Negotiation in Open Innovation: A Literature Review

Group Decis Negot https://doi.org/10.1007/s10726-018-9568-8 Negotiation in Open Innovation: A Literature Review Mario Barchi1 · Marco Greco2 © Springer Science+Business Media B.V., part of Springer Nature 2018 Abstract Open innovation describes a model of innovation that has gathered increasing consensus both in the literature and among practitioners. Studies on open innovation have shown how organizations can benefit from interaction with other subjects to foster their innovation activities. Somewhat surprisingly, although such interactions entail complex negotiations, very few studies have organically analyzed the role of negotiation from an open innovation perspective, although many of them emphasize its importance in successful collaborations. This article aims to analyze the state of the art on the peculiarities and the critical aspects of negotiation for organizations that adopt the open innovation model. Thus, this article presents a systematic literature review that organizes and discusses the main contributions of 70 relevant manuscripts. Such studies have been classified according to three classes (preparation, bargaining, and other) and eleven subclasses. The article has implications for both practitioners and academics. Indeed, the review allows practitioners to identify the literature that is relevant to their own topics of interest, while the conclusions herein provide academics with recommendations for further research on specific aspects of negotiation and open innovation. Keywords Open innovation · Negotiation · Intellectual property · Literature review B Marco Greco [email protected] Mario Barchi [email protected] 1 Land & Naval Defence Electronics Division, Leonardo Company S.p.A, Via Tiburtina km 12,400, 00131 Rome, RM, Italy 2 Department of Civil and Mechanical Engineering, University of Cassino and Southern Lazio, Via G. Di Biasio 43, 03043 Cassino, FR, Italy 123 M. Barchi, M. Greco 1 Introduction In the last decade, the open innovation (OI) model has strongly influenced the innovation literature, giving rise to an epistemic community that has produced hundreds of articles (West et al. 2014). Such model, introduced by Chesbrough’s (2003) seminal book, emphasizes the importance of interacting with external subjects to innovate. When two or more organizations agree to develop a product, process or organizational innovation, their human resources must share some of their competencies and know-how. Thus, OI often requires a complex process that starts with the identification of suitable partners and proceeds through the negotiation of the terms of the co-development, including the issues associated with the resulting intellectual property (IP). In the remainder of this article, we will refer to the negotiations among organizations that innovate in accordance with the OI model as ‘OI negotiations’. The efficiency and effectiveness of such negotiation processes are likely to influence not only the ultimate success of a new product in a certain market but also its developmental costs and timing. Similarly, poorly managed negotiations with regard to co-developed processes or organizational innovations will most likely return disappointing results. Negotiation may also play a critical role within organizational boundaries (Dabrowska and Savitskaya 2014) when managers must incentivize or persuade their human resources to share their knowledge and accept externally developed ideas, products or processes, thereby boosting absorptive capacity (Cohen and Levinthal 1990) and hindering the not-invented-here syndrome (Katz and Allen 1982). Thus, entrepreneurs and managers, as well as the key figures of other organizations that are heavily involved in OI collaborations (such as universities, research institutions, and public governance), would particularly benefit from a clear understanding of the skills, strategies, technologies, and best practices that can enhance OI negotiations. Indeed, properly managing such negotiations is key to enhancing a firm’s capability to innovate, which in turn is the basis of achieving a competitive advantage over competitors. Somewhat surprisingly, very few studies pertaining to the OI literature have analyzed the negotiation processes that precede inter-organizational interactions, continue as the R&D labs interact with one another, and culminate in IP issues with regard to co-developed products or services that are ready to enter the market. This is especially peculiar if we consider the vast number of studies that address the relationship between OI and innovation performance (Greco et al. 2015) or the importance of appropriability regimes to enable OI (Laursen and Salter 2014). Therefore, this article aims to shed light on OI negotiations to organize the current understanding of the topic and identify areas for future studies. An extensive analysis of the literature based on the Elsevier’s Scopus and Google Scholar databases led to the identification of 355 manuscripts, of which 70 were considered relevant and classified according to three classes. Two of them describe the negotiation phases, preparation and bargaining, while a third residual class (other) includes the remaining manuscripts. Each class is subdivided into subclasses that address specific aspects of negotiation. The article is structured as follows: Sect. 2 provides some basic background on OI and negotiation, Sect. 3 describes the method used to perform the systematic litera- 123 Negotiation in Open Innovation: A Literature Review ture review, Sect. 4 presents the results and discusses them, and Sect. 5 presents the conclusions of the study and identifies areas for future research. 2 Conceptual Background The rationale behind OI is that organizations do not possess all the resources and competencies they need and thus may find it convenient to search for them outside their organizational boundaries (Weigelt 2009; Grimpe and Kaiser 2010). In addition, interacting with external subjects will increase an organization’s problem-solving capabilities (Duysters and Lokshin 2011), enable new paths to an existing market, or foster the creation of standards in new markets (Dahlander and Gann 2010). Most of the studies in the OI literature agree in their description of typical OI processes according to the following three approaches (Chesbrough et al. 2006; Gassmann et al. 2010; Huizingh 2011; Mazzola et al. 2012): • inbound (or outside-in) OI: incoming flows of knowledge. Enriching the knowledge base of an organization through external sources of knowledge can improve its innovation capabilities; • outbound (or inside-out) OI: outgoing flows of knowledge. Transferring knowledge to the outside environment can improve profitability; • coupled OI: the combination of incoming and outgoing flows of knowledge typical of alliances and joint ventures. OI is enabled by individual-level and firm-level capabilities, which lead to the development of absorptive and desorptive capacities. The former is the capacity to identify the value of new external knowledge, assimilate it and then apply it for commercial purposes (Cohen and Levinthal 1990), which depends on both organizational culture and the skills of human resources with respect to the contents of the OI project. The latter describes the ability to identify technology transfer opportunities and transfer knowhow or technology to an external recipient. Desorptive capacity is also particularly important to find suitable applications for a firm’s own technologies (Lichtenthaler and Lichtenthaler 2010). The success of OI among firms is related to its capability to foster innovation performance, which has been increasingly studied in the past decade, as outlined by several recent literature reviews (Schroll and Mild 2012; West and Bogers 2014; Greco et al. 2015). Indeed, most empirical studies have confirmed that OI has a positive impact on innovation performance (Miotti and Sachwald 2003; Negassi 2004; Czarnitzki et al. 2007; Chiang and Hung 2010; Grimpe and Kaiser 2010; Duysters and Lokshin 2011; Schweitzer et al. 2011), although diminishing marginal returns of OI to innovation performance are likely to exist (Laursen and Salter 2006; Kang and Kang 2009; Duysters and Lokshin 2011; Greco et al. 2016) due to the phenomena of over-search (Koput 1997; Laursen and Salter 2006) and over-collaboration (Duysters and Lokshin 2011; Bader and Enkel 2014). Among the causes of over-search and over-collaboration, of note is that collaboration with external organizations may require high maintenance costs to sustain the coordination complexity (Narula 2004; Duysters and Lokshin 2011) that is associated with the transaction costs embedded in OI negotiations and in the geographical and 123 M. Barchi, M. Greco social distance between partners (Boschma 2005; Balland 2012; Huang and Rice 2013; Ben Letaifa and Rabeau 2013). Furthermore, each collaboration channel (i.e., collaboration with universities, suppliers, customers) encompasses different institutional norms, habits, and rules, consequently requiring different organizational practices (Laursen 2011) and, most likely, different approaches to negotiations. Organizations employ one or more OI approaches in order to achieve benefits such as improved financial performance, increased innovativeness, and increased market share. The reciprocal nature of such benefits might suggest that OI negotiations are likely to be integrative (or win–win) in nature (Wuggetzer et al. 2010). In other words, when OI negotiations are meant to produce reciprocal benefits, the counterparts will not aim to ‘grab the biggest slice of the fictional pie’, as a distributive (or win-lose) approach to negotiation would suggest, but rather to seek agreements that maximize a return for all parties, managing value creation and value appropriation in a more sensible way (Vanhaverbeke and Cloodt 2006). A win–win approach can nurture the relationships among the counterparts, which in turn are seen as a critical source of success in today’s business environment (Welbourne and Pardo-del-Val 2009). Furthermore, certain collaborations may require the creation of a business