This is an MIT Sloan Management Review article. Many industrial companies are trying to profit from open innovation, which involves actively collaborating with external partners throughout the innovation process. Many companies now acquire technology from external sources in order to strengthen and speed up their internal innovation processes -an approach the authors call inbound open innovation. Companies also increasingly transfer some of their own proprietary technology to other companies by means such as licensing -an approach known as outbound open innovation. The researchers studied the role of employee attitudes in open innovation through a large-scale benchmarking study of German industrial companies. The authors conclude that employee attitudes that favor internal innovation often impede the successful implementation of open innovation strategies. But the researchers found that a group of companies that pursue both inbound and outbound open innovation achieved the highest average return on sales. However, the companies that pursued traditional closed innovation strategies had a higher average return on sales than the group of companies that transfer their own technology to others but don't acquire much technology from external sources. These findings, the authors note, suggest that a focus only on outbound innovation may be dangerous, as a company risks transferring its "crown jewels." The authors note that the results of their study underscore the need to change employee attitudes if managers aim to implement open innovation strategies; managers, they note, need to communicate their open innovation strategies to employees, have executive champions for them and devise suitable incentives and organizational structures to encourage open innovation.

In light of the trend towards open innovation, interorganizational technology transfer by means of alliances and licensing has often become a key component of open innovation processes. Inbound open innovation describes inward technology transfer, whereas outbound open innovation refers to outward technology transfer. Traditionally, inward technology transfer has received considerable attention because most practitioners and academics focus on the technology recipient's absorptive capacity. In contrast, the role of the technology source has been relatively neglected. This article addresses the concept of desorptive capacity, which refers to a firm's ability to identify technology transfer opportunities and to transfer technology to the recipient. The notion of market knowledge in the concept of desorptive capacity deepens our understanding of many firms' managerial difficulties in implementing active technology transfer strategies. Thus, desorptive capacity enriches our understanding of the dynamics of outward technology transfer. It provides new insights into the success or failure of interorganizational technology transactions.

In the past, most industrial firms focused on applying technology assets in their own products and services. Along with the trend towards open innovation, however, many firms have recently started to actively license out technology. These firms consider technology licensing a strategic activity, which may include all technology assets and which goes far beyond the marginal activity of commercializing residual technologies. The research collected for this article shows that the strategic drivers of technology licensing are often more important than generating licensing revenues. The strategic drivers strengthen the interdependencies between internally and externally commercializing technology. Product marketing and licensing are complements rather than substitutes in technology exploitation.