Opening up innovation: the impact of contextual factors on the co-creation of IT-enabled value adding services within the manufacturing industry

This paper examines the contextual factors that influenced an open innovation project failure. To this end the paper adds to the discussion on open innovation in non high-tech settings and highlights the importance of contextual factors as determinants of success or failure within the open innovation paradigm. It is based on a case study performed at PowerDrive, a manufacturer of hydraulic drive systems, and three of its customers, and follows their attempt to co-create new value-adding services through the innovative use of information technology in the form of a remote monitoring system. The study shows that open innovation project success cannot be measured only in terms of coherence with set targets of quality, time, and costs, but also has to include the creation of mutual value and the development of trust and strong inter-organizational relationships. Furthermore, the role and character of information technology has to be considered and accounted for and the social context made explicit. By managing the value creation process, the value proposal stands a better chance of indeed providing value.