Mysql And Open Source Essay

830 words - 3 pages

Open innovation is the use of purposive inflow and outflow of knowledge to accelerate internal innovation as well as to expand the markets for external use of innovation. The central idea behind open innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead use a mix of internal as well as external ideas. In addition, internal inventions not being used in a firm's business should be taken outside the company (e.g., through licensing, joint ventures, spin-offs). The concept of open innovation is important since a plethora of information is available today from external sources like universities (where research is funded by government and private companies), other companies as well as start-ups funded by venture capitalists. In addition, the mobility and availability of a large number of skilled people make open innovation even more relevant. Companies would be mistaken if they try to be fully vertically integrated with everything from fundamental research till final development done in-house only.
However, an important concept associated with the open innovation paradigm is the significance of business model. Shafer defines business model as a “representation of a firm’s underlying core logic and strategic choices for creating and capturing value within a value network”. Specifically, the functions of the business model are to articulate the value proposition, identify market segment, define the structure of the firm’s value chain, specify revenue generating mechanism, define cost structure and formulate a competitive strategy. The importance of business model is that it serves as an intermediate link between the technical and economic domains. It should be noted that a firm’s realization of economic value from its technology depends on its choice of business model, rather than from some inherent characteristic of the technology itself. Open innovation is good, but not sufficient alone to make a company profitable, a viable business model must accompany it. The significance of business model is aptly reflected in the words of Dr. Chesbrough, “A mediocre technology pursued within a great business model may be more valuable than a great technology in a mediocre business model.”
An appropriate example in this context is the case of open source software and how a company MySQL developed a successful business model for open source database. Open source is a development method for software that harnesses the power of external knowledge base, distributed peer review and transparency of process. The promise of...

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