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For Peer Review View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Northumbria Research Link Citation: Ciesielska, Gosia (2018) Nokia on the slope: The failure of a hybrid open/closed source model. International Journal of Entrepreneurship and Innovation, 19 (3). pp. 218-225. ISSN 1465-7503 Published by: SAGE URL: https://doi.org/10.1177/1465750317742843 <https://doi.org/10.1177/1465750317742843> This version was downloaded from Northumbria Research Link: http://nrl.northumbria.ac.uk/39804/ Northumbria University has developed Northumbria Research Link (NRL) to enable users to access the University’s research output. Copyright © and moral rights for items on NRL are retained by the individual author(s) and/or other copyright owners. Single copies of full items can be reproduced, displayed or performed, and given to third parties in any format or medium for personal research or study, educational, or not-for-profit purposes without prior permission or charge, provided the authors, title and full bibliographic details are given, as well as a hyperlink and/or URL to the original metadata page. The content must not be changed in any way. Full items must not be sold commercially in any format or medium without formal permission of the copyright holder. The full policy is available online: http://nrl.northumbria.ac.uk/policies.html This document may differ from the final, published version of the research and has been made available online in accordance with publisher policies. To read and/or cite from the published version of the research, please visit the publisher’s website (a subscription may be required.) The International Journal of Entrepreneurship and Innovation For Peer Review NOKIA ON THE SLOPE: TH E FAILURE OF A HYBRID OPEN/CLOSED SOURCE MODEL Journal: The International Journal of Entrepreneurship and Innovation Manuscript ID IEI-17-0099 Manuscript Type: Teaching Case Study Keywords: open source, knowledge integration, hybrid innovation model, Nokia This case study explores the origins of Nokia’s decline in the mobile technology market, as an unsuccessful attempt to introduce an open source strategy into the business. Nokia created a hybrid model, which codified conflicting principles taken from closed and open mode of collaboration. A series of implementation problems resulted in Nokia struggling to attract open source partners, growing issues with managing Abstract: in-house staff and ultimately failing to develop a new mobile operating system fast enough to stay competitive. Key learning outcomes: At the competition of the case study students will: • understand complexity of open innovation implementation when paradigmatic differences between businesses and/or partners are not resolved; https://mc.manuscriptcentral.com/iei Page 1 of 20 The International Journal of Entrepreneurship and Innovation 1 2 3 4 • be able to critically evaluate a hybrid knowledge innovation model and 5 how it might create difficulties at the operational level • identify challenges of management in relation to open source software 6 developers, 7 • analyse strategies which corporations may employ to successfully benefit 8 from the open source software (and similar) movement and how 9 organizational hypocrisy can lead to failure of open innovation projects. 10 Intended use: This case study is best suited for post-graduate or executive 11 courses. 12 13 14 15 16 17 18 For Peer Review 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 https://mc.manuscriptcentral.com/iei The International Journal of Entrepreneurship and Innovation Page 2 of 20 1 2 3 4 NOKIA ON THE SLOPE: THE FAILURE OF A HYBRID OPEN/CLOSED SOURCE 5 6 MODEL 7 8 9 10 11 12 13 14 15 Background 16 17 18 For Peer Review 19 20 Open innovation has become a new paradigm for understanding industrial progress. It 21 22 works on the premise that widely distributed knowledge leads to innovation, which occurs 23 24 at the interspaces between a diverse range of groups and organizations (Swan & 25 26 Scarbrough, 2005). Primarily to advance their technology and systems, businesses need 27 28 to make use of both internal and external ideas (Chesbrough, 2003). Open innovation 29 30 31 models enable customers and users to contribute their knowledge to a company’s R&D 32 33 processes. Many companies now understand the benefits of this and have incorporated 34 35 such models to strengthen their creativity and profits (Weber, 2004). Open source software 36 37 (OSS) is the common field in which open innovation takes place. However, we must 38 39 40 remember that open source software is a community-based model of development, not a 41 42 business model per se , and its existence precedes the concept of open innovation. 