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Abstract: This paper investigates the previous theoretical and empirical studies
regarding the current philosophical understandings of co-innovation and
subsequently suggests a theoretical framework that exhibits the analytical
pillars and the possible outputs of this notion in practice through various case
studies. The analysis of this study involved examining secondary sources of
scholarly literature by discussing the conceptual understandings and empirical
findings on the concepts of co-innovation in several academic databases.
Co-innovation is defined as a shared work of generating innovative and
exceptional design conducted by various actors from firms, customers, and
collaborating partners. This study proposes that there are five principal
elements within the idea of co-innovation: collaboration, coordination,
co-creation, convergence and complementary. The possible outputs of
co-innovation can either be a new business model, new customer base, new
customer value, new value chain, or new products and services. This paper
attempts to evaluate the emerging concept of co-innovation and propose a
conceptual framework rooted in various authentic business cases and
theoretical literature.
1 Introduction
Studies that aim to exemplify the philosophy and applicability of co-innovation have
been multiplying in the past years (Bossink, 2002; Beelaerts and Santema, 2006;
Parmentier and Mangematin, 2011; Lee et al., 2012; Vesterberg, 2014; Bitzer and
Bijman, 2015; Botha et al., 2015; Bugshan, 2015). These literature have revealed both
theoretical and empirical findings in various business contexts. In this paper, we discover
the need to contribute in the co-innovation streams to suggest a generic conceptual
framework that illuminates readers of the current understandings in co-innovation, its
conceptual antecedents or logical constructs, and the possible outputs out of this notion.
However, this study argues that to date, there have been no studies that have
presented a conceptual framework of co-innovation that could act as guidance for
industry practitioners in implementing such concept. This paper is therefore aimed at
bringing forward a framework which contains the five co-s of co-innovation as a general
theoretical point of departure to be utilised by firms in the market. This research will be
based on previous studies carried out by various scholars in different fields.
This paper will first provide a succinct overview as to why businesses shift towards a
collaborative action between firms and customers from service-dominant logic (SDL)
(Vargo and Lusch, 2004). Then we continue to discuss value innovation before advancing
further into co-innovation (Kim and Mauborgne, 1997). We argue that it is important to
mainly denote and emphasise the preceding concept of innovation that tends to be
slightly unidirectional. Having discussed the above points, the investigation follows with
focusing on the idea of co-innovation from various theoretical papers, cases, and
empirical results in authentic business settings. Finally, this paper proposes a conceptual
framework regarding co-innovation concept from the above arguments.
Our study is structured into four specific sections. The first part presents the idea of
marketing, innovation, value, and SDL; it is primarily devoted to elucidating succinct
overview on the paradigm shift in the business landscapes that form the concept of
collaboration. The second section focuses on the idea of value innovation – a
unidirectional innovation philosophy – that seems to be the concept that precedes the
notion of co-innovation. The third section is the nucleus of this study as it addresses the
Co-innovation: a review and conceptual framework 363
idea of co-innovation, logical constructs, and possible outputs derived from previous
researchers. Subsequently, the conceptual framework of co-innovation is developed
through the synthesis of theoretical and empirical evidence from various cases, and then
this paper concludes with limitations of the study as well as future directions.
seem that the classical view of innovation also need transformation. That is to say, the
idea of value innovation’s unidirectional approach has appeared to be sell-by date.
by Schumpeter (1934), Romer (1990), Teece (1996) and Baumol (2002) that assumed
innovation must be heavily concentrated on the producers’ role to outperform
competitors in their industry. Innovation must be kept secret to ‘surprise’ the market, and
hence becoming a market leader. This philosophy, however, might no longer be relevant,
as globalisation has affected the market into information societies.
Given the above arguments, the idea of open and collaborative innovation shall then
be the cornerstone of businesses. Baldwin and Von Hippel (2011) defined open,
collaborative innovation as a shared work of generating innovative design conducted by
various actors from firms, users, and collaborating partners. Align with Beelaerts and
Santema (2006); this idea simply disassembles borders and boundaries that might have
previously inhibited firms to bring forth fresh new ideas and insights from the users’
perspectives after buying or consuming particular services or products provided by the
company in the market in their daily lives. Co-innovation, as a form of open and
collaborative innovation, is then drawing the attention of various scholars.
