
2.86 0.95
In- and out-licensing of intellectual property rights 2.57 1.09
Markets for intellectual property rights (e.g., patent auctions, platforms
for trading of intellectual property rights)
2.50 0.94
When asked ‘How important are the following measures to follow up the value of open
innovation activities?’ the highest rated answer was ‘Number of successful innovations
generated from open innovation’ (M = 4.15). Also on this question, IP trading scored low
(M ‘Number of patents’ = 3.15 and M ‘Number of in-licensed or out-licensed IPR’
= 2.92). On the question related to perceived risks with engaging in open innovation, the
respondents rated highest competition-oriented risks, e.g., that competitors may gain
strategic knowledge, strengthen their market position, and possibly gain more benefits
from the collaboration than the firm itself (see Table 2).
The responses from the survey indicate that open innovation as a concept is not yet
diffused among the (top) managers in the Swedish bio-pharmaceutical industry.
However, when asking more directly what type of activities the firm has been engaged in
daily practice (regardless of any knowledge about ‘open innovation’ concept), a
somewhat different pattern emerges. Table 3 shows that among the respondents only 24%
state that they have not performed any of the proposed open innovation-related activities.
60% have engaged in external networking to bring in external knowledge in their
innovation work. 42.6% have involved customers or users, which is higher than involving
non-R&D-employees (27.7%). More than 40% have to some degree used outsourced

146 B. Remneland-Wikhamn and W. Wikhamn
R&D services. Again, the least utilised activities in the list are the more transaction-based
activities such as venturing, external investments and in-licensing.
Table 2 Perceived risks with open innovation (N = 13)
How do you perceive the following risks for the firm related to open
innovation activities? (1 = very low risk; 5 = very high risk)
Average
score
Standard
deviation
Strategic knowledge may end up with competitors 3.85 0.55
That competitors strengthen their positions with our ideas/innovations 3.69 0.75
It is difficult to fairly divide the benefits stem from collaborative open
innovation work among the participants
3.54 1.13
It is difficult to seek patent on the results from open innovation 3.46 1.33
That open innovation projects fail or become financially costly 3.31 0.48
That it leads to big/increasing administrative costs (e.g., contracts,
coordination, follow-ups)
2.77 0.83
That the firm lose key staff to collaborating firms 2.54 0.88
That the firm’s hierarchical structure dissolves 2.23 0.93
That important stakeholders start to talk negative about the firm (e.g.,
customers, and suppliers)
2.00 0.82
That the corporate culture negatively changes 1.69 0.85
Analysing the data further provides an even more elaborated picture. Firms led by
respondents who know about open innovation have, not surprisingly, more utilisation of
open innovation activities. For instance, 86% of the firms with knowledge about open
innovation engage in external networking, compared to 55% of those not knowing about
open innovation. Similarly, 43% of the companies knowing about open innovation
involve non-R&D personnel in the innovation process, compared to 26% of those not
knowing about open innovation. Two points are worth to highlight in this regard:
1 that knowledge of ‘open innovation’ and the frequency in utilising open innovation
are related, but also that
2 firms that do not know about open innovation still to a surprisingly high degree
utilise open innovation activities in practice.
The latter finding is even more pervasive if we take into account that some of
respondents who are not aware of the open innovation concept possibly do not work for
companies performing innovation at all.
Similar patterns are found when relating innovation strategy with the utilisation of
open innovation activities. Hence, firms with official innovation strategies tend to adopt
open innovation activities more frequently than those that do not have an innovation
strategy. Furthermore, looking at how the existence of an own R&D-department relates to
the use of open innovation activities suggests, in line with the absorptive capacity theory
(Cohen and Levinthal, 1990), that firms with own R&D capabilities tend to absorb and
engage in open innovation activities more effectively. It is even so that having an own
R&D department is very strongly associated with willingness to outsource R&D
activities. Put differently, companies utilising open innovation seem to not do it just in
order to downsize their own R&D budgets – rather the contrary.