model that is shared among the various parts of the alliance, which is only achievable through integrative negotiation. Nonetheless, even in OI negotiations, partners may behave unpredictably or resort to their bargaining power to increase their own ‘slice of the pie’ (Parida et al. 2012), although this is approach may compromise the partnership in the mid-long term. Although negotiation books and courses often deliberately focus on the bargaining phase of the negotiation process, preparation is likely to be even more important. Thompson and Leonardelli (2004) resorted to the 80-20 Pareto rule to advance that negotiators should dedicate 80% of their efforts for effective preparation, and they should dedicate the remainder for actual execution. However, the OI literature mainly mentions negotiation without explicitly making reference to any specific phase (e.g., Gresse and Gredel 2008; Luoma et al. 2010; Dahlander and Gann 2010; Huang and Rice 2013; Evitt 2014; Seeger 2014; Conway et al. 2015; Ollila and Yström 2015). The preparation phase includes the use of negotiation support tools to cope with the difficulties associated with the selection of partners (Manotungvorapun and Gerdsri 2015) to manage the complexity of co-development projects and to formulate the negotiation strategy required to face all possible obstacles related to OI. Such obstacles may include the growing number of subjects involved, cross-cultural and managerial differences (Metcalf et al. 2006), differences in bargaining power (Leiponen 2008), communication interferences, and legal and political differences. According to Seeger (2014), inadequate preparation and wrong partner selection are among the potential reasons for the complete failure of an OI project. The bargaining phase comprises the choice of the strategies required to fruitfully co-develop innovations (Den Ouden 2012) as well as to define the IP issues (Wuggetzer et al. 2010; Manzini and Lazzarotti 2016). Furthermore, since OI implies a continuous negotiation process that lasts throughout the duration of a collaboration, the choice of the governance mechanisms of the network of partners (Kale and Singh 2009; Olander et al. 2010) can also be associated with the bargaining phase. 123 Negotiation in Open Innovation: A Literature Review OI negotiations are affected by issues that are not strictly associable with either of the two phases, such as the setup of a corporate culture that is open to external subjects, the development of absorptive and desorptive capabilities (Cohen and Levinthal 1990; Lichtenthaler and Lichtenthaler 2010), the usage of technologies and decision support systems (Tossavainen et al. 2016), as well as the development of know-how regarding the different IP protection mechanisms (Manzini and Lazzarotti 2016). Negotiations between organizations can be facilitated by innovation intermediaries who hold a central role in OI. Specializing in the brokerage of activities related to problem-solving, technology transfer, networking, and bridging, innovation intermediaries facilitate the sharing of knowledge between public and private organizations, building innovation ecosystems (Agogué et al. 2013). This study aims to delve into the existing literature to facilitate the understanding of how the relationship between OI and negotiation has been studied and which aspects remain unexplored. 3 Literature Review Method The bibliographic analysis was performed in a transparent and replicable way (Tranfield et al. 2003) according to the following four steps: (1) the definition and use of a query on a reputed scientific database; (2) the identification of relevant manuscripts associated with the topic of this study; (3) a vertical research of both cited and citing manuscripts starting with those identified in step 2; and (4) a classification of the manuscripts that aim to provide readers with useful insights into OI negotiations. 3.1 Step 1: Scopus Query The first step involved performing a query on the Elsevier’s Scopus database (run on January 18th, 2017), which has often been used for similar purposes (e.g., Mention 2012; Spender et al. 2017; Grimaldi et al. 2017). Since the number of studies about OI and negotiation is remarkably small, we chose Scopus instead of its main competitor, Web of Science, as the former has nearly twice the coverage of the latter (i.e., nearly double the titles indexed), increasing our chances to identify suitable manuscripts and to increase the completeness of our research. The query was formulated using the search keys ‘open innovation’ and (‘negotiation’ OR ‘bargaining’) in the title, the abstract and the keywords of each contribution. The keywords were chosen to ensure both the relevance of the manuscript with respect to negotiation (and its main synonym) and the explicit collocation of the manuscript in the OI epistemic community. As a result, we obtained 18 manuscripts. 3.2 Step 2: Preliminary Evaluation Each manuscript has been preliminarily evaluated to assess its actual relevance to the research through the simultaneous application of the following criteria: 123 M. Barchi, M. Greco 1. Significant evidence of insights related to OI negotiations; 2. A significant contribution to the literature: we discarded the manuscripts that, on the basis of our own evaluation, did not contribute general value on the topic, for instance, focusing on very specific aspects of OI negotiations outside the general aim of this review. For example, the paper of Venugopal et al. (2008) was not considered relevant to the research because it deeply focused on the technical description of negotiation protocols in a cloud OI environment. Step 2 returned a total of 8 manuscripts. 3.3 Step 3: Vertical Research Starting with the 8 manuscripts identified in Step 2, we performed a vertical search that allowed us to identify the following: a. additional manuscripts selected from the references of the manuscript on the basis of semantic affinity with the keywords used in the Scopus query (i.e., ‘open innovation’, negotiation), either with respect to the title or with respect to the manuscript in-text citation; b. additional manuscripts selected among those citing the manuscript, through a query on the search engine Google Scholar, using the search key ‘open innovation’ and (negotiation OR bargaining)’ in conjunction with the function ‘cited by’. The resulting manuscripts were preliminarily assessed (Step 2) and then used for further vertical searches (Step 3). Of the 355 manuscripts retrieved through steps 1-3, 70 were considered relevant for this study. Among them, 43 were journal articles, 12 were conference articles, 5 were Ph.D. dissertations, 5 were books, 3 were book chapters, and 2 were reports. As shown in Fig. 1, the literature directly or indirectly addressing OI negotiations has grown rapidly, with the manuscripts published in the last three years comprising nearly 40% of the total. However, it is also evident that 2016 did not match the growth of the earlier years. This may be related to a less substantial effect of Step 3, as the papers published in 2016 typically include references from the previous years. We also considered four articles related to OI that were published before 2003, although the term was coined that year: • Hall and Hall (1990) introduced the construct of ‘context culture’, whose impact on cross-cultural OI negotiations has been recently studied (Dabrowska and Savitskaya 2014); • Hofstede (2001) identified several cultural dimensions (i.e., individualismcollectivism; masculinity-femininity; uncertainty avoidance; and power distance), laying the foundations for more recent studies on cross-cultural OI negotiations (Hofstede et al. 2012; Dabrowska and Savitskaya 2014); • Aghion and Tirole (1994) paved the way for the analysis of Gambardella and Panico (2014) on the relationship between bargaining power and the results of an OI negotiation; 123 Negotiation in Open Innovation: A Literature Review 16 14 12 10 8 6 4 2 0 1990 1994 1998 2001 2003 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Second Step Final Result Fig. 1 Publishing trend for relevant manuscripts Table 1 Top six journals publishing relevant literature Journal Articles Research-Technology Management 5 Research Policy 4 R&D Management 3 Technovation 2 Journal of Business Research 2 Group Decision and Negotiation 2 • Salacuse’s manuscript (1998) is the basis for the studies of Metcalf et al. (2006) on the role of cultural aspects in negotiations. Table 1 lists the top six journals that have published more than one article included in the final 70. 3.4 Step 4: In-Depth Analysis and Classification Given the great heterogeneity of the collected manuscripts, their classification in rather homogeneous categories required a mixed approach, including both ex-ante and expost definitions of the clustering criteria. To organize the literature, we focused on the two fundamental phases of a negotiation: preparation and bargaining. Such bipartite structure is meant to support the reader in understanding how the literature has addressed the two phases. We could not define subclasses according to any of the most popular classifications of the different approaches to OI, such as pecuniary versus non-pecuniary and inbound versus outbound OI (Dahlander and Gann 2010), internal versus external OI 123 M. Barchi, M. Greco actions (Greco et al. 2015), or degree of openness of the innovation process and/or its outcome (Huizingh 2011). Indeed, they were not appropriate for most of the identified manuscripts. We also did not resort to the popular quantitative methods used to identify topics in the literature, such as automated content analysis (Krippendorff 1980) and advanced clustering techniques (Yan and Ding 2012), given the extreme heterogeneity of our 70 manuscripts (both in terms of topics and of types), the sparsity of the links between them, and the substantially marginal space devoted to negotiation in most of them. Therefore, we adopted an ex-post or bottom-up approach and clustered the manuscripts by identifying similarities among them, along with the two fundamental classes of negotiation preparation and bargaining. The preparation