Understanding the human side of openness: the fit between open innovation modes and CEO characteristics

In small- and medium-sized enterprises (SMEs), where typically the decision-making process is highly centralised, important decisions, such as open innovation (OI) adoption, will be strongly influenced by the characteristics of their Chief Executive Officers (CEOs). Pointing the attention to the strategic leadership and human elements, this paper sheds light on the micro-foundation of OI by emphasising the role that the personal traits of key individuals in innovation. OI adoption could result in the enactment of several OI modes – each representing an opportunity of potential change (of market, of technology or/and of the organisation) – and this paper attempts to examine the relationships between the CEO characteristics and each of the OI modes. Our analysis, using Korean SME data, shows that CEOs’ positive attitude, entrepreneurial orientation (EO), patience and education can play important roles in facilitating OI in SMEs. However, this paper also observed that the effects of CEO characteristics on OI adoption were differently configured according to the nature of each OI mode, for example, CEOs’ patience and EO had different impacts depending on the degree of uncertainty in the OI mode. This suggest that OI must be understood as a wide innovation spectrum, and, to increase opportunities for successful OI adoption, CEOs have to attempt to compensate for characteristics they may lack by recruiting appropriate complementary top managements. The research has practical implications for CEOs and policy makers who are interested in enhancing competitiveness of SMEs.     

Commercialization performance of outbound open innovation projects in public research organizations: The roles of innovation potential and organizational capabilities

The current literature on open innovation (OI) has been limited to organization-level studies of inbound OI despite the importance of understanding outbound OI to improve performance of public research organizations (PRO) at project level. Our study contributes to the OI literature by investigating the relationship between the innovation potential and the commercialization performance of 189 outbound OI projects between PROs and firms, and the effect of network and project management processes on this relationship. In line with our expectation, our results demonstrate that PRO-firm outbound OI projects with technologies of high innovation potential are likely to have high commercialization performance. In addition, we empirically establish that among projects with technologies of high innovation potential, those with high resource allocation quality are more likely to have high commercialization performance. Finally, our findings indicate that among projects with technologies of high innovation potential, those with high opportunity discovery through networks are more likely to have high commercialization performance.     

The effects of complementarity of knowledge and capabilities on joint innovation capabilities and service innovation: The role of competitive intensity and demand uncertainty

Service innovation has become increasingly important for the growth of developed and developing countries. Despite an extensive body of literature on the role of joint innovation capabilities in improving a firm's innovativeness, the multivariate influences of operant resources and joint innovation capabilities, as well as the interplay among these in the prediction of service innovation have not been scrutinized in the context of B2B SMEs in a developing country. This study aims to fill this gap by testing a model that shows the relationships among complementarity of knowledge and capabilities as operant resources, joint innovation capabilities, and service innovation. We derive hypotheses about these relationships and test them using data from a sample of 302 respondents from 151 firms operating in the UAE. The results show that the relationships between complementarity of knowledge and joint innovation capabilities, and between joint innovation capabilities and service innovation, are significant and positive. They also show that the mediation effect of joint innovation capabilities on the relationship between complementarity of knowledge and service innovation is positive and full. This study also tests the moderating roles of competitive intensity and demand uncertainty in the relationship between joint innovative capabilities and service innovation and finds that their connection is stronger when competitive intensity is high.     

The learning subsystem interplay in service innovation in born global service firm internationalization

We examine the role of learning firm-specific advantages of small and medium size (SME) service firms in their internationalization. We focus on technical services that have received limited scholarly attention. We theorize that innovative born global firms build a set of capabilities in market, internal and relational learning that will provide new knowledge configurations to undertake technical and administrative innovations. Adopting an organizational sub-system view, we posit that market learning drives other learning capabilities in the firm to contribute collectively to innovation, and in turn, international market outcomes. The findings of our study of US born global SMEs support this theorization. Market-learning capability operates in a complex set of relationships with other learning capabilities in its contribution to innovation. Interestingly, relative to technical innovation, administrative innovation makes a prominent contribution to international market outcomes. We discuss implications of our findings for theory and practice and provide future research directions.     

