Open and Closed R&D Processes: Internal Versus External Knowledge

In an attempt to help keep up with the ever changing business environments, firms arecontinuously attempting to find ways to open up their organizations boundaries, enablingexternal sources to be used. Through a means of restructuring their R&D systems, firmswill face challenges when it comes to balancing their external and internal R&D activities,allowing them to profit from the amount of external knowledge that they retrieve.Throughout this paper, discussions on the influences that R&D configuration has on theperformance of firms and moderating R&D capacity will be discussed further.According to researched findings, firms that continue to rely on external R&D actionsexperience an increase in innovative performance, up to a certain point. Larger shares ofexternal R&D services will reduce a firm’s performance. Finding the perfect mediumground is something that all chemical engineering firms will need to work on, in order toincrease innovative performance, but not ruin their performance in the same respects. Thispaper will provide an increased amount of understanding in regards to the open innovationparadigm, which suggests that opportunity costs open for R&D borders is a lot higher forfirms that possess high quality technologically based knowledge stock (Elsevier B.V., 2012).