class, which addresses the groundwork that must be done before the actual negotiation starts, includes three subclasses: 1. Partner selection, which refers to the need to identify the appropriate subject with which to collaborate, taking into consideration several factors, such as cultural similarities and proximity; 2. Bargaining and contracting power, which refers the ability to influence the terms and conditions of a contract in the subject’s favor (Argyres and Liebeskind 1999); 3. Trust, which is fundamental to preventing opportunistic behavior during the bargaining phase. In addition, for the bargaining class, which encompasses the actual negotiation management, we identified three subclasses: 1. Competencies, which describe the fundamental skills needed to negotiate in an OI context; 2. Governance mechanisms, which describe the various relational and contractual ways in which partners can coordinate their efforts and combine their targets; 3. Good practices, which describe some of the factors that determine successful OI negotiations. A large number of manuscripts explore aspects of OI negotiations that cannot be strictly associated with either ‘preparation’ or ‘bargaining’, or that provide insights for both negotiation phases. Therefore, we also introduced an ‘other’, which is a residual class of manuscripts that includes the following: 1. frameworks (i.e., overall models describing single or multiple aspects of the negotiation process); 2. general analysis of IP issues; 3. absorptive and desorptive capacities; 4. corporate culture and intrafirm negotiation aspects; and 5. the emerging role of technology in OI negotiations. Notably, the manuscripts included in the ‘other’ class are often mentioned in the other two classes when they provide the reader with insights that are useful for the preparation or bargaining phases. Therefore, the final set of manuscripts is examined and classified with respect to the conceptual model described in Table 2. The full list of the selected manuscripts can be accessed online (Greco and Barchi 2018). 123 Negotiation in Open Innovation: A Literature Review Table 2 Conceptual model Other Frameworks Intellectual property Absorptive and desorptive capacity Corporate culture and intra-organizational negotiation Technology Preparation Partner selection Bargaining and contracting power Trust Bargaining Competencies Governance mechanisms Good practices 4 Results and Discussion This section presents the results of our analysis of the literature on OI negotiations. 4.1 Other As introduced above, many manuscripts cannot be univocally classified on the basis of the two fundamental phases of the negotiation process (preparation and bargaining), being strongly related to both of them. This class comprises five subclasses: frameworks, IP, absorptive and desorptive capacity, corporate culture, and technology. 4.1.1 Frameworks Many authors have recognized the importance of inter-organizational negotiations and proposed frameworks to support managers both in the preparation and in the bargaining phases. Kale and Singh (2009) advance that organizations should codify their accumulated know-how in the form of usable knowledge objects, such as alliance management guidelines, checklists, and manuals, which incorporate best practices to manage the different phases and decisions in the alliance life cycle. Thus, organizations should identify their own sets of tools and codified activities as a result of their own experience, building a framework to support negotiations. In this vein, Airbus Cabin Innovation and Design (Wuggetzer et al. 2010) starts from its own OI experience and proposes an IP management model that is adaptable to situations with the aim of categorizing potential partners according to various criteria. An example of an activity-oriented framework is the model ‘want, find, get, manage’ (Slowinski and Zerby 2008; Slowinski and Sagal 2010). The model splits collaborations into four sequential but overlapping segments of activities. Each segment has its IP issues and its challenges. The decisions on IP in a segment may influence the decisions in other segments or compromise the entire value of collaboration. The 123 M. Barchi, M. Greco ‘want’ segment focuses on a clear understanding of the assets that are required by a firm. The ‘find’ segment focuses on locating possible sources of external assets. In the ‘get’ segment, the resources are acquired by contract, including the necessary rights to carry out business plans. Finally, the ‘manage’ segment drives collaboration towards success. The ‘find’, ‘get’ and ‘manage’ phases are more closely related to negotiation, spanning from its preparation (gathering information on potential partners in the ‘find’ section) to the bargaining phase, searching for a suitable agreement capable of meeting the technical and business requirements of all parties, and managing the partnership. Other examples of activity-oriented frameworks were proposed by Boscherini et al. (2010) and by Den Ouden (2012). The former framework aims to support the launch of a pilot project and is structured in three sequential steps: (1) the conception of the pilot project, (2) its realization and (3) the transfer of the results. In addition, the latter framework is structured in three steps (what to discuss and understand, what to choose, and what to agree upon), pushing decision makers to answer relevant questions to improve the management of multi-partner alliances. Slowinski and Zerby (2008) propose a framework that specifically aims to identify the business interests of a potential partner. According to this framework, the business interests of each partner in a bilateral negotiation can be viewed as a three-dimensional cube that contains several mini-cubes. Each mini-cube describes different geographies, fields of use and time-frames. By understanding the business and technical needs of both partners, they can agree on which mini-cubes fall under one organization’s business interest, the other organization’s business interest, both organizations’ interest, or neither of the two organizations’ interest. The cube shows how two organizations can maximize the value of innovation by allocating rights to the one that can best exploit innovation in each geography, field of use, and time frame. In a recent theoretical study, Dabrowska and Savitskaya (2014) discuss the role played by several constructs in cross-cultural OI negotiations, which have been previously defined in the literature (Hofstede 2001; Hofstede et al. 2012): • ‘power distance’, which describes the power and hierarchical relationships that are needed in a certain culture (a high power distance reflects a greater importance of hierarchy in a certain culture); • ‘context’, which describes the amount of information describing an event (in a high context culture, few pieces of information are coded and explicit); • ‘uncertainty avoidance (low vs. high)’, which measures how people in a certain culture avoid uncertainty, feel threatened by unknown situations, and take steps to avoid them; • ‘individualistic versus collectivistic’ cultures, which differ in that the former considers the interests of an individual to be more important than those of his or her group, while the latter describes the opposite; • ‘masculinity versus femininity’ cultures, which differ in that the former describes a person who ‘lives to work’, whereas the latter describes a person who ‘works to live’; • ‘short term versus long term’ orientations. In long-term oriented societies, people value actions and attitudes that affect the future: persistence and perseverance, thrift, 123 Negotiation in Open Innovation: A Literature Review Crama et al. (2007) • Model for the evaluation of R&D projects based on various evaluation methods, taking into account both the technological risks and the uncertainty in terms of commercial success. The model also proposes appropriate contractual structures for licensing purposes and generates critical information for the preparation of negotiations in terms of break-even analysis, tradeoffs and bargaining zones. Slowinski and Zerby (2008); Slowinski and Sagal (2010) • The ‘want, find, get, manage’ model. The ‘want’ segment focuses on a clear understanding of which assets a company requires to accomplish its growth objectives. The ‘find’ segment focuses on locating possible sources for external assets. In the ‘get’ segment, the resources are acquired by contract. The ‘manage’ segment drives collaboration towards success. Kale & Singh (2009) • Alliance management tools and key success factors of an alliance. Wuggetzer et al. (2010) • IP management model, adaptable to situations, aimed to categorize potential partners according to various criteria. Boscherini et al. (2010) • Framework to support the launch of a pilot project, structured as (1) the conception of the pilot project, (2) its realization, and (3) the transfer of the results. Den Ouden (2012) • Three-step framework: (1) What to discuss and understand, (2) What to choose, and (3) What to agree upon. Decision makers should answer relevant questions to improve the management of multi-partner alliances. Dabrowska and Savitskaya (2014) • Framework to explore the role played by several constructs in cross-cultural OI negotiations, including ‘power distance’, ‘context’, ‘uncertainty avoidance (low vs high)’, ‘individualistic vs collectivistic’ cultures, ‘masculinity vs femininity’ cultures, and ‘short term vs long term’ orientations. Fig. 2 Overview of the discussed frameworks and shame. Short-term oriented societies foster virtues that are related to the past and present, such as immediate stability, national pride, respect for traditions, the preservation of ‘face’ and fulfilling social obligations. Finally, the real implementation of a framework that supports the negotiation of licenses with potential business developers and marketing partners should be noted. Crama et al. (2007) develop a model for the evaluation of R&D projects in Phytopharm plc, a pharmaceutical company. The model is based on various evaluation methods, including net present value, decision analysis, and Monte Carlo simulation, and takes into account both the technological risks during the development stages of pharmaceutical products and the uncertainty in terms of commercial success. In addition to determining the value of a developing product, the model also proposes appropriate contractual structures for licensing purposes, adhering to an agreement of equitable sharing of the value of the project between the two parties. Finally, the model generates critical information for the preparation of negotiations in terms of break-even analysis, trade-offs and bargaining zones. The analysis of the above-described frameworks highlights two important results. First, negotiation pertains in a more or less explicit way to all the stages of an alliance 123 M. Barchi, M. Greco life cycle, both outwards and towards the organization. Second, OI requires the proper evaluation and management of cultural differences and IP. An overview of the discussed frameworks is shown in Fig. 2. 