Open innovation in practice 147
Table 3 Which of the following activities have the firm been engaged in between 2009–2011?
Freq.
total % total Know
OI
Not
know
OI
Have
innov.
strategy
Have
not
innov.
strategy
Have
R&D
dept.
Have
not
R&D
dept.
Innov.
effective
Not
innov.
effective
Activity
N = 101 N = 99 N = 99
N = 99
N = 100
External networking (i.e., inno vation work together with external networks,
communities, for example, in bringing in external knowledge or human capital to the
firm)
60 59% 86% 55% 79% 40% 77% 54% 67% 53%
Involvement of customers/users in the innovation process (i.e., directly involving
customers/users in, for example, active market anal ysis to explore their needs, or in
developing products/services based on users own specifications or product
modific ations)
43 43% 64% 40% 64% 25% 64% 38% 69% 24%
Outsourced R&D (incorporated R&D-services from other organisations, such as
universities, public research organisations, commercial engineers or suppliers)
41 41% 43% 41% 66% 19% 73% 31% 55% 31%
Out-licensing (i.e., sold or offered licenses/royalties to other organisations in order to
better utilise the firm’s intellectual property rights, such as patents, copyrights or
trademarks)
28 28% 36% 27% 43% 15% 36% 26% 36% 22%
Involvement of employees in the innovation process (i.e., utilised knowledge and
initiatives from employees which normally do not participate in the R&D, for example,
by exploring their suggestions, letting them run innovation projects, or creation of
innovation teams)
28 28% 43% 26% 45% 13% 50% 21% 40% 19%
Venturing (i.e., creating new organisations based on internal knowledge, economic
means, and/or other support functions from the firm)
17 17% 21% 16% 23% 11% 27% 14% 26% 9%
External research investments (i.e., investing own capital in new or established firms in
order to make external use of knowledge or to create other synergies)
16 16% 29% 14% 21% 11% 32% 10% 26% 9%
In-licensing (i.e., acquired or utilised intellectual property rights, such as patents,
copyrights or trademarks, from other organisations in order to make use of external
knowledge in the innovation work)
16 16% 21% 15% 25% 8% 27% 12% 31% 5%
None of the above activities 24 24% 0% 27% 2% 44% 0% 30% 12% 33%
Note: Multi
p
le answers are allowed.

148 B. Remneland-Wikhamn and W. Wikhamn
Finally, Table 3 shows how firms that have generated at least one innovation (product,
service and/or process) between 2009 and 2011 (labelled ‘innovative effective’) differ
from those that have not generated any innovation during that time span (labelled ‘not
innovative effective’). Also, here the results show a consistent pattern in that innovative
effective firms tend to utilise open innovation activities to higher degree than those that
have not been innovative effective. The difference is remarkable in, for instance, the
willingness to involve users (69% vs. 24%) and employees (40% vs. 19%) in the
innovation process.
5 Discussion
This study reports that Swedish bio-pharmaceutical companies generally put much
emphasis on innovation. Around 40% of the respondents state that their firms have an
innovation strategy and almost an equal number of firms have introduced innovations
between 2009 and 2011. Small firms stand for many innovations in absolute numbers
(e.g., 68% of the total product innovations have been launched by firms with less than 20
employees), but not in relative terms (e.g., 16% of the firms with less than 20 employees
launched product innovations).
The study reports that firms still maintain much of innovation work in house (60% of
the innovating firms state that they have developed innovations by their own). However,
a considerable amount of work is also done together with external stakeholders. This is
especially true for product innovations (52% of the product innovating firms have
developed innovations with institutions such as universities, 44% with customers/users
and 32% with suppliers). Swedish bio-pharmaceutical firms work less with business
partners that can be perceived as competitors (about 20%), and even lesser with firms
outside of the bio-pharmaceutical industry (about 8%).
The open innovation notion is still not a well-diffused innovation management
approach among the general population of Swedish bio-pharmaceutical firms (only 12%
had heard of the term, 2.6% had an open innovation strategy and 0% measure open
innovation activities). On the other hand, a large number of firms that have not heard of
open innovation still perform open innovation related activities in their innovation
practice (e.g., 55% of them do external networking, 41% have outsourced R&D, 40%
involve customers). Only about one quarter (27%) of the respondents who have not heard
of open innovation also state that they do not do any of the listed open innovation
activities in practice.
The few respondents (N = 14) knowing about open innovation tend to define it to a
larger extent in terms of external, relational network collaborations, rather than as
transaction-based exchange of intellectual property rights. On a five-grade scale
(1 = strongly disagree; 5 = strongly agree), activities such as open source, solver
communities, external partner networks and involvement of users get more than 4.0 on
average, while activities such as joint ventures and formal partnerships, corporate venture
programmes, in- and out-licensing of IP, and markets for IP trading get less than 3.0 on
average. When the same respondents reflect on which potential threats they see with open
innovation, they highlight risks related to competitors’ possible gains (e.g., that strategic
knowledge will reach competitors, or that the competitors will strengthen their market
positions), rather than internal organisational challenges (e.g., loss of key staff,
dissolution of hierarchical structures, change in corporate culture).

