The role of contracts and intellectual property rights in open innovation

Our exploratory empirical study, based on interviews and a survey of firms, addresses a number of questions on the role of formal contracts and intellectual property rights in the context of firm-to-firm open innovation. We find that firms active in open innovation have a very strong preference for the governance of their open innovation relationships with other firms through formal contracts. Also, despite the open nature of open innovation, firms still see intellectual property rights as highly relevant to the protection of their innovative capabilities. We find the degree of openness of firms, their formal legal attitude, and the competitive dynamics of their product market environment to be related to the preference of open innovation firms for intellectual property rights. Furthermore, the strength of firms’ internal R&D capabilities increases the positive relationship between openness and the preference for intellectual property rights.