A new vision of technology, science and their relationships to business
Outside of a closed innovation model, how to create and capture value from technologies becomes a real issue. And this is precisely the core issue of the business model literature because “technological innovation does not guarantee business success” (Teece 2010, p. 183). In other words, the economic value of a technology remains latent until it is somehow commercialized via a business model which unlocks the value potential embedded in technologies and converts them into market outcomes (Chesbrough, Rosenbloom, 2002; Chesbrough, 2006a; Teece, 2010). Put another way, without a business model, the commercial success of a technical invention happens as a result of serendipity. Consequently, “a mediocre technology pursued within a great business model may be more valuable than a great technology in a mediocre business model” (Chesbrough, 2003, p. 64). By revealing the core role of the business model, the business model literature contributes to re-balancing the innovation process in which upstream stages were overemphasized and thus challenges the linear model of innovation.
Moreover, it leads to a more complex vision of technology, basic research, and their relationships with business. Many business model authors do not investigate the technology issue much and consider technology as given and as an input for business model design. Indeed, the purpose of the business model literature is to understand the factors that impact success at the commercialization stage. It deals with business models as a means to unlock the potential value embedded in technologies, to select the appropriate technologies, to explain which technologies and features are to be embedded in the product and service, and to build their market image (Chesbrough, Rosenbloom, 2002; Chesbrough, 2006a; Teece, 2006, 2010). There arises from such an analysis a fuller conception of technology which encompasses both technical and economic features, the latter waiting to be revealed (by business models).
However, the business model literature is more prolix on science. It has also disrupted the vision of the exclusively public nature and the place of basic research supported by the linear model of innovation. It considers that the absence of good private business models for scientific research explains the lack of private investment in basic research and contributes to market failures (Teece, 2010). Consequently, developing business models for science may be viewed as a way to reinforce the links between science and business. Introducing an open business model approach may highlight new ways to create and capture value from science.
Firstly, authors propose a new vision of intellectual property rights. Chesbrough (2006b) argues that managing intellectual property in connection with the company’s business model is necessary not only to capture value of innovation, but also to create value from innovation (Chesbrough, 2006b). Patents are not only a way to create a monopoly on scientific findings and to capture their entire value. They are themselves a source of value creation in particular through licensing. That is why companies need strong intellectual property so as to capture value through intellectual property licensing (Teece, 2010). Moreover, in the open innovation paradigm, when a patent does not fit in with the corporate business model, it is possible to capture value by selling it to another company or by licensing. External intellectual property rights complement the business model and these assets become attractive for the outside.
Secondly, next to the management of intellectual property rights, in an open innovation model, one way to impart value to scientific discoveries is to push this activity outside the firm in order to create spin-offs. A major contribution of the business model approach regarding knowledge is that knowledge spillovers may be viewed as a consequence of the firm’s business model and not as a cost (Chesbrough, 2006b). Cases of spin-off creation coming from private firm research laboratories (Chesbrough, Rosenbloom, 2002) are often cited as a result of a misalignment between the inventions developed by the laboratory and the firm’s business model. However spin-off creation comes not only from private companies but also from universities.
The development of new entrepreneurial science-based activities which generate new business models is a specific case that is worth emphasizing. These new science-based business models emerge in a new entrepreneurial class of firms deeply immersed in science. Pisano (2010) speaks about science-based businesses defined as “entities that both participate in the creation and advancement of science and attempt to capture financial returns from this participation. They are not simply ‘users’ of science, but contributors to it as well”. These relatively new businesses are at the frontier of knowledge and the firms are not only science-based, but also market-oriented and play a critical role in the commercialization of new technologies. This is particularly the case in the biotechnology and nanotechnology sectors. In these sectors, the link between universities’ scientific advances and industrial innovation is stronger and more direct than in other sectors sheltering more traditional high technology start-ups (Mowery, Sampat, 2005). In these fields, scientific feasibility is not a problem because the reasonably well-established scientific basis allows companies to launch commercial products relatively quickly. According to Pisano (2006), science-based business models (especially in the biotechnology sector) need to be improved in order to support the development of start-up companies. He observes that the lack of a good business model will induce a lack of economic performance from these starts-ups.
All these elements are consistent with the evolution of the nature of the connections between the worlds of science, technology and business. These changes are accompanied by changes at university level (e.g. changes in university governance). We assume that this may be linked not only to the decline in public funding for universities and their subsequent need to find new financial resources, but also to the openness of the innovation process which fosters relationships between academic research and industry at all levels. In the current open innovation paradigm, universities have become central in the business of science and have developed aggressive approaches to intellectual property in order to capture monetary returns (Pisano, 2010). The way in which the outputs of university research are diffused toward society and commercial spheres can take different forms, varying across industries and over time (licensing, spin-off…). Consequently, they have developed a specific organization aiming to capture financial returns on intellectual property and this is particularly the case in the US. In fact, the US Congress passed the Patent and Trademark Amendments (1980) in order to reinforce academic research. This Bayh-Dole Act gave universities and non-profit-institutions the right to retain the property rights to inventions deriving from federally funded research. This Act is based on the assumption that the economic efficiency of R&D projects is linked to the appropriability of R&D results. Mowery and Sampat consider that “the Bayh-Dole Act is the ultimate expression of faith in the ‘linear model of innovation’ – if basic research results can be purchased by would-be developers, commercial innovation will be accelerated” (Mowery, Sampat, 2005, p. 229). Scholars mention the risks associated with this approach and the incentive for universities to perform research that could be expected to produce important commercial inventions to the detriment of more basic science. Moreover, focus on patents may mask the other channels of scientific knowledge diffusion and interactions between industries and universities.