43 44 Extant studies suggest that the open innovation models offer many opportunities, although 45 46 it also bear risks. Although it can be argued that open innovation is inevitable, it remains a 47 48 challenge for business organizations seeking to benefit from external knowledge sources 49 50 51 but still operating like closed systems. The change in the business model requires not only 52 53 adapted structures and systems, but also redefining of a company’s role in those 54 55 structures and systems (Ciesielska, 2010). The open paradigm also challenges the 56 57 traditional proprietary business approach because it is ruled by a different intellectual 58 59 60 1 https://mc.manuscriptcentral.com/iei Page 3 of 20 The International Journal of Entrepreneurship and Innovation 1 2 property regimes and populated by variety of participants with different ideologies. But 3 4 above all, a fully open R&D process makes a company more vulnerable to its competitors. 5 6 It also risks that their competitive advantage may be easier to copy. However, somewhat 7 8 ironically, the whole body of open innovation research offers little in-depth analysis of the 9 10 11 organizational and legitimacy problems involved in creating a hybrid open 12 13 source/corporate structure. Ruuska et al. (2009) argue that any knowledge integration 14 15 requires crossing not only temporal, spatial, and task boundaries but also authority, social 16 17 and identity boundaries. The former ones may be less visible and harder to overcome. 18 For Peer Review 19 20 Generation of knowledge is a collective activity and as such requires substantial levels of 21 22 coordination between heterogeneous agents and common coherent institutional 23 24 background in order to succeed (Antonelli, 2006): ‘Knowledge does not spill freely and 25 26 automatically in the atmosphere: dedicated efforts are necessary to create the institutional 27 28 context into which external knowledge can be acquired and to reduce its uncontrolled 29 30 31 leakage.’ (Antonelli 2006: 234) Literature identify employees, R&D personnel (Schroll and 32 33 Mild, 2011), non-R&D personnel (Robertson et al., 2012) and managers (Jones, 2006) as 34 35 important gatekeeper for absorbing new knowledge. Laviolette et al. (2016) report that 36 37 both non-research and development personnel can play a crucial role in inbound open 38 39 40 innovation. 41 42 In their seminal work, Meyer and Rowan (1977) noted that individuals in organizations 43 44 tend to get involved in symbolic actions that aim to decouple from formal structures. 45 46 Decoupling means that organizations tend to adopt various formal solutions in response to 47 48 a range of institutional pressures, but do not necessarily enact those structures. When 49 50 51 organizations have to deal with incommensurable institutional or stakeholders’ pressures, 52 53 they often start to couple their activities, talks, and decisions in odd manners (Brunsson, 54 55 2003). The concept of organizational hypocrisy explains how organizations struggling for 56 57 legitimacy and satisfying interests of different parties talk and decide about important 58 59 60 2 https://mc.manuscriptcentral.com/iei The International Journal of Entrepreneurship and Innovation Page 4 of 20 1 2 issues, showing their involvement in one direction while in practice acting in the opposite 3 4 direction. This implies that, if a company makes many statements and reveals future plans, 5 6 actual executions may be far away (or even opposite) from those declarations. However, 7 8 the organizational hypocrisy strategy only works if people assume that talks are leading to 9 10 11 coherent actions and it is not revealed that the organization is decoupling its talks from 12 13 activities (Brunsson, 2003). Swan and Scarbrough (2005), in their study on the politics of 14 15 networked innovation, highlight that the power of the system may constitute barriers to 16 17 innovation and make knowledge integration efforts less effective. Enberg et al. (2006) 18 For Peer Review 19 20 argue that little effort has been devoted to developing alternatives to rationalistic project 21 22 management concepts of how and with what mechanisms knowledge integration 23 24 processes are utilized in the context of uncertainty and political pressures. 25 26 27 28 29 30 31 32 The case 33 34 In 2013 Nokia sold their mobile branch to Microsoft for $7.17 billion. After several years of 35 36 37 outstanding success and rising profits, the company had already failed in its transition to 38 39 smart phones and a customer-focused business model (Doz & Kosonen, 2008). But the 40 41 problems started in the early 2000s when the company seemed to lose its strategic 42 43 sensitivity. This is possibly due to a great success during the 1990’s, which made its 44 45 leaders underestimate rising competitive threats and a new phase of technological 46 47 48 progress in the mobile industry (Ciesielska, 2010).
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