By far, this study noted that it is Bossink (2002), Lee et al. (2012) and Bitzer and
Bijman (2015) that have comprehended, extended and discussed exhaustively the
philosophical notion of co-innovation. Various cases of fruitful collaborative innovation
in the practical business settings do present such as the symbiotic mutualism of Nike and
Apple (Ramaswamy, 2008), Lego (Greer and Lei, 2012) and DuPont (World Economic
Forum, 2015). There are several studies, however, which have also demonstrated the
fruitfulness of co-innovation implicitly such as the cases of IBM, Mekanism, Lake Nona
(Shih et al., 2008; Edmonson et al., 2012; Teixeira and Caverly, 2012).
3 Co-innovation
Before Bossink (2002), there were in fact several scholars who had formerly apprehended
the importance of collaborative or participative innovation rather than the classical view
of one-way waterfall logic of innovation (see for examples Rothwell and Dodgson, 1991;
Gemünden et al., 1992; Tidd, 1995; Berthon et al., 1999; Doz et al., 2000). Their studies
explicated that innovation includes external participators such as universities, research
institutes, or customers. According to Baldwin and Von Hippel (2011) in their article
titled Modelling a paradigm shift: from producer innovation to user and open
collaboration innovation, the nature of innovation shall no longer rely solely on the
producer’s role but directed towards participatory forms with customers as well as other
relevant external stakeholders. Hence, co-innovation requires serious attention, and it
might become highly disadvantageous for the firm if not properly organised (Shih
et al., 2008). The idea is primarily to challenge the classic way of producer-centric views,
hence opening up new possibilities, and breaking the boundaries between firms and
external stakeholders to achieve not only profits but greater good in the society (Botha
et al., 2015).
Co-innovation is not without any sound theoretical background. As discussed in the
first section that marketing has shifted its focus from company-centric towards
customers, so thus innovation needs to mimic the way marketing philosophy is seen
(Chesbrough and Appleyard, 2007). In the digital era, customers currently have more
bargaining power compared to the historical times where people had insufficient ability
towards information gathering. Nowadays, customers’ bargaining power is high since
366 H.S. Saragih and J.D. Tan
information could easily be found on the tap of their fingers. Suppliers, on the other hand,
have slightly lesser bargaining power due to the technological advancement that can
connect their potential customers with their competitors relatively with ease. This
pinpoints some certain phenomenon such as co-creation, coproduction, or prosumer
demonstrating how the customers have significant impacts in creating values with firms.
That is to say; collaboration has become the nucleus of business activities (Caruso et al.,
2009; Rittgen, 2010; Nidumolu et al., 2014; Vercesi et al., 2014).
It is the time for reciprocal, mutual symbiotic between firms and customers in
creating value. In this sense, value is no longer built solitarily by companies (Odenthal
et al., 2004), rather it is constituted in the market (Prahalad and Ramaswamy, 2004).
Innovation, therefore, does not rely only on firms, but also accounted on customers as the
users; it does make sense that open and collaborative innovation must be taken into
consideration seriously by firms, managers and scholars to open up new horizons in the
business markets to provide exceptional services. Hence, value co-innovation in this
study is the act of collaborative actions carried out by various internal and external
stakeholders towards creating distinctive and exceptional value in the market (Lee et al.,
2012).
Implementations of co-innovation have been investigated in both product and
service-intensive industries. Bossink (2002) has provided the full list of co-innovation
interactions patterns globally which were noted by numerous scholars. It ranged from
aerospace, agriculture, automotive, chemical, consumer electronics, education,
petrochemical, and even textile found in various countries (Baba, 1989; Wissema and
Euser, 1991; Bidault et al., 1992; Tidd, 1995; Shaw, 1996; Kraatz, 1998). In the more
recent times, the cases of Nike and Apple have been one of the most popular examples
regarding collaborative innovation (Ramaswamy, 2008). Maniak and Midler (2008) have
attempted to investigate the notion of co-innovation in car manufacturing industry
empirically. It is also found that Van Blokland et al. (2008) has uniquely contributed in
the streams of co-innovation through their confirmatory study in the airline industry
about market share and time to market seen through the time-value curve. Through his
study, it is discovered that collaborative innovation resulted in higher market shares and
shorter time to market, which signifies desirable result throughout this collaborative
actions.
In the service-intensive industries, there are also several scholars who had
investigated the concept of co-innovation. Parmentier and Mangematin (2011) examined
how co-innovation be applied in creative industries. Their study eventually shed some
light regarding the collaborative activities in four firms: Trackmania, Freebox,
Propellerhead, and MySQL. It was discovered that the locus of innovation is found in the
user communities, which must be fully acknowledged by firms in these industries. Not
only coordination between the two actors on the innovation locus, but synergistic
orchestration throughout the innovation processes that are crucially demanded. Sørensen
and Mattsson (2008) studied co-innovation and its relevance in the collaborative
public-private city innovation.