From an ambiguous conception of the process of innovation to an adaptive platform of innovation
The business model literature thus contributes to a better understanding of science, technology, and their relationships to business in an open innovation context and insists on the downstream stages of the innovation process. However, it does not seem to elaborate on the legacy of Chesbrough related to his conception of the typical open innovation process. Indeed, business model authors frequently omit to analyze interconnections and feedback loops between each activity along the pathway of innovation, or in other words they do not seem to have realized that porous borders exist between these activities, whether they are internal or external ones. By focusing exclusively on business models and by considering that technological innovation is given and that the company only needs to create and capture value from it through an appropriate business model that has to be designed, most business model authors partially reintroduce the linear model of innovation. This is more explicitly the case of van der Meer’s contribution (2007), for example, who suggests breaking the innovation process down into three basic stages: the concept stage, the development stage, and the business stage, without any feedback loops, thereby introducing a kind of open system stage-gate model for innovation of a linear type.
Nevertheless, more accurate visions of the innovation process are built within the business model literature. Chesbrough himself, whose further works after his 2003 book could be categorized as belonging to this literature, proposes a business model framework connecting the business model, the innovation process (originally considered as the process of technology creation), and the intellectual property rights management system (Chesbrough, 2006a). He thus goes further into the analysis of the relationships between the process of technology creation and the process of economic value creation and capture from technology, giving at least a first answer to further writings that Dahlander and Gann (2010) called for  See section “Further developments on open models of.... It is not astonishing that Chesbrough is one of the most active contributors to the understanding of how a business model perspective may change the vision of the innovation process, given his specific position in-between the research field of open innovation and of business models.
Chesbrough (2006a) constructs a framework aiming to encompass different types of business models that currently coexist in the open innovation paradigm. He considers that business models vary in two dimensions: first, depth of investment made to support the business model and, second, openness of the business model. Six types of corporate business models are arranged sequentially from very basic (not open and not very valuable) models to far more advanced ones (open and very valuable). We propose to focus our attention on the underlying process of innovation that each type encompasses. Unlike type 1 (an undifferentiated business model which does not incorporate any innovation process either), type 2 (a differentiated business model with an ad hoc innovation process) and type 3 (a segmented business model with a planned innovation process) are based on what resembles the linear model of innovation. However, with type 3 there is an evolution towards a more market pull innovation process and the participation of suppliers is requested. Type 3 is similar to the closed innovation model (within the open innovation paradigm, where value creation and capture are more problematic than before). Even though there is a nascent porosity between the innovation process and the business model at the company level with type 3, type 4 (an externally aware business model coupled with an externally supportive innovation process) contributes to blur internal as well as external boundaries of the innovation process; moreover the business model increasingly acquires as much attention as the innovation process with innovation becoming “a cross-functional activity”.
Technology creation (or external acquisition) becomes a part of the innovative process which is no longer limited to it. But the real shift in the conception of the innovation process comes with type 5 (integration of the innovation process with the business model). In this type, the business model “plays a key integrative role within the company” (Chesbrough, 2006a, p. 123) and for joining internal and external innovation activities as well. The business model is considered as a “platform to connect and coordinate innovative activities” (ib.), whether they originate from internal or external sources. Technology creation is no longer separated from the rest of the innovation process, but innovation itself becomes a business function and is supported by “cross-functional innovation teams”. It is as if there are no longer upstream and downstream activities, all of them interacting at each moment of the process through the business model as a basis for these interactions. With type 6 (an innovation in the business model in the course of the innovation process or the adaptive model), a dynamic view is introduced within the process. Beyond a deeper integration of the business models of each partner in the business network (the company, suppliers, customers), the innovation process finally requires a change of the business model(s) that support this very innovation process. In particular, Chesbrough insists on the fact that open innovation involves opening up the business model as well: “Companies must develop more open business models if they are to make the most of the opportunities offered by Open Innovation” (Chesbrough, 2006a, p. 107). A kind of virtuous circle of innovation is set in motion, with the current business model supporting the innovation process, from its technological to its economic features, which in turn results in an innovation in the corporate and associated network business model  Even if it was beyond the scope of this section to....
Like Chesbrough, some business model authors point out that the capacity of a firm to capture value from innovations will be seriously jeopardized without the capacity to create new business models, that is, unless there is innovation in the business model too (Teece, 2010, Chesbrough, 2010). Business model innovation may help to establish another source of competitive differentiation, “as some firms develop superior capabilities at experimentation and consequently can build better models more quickly than their slower counterparts” (McGrath, 2010, p. 260). However, as mentioned by Frankenberger et al. (2013), innovation in the business model is a new subject matter in research and even though its importance is now acknowledged, little research is available to account for the business model innovation process itself. Frankenberger et al. (2013) try to overcome this weakness and propose an integrative framework describing the steps in business model innovation  This initiative is worth highlighting as it is one.... Their analysis is interesting because it shows a similarity between the technological innovation process and the business model innovation process and also that the innovation process is not of a linear type. However technological innovation is left outside the innovation process of business models. Unfortunately, the dialectic process outlined by Chesbrough is not further developed in this approach.