The Objective of a Firm Using Open Innovation Is To

question 2

Multiple Choice

The objective of a firm using open innovation is to:

• A) completely outsource its R&D.
• B) to reach out beyond its familiar research partners and to access R&D carried out globally.
• C) allow for inputs purely from external sources by keeping the internal sources on hold for a later point in time.
• D) get tolerant to some aberrations and thereby allow innovation at the cost of rule violations.

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Definitions:

Long-run Average Total Cost

The per-unit cost of production when all inputs, including those typically fixed, can be varied, showing economies of scale if downward sloping.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the average cost of production falls with increasing output.

Constant Returns to Scale

A situation in production where increasing the input of all resources by any proportion yields an increase in output by the same proportion.

Long-run Average Total Cost

The per unit cost of production when all inputs, including capital, are variable, assuming optimal efficiency.