4.1.2 Intellectual Property The proper management of IP is the basis of OI negotiations. Indeed, firms are motivated to strategically use patents and licenses as negotiation levers to prevent violations, block competitors’ innovations and capture added value from innovative efforts (Dasgupta et al. 2009). The more organizations consider licensing an important channel to exploit technology, the more negotiation for potential licenses becomes a fundamental element (Lichtenthaler 2011). Although the extent to which secrecy can achieve these strategic goals remains partly unexplored, the initial clues suggest that knowledge exchange can facilitate cooperation between informal networks and interorganizational negotiations (Bos et al. 2015). Notably, small firms are often little informed about IP protection; therefore, intermediaries may facilitate the exchanges among firms and provide training about IP rights (Edler et al. 2015). However, intermediaries may also be of use as facilitators of IP negotiations under more general circumstances (Howells 2006). Negotiations with potential partners are typically performed in multiple stages, focusing on commercial and technical aspects, and can be risky (Sikimic 2014). Indeed, the collaboration with a partner may require disclosing certain information about the focal firm’s technologies to negotiate on the technological value and on the transfer. Although a strategic use of patents and licenses can mitigate the disclosure risks, it may lead to costly and lengthy negotiations, especially considering the complexity caused by organizations that may differ in their management education, culture (Batterink 2009; Evitt 2014) and even language (Luoma et al. 2010). Furthermore, the more intensively external organizations are involved in the innovation process, the more the focal firm’s own knowledge spills outside the organizational boundaries. Such dissemination risk at first leads firms to hesitate to open their innovation process, and there is an objective difficulty in identifying trustworthy potential partners. Furthermore, as the entire collaboration process implies the transfer of knowledge between the parties, Gresse and Gredel (2008) suggest not only to focus on the IP of the outcome of the OI project but also to explicitly take into consideration the knowledge management process. IP issues become more complicated when several organizations are involved. Therefore, before starting a project, extensive negotiations may be needed, which takes time, effort, and management skills and still may not rule out a dispute at a later time (Seeger 2014). In this scenario, each firm should carefully identify and understand its goals, its potential problems (Evitt 2014), and all parties’ bargaining power (Ollila and Yström 2015). 4.1.3 Absorptive and Desorptive Capacity Both absorptive and desorptive capacity constitute a set of skills that also include negotiation (Braun et al. 2012). Thus, the effective management of OI negotiations requires the enhancement of the procedural and structural characteristics of the firm, 123 Negotiation in Open Innovation: A Literature Review as well as of the individual skills of its human resources. From a procedural point of view, this can be easily confirmed by observing that negotiation is one of the main stages of an effective OI process. From a structural point of view, Braun et al. (2012) argue that absorptive capacity, in turn, depends not only on the direct interface with the external environment but also on the knowledge transfers among sub-units within the organization. This implies that the structure of communication acquires importance not only towards the external environment but also towards the inside. Moreover, according to the same authors, the importance of desorptive and absorptive capacity in negotiation moves from an enterprise level to a personal level (individual skills), as also later confirmed by Patterson and Ambrosini (2015). The above considerations indicate the basis for a successful OI negotiation: the presence of an organizational structure that fosters communication outwards and inwards, the existence of an efficient and effective process of negotiation, and the availability of human resources with specific skills. Where these elements are not present or poor, or if a widespread win–win culture is still missing, organizations may resort to intermediaries. 4.1.4 Corporate Culture and Intra-Organizational Negotiation Several studies agree that OI not only requires inter-organizational negotiations but also intra-firm negotiations aimed to obtain support for external collaborations (Slowinski and Zerby 2008; Boscherini et al. 2010; Slowinski and Sagal 2010). Thus, without internal cohesion, alliances with external partners are fragile and doomed to fail. In addition, an effective approach to OI requires a cultural change that must be accepted not only by managers with the power to avail external alliances but also by all the human resources of the organization. Indeed, managing external subjects may foster intra-organizational conflicts due to the not-invented-here syndrome. This syndrome describes the situation in which a certain idea or technology developed elsewhere is accepted with suspicion by internal human resources, when such an idea or technology is not uniformly met with opposition; however, it is considered inferior to internally developed ones (Katz and Allen 1982). Thus, a firm that is willing to gather technologies or know-how from an external source must make investments to facilitate their acceptance or manage the conflicts or the resistance that may emerge as a result of the not-invented-here syndrome (Salge et al. 2013). Such investments may aim to improve information processing, educate human resources to recognize the causes of the not-invented-here syndrome and use de-biasing techniques (Antons and Piller 2015). From this perspective, negotiation represents a typical strategy to internally pursue cultural change (Bate 1994) and a necessary approach to promoting collaboration with external organizations. 4.1.5 Technology In an era dominated by technology, OI negotiations are affected by its influence through new scenarios, new media, and negotiation tools. Technology may enable electronic markets that attract suppliers in the buyers’ market, fostering vertical collaborations (Lee et al. 2009). Furthermore, technology is often used for the development and 123 M. Barchi, M. Greco implementation of support tools as well as the protocols and mechanisms of negotiation or conflict resolution. Some of the frameworks discussed above can be used in both the preparation and the bargaining phases, for example, to determine the behavior that should be adopted towards partners with a specific negotiation culture (Dabrowska and Savitskaya 2014) or simply to share forecasts and strategies (Crama et al. 2007). The use of technology for the implementation of these instruments, when wise and possible, increases the effectiveness and efficiency of negotiation. A further example of how technology can support negotiation is the work of Yuan et al. (2013), which proposes a framework and a system for creating service imagery in crowdsourcing. Service imagery describes the set of images associated with the provision of a service aimed to positively influence a customer’s perception and emotions with regard to the service and its use. The ultimate goal is to facilitate Small and Medium Enterprises (SMEs) in driving service innovation through an image-based approach. Both the framework and the system rely on the cooperation of a broad community of interpreters and include a module for the management of conflicts, which is useful both for the definition of a coherent set of basic images and to mediate problems in which agents may have suggested very different images. Technology also helps in situations in which tight budgets and time constraints limit the possibility for personal meetings, which hinders negotiation and conflict resolution: lately, a goal-sharing system for enabling OI has been implemented through information and communication techniques such as social networks, blogs, and eParticipation systems (Tossavainen et al. 2016). This system, called GoalShare, has functions for creating issues, collaboratively forming public goals and discovering similar goals and users. GoalShare is also integrated with a negotiation user interface on video conferencing platforms, allowing the structuring of goal trees from public goals utilizing linked open data and facilitating common understanding and conflict resolution through the use of high-bandwidth communications. Similarly, Avenali et al. (2013) propose the design and implementation of an innovative web-based tool, the open contract mechanism, which allows client firms and suppliers to dynamically and simultaneously negotiate the clauses and characteristics of distinct innovation contracts in OI and collaborative crowdsourcing environments. The tool can be implemented inside OI web-based platforms for evaluating offers and determining winning ones and therefore guaranteeing valuable binding contract clauses. Another example is cloud-based design and manufacturing (CBDM) systems (Wu et al. 2013), which allow the collaborative creation of product models that enable collective OI and the rapid development of products at minimal cost through a platform of social networking and negotiation between service providers and consumers (Schaefer 2014). In the field of CBDM, virtual trading platforms between consumers and service providers contribute to high system efficiency. The latest architectures of CBDM include platforms and negotiation mechanisms, which in turn implement protocols for the dynamic negotiation of service level agreements between service providers and consumers, which are designed for the effective protection of IP. In this regard, it should be noted that negotiation in CBDM poses a cyber-security problem, for which different solutions have been proposed (Schaefer 2014; Alnuem et al. 2015). A knowledge management system is the core of CBDM, creating knowledge repositories based on its data and its knowledge bases. Furthermore, a knowledge management system 123 Negotiation in Open Innovation: A Literature Review can foster knowledge and resource sharing among service providers and consumers through an intelligent search engine and a series of negotiation mechanisms. For example, an intelligent search engine helps to identify key service providers and consumers, the knowledge of specific service providers, the links among service providers and consumers and, more importantly, their resources and information. Because both service providers and consumers aim to find an optimal solution (i.e., minimum cost and time, in addition to higher service quality) to support the negotiation processes in a CBDM, a platform negotiation and a series of negotiation mechanisms are required (Wu et al. 2013). Such negotiation mechanisms may be designed to allow automated negotiations between the providers and consumers of services (Conway et al. 2015). Our analysis highlights that the typical services provided by intermediaries are often enhanced by technologies such as software, applications, platforms or suites of technologies. 4.2 Preparation During the preparation phase, an organization should analyze the scenario and the interests and bargaining power of all the parties involved in the negotiation. Based on this analysis, the firm estimates its best alternative to the negotiated agreement (BATNA) (Fisher and Ury 1981) and defines its negotiating strategy. The literature covers several relevant aspects for the preparation of an OI negotiation, which is described in this class. 4.2.1 Partner selection Regardless of the reason for an organization to adopt the OI model for its innovation activities, a major issue involves the selection of its potential partners. Cultural dissimilarities may cause heavy coordination costs (Christensen et al. 2005), especially when a firm cooperates with a research institution such as a university (Melese et al. 2009; Saguy 2011). Indeed, scholars often focus on basic research, which may not immediately produce suitable outputs for the industry (Huang and Rice 2013; Prud’homme van Reine 2015). Furthermore, universities are often linked to industries by strict contractual agreements that exacerbate transaction costs. To some extent, selection costs may be reduced by including geographical proximity among the partner selection strategies (Boschma 2005; Balland 2012; Huang and Rice 2013). However, there is also evidence that geographical proximity may be a barrier to social proximity (Ben Letaifa and Rabeau 2013), which represents the individual levels of relationships based on friendship, kinship, and experience (Boschma 2005). Selection strategies should take into account the cultural characteristics of the potential partners. Starting with Salacuse’s early study (1998), Metcalf et al. (2006) analyze how five countries representing five cultural clusters (namely, Finland, India, Mexico, Turkey and the USA) differ in several negotiation factors, all sharing only one common point: in none of them do the negotiators appreciate broad or vague contract language. In Dabrowska and Savitskaya’s previously discussed framework on the cultural aspects of OI (2014), several insights apply to the preparation phase of negotiations. First, the external partners associated with a low power distance will 123 M. Barchi, M. Greco lead to negotiations based on the knowledge and experience of the participants, while external partners described by a high power distance will lead to negotiations held among high roles in the hierarchy. Second, the authors advance that it is likely to obtain an agreement at the early stages of a negotiation with partners described by a low power distance context and high risk aversion. In the case of partners described instead by a high power distance context and low risk aversion, the firm must establish relationships and trust before any written agreement. Third, in individualistic cultures, organizational success is attributed to withholding information and avoiding alliances, while for collectivists, success is attributed to sharing knowledge through alliances. Fourth, masculine cultures pay great attention to performance, while feminine cultures value quality of life and environmental awareness. Finally, short-term cultures seek immediate benefits and focus on present sales results, while long-term cultures seek long-term benefits, which may suggest the cannibalizing of present technology if there is an opportunity to achieve better results with new innovation in the future. The issue of partner selection is also examined through a multidimensional approach by Manotungvorapun and Gerdsri (2015). The authors discuss the difficulties in choosing the ‘right’ partner and, on the basis of a previous study (Emden et al. 2006) that considers three types of alignment (technological, strategical and relational), develop an assessment model to identify the degree of matching quality of potential allies. Matching quality indicates the correspondence of a potential partner to certain requirements and is characterized by two main dimensions: compatibility and complementarity. The former provides matching quality through similarity: skills can be combined to create value because they are similar or share a standard interface. The latter matches quality through diversity. Matching quality is initially distributed in nine areas: technical skills, complementarity in technical resources and knowledge of the market, overlapping knowledge bases, correspondence of interests, correspondence of motivations, compatible cultures, willingness to change, and focus on long-term relationships. The nine areas are grouped into three phases: technological, strategic and relational alignment. Each area is then evaluated with respect to the desired characteristics of the target partners and receives a rating according to the criteria outlined by the model. The result is displayed as a dotted line on a radar chart. The evaluation of the candidate partner is then made by comparing its measures with those of the target partner. Finally, Xu and Cai (2013) proposed a method that allows the quantitative comparison of alternatives in group decision making. As shown in their article, the method can be purposely used to enhance the process of selection of strategic alliance partners. Organizations that are interested in OI but are inexperienced in any of the abovementioned methods may resort to intermediaries that specialize in the selection of collaborative partners (Howells 2006). 4.2.2 Bargaining and Contracting Power Bargaining power is a critical element in negotiation, as asymmetric power may lead to the misallocated ownership of innovative outputs and create inefficiencies (Leiponen 2008). 123 Negotiation in Open Innovation: A Literature Review Capability to collaborate with many different Firm Bargaining power parties Decision rights in the collaboration size Ownership of critical assets Contracting power Share of the collaboration output Emphasize critical technological knowledge with long-term promising results Late contracts in the If supplier innovation development process Fig. 3 Sources of bargaining and contracting power and their effect on OI negotiations Gambardella and Panico (2014), starting with Aghion and Tirole’s seminal paper (1994), distinguish between contracting power (the power to decide the allocation of decision rights when stipulating a contract) and bargaining power (the power to capture innovation value). While the former power is associated with the capability to collaborate with alternative partners, the latter is associated with the ownership of critical assets. The extent to which a firm owns such sources of power is associated with its capability to succeed at the negotiation table. Therefore, managers should carefully assess their situation before starting an OI negotiation. Small firms should attempt to gather comparatively greater bargaining power than their size would imply, for instance by owning critical technological knowledge and signaling promising longterm perspectives for such technology (Christensen et al. 2005), especially when the feasibility of the technology for the market is proven (Mehlman et al. 2010). Bargaining power is also influenced by the timing in which the alliance is stipulated along the R&D process (Lo Nigro 2016), with late contracts increasing the suppliers’ power. Lerner et al. (2003) define bargaining power in terms of available equity financing, while Bosse and Alvarez (2010) consider bargaining power both in terms of financial resources (i.e., the proportion of a firm’s financial capital provided by its alliance partner) and market access (i.e., the benefit provided to a firm from using its partner’s product market). The authors also recommend not measuring bargaining power in terms of absolute or relative size, because this may generate misleading results. Figure 3 schematizes the main sources and effects of bargaining and contracting power. 