Final answer:
Open innovation is a business model that extends the search for and commercialization of new products beyond an organization's boundaries and therefore, the statement is false. Market competition drives innovation, leading to potential higher income and profits, but the ease of copying inventions can discourage investment in research and development.
Step-by-step explanation:
The term open innovation refers to the concept where a company does not limit its search for and commercialization of new products to its internal resources but rather extends beyond its own boundaries by including external sources in the innovation process.
This can involve collaborations with other firms, academic institutions, and even customers to bring in fresh ideas and accelerate the development of new products and technologies. Therefore, the statement that open innovation means limiting the search for new products within the organization is false.
Market competition incentivizes firms to innovate, as this can lead to the production of goods more cheaply or with desired characteristics that consumers are seeking, thus earning higher profits. As Gregory Lee, CEO of Samsung, emphasized the importance of innovation in staying ahead in the market, disruptive market changes through innovation can lead to more income and profits.
However, if the inventions are easily copied, it discourages further investment in research and development due to the loss of exclusivity and potential profits.
Furthermore, the broader social benefits of new technology often exceed the private benefits to the innovator. To encourage more innovation, ways for inventors to capture a greater share of these broader social benefits could provide a stronger incentive for the pursuit of new inventions.