Open Innovation and Knowledge Leakage in Contract Manufacturing

Abstract

Contract manufacturers collaborate with many clients, which exposes them to new ideas but also to the risk of leaking knowledge between competitors. We study how 41 manufacturers in Southern Europe and West Africa manage this tension, using interviews, plant visits and a survey of production managers. Firms that separated project teams, documented what each client owned and trained staff in disclosure rules reported fewer disputes and still learned from every engagement. Firms that relied on trust alone lost clients after a single incident. We show that protective routines and openness are complements when they are explicit and consistently applied. The study offers a simple governance checklist for suppliers who want to benefit from open innovation without becoming the weak link in their customers' intellectual property, and it highlights the contracts and training that made the difference in practice.