Published In

California Management Review

Document Type


Publication Date

Fall 2007


Barriers to entry (Industrial organization), Diversification in industry, Branding (Marketing), Business planning, Intellectual cooperation


The article discusses a process of business innovation known as open innovation and its relation to traditional business strategy. The competitive strategy developed by Michael Porter emphasized rivalry, buyer power, and barriers to entry as forces that could enhance a producer's surplus. The authors discuss the impact of the Porterian value chain, the processes of production through to the consumer, on subsequent business practices. However, this theory does not account for external sources of value to a company, such as innovation communities, volunteer contributors and surrounding networks, including social networking web sites, open source software and the Wiki model of open contributions. The concept of openness requires shifting from ownership to value creation and value capture.


This is the publisher's final PDF. Chesbrough, H. W., & Appleyard, M. M. (2007). Open Innovation and Strategy. California Management Review, 50(1), 57-76. (c) 2007 by the Regents of the University of California. Published by the University of California Press. Permission received from publisher.

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