An exploratory study of the economic effect of open innovation

Purpose - The purpose of this paper is to discover the economic effects of open innovation investigated the following research questions: do economic effects of open innovation - a certain economic phenomenon or economic paradigm that surpasses the level of the management strategies of individual enterprises - exist? If so, what are the economic effects? Design/methodology/approach - The authors analyse the change of classical economic characteristics, such as diminishing marginal products, economy of scale, and X-inefficiency, which are selected by literature review to find out the effects of open innovation. The authors select long-tailed phenomena and App Store phenomena, which are a direct result of open innovation. From these, the authors find out the effects of open innovation. Findings - Through exploratory-level studies, the economic characteristics of open innovation have been identified: gradual increases of marginal products, the economy of diversity, and X-efficiency improvement. Research limitations/implications - These three economic characteristics of open innovation have been verified through secondary analysis methods based on the long-tailed phenomenon and App Store phenomenon. Open innovation triggers new economic effects. Thus, the authors should create new strategies and policies to treat open innovation that are based on additional deep research. Practical implications - This paper introduces new ideas about open innovation in economics. Social implications - According to the findings, open innovation will give the authors new ways to develop continuously in a knowledge-based economy. Originality/value - For the first time, the authors understand the economic value of open innovation and its implications.