4 Review method
Various databases of scholarly literature were selected as the primary sources of this
study, which are Science Direct, JSTOR, EBSCO, and ProQuest. Several keywords are
Co-innovation: a review and conceptual framework 367
5.1 Collaboration
Having frequently been mentioned in the previous paragraphs, collaboration is nowadays
imperative for firms to survive in the market. Studies regarding cooperation between
companies and external actors have been proliferating in the past years (Wang and
Archer, 2004; Singh and Mitchell, 2005; Rittgen, 2010; Evans et al., 2011; Vercesi et al.,
2014). This might be caused by the paradigm shift of marketing scholars that have
deconstructed the company-centredness view of achieving sustainable competitive
advantage solitarily. Collaboration in this study refers to the multi-actors active
participatory actions with each distinct characteristics and resources (Bitzer and Bijman,
2015). That is to say, firms are not only responsible for orchestrating innovative ideas
autonomously, but they must also acknowledge the roles of external stakeholders such as
customers, suppliers, partner organisations, governments, universities, even competitors
and alike to open up new possibilities, insights and ideas throughout the innovation
processes (Lee et al., 2012; Vesterberg, 2014). The impressive case of IBM in
collaborating with its competitors in developing semiconductors such as chartered
semiconductor, Infineon, and advanced micro devices has been one breakthrough
example of collaborative value innovation amongst firm and its competitors (Shih et al.,
2008).
5.2 Coordination
Considering the main difference between coordination and collaboration is important. In
this paper, the context of cooperation is meant to diminish boundaries between firms and
the outsiders, making the innovation open by involving not only internal but also external
sources (Chesbrough, 2006). In this respect, the idea of coordination is to ensure
harmonious orchestration of various contributing actors with their unique resources
towards synergistic goals desired by the company. Obviously, the coordinating
actor – the main firm – must ensure that every contributing stakeholder that is fully
assigned and utilised parades concurrently towards a specific direction.
It is evident from the case of Lake Nona Medical City that to achieve the four pillars
of innovation, they intensely coordinated with several stakeholders such as general
368 H.S. Saragih and J.D. Tan
electric and Promethean (Edmonson et al., 2012). It was not merely ‘outsourcing’ the
innovative ideas towards its partners, but actively involved in the operational processes.
In the case of IBM, the coordination aspect is apparent to avoid misuse of the
collaborated projects that are filled with various actors and competitors (Shih et al.,
2008). As stated by Caruso et al. (2009) organisation must find the effective ways to
coordinate spontaneously and responsively across its units.
5.3 Convergence
Given the above arguments, the notion of convergence by Lee et al. (2012) is therefore
indispensable. They noted that value-focused innovations demand convergent thinking.
Vesterberg (2014) demonstrated that the idea of open innovation must be directed
towards a specific purpose, as evidenced by Herzog (2011) in Figure 1. By that, it is
plausible to state that every resources and capabilities possessed by various actors in the
innovation process – technological, organisational, and institutional – must be arranged
complementarily towards the desired objectives. Following the digital trends in the
present era, firms must ensure that their innovative ideas are effectively commercialised
in the market whether their services are distributed from owned, paid, or earned media
(Strauss, 2016). Everything must be directed towards a specific direction.
Convergence entices various contributing actors to act towards a shared and focused
purpose. The case of Mekanism as one of the leader in viral marketing in its era around
2007 to 2011 provides clear understanding regarding the way in which it collaborated
with its customers in creating e-WOM with bloggers, ‘vloggers’, artists and sport stars
(Teixeira and Caverly, 2012) through the power of technological and organisational
capabilities. Mekanism collaborate with the above, various actors towards owned, earned,
and paid media (Strauss, 2016) to make their contents viral on the internet, combined
with the new concept of storytelling, making them exceptionally different with their
competitors.
5.4 Complementarity
For the above reasons, complementarity between technological, institutional,
organisational (Bitzer and Bijman, 2015) resources and capabilities shall be incorporated
properly. Technological capability refers to the organisations’ ability in managing
existing and potential technology; institutional capabilities relates to the formal
governance and norms applied and constituted by the firm as well as its external
stakeholder; lastly, organisational capability refers to the firms’ ability in managing the
firms’ organisational culture and behaviour.
The combinations of the above aspects, if exploited properly, can result in unique
value proposition in the market. It may not always be rooted on technological resources
and capabilities; rather it is established due to the organisational and institutional
capabilities. The cases of Kinepolis and Accor, for instance, did not rely mainly on
technological advancement. In fact, they only exploit their institutional capabilities to re-
engineer the business model with the exceptionally different value proposition in the
market. This argument is in line with Adler et al. (2011) who contended that
organisations need to develop ‘new organisational capabilities, and the coordinating
mechanisms to make it scalable’. In this sense, it is plausible to say that the stated
mechanism might be built based on the technological or institutional capabilities, which
complement one another towards organisational capacities.
