“Companies that do not innovate die.” With these first words Chesbrough (2003) starts his book wherein he launched a new paradigm combining concepts of knowledge and technology exchange into one new concept: open innovation. In his book innovation is almost exclusively associated with technological R&D for manufacturing companies. The notion that also services can be innovative is not widely spread. Moreover, the notion that service innovation can benefit from practicing open innovation instruments is currently even more unknown. This study aims to explore both service innovations and open innovation and to expand the current knowledge on both subjects. Furthermore, it aims to study how developing service innovations can benefit from open innovation in the public and private healthcare domain in the Netherlands. Qualitative research is performed to explore how open innovation instruments are practiced in the development process for new health services and which benefits and barriers are perceived. To reach this goal a theoretical study is performed and in-depth interviews were conducted. Open innovation can be seen as three movements for knowledge and technology exchange: outside-in, inside-out, or a combination of these two; the coupled approach. Findings indicate that organizations are more willing to use external knowledge rather than commercializing internal knowledge as they use the outside-in approach far more than the inside-out approach. The instruments of the coupled approach are however used regularly by organizations that develop services. Organizations increasingly lose direct contact with customers due to an increase in electronic service provision. As a result, organization active in service development experience inside-out instruments of open innovation as a valuable approach to acquire new ideas and knowledge needed for the development of new services. Companies use the knowledge gained from customers, employees, universities and suppliers to stimulate the idea generation stage and to test new services and concepts. The inside-out instruments, licensing Intellectual Property licensing to other firms and spin-outs, are hardly practiced by the organizations to commercially transfer internal knowledge outside their usual sales channels. Most service developing organizations have no formal strategies for the inside-out approach. By selling or licensing internal knowledge they could expend their business. This should start by actively pursue Intellectual Property Rights management. The coupled approach is frequently practiced with the instruments of foresight workshops and joined development. Benefits perceived when practicing open innovation are extending competences, facilitate testing opportunities, gain new ideas, learn from cultural differences and provide new paths to the market. The main barriers found were intellectual property issues, administrative issues and partner selection
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