A Self‐Tuning Model for Smart Manufacturing SMEs: Effects on Digital Innovation

With the changing way people live, communicate, and work, enterprises are striving to shift their existing business model into a “self‐tuning” one. Enterprises are becoming more agile, adaptive, and ambidextrous in order to boost innovation in the current digital transformation era. Nowadays, “digital innovation” is closely associated with Industry 4.0 enablers and smart enterprises. Prior research has shown that while multinational enterprises—across many sectors—have already embraced the aforementioned advancements, their adoption by small and‐medium‐sized enterprises (SMEs) has so far taken place mainly in the manufacturing sector. Thus, based on a sample of 280 self‐tuned smart manufacturing SMEs and having utilized the structural equation modeling (SEM), this study was aimed to investigate how digital innovation is influenced by the three pillars of self‐tuning models—agility, adaptation, and ambidexterity. Our paper has focussed on the digital systems in which SMEs, spurred by networking and open innovation solutions, operate and innovate in response to external triggers, displaying a balance between exploration and exploitation, and a strong agile capacity.     

Patenting Activities and Firm Performance: Does Firm Size Matter?

Whereas prior research has provided valuable insights into the willingness of small and medium‐sized enterprises (SMEs) and large firms to engage in patenting, a comparison of the performance implications of patenting activities across small and large firms is still lacking. This gap is important because SMEs and large firms, having different resources and capabilities, might benefit from patenting activities in different ways. In particular, SMEs can be expected to benefit less from patenting activities in terms of protection against imitators than large firms. On the other hand, the propensity and ability of SMEs to license out their patents and generate additional revenue streams might be relatively higher than that of their large counterparts. This paper studies the impact of patenting on licensing, innovation, and financial performance for both SMEs and large firms, using multiple‐group path analyses on a sample of 358 manufacturing firms. Contrary to expectations, this study demonstrates that not only large firms, but also SMEs benefit from patenting in terms of commercializing product innovations. Moreover, for both SMEs and large firms, such increased innovation performance in turn contributes to higher profit margins. Patenting activities also increase the ability of SMEs and large firms to license out knowledge to external parties, and this positive effect is significantly stronger for large firms. However, neither in SMEs nor in large firms, these outward licensing activities generate short‐term financial benefits. Finally, the study demonstrates that patenting activities do not trigger significant cost disadvantages for either SMEs or large firms. Jointly, these findings provide unique insights in the value‐generating and cost‐increasing effects of patenting, suggesting that not only large firms, but also SMEs should consider patenting as a viable strategy to fully reap commercial benefits from their innovation activities. At the same time, they temper open innovation scholars’ expectations regarding the financial benefits of licensing out knowledge. Overall, these findings point to opportunities for optimizing the intellectual property management of both SMEs and large firms.     

The impact of SME internationalization on innovation: The mediating role of market and entrepreneurial orientation

In today's highly competitive global environment, even small and medium-sized enterprises (SMEs) need to make product and process innovations in order to outperform the competition and satisfy global customers. Investigating the success factors of innovation performance has become critical for the survival and competitiveness of SMEs. The aim of this study is to explore the impact of the degree of internationalization (DoI) on innovation performance through the mediating factors of market and entrepreneurial orientation in the context of emerging-market SMEs. We tested our model and hypotheses with 235 SMEs in the United Arab Emirates, which is an emerging market. The results obtained from partial least squares estimates indicate that the degree of internationalization positively affects innovation performance and, more importantly, that this relationship is indirect and fully mediated by market and entrepreneurial orientation for SMEs. These results shed light on the mechanism of the effect of DoI on innovation performance in the emerging-market SME context.     

