Strategic Choice between Closed and Open Innovation: Answer from the Neo-Institutional Economics

In the paper the transition from the «traditional» in-house strategy of innovation activities, used by the majority of companies so far, to an open innovation strategy is considered. The authors develop some criterion to justify the innovation strategy to be selected. This criterion is based on the neo-institutional analysis of comparing the transaction costs and benefits associated with these strategies. Finally, some practical recommendations to organize the Russian business’ innovation activities and to improve the government competition and industrial policy are provided.

Keywords: innovative activity of a firm, innovation strategies, the model of open innovation, co-operation in R&D