4.2.3 Trust Trust is critical in networks and partnerships (Ojala and Hallikas 2006). The risk of moral hazard embedded in inter-organizational collaborations (Lo Nigro 2016) 123 M. Barchi, M. Greco is linked to the concept of trust. Panico’s research (2014) analytically examines the dynamics of the building processes of OI alliances in the presence or absence of trust among the parties. The theoretical results of the study lead to a number of important implications. First, the value creation and capture increase with the experience and the technological relatedness between partners and when the two firms have a more equitable control over resources. In addition, trust is reduced between firms that share control and engage in high-value and low-frequency alliances, because the greater emphasis on cooperation to create value is accompanied by greater competition. Instead, partners that engage in high-frequency but low-value alliances invest less in value creation but face less competitive pressure, and this condition makes them more willing to trust each other. When mutual trust emerges, firms cease to compete in terms of the distribution of value created, and they can focus on the creation of value. According to Munyon et al. (2011), trust is one of the key components of the quality of an alliance, although in its preliminary phases, the partners must build on future expectations or the second-hand experiences of other firms, which essentially characterize the reputation of the counterparts. Trust may also be enhanced by the involvement of intermediaries, at the point at which a network of intermediaries is referred to as ‘trust builders’ (Porto Gomez and Otegi 2014). 4.3 Bargaining Once the preparation of the negotiation is completed, firms must put their strategies into practice. This class describes the extent to which negotiators must develop specific skills for OI negotiation; acquire the governance mechanisms required to guarantee mutual benefits to the partners; and obtain a number of good practices and useful insights that can be found in the literature. 4.3.1 Competencies OI negotiators must build specific skills to negotiate fruitfully with several organizations characterized by different cultures, risk perceptions, priorities, and goals. Differences among the counterparts are likely to favor the emergence of conflicts that may make negotiations more complex and slower. As discussed above, the importance of relationships based on trust is especially true in OI, where partners are supposed to create win–win situations and establish long-term relationships. In such an environment, negotiators should embrace and embody a shared vision, setting aside the transactional short-term perspective that may impede long-term benefits (Ben Letaifa 2014). Negotiators should also be able to take into account the role of different cultures, both within the same organization and among different ones (Dabrowska and Savitskaya 2014). According to Carvalho (2014), the goal of a negotiator who is willing to enable a partnership is to obtain mutual commitment, mutual trust, mutual adaptations and mutual relationship management. Indeed, mutual commitment and mutual trust support the involved enterprises in avoiding lengthy contract negotiations, while mutual adaptations and mutual relationships management can lead partners to link and match 123 Negotiation in Open Innovation: A Literature Review their capabilities. The power of these mutual enablers appears stronger when the negotiating or collaborating parties are geographically far apart, which means that more complex relationships require more intensive common enablers (Carvalho 2014). Ultimately, the organizations that choose to adopt the OI model should be sure that they have the right skills to manage it, such as interpersonal influencing, trust-building and negotiation skills: an outstanding negotiator profile is rich in skills that go beyond typical negotiation skills to include a wider set of competencies, such as those of a leader. The higher the degree of innovation openness (up to the extreme form of ‘broadcast search’), the more such skills must be refined (Lameras et al. 2012). Having these skills involves specific training for firms and the adoption of specific recruitment criteria for new employees (Batterink 2009). Chatenier et al. (2010) conducted a study to identify the skills required for an OI professional. They identified 34 competencies that were grouped into four semantic clusters with their relevant scope: self-management skills, interpersonal management (in collaborations among organizations), project management (throughout the entire innovation process), and content management (during the creation of a collaboration). Although the capability to negotiate is only one of the 34 (placed in the content management cluster), most of the remaining competencies are clearly related to it, such as the capability to maintain self-control, to build trust, to influence others and to interpret the received signals. One downside of the research of Chatenier et al. (2010) is that it does not indicate how context-dependent the competencies are or which is more important. Finally, it is also worth quoting Dragsdahl Lauritzen (2015a), who encourages managers to nurture ‘paradoxical capabilities’ to combine differentiation and integration tactics and to purposely exploit the benefits that may arise from a collaboration with a firm’s users. 4.3.2 Governance Mechanisms This subsection explores the roles, dynamics and interactions between relational governance mechanisms (e.g., trust and norms) and contractual governance mechanisms (e.g., contracts and IP rights) in OI. Munyon et al. (2011) emphasize that to be successful, the governance of an alliance should nurture the perceived justice, reciprocal trust, respect and liking, support and empathy, commitment and accountability. However, the authors do not propose a specific governance mechanism capable of supporting such dimensions. Pattit (2012) advances that communication and safeguarding provisions should be used to address the typical hazards of R&D alliances: transferability and appropriability. The effective application of these mechanisms is in any case subject to three key concepts (Slowinski and Sagal 2006): background IP (IP owned by each partner before starting the alliance), foreground IP (IP to be created within the alliance), and alliance boundaries (a clear definition of the purpose of the alliance). Olander et al. (2010) emphasize the importance of governance mechanisms in the relationships between suppliers and customers, with particular reference to collaborative R&D projects. The authors find that the relative importance of different governance mechanisms varies during the different phases of collaborative projects, namely, the exploration, development, and marketing phases. First, the relational governance is 123 M. Barchi, M. Greco more important in the exploration stage and may also replace the contractual governance, especially when there is no history of previous collaboration between partners. Second, both relational and contractual governance mechanisms complement each another in the development phase. Indeed, relational governance allows for the treatment of mishaps with care and the enhancement of mutual trust development, while contractual governance promotes and strengthens trust evolution. In fact, apart from being a support to prevent the appropriation of knowledge, contractual governance can contribute to the nurturing of relational capital. Third, the use of contractual governance is more evident in the finalization phase (although the setting of this governance must begin as soon as possible), and it should not be neglected due to industry or local regulations traditions. Indeed, although the role of trust and mutual understanding tends to increase with the maturity of a relationship, this is often not very important in regard to producing incomes in the final stages of a collaboration. Paradoxically, in extreme cases, excessively high levels of ex-ante confidence can make it difficult to draw up appropriate contracts. However, relational mechanisms also play a role in the finalization of projects (especially in compensating for potential deficiencies in contractual governance) and in the willingness to work together in the future. The authors also argue that it would be desirable to make explicit the relational governance at strategic and operational levels. In doing so, the people involved may develop a greater commitment towards the exchange of information, providing fair expectations for both parties. The need to consider contractual governance mechanisms from the beginning of a collaboration is shared by many authors (Slowinski and Sagal 2006; Slowinski et al. 2006; Kale and Singh 2009; Mehlman et al. 2010). Even if OI requires the sharing of IP assets, the need to protect IP from unintentional use is equally important. Thus, Mehlman et al. (2010) provide a description of the main negotiation activities, indicating the contractual instruments to be used in each phase of a collaboration, as summarized in Fig. 4. Kale and Singh (2009) present a large number of potential equity and contractual arrangements that may characterize a collaboration between organizations, also providing governance recommendations. Slowinski et al. (2006) and Mehlman et al. (2010) emphasize that non-disclosure agreements (NDA) and joint development agreements (JDA) are most effective when backed by specific organizational actions or by internal alliances, as mentioned above. In addition, each party must be aware of which information should be shared with partners, which information could be shared, and which should never be shared. To achieve this goal, the organizations’ training activities should include a clear understanding of the correct use of information. Similar considerations of governance mechanisms are advanced by Manzini and Lazzarotti (2016) and Manzini et al. (2012), who claim that each phase of a collaboration must be managed through specific agreements, both legal (e.g., patents) and contractual. Each phase is then protected by an agreement concluded in the context of the phase or at an earlier stage. Starting with the considerations of Mehlman et al. (2010), Manzini et al. develop a protection model for complex environments such as those of