Events

Professor John Bai
Associate Professor of Finance
D’Amore-McKim School of Business
Northeastern University

We investigate the increasingly common practice of open innovation (OI), wherein internal innovation is supplemented with external sources (hackathons, open innovation labs, or crowdsourcing). OI can be value-increasing as it may give access to a larger pool of talent, accelerate idea development, and spread out innovation-related risks. Yet, OI may trigger the revelation of proprietary information and can be hard to integrate. Using a novel dataset, we show that investors view OI initiatives positively. The value-added stems from hiring more productive inventors, boosting incremental innovation, and reducing costs, rather than from growing sales or introducing new products.