Nike's Open Innovation Strategy Nike Essay

Excerpt from Essay :

Therefore, it is important to use external sources of innovation. In addition to this, companies must take into consideration the fact that some of the best solution can be found in their external environment.

The costs associated with the company's activity are significantly affected by its open innovation strategy (OPINET, 2010). This is because this strategy leads to reduced costs of the research and development process. By collaborating with other companies, Nike also shares the costs of innovation (OECD, 2008). This is an important factor that can help Nike reduce the price of products, which can be used in order to attract a higher number of customers. In addition to this, Nike's research and development process can be increased. This leads to expanded innovation activities that can determine the improved production that Nike requires in order to create competitive advantage.

There are also other important advantages determined by open innovation. This strategy can help Nike become an important player in the research and development community. This significantly improves Nike's image within this community. Such a strategy leads to the fact that Nike is interested in developing a strategy based on corporate social responsibility (InnoCentive, 2010).

It has been observed that it important for customers that the brands they purchase from are interested in such activities. Most customers orient towards companies that are involved in the development of their communities and that play an important role in improving the conditions of the environment that characterizes these communities. Therefore, it is important that Nike understands this needs and that is interested in developing such practices.

The open innovation strategy can help Nike create an important market entry barrier. These barriers are very important in the case of companies in this business sector because they can determine the type of companies that enter this market and their innovation abilities. It is difficult for some of the companies that want to address this industry to invest in innovation.

Open Innovation Disadvantages

The strategy based on open innovation presents numerous advantages. However, there are also certain disadvantages that must be taken into consideration. Such a disadvantage is represented by the fact that open innovation is not suitable for all companies. Smaller companies seem to be favored by open innovation because they can benefit from important inventions and pattern developed by other companies. The fact that they invest less in their research and development process because they purchase patents from other companies makes them important competitors of larger companies like Nike.

This means that Nike is somewhat threatened by smaller companies that benefit from the same innovation that Nike uses. Therefore, it is important that Nike carefully selects the innovation process that wants to be used in its open innovation strategy (Schroll, 2009). The company's objective is not represented by helping other companies, but by improving its innovation processes in order to improve its business (QuickMBA, 2010).

The fact that Nike uses open innovation can help competitors improve their production process, which leads to reduced prices of their products and services. This increases competition in this business sector. Therefore, it is recommended that Nike reduces the open innovation issues that are communicated with its competitors.


It is important that companies understand what innovation is, how it can be used, and how competitors must be viewed from this point-of-view. Some companies focus on open innovation, while others prefer closed innovation. It is important that companies establish which type of innovation works best in their case. There are numerous advantages associated with open innovation. There is an important relationship between open innovation and corporate social responsibility.

Open innovation helps reduce the risks of the research and development process. The costs associated with this process are reduced in the case of companies that prefer open innovation. Nike is one of the companies that have developed an open innovation strategy and that are successful at it. This strategy leads to establishing high quality standards in this industry. This favors the company, its employees, and its customers. Therefore, it is important that the company develops an open innovation strategy that can improve its efficiency and productivity.

Reference list:

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14. Borchardt, J. (2008). Open Innovation Becoming Key to R&D Success. Lab Manager Magazine. Retrieved April 27, 2012 from

15. Open Innovation Benefits for SMEs (2010). OPINET. Retrieved April 27, 2012.

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