Open Innovation: Costs Higher Than Financial Benefits In The Short Term

At the website of the Belgian management school, Vlerick Leuven Gent, I found the below snippet on some research on joint ventures and open innovation.

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Researchers Dr. Dries Faems and Dr. Matthias de Visser (Universiteit Twente) and Prof. Bart Van Looy and Dr. Petra Andries (Katholieke Universiteit Leuven) came to the conclusion that − in the short-term − the financial costs of innovative joint venture projects are greater than the financial benefits.

In their research, they studied the collaborative activities and the financial performance of 305 Belgian industrial companies. Collaborating with several partners does produce greater innovative strength − but it also increases the proportion of employee expenses in the added value, which in turn has a negative effect on financial performance. In the short-term, it appears that this cost-raising effect is even greater than the indirect value-creating effect of the joint venture.

Do these findings signify the end of open innovation? The researchers don’t think so. The innovative and financial surplus value of joint venture initiatives does become evident over the long-term. In evaluating open innovation models, people in the public as well as the private sector often want to see quick results. Indeed, in the short-term the costs are particularly visible, while the benefits take longer to manifest. A bit of patience and staying power are apparently essential.
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The report was quite interesting which you can check out on this link: Value-Enhancing And Cost-Increasing Effects Of Open Innovation