5.5 Co-creation
The last aspect but unquestionably possesses a similar level of importance amongst the
other constructs is co-creation. This aspect plays a crucial role in the collaborative
innovation process as illustrated by Romero and Molina (2011). They stated that firms’
abilities to manage costs, quality, and response time to gain and sustain competitive
advantage would still be needed. However, in the current era, it is much more important
for firms to learn new capabilities to co-create value with the customer; thus firms must
be able to create enticing experiences with consumers through collaboration, which is
later expected to produce highly relevant innovative ideas. Again, since the focus of
marketing has moved towards customers (Vargo and Lusch, 2004), it is arguably
reasonable to also collaborate with them as potential innovating partners. Co-creation
does involve not only customers, but also other firms’ external stakeholders such as
universities, research institutes, communities, and alike.
370 H.S. Saragih and J.D. Tan
Having discussed the five pillars of co-innovation in the previous section, this paper
attempts to propose a conceptual framework of co-innovation with the pillars mentioned
above. The proposed theoretical framework is illustrated in Figure 2.
followers, artists) amongst the brands developed advertising by collaboration digital era
The comments contracting parties
given by the
audiences in the
social media can
give unique
insights towards
Mekanism or its
clients for future
offerings
371
372
Table 1
Webasto Chesbrough Webasto and its The workshop Technological Webasto has Webasto collaborated both New product:
and Stern users in involves lead users, capabilities and challenged the way with internal professionals Multipurpose tailgate
(2012) developing new Webasto’s designers, resources are innovation done in its and its external stakeholders,
ideas and experts which directed toward nature the lead users
focuses large feasible ideas
amounts of ideas into generated from
few most feasible the workshop
proposals
Nike and Ramaswamy Nike and its Nike attempts to Nike has the N/A In this case, Nike and Apple New customer base:
Apple (2008) customers in orchestrate the capability in both has successfully Joga.com, online
Some empirical cases of co-innovation (continued)
IBM is one of the examples that has demonstrated successfully the coordinated
collaboration towards creating innovation with its competitors (Shih et al., 2008),
breaking the boundaries of longstanding view of the isolated form of innovation (Lee
et al., 2012). Nike and Apple strengthen this view that to produce distinctive value
proposition in the market, collaboration is one key to achieve such objective
(Ramaswamy, 2008). Nike’s efforts to also co-create innovation in their sneakers
products with its customers has successfully demonstrated the way in which collaboration
opens up new horizons in making innovation ideas.
7 Concluding remarks
Although the review has reached its aims, this study is not without any limitations. In this
exploratory paper, we only provide several cases from secondary sources to constitute the
proposed conceptual framework, and the mentioned cases are expected to give clear
understandings regarding the way in which co-innovation takes place in firms. Hence,
further investigation can provide new and novel insights that might be missed on this
374 H.S. Saragih and J.D. Tan
proposed conceptual framework. Second, this study has gathered and referred literature
from very limited scholarly databases as have been mentioned in the preceding section.
This is mainly due to the authors’ limited access towards other scholarly databases. This
study has not yet discussed ‘free innovation’ (Hippel, 2017) and how it might differ with
the four types of innovation presented earlier in this study. Future research must highlight
this issue and shed some light in this particular topic.
The implications in this study, practically, are that industry player can begin to
ponder in technical manners that there are principally five elements of conducting
co-innovation process. Managers can begin to initiate the discussions ways in which
co-innovation process must be built. Theoretically, this study has initiated the discussions
how co-innovation can be implemented in various organisational settings. Future research
must be directed towards a detailed understanding regarding how each of this element
can be practised in different organisational settings and industries. Also, future scholars
and practitioners would be greatly benefited by sound statistical evidence as to why these
five elements are essential as the foundation of co-innovation processes.
This research has highlighted the concept of co-innovation that begins by first
explaining the SDL perspective, the notion of value innovation, continued with the five
constructs of co-innovation along with its possible outcomes and finally proposes a
conceptual framework of co-innovation. Through this paper, scholars as well as
managers, are expected to realise that solitary and isolated practices of value creation and
innovation might gradually be shifting towards more open and collaborative forms.
Acknowledgements
The authors would like to extend their appreciation to Professor Angappa Gunasekaran,
PhD and the two anonymous peer-reviewers for the invaluable suggestions in improving
the quality of the paper.
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