Open innovation in practice 149
Although as stated earlier, several firms that do not know about open innovation still
do open innovation-related activities, there is a rather clear tendency that firms engaging
in innovation work in general also tend to utilise open innovation activities to a larger
extent. This is consistent when looking at firms who have an innovation strategy
compared to those who do not have, firms who have an R&D department compared to
those who do not have, and not surprisingly those who know about open innovation
compared to those who do not. The study also implies that firms who engage in open
innovation activities do not do it mainly to downsize their own R&D departments. On the
contrary, the firms with own R&D departments tend to use, for instance, outsourcing of
R&D to a larger degree than those who do not have own R&D departments.
We could also see patterns in that firms who have a more international customer base
tend to use more of open innovation activities than those who have a more local customer
base, and the same was true for partner location (although to a lower level). What is
particularly interesting is that when comparing the firms who have succeeded in
launching innovations between 2009 and 2011 with those who have not done so, there is
a rather significant difference in the utilisation level of open innovation activities.
Comparing ‘Innovation effective firms’ with ‘Not innovative effective firms’, the former
use to a much larger extent involvement of customers/users (69% vs. 24%), non-R&D
employees (40% vs. 19%) and in-licensing (31% vs. 5%) as well as out-licensing (36%
vs. 22%). Put differently, open innovation work in Swedish bio-pharmaceutical firms
relates rather strongly with innovation work in general and with successful innovation
work in particular.
6 Conclusions
In this paper, we have made a contribution to the open innovation literature by providing
a quantitative study of open innovation in the bio-pharmaceutical industry in Sweden. We
have asked the respondents about their specific knowledge of open innovation and we put
that in relation to their innovation practices. By this, we aimed to go beyond the
anecdotal success-stories, to provide insights on how well-spread the open innovation
concept actually is in practice. Our study indicates that the notion of open innovation is
not in itself very well diffused among the Swedish bio-pharmaceutical companies in
general, but it also shows that open innovation related activities have a central role in the
actual innovation work performed as they strongly relate to the core of R&D intensity as
well as effectiveness.
This quantitative study on open innovation is deliberately limited to a particular
industry (bio-pharmaceutical industry) and a geographical region (Sweden) in order to be
more specific and context dependent. It might however limit the external validity of the
paper. Comparisons with other countries and/or other industries are suggested for future
studies. Due to the limited number of respondents, our conclusions are only tentative and
should be complemented and extended in future studies. We find it unlikely, however,
that the reported frequency of, e.g., knowledge about open innovation would be higher
among the non-respondents, since there should be an intrinsic motivation among the
firms using open innovation to participate in the survey. The study could, however, have
been enriched by doing follow-up qualitative interviews and to more thoroughly study the
non-respondents in order to understand their motives.

150 B. Remneland-Wikhamn and W. Wikhamn
The discussion part concludes, quite boldly, that open innovation work is
significantly associated with innovation work in general and with successful innovation
work in particular. This could partly be attributed to that some bio-pharmaceutical firms
might not be involved in any innovation activities at all, and hence would not have the
need to perform open innovation work, any more than establishing innovation strategies
and R&D departments. Furthermore, as reported, many of the respondent firms are small,
which could imply that they have not yet any need to structure their innovation work in
traditional hierarchical and deliberate forms. A further research on how small and
middle-sized firms act more specifically in relation to open innovation is urged,
something which has already been proposed and initiated by other scholars (e.g., Lee
et al., 2010; Van de Vrande et al., 2009). We also believe that some of the rather
unexpected indications of this study should be further investigated and analysed, such as
the relation between own R&D department and outsourcing of R&D, views on open
innovation as relational rather than transaction-based, and that open innovation activities
are associated with innovation effectiveness.
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