Supervisors: Pernille Smith & Michael Zaggl
Discussants: Susan Hilbolling & Ferran Giones Valls, University of Stuttgart (participating online)

Abstract
Open innovation, as a problem-solving process, is a pivotal strategy for corporations to address internal challenges by leveraging external knowledge. Identifying and formulating internal business challenges is a crucial precursor, especially in the context of ill-structured or wicked problems. Structured corporate-startup-collaboration programs as a common open innovation form represent a unique dynamic where problem formulation originates from the corporation but receives collaborative input from the startup. Upon formulating the problem, corporations and startups engage in collaborative efforts, often utilizing pilot projects to test solutions within a limited time and scope, thereby reducing investment risks for both actors. We investigate how the corporation and startup jointly formulate the problem and how the formulated problem influences the subsequent coordination between corporations and startups during collaboration initiation. The researchers accompanied a startup innovation contest in the German housing industry for a year that created pilot projects between six housing companies and startups solving the companies’ challenges. By adopting a micro-level lens based on a process and practice perspective, we are able to show the development of the joint problem formulation in-depth and how the successive pilot project integrated the formulated problem.

The findings show that the problem formulation process requires a delicate balance to capture the corporate needs while integrating the startup’s perspective. An overreliance on startup solutions in the problem formulation diverts the company’s perspective to non-urgent problems. Besides, a lack of integration of the formulated problem in pilot project aspects leads to unsatisfactory pilot project results for the corporation. Both dynamics negatively impact the collaboration process between the two actors. This study contributes to the literature on corporate-startup collaborations by underscoring the enduring relevance of problem formulation not only during the collaboration initiation phase but also throughout the coordination process. Moreover, the paper enriches the problem formulation research stream by providing a detailed analysis of the practices employed in this crucial phase of the open innovation process.

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