inter-organizational collaborations, explaining whether and how different IP protection mechanisms can be integrated into the different phases of the innovation process as well as in the correspondence of different sets of partners. In the early stages 123 Negotiation in Open Innovation: A Literature Review • During the exploration phase the negotiatiors should clearly define: • What must be disclosed • The rights of each party with reference to the use of disclosed information • The confidentiality duration Exploration • The outcome of the negotiation should result in a non-disclosure agreement • During the joint development phase negotiatiors should clearly define: • A fully description of the Joint development • Agreement boundaries Joint development • Intellectual property rights for each party • The outcome of the negotiation should result in a joint development agreement • If the collaboration was successful, the marketing stage will feature arrangements that enable the business, such as: licenses, purchase Marketing agreements, joint marketing agreements Fig. 4 Main negotiation activities and contractual instruments in OI. Source: adapted from Mehlman et al. (2010) of collaborations, protection is difficult to achieve and seldom satisfactory: in these phases, the level of uncertainty is very high and encoding is low because partners work on concepts that are yet to be defined in detail and may significantly change during the process. Therefore, in these phases, legal protection mechanisms have low efficacy. For this reason, contractual protection mechanisms such as an NDA or a memorandum of understanding (MOU) are preferred to legal mechanisms for their flexibility. Nevertheless, even these tools, if taken individually, have limited effectiveness. However, when used together and integrated in a complementary way with other soft and informal mechanisms (e.g., limited access to information), may provide some protection. The development phase is characterized by a decrease in uncertainty and an increase in coding so that stronger legal protection tools may be used. However, the risks are not completely absent; thus, it becomes necessary to use patenting strategies that cover many possible evolutions of the innovation. In addition, the need to involve many partners in this phase requires the use of additional mechanisms (e.g., NDA, JDA, copyright) to protect against opportunistic behavior or uncontrolled strategic knowledge appropriation. In the final phase, the commercial release, attention should be paid to the rights of use of the new IP and of the existing IP, to the definition of the terms of licensing, royalties, and of the collaboration duration and to the sharing of the market. 123 M. Barchi, M. Greco The importance of contracts still remains a controversial subject in the OI literature: if it is a fairly widespread opinion that contractual protection mechanisms should be used from the early stages of collaborations, Lo Nigro (2016) shows that the early use of contracts might hinder OI principles, such as the maximization of value creation and capture. Specifically, the author explores the extent to which contract timing affects the outcome of a collaboration. Contract timing is likely to affect both the effort of the supplier and the value of the innovation obtained by the customer. Indeed, while contracts that are signed early in the R&D process require a greater effort from both parties and expose them to a shared risk of moral hazard, in late contracts, suppliers are in better negotiation conditions due to the shorter and less risky life of the contract and to the increased experience gained. Hagedoorn and Zobel (2015) demonstrate a strong preference for the governance of OI through formal contracts. Despite the open nature of OI, firms continue to see IP rights as the main means for the protection of their innovative capabilities. The strength of firms’ internal R&D capacity enhances the positive relationship between an open attitude and the preference for IP rights. This relationship seems to be less evident in collaborations between firms and universities. In fact, firms are less likely to apply contractual mechanisms when working with universities because the latter do not generally possess the skills needed to negotiate and monitor such contracts. In these cases, the inclusion of intermediaries in negotiations can often resolve tensions and difficulties (Edler et al. 2015). Governance mechanisms also apply to OI initiatives that involve not only organizations such as firms and universities but also other stakeholders such as citizens, public administration and the representatives of other relevant groups in the public realm (De Liddo and Concilio 2017; Nogueira et al. 2017). This is the case, for instance, of Urban Labs, which require the complex management of such heterogeneous subjects. On this topic, Scozzi et al. (2017) propose a methodology to support the management of urban labs, leveraging the soft system methodology, which helps in the identification of feasible solutions to the issues that may arise in such complex OI systems. 4.3.3 Good Practices This subclass includes a set of good practices that may be adapted to different contexts and that are specifically oriented to OI negotiations. We have already suggested that an alliance between two partners also requires intrafirm negotiations. In this vein, Slowinski and Zerby (2008) advance that when two organizations set up an alliance, each of them must set up a hidden ‘internal alliance’ that provides the external alliance with critical resources at critical times. Such internal alliance ensures that all internal stakeholders agree on objectives, milestones, timelines, resource needs and the use of the firm’s IP. Of course, these considerations also apply in the case of multiple alliances. As we have just noted, such considerations again give rise to the need to use a structured process for internal planning and negotiation (Slowinski et al. 2006; Slowinski and Zerby 2008; Mehlman et al. 2010; Slowinski and Sagal 2010). Indeed, firms often find it difficult to turn contracts into alliances. The negotiation phase requires the detailing of many aspects that previous interactions often treat only in a generic way, such as financial aspects, compatibility, and the anal- 123 Negotiation in Open Innovation: A Literature Review ysis of the partners’ strategic objectives. As we have already observed, there seems to be a link between the use of a disciplined and structured process and the success of a collaboration, for which success may include either a mutually acceptable agreement or the rapid realization that a mutually acceptable agreement is not possible, thus minimizing the waste of resources and opportunity costs related to unnecessary negotiations. Within a structured process of negotiation, managers should be able to grasp lessons from previous alliances to design more effective contracts in the future (Pattit 2012). Cultivating contract design capabilities requires a conscious effort, which may be particularly challenging, especially for smaller firms. Given their focus on technical issues and on mere survival, smaller firms are often hesitant to dedicate resources to the establishment of a proper alliance function. However, in light of historically high failure rates for alliances, it can be useful, for the future, to establish processes to capture lessons from previous experiences. In turn, the lessons-learned acquire a greater value if they are also built by observing the behavior of the other party during both the development of the contract and its implementation (Pattit 2012). During negotiations, firms should show and require clarity of purposes from the beginning (Slowinski and Sagal 2006), allowing an unambiguous definition of both the purposes and boundaries of the alliance. Particular attention should be paid to cultural and managerial differences, which are often significant in OI (as shown in Sect. 4.1.4). Negotiations often involve attempts by each potential partner to obtain an edge over the others, despite good intentions. For this reason, negotiations may become long and complex. It may become difficult to reach mutually acceptable positions and even when an agreement finally appears to have been achieved, relative deprivation phenomena can call the entire process into question, or at least affect the alliance implementation. Partners are more likely to reach an agreement when they focus on mutual interests, thus improving their ability to serve their customers better than their competitors could (Slowinski and Zerby 2008; Slowinski and Sagal 2010). The creation of a structure or a separate entity that is responsible for the coordination and management of all alliance activities may be very helpful. A dedicated function for alliance management provides firms with multiple benefits: it becomes the focal point to capture and store experiences, it improves the visibility and awareness of the firm’s alliances, it provides legitimacy and support, and it acts as a monitoring element of the alliance performance, identifying potential issues and taking all necessary measures to promptly resolve problems and conflicts (Kale and Singh 2009). As a part of a dedicated structure, it is then a necessary coding process that facilitates the replication and transfer of the best practices within the firm, creating a reference framework for managers. It may be appropriate to include experts in business development and/or legal issues within the negotiating team to support the construction of well-written contracts (Pattit 2012), and thus, they can contain clauses that not only protect the interests of both sides but also encourage both parties to purposely collaborate. The literature provides a broad discussion on the role of intermediaries in helping firms to create collaborative cross-functional networks (Howells 2006; Lameras et al. 2012; Porto Gomez and Otegi 2014; Prud’homme van Reine 2015). The use of an intermediary service may be necessary for those contexts that are characterized by 123 M. Barchi, M. Greco Establish and maintain an internal alignment Use a structured process