Firm survival through a crisis: The influence of market orientation,marketing innovation and business strategy

As an outcome of the economic crisis, the global manufacturing sector is collapsing. Focusing on Chinese manufacturing small and medium enterprises (SMEs), this study investigates whether marketing innovation, defined as improvements in the marketing mix, can assist in withstanding the challenges of operating under the current economic conditions. A conceptual model linking market orientation, marketing innovation, competitive advantage and firm survival is tested using structural equation modelling. Three key findings are derived. First, the examined Chinese manufacturing SMEs had a greater perceived likelihood of survival had they developed and sustained a competitive advantage. Second, marketing innovation assisted in developing and sustaining competitive advantages based on differentiation and cost leadership strategies. Third, marketing innovation capabilities improved when the examined manufacturing SMEs were competitor oriented and had good inter-functional capabilities.     

The determinants of innovation in green supply chains: evidence from an Italian sectoral study

Innovation processes are increasingly spreading through the unbounded universe of European small and medium enterprises (SMEs). It represents a fundamental opportunity especially for those SMEs operating in the so‐called ‘green economy’ sectors, in order to be competitive in a National, European and International market with their sustainable products and services. Drawing upon a database of over 300 enterprises operating within the eight defined green sectors, this paper assesses the determinants and drawbacks of innovation. In particular, by using an econometrical approach, we tested the following propositions: (1) small dimension of enterprises is not an obstacle to their innovation capabilities; (2) the adoption of an internationalisation strategy is an opportunity and a stimulus to innovation for SMEs; (3) cooperation with research centres, financial partners, trade association and public entities can help SMEs to overcome difficulties and help them to develop and offer innovative products and services, so to be competitive at an international level. The econometric analysis shows a positive impact of the variables ‘dimension’ and ‘level of internationalisation’ on innovation capabilities. In addition, cooperation with research centres and access to capital market are positively related with effective innovations.     

Crowdsourcing without profit: the role of the seeker in open social innovation

Crowdsourcing has increasingly been studied as an open innovation (OI) mechanism by which organizations (seekers) engage with an external crowd of potential solvers. Previous crowdsourcing research has focused on solvers and their individual motivations, providing few insights as to why and how seekers use crowdsourcing, and how these choices affect the value that might be realized from these efforts. Prior research has also emphasized profit‐seeking firms, despite the use of OI practices by public sector organizations to achieve societal benefits. This paper examines the organizational and project‐level choices of government agencies that crowdsource from citizens to drive open social innovation, and thus develop new ways to address societal problems, a process sometimes termed ‘citizensourcing.’ Using rich data from 18 local government seekers that use the same intermediary, we develop a model of seeker crowdsourcing implementation that links a previously unstudied variance in seeker intent and engagement strategies to differences in project team motivation and capabilities, in turn leading to varying online engagement behaviors and ultimately project outcomes. Our study compares and contrasts governmental and corporate crowdsourcing to reveal that the non‐pecuniary orientation of both seekers and solvers means that the motives of government crowdsourcing are fundamentally different from corporate crowdsourcing, but the process in our sample more closely resembles that of a firm‐sponsored community rather than government sponsored contests. More generally, we show how seeker organizational factors and choices shape project‐level implementation and success of crowdsourcing efforts, as well as provide insights for OI activities of other smaller, geographically bound organizations.     

The microfoundations of open innovation: CEO overconfidence and innovation choices

How to successfully drive open innovation (OI) has been an important issue. However, the existing literature on the determinants of OI mainly focuses on organizational and contingent factors, and the “human side” of it is still not well understood, which also motivates us to explore it more deeply. This paper attempts to link upper echelon theory with OI research using data from a large sample of Chinese listed companies to investigate how the overconfident tendency of the CEO affects his or her preference for different OI modes. At the same time, what role do other top management team (TMT) members play in this process. The results show that overconfident CEOs favor market and organization-oriented OI over technology-oriented OI, and TMT governance can moderate such relationship, that is, as the level of TMT governance increases, the preference of overconfident CEOs for market and organization-oriented OI will be weakened, avoiding the negative effect of excessive adoption of such activities on firm performance. By focusing on the human side of OI, this paper adds to the literature on the impact of strategic leadership, namely the influence of key individual CEO and other executives within the organization on OI management, which is also a response to the emphasis that more attention should be paid to the microfoundations of OI in the future.     

