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Researchers on open innovation (OI) and user innovation (UI) share certain assumptions and precepts. Perhaps most importantly, they agree that knowledge relevant for innovation is widely dispersed outside the firm (Bogers & West, 2012). Henry Chesbrough (the father of open innovation) writes that “useful knowledge is generally believed to be widely distributed, and of generally high quality”(Chesbrough, 2006b: 9), while Eric von Hippel (the father of user innovation) concludes that “the information needed to innovate in important ways is widely distributed”(von Hippel, 2005: 14). However, OI and UI are at best partly overlapping perspectives on this distributed model of innovation. While the two differ in their values and assumptions, an important factor in their limited commensurability is their tendency to study different phenomena. Open innovation is a firm-centric paradigm that is primarily concerned with leveraging external knowledge to improve internal innovation and thus the firm’s economic performance. User innovation is mainly about individuals using innovation to address their own (often unique) needs, without regard to firm success and often as part of a socially embedded community.

In this chapter, we focus on the overlap of these two perspectives: when individual users innovate in ways that improve the offerings of firms. In some cases, firms leverage existing innovations by users; in other cases, firms and users collaborate to create innovations that have both use or social value for users and commercial value for firms. We begin by reviewing the user and open innovation literature, and then contrast their overlapping and divergent …