Generative and degenerative interactions: Positive and negative dynamics of open, user-centric innovation in technology and engineering consultancies

The related concepts of open innovation and user-centric innovation are currently popular in the literature on technology and innovation management. In this paper, we attempt to address two shortcomings to their practical application. First, the precise mechanisms supporting open and user innovation in different industrial contexts are poorly specified. Second, it is not clear under what circumstances they might become dysfunctional. We identify how the interaction of meso- and micro-level mechanisms contribute to project-based user-centric innovation, based on a detailed characterization of the business activities of eight technology and engineering consultancies working across a range of sectors. We develop and illustrate the notion of generative interaction, which describes a series of mechanisms that produce a self-re-enforcing ecology, which favours innovation and profitability. At the same time, we observe the opposite dynamics of self-reinforcing degenerative interaction likely to produce a cycle of declining innovation and profitability. In the specific context of project-based firms, we show that user-centric, open innovation can affect performance negatively, and we discuss the consequences (positive and negative) of different patterns of interaction with clients.