How the "open innovation" concept might be used to improve profitability in the service industry
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- Master Thesis 
Innovation drives economic growth and profitability. History reveals that innovation leading to technological advances occurs when knowledge is shared. Research shows that some innovative companies that produce goods have successfully adopted open innovation processes. The research question is: How can the service industry implement successful open innovation processes that lead to improved profitability? Using a systematic review process we identified the most critical 42 articles in the field of open innovation and innovation specific to the open source software (OSS) industry. The OSS industry is early adopter of open innovation practices. Open innovation (OI) is being discussed and utilized in several goods-producing industries, including software, video gaming, telecommunications, sports equipment, and pharmaceuticals. Each company discussed in this paper is sharing internal knowledge and gaining outside input in different ways. There are two basic findings based on the research and the case studies: 1) There are six characteristics common to how the open innovation process has been implemented; and 2) There is no established, best practices process to implement open innovation. We use the identified characteristics to create a conceptual categorization (fundamentals, facilitators and actionables) that we then apply to the service industry for further analysis. Service firms, like goods-dominated firms adherent to service-dominant logic, are in the business of monetizing skills and knowledge. Open innovation is about involving internal and external stakeholders in this process. The two concepts, open innovation and services, are compatible. The key component of open innovation is the human element. Active involvement from board level executives (i.e., the lead user) is critical to driving the adoption of open innovation processes - in any industry category, and especially in services where knowledge is more tacit. More research should be done to better understand how the management of innovative companies shares knowledge.