A Bibliometric Review of Open Innovation: Setting a Research Agenda

Through an objective, systematic, and comprehensive review of the literature on open innovation (OI), this article identifies gaps in existing research, and provides recommendations on how hitherto unused or underused organizational, management, and marketing theories can be applied to advance the field. This study adopts a novel approach by combining two complementary bibliometric methods of co‐citation analysis and text mining of 321 journal articles on OI that enables a robust empirical analysis of the intellectual streams and key concepts underpinning OI. Results reveal that researchers do not sufficiently draw on theoretical perspectives external to the field to examine multiple facets of OI. Research also seems confined to innovation‐specific journals with its focus restricted to a select few OI issues, thereby exerting limited influence on the wider business community. This study reveals three distinct areas within OI research: (1) firm‐centric aspects of OI, (2) management of OI networks, and (3) role of users and communities in OI. Thus far, studies have predominantly investigated the firm‐centric aspects of OI, with a particular focus on the role of knowledge, technology, and R&D from the innovating firm's perspective, while the other two areas remain relatively under‐researched. Further gaps in the literature emerge that present avenues for future research, namely to: (1) develop a more comprehensive understanding of OI by including diverse perspectives (users, networks, and communities), (2) direct increased attention to OI strategy formulation and implementation, and (3) enhance focus on customer co‐creation and conceptualize “open service innovation.” Marketing (e.g., service‐dominant logic), organizational behavior (e.g., communities of practice), and management (e.g., dynamic capabilities) offer suitable theoretical lenses and/or concepts to address these gaps.     

Investigating the Influence of Technology Inflows on Technology Outflows in Open Innovation Processes: A Longitudinal Analysis

The open innovation (OI) paradigm emphasizes the importance of integrating inbound and outbound flows of technology to increase a firm's innovation performance. While the synergies between technology inflows and outflows have been discussed in conceptual OI articles, the majority of empirical studies have typically focused on either the inward or the outward dimension of OI. According to recent reviews of OI literature, there is a need for further research that takes an integrated perspective on this topic and studies the combination of the inbound and outbound dimensions of OI. This paper follows these calls by focusing on technology licensing as the main contractual form for OI, and by investigating the relationship between technology in‐licensing and out‐licensing activities at the firm level of analysis. In particular, this paper argues that technology in‐licensing positively influences the volume of technology out‐licensing through two mechanisms. The first—resource‐based—occurs because in‐licensing investments expand and enrich the firm's technology base, thus increasing its value and, as a result, creating more opportunities for out‐licensing. The second—capabilities‐based—occurs because, due to commonalities between technology in‐licensing and out‐licensing in terms of performed tasks and required skills, repeated execution of in‐licensing transactions contributes to the development of higher out‐licensing capabilities and, as a result, increase out‐licensing volume. These arguments are tested using a panel dataset of 837 Spanish manufacturing firms over the period 1998–2007. Consistent with the predictions, the empirical analysis shows that higher investments in in‐licensing and more extensive in‐licensing experience lead to superior volumes of technology out‐licensing. These results contribute to research on OI and licensing, by empirically showing the existence of positive interactions between technology inflows and outflows and of synergies in the development of absorptive and desorptive capacities.     