for internal planning and for negotiations Create a structure or a separate entity responsible for the coordination and management of all alliance activities Logical sequence Include experts in business of a development and / or legal issues Evaluate the possibility of relying in the negotiating team to build on an intermediary service negotiation process well written contracts Show and require clarity of purposes from the beginning Learn from the counterparts Identify good practices for future negotiations Fig. 5 Good practices arranged along the logical sequence of a negotiation process complexity, a difference of interests or lack of negotiating skills. For example, intermediaries are used in facilitating contract negotiations (Howells 2006), the crowdsourcing process (Lüttgens et al. 2014; Dragsdahl Lauritzen 2015a, b), or in negotiations between firms and universities (Lameras et al. 2012; Porto Gomez and Otegi 2014). Despite the barriers and managerial difficulties, the use of services that can facilitate the search for partners and the negotiation process is still limited (Gambardella et al. 2014). On the one hand, the literature argues that intermediary organizations can help resolve conflicts between firms, bridging the opposite logic in which they originate; on the other hand, Dragsdahl Lauritzen (2015a) highlights the risk that intermediaries can create new paradoxical tensions, increasing uncertainty about the sense of belonging, which inevitably arises in a new organizational construct such as an alliance. These considerations move the centrality of the brokerage service to the building of a sense of identity and belonging to the alliance, rather than bridging opposite logic. The most relevant good practices described above are illustrated in Fig. 5, following the logical order of a negotiation process. 123 Negotiation in Open Innovation: A Literature Review 5 Conclusions This article explored the OI literature to facilitate a better understanding of the role of negotiation, of its characteristics and of its critical issues. Indeed, we observed how negotiation is critical for OI. The analysis confirms the inherent complexity of negotiation in inter-organizational interactions. Indeed, the cultural and managerial heterogeneity of the various stakeholders participating in an alliance often results in considerable difficulty in communication and in managing negotiations. Furthermore, the presence of a high number of actors often forces the matching of multiple different (or seemingly different) interests. In any case, the proper management of IP and decision rights is an important issue and requires the negotiation of agreements during the entire lifecycle of a collaborative project, from exploration to marketing. All these elements contribute to making OI negotiations complex, long-lasting and frequent. The complexity is even more pronounced in organizations that, despite having chosen to adopt the OI model, are not ready for a radical cultural change that intimately involves their identity and their sense of belonging. Both inter-organizational and intra-organizational negotiations characterize OI. The former describes the negotiations of the focal firm with the potential or acquired partners, and the latter describes both the negotiations that aim to obtain the commitment of the top management in supporting external alliances and the internal negotiations that are required to facilitate the cultural change that can motivate the human resources towards OI. In this scenario, the ability to create a climate of trust both within the organization and in the relationships with the partners becomes a major negotiation skill: trust becomes the means to establish long-term relationships, in which sharing knowledge is a fluid and continuous stream. Thus, OI negotiations require a continuous focus on the human side, which is needed to create long-term win–win situations. Methods and negotiation strategies cannot suffice in an OI perspective if they are not backed by a shared vision. These considerations lead to a holistic negotiation approach, with negotiation activities present throughout the entire lifecycle of an alliance, spanning both inside and outside the organization. In this perspective, negotiation acquires great importance, and it requires a clearly defined structure in a process led by top managers that makes use of modern technological support to be more efficient and effective. Where the necessary competencies to manage such complex negotiations are missing, intermediary services can facilitate the whole negotiation process. For example, this occurs in collaborations between large firms and universities, or SMEs. Despite the importance of negotiation in an OI perspective, many aspects remain relatively unexplored. First, despite the OI narrative, organizations often collaborate to maximize their own results, to minimize their own risks and to avoid excessive spillovers of their own knowledge to their partners. This can ultimately have a detrimental effect on the successfulness of the alliance (Gambardella and Panico 2014). As suggested in the OI literature (Bogers et al. 2017; Chesbrough 2017; West and Bogers 2017), further studies should try to define a feasible OI business model. In our opinion, such business model should go beyond the boundaries of a single organization and describe how the interactions between allies should be managed to create value while keeping under 123 M. Barchi, M. Greco control the potential drawbacks. Such business models should allow realistic and actually implementable frameworks, which should consider the following: • more sophisticated contractual instruments, as current models often assume that IP rights are in the hands of only one partner or another, while parties might choose to share their decision rights, better balancing incentives and producing better outputs; • non-economic factors that may facilitate the release of decision rights and may affect the outcome of the alliance; • the collaboration between more than two parties, where several parties cooperate in the generation of innovation, pursuing their own goals (most of the current models consider only cooperation between two parties); • the strategic interactions between parties that compete in the market and that collaborate with the research units. Second, as discussed above, there is little agreement about the importance of contracts in OI. On the one hand, many authors suggest that contractual protection mechanisms should be used at an early stage of collaborative projects; on the other hand, it has also been argued that the early use of contracts might hinder the maximization of value creation and capture. Future research should clarify this ambiguity, possibly indicating the conditions that make one approach better than the other. Third, this paper has shown how the current literature provides a fair and valid set of skills required for OI negotiations (Batterink 2009; Chatenier et al. 2010). However, further studies may clarify which of such skills are crucial in certain specific contexts (i.e., countries, industries) and which ones are not. Even the leadership, a key competence for negotiation in an OI context, is a multidimensional competence, whose individual components can be or not be influential in a specific context. A more detailed study of the relationships among skills, context, and success would provide clear added value. Fourth, as mentioned above, very few studies have explicitly targeted and analyzed OI negotiations. This means that we know little about how negotiation patterns change when different categories of partners interact. How different is negotiating with a university from negotiating with a supplier or a customer? How does negotiation change with the number of partners involved in an OI project? Are OI negotiations that are managed through online platforms more effective and efficient than ‘traditional’ negotiations? Finally, intermediaries are often considered to be powerful solutions to cope with the weaknesses of the focal firm. They can be of help when the firm lacks absorptive or desorptive capacity, when it lacks the capabilities to coordinate many partners, and when it is not aware of the various IP protection mechanisms. Intermediaries can nurture reciprocal trust among the partners and help them to interact with appropriate technologies. However, if, the literature confirms the role and importance of intermediaries, it also highlights the risk that intermediaries might create new paradoxical tensions, consequently increasing the uncertainty about the sense of belonging that inevitably arises in new organizational constructs. Future research could further analyze this phenomenon, providing a clear answer on what an intermediary service currently is, and perhaps what it should be. 123 Negotiation in Open Innovation: A Literature Review We are aware that this study is subject at least to two limitations. First, our systematic literature review depends on the specific keywords we chose. Despite our efforts to identify related studies of interest for our analysis, we cannot claim that each and every relevant manuscript has been included in this literature review. Indeed, we focused on manuscripts that were patently positioned in the OI epistemic community (i.e., explicitly using the ‘open innovation’ keyword in title, abstract or keywords) to understand how such community is addressing the negotiation topic. Nonetheless, we are aware that many studies not explicitly positioned in such literature address topics that are typical of OI, such as networking or inter-firm, intra-firm and inter-personal collaboration, and may contribute to filling some of the gaps identified in this article. Second, we classified the manuscripts along three classes and 11 subclasses that could have been organized differently. We followed the logic of the negotiation process as we considered it the most readable approach, especially for innovation managers and researchers with little knowledge of the OI theory; however, future studies may want to propose different structures. 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