Open Innovation in Practice: Goal Complementarity and Closed NPD Networks to Explain Differences in Innovation Performance for SMEs in the Medical Devices Sector

Cooperation with other organizations increases the innovation performance of organization, especially for small and medium‐sized enterprises (SMEs) as they encounter liabilities of “smallness” (e.g., limited financial resources, and manpower). In the medical devices sector, collaboration with external partners for NPD becomes increasingly important due to the complexity of the products and the development process. About 80% of companies in this sector are SMEs. These companies operate in a highly regulated sector, which affects the organization of the external network required for the new product development (NPD) process. SMEs are practicing extensively open innovation activities, but in practice face a number of barriers in trying to apply open innovation. This paper examines multiple network characteristics simultaneously in relation to innovation performance and thereby aligns with and builds further on configuration theory. Configuration theory posits that for each set of network characteristics, there exists an ideal set of organizational characteristics that yields superior performance. In this research, the systems approach to fit is used. Fit is high to the extent that an organization is similar to an ideal profile along multiple dimensions. This ideal profile represents the network profile that the 15% highest performing companies use. It is argued that the smaller the distance between the ideal profile and the network profile that is used, the higher the performance. The objective of this research is (1) to examine the relation between the ideal profile and innovation performance and (2) to examine which organization of the network profile is related to high innovation performance. Quantitative survey data (n = 60, response rate 61.9%) form the core of this research. The quantitative results are clarified and have been triangulated with qualitative interview data (n = 50). Our findings suggest the presence of an “ideal” NPD network profile (in terms of goal complementarity, resource complementarity, fairness trust, reliability trust, and network position strength): the more a company's NPD network profile differs from this ideal profile, the lower the innovation performance. In addition, the results of our study indicate that the NPD network profiles of successful and less successful SMEs in the medical devices sector significantly differ in terms of “goal complementarity,” while this is less the case for trust and resource complementarity labeled distinctive by previous research. Finally, results show that a relatively closed, focused, and consistent “business‐like” NPD networking approach, which is characterized by result orientation and professionalism, is related to high innovation performance. It is recommended that SMEs in the medical devices sector aiming to distinguish themselves from competitors in terms of innovation performance focus on goal complementarity while adopting such a business‐like attitude toward their NPD network partners.     

Managing business-to-business open innovation: A project-level approach

Embracing business-to-business open innovation (B2B OI) can enable firms to remain competitive in an increasingly saturated business environment. Whilst B2B OI is generally undertaken to serve the needs of a specific innovation project, previous research has mainly studied it from the firm-level perspective. Accordingly, the number of project-level studies on B2B OI, especially empirical, remains limited, resulting in an incomplete understanding of B2B OI management. In this editorial, we briefly review the B2B OI literature, discuss the importance of studying B2B OI at project level, and describe how each of the six articles included in our special issue contributes to this field. Moreover, we suggest future research opportunities with regard to issues and topics that remain largely under-investigated in project-level B2B OI, but which also open up to a multilevel perspective.     

Do not miss the boat to outside-in open innovation: Enable your employees

In a highly competitive business environment, firms are increasingly opening up to external partners and gathering their knowledge to improve internal innovation processes. Although researchers have found that outside-in open innovation (OI) has a multitude of positive outcomes (e.g., improved innovation performance), few have studied its antecedents, and especially the “softer” ones. Thus, this study aims to empirically examine three “softer” drivers of outside-in OI (i.e., entrepreneurial culture, OI support, and OI enablement), based on a cross-industry sample of 104 firms. The results show that the relationship between entrepreneurial culture and outside-in OI is fully and positively mediated by OI enablement, whereas the mediating role of OI support in such relationship is not significant. This implies that entrepreneurial culture is unlikely to increase the level of outside-in OI, unless firms enable their employees, through systematic training and the deployment of teams, to effectively gather relevant knowledge from external partners.     

The nature of SME co-operation and innovation: A multi-scalar and multi-dimensional analysis

Recent work on SMEs and networks has emphasised the importance of external co-operative ties in enhancing firms’ innovative performance. These external ties provide resource constrained SMEs with access to a wider set of technological opportunities through information sharing and resource pooling. Previous studies of the SME innovation–cooperation relationship have used categorical measures to capture tie existence which, while providing some useful insights, largely fail to capture the strength of co-operative relationships and/or the variety of relational directions in which co-operation occurs. This study aims to address this measurement deficiency and explore the SME innovation–cooperation relationship by designing and utilising measures that capture both the multi-scalar (strength) and multi-dimensional (variety) nature of co-operation and innovation. We then apply these measures to a survey of UK manufacturing SMEs. Data is obtained for 371 SMEs, and we then assess the innovation–co-operation relationship within a multivariate regression framework. We find that the strength of cooperative ties across a range of productive activities within the value chain are important facilitators for SME innovative capability; this is true for both product and process innovation. However, we find that SME co-operation with rivals (co-opetition) has no significant impact upon innovation. Our results have significant implications for both supply chain managers and policy-makers interested in enhancing innovation among SMEs. In particular, we argue that SME innovative activity benefits from good, close dyadic relations within the supply chain, while more generally policy should be geared towards nurturing and sustaining SME innovation networks.     

The innovation work environment of high–tech SMEs in the USA and Canada

This study examined the climate for innovation and creativity, and related outcome measures, in 31 Canadian and 11 US small– and medium–sized enterprises (SMEs), as assessed by 120 R&D engineers in those firms. Prior studies on the innovativeness of countries have been critical of Canadian firms compared to those in other industrialized countries. Our study tested whether differences existed between perceived climates, creativity and productivity of US and Canadian SMEs. The results indicated that the innovative climates and the perceptions of creativity and productivity of US and Canadian firms are very similar. Furthermore, the most important factors relating to creativity (Challenging Work and Organizational Encouragement) were the same for both the USA and Canada. Our conclusion is that support for innovation in Canadian SMEs is comparable with that of US SMEs. Differences in innovation measured at the national level can probably be attributed to other factors, such as industry structure and the degree of innovation in large firms.     

A new perspective on open innovation: established and new technology firms in UK bio‐pharmaceuticals

The aim of this paper is to explore open innovation (OI) implementation and its impact on firm innovation performance in sectors experiencing technological discontinuities. The paper employs the framework of inbound, outbound and coupled OI to identify processes reflecting sourcing, externalising and exchanging knowledge across organisational boundaries on upstream and downstream innovation activities and explores their impact on the innovation performance of new and established technology firms. The empirical setting is the UK bio‐pharmaceuticals sector during 1991 and 2001, a paradigmatic era of discontinous change and intensified OI implementation. First, our findings show that new technology firms (NTFs) and established technology firms (ETFs) differ in their extent and patterns of inbound, outbound and coupled OI, reflecting that they implement OI to manage their competences in light of technological change. Second, we identify a complex and multifaceted relationship between OI and patenting performance, with NTFs experiencing enhanced performance from some OI processes while ETFs experiencing challenges. The paper suggests that delineating OI into inbound, outbound and coupled, along upstream and downstream activities, offers a deeper understanding of the role of OI in innovation, guiding selective implementation in pursuing enhanced innovation performance during periods of discontinuous technological change.     

The many shades of ‘openness’: an application of item response theory to open innovation research

This study addresses one of the most basic research questions investigated in the Open Innovation (OI) literature: how open are firms? This question has remained partially unanswered given the challenges encountered by empirical research in assessing the relevance of specific OI practices within the OI model, as well as the types of activities perceived by managers as OI benefits or concerns. To provide an answer to this question, we suggest a framework using Item Response Theory to improve over current measures of firms' openness and test it on a sample of 383 technology‐based SMEs. Our theoretical model conceives openness as an instance of how firms make decisions regarding the adoption of different OI practices based on their evaluation of OI benefits and concerns. Focusing on the relationship between firm‐level differences in terms of openness and the types of OI practices adopted by these firms, we show that significantly different levels of ‘OI maturity’ are required to broaden the scope of external partnerships and to shift from non‐pecuniary OI modes (relation‐based approaches) toward pecuniary (transaction‐based) practices. Our results have relevant implications for the OI literature and provide new managerial insight into OI adoption.