Elsevier

Technovation

Volume 103, May 2021, 102232
Technovation

Open innovation within high-tech SMEs: A study of the entrepreneurial founder's influence on open innovation practices

https://doi.org/10.1016/j.technovation.2021.102232Get rights and content

Highlights

  • A ‘human’ micro-level perspective of the SME leader (founder/CEO) within open innovation adoption.

  • Identifies the SME open innovation dynamics and highlights the differentiating factors of adoption in the SME context.

  • SME open innovation is exemplified by a project based ‘operational’ rationale and a ‘switchback’ to closed practices.

  • SMEs tend to adopt a sequential and temporal pathway, developing innovation capabilities and maturing on a project basis.

  • This research establishes the connection between open innovation and entrepreneurship theory.

Abstract

This study aims to deepen our knowledge of the SME ‘human’ role within open innovation adoption. To achieve this, we explore how the SME leader, namely the founder/CEO managerial characteristics influence the SMEs open innovation adoption dynamics (i.e. mechanisms, partners, motives and sequence of adoption). The empirical analysis is based on seven Irish medical device SME case studies achieving high growth ambitions at an international level. Our findings demonstrate that SME open innovation adoption is exemplified by a project based as opposed to an organisational level rationale and a natural tendency to pivot back towards the closed paradigm through a ‘switchback' strategy once the need has been addressed. In turn, SMEs develop open innovation capabilities on a project by project basis and mature as a consequence, thus highlighting the importance of the ‘doing, using, interacting’ mode of learning within SME OI development. Furthermore, SMEs tend to adopt a common sequential and temporal pathway commencing with a commercialisation focus through the outside-in mode followed by a complex, coupled co-creation mode. This study also provides insights into how the founder/CEO's characteristics influence OI adoption dynamics using the West and Bogers (2014) obtaining, integrating and commercialising framework thus extending upper echelons theory (UET) and strengthening the connection between open innovation and entrepreneurship theory.

Introduction

The paradigm of open innovation (OI) has in recent years dominated the attention of many innovation studies scholars (Martin, 2012; Stanko et al., 2017; Bogers et al., 2017; Randhawa et al., 2016). Whilst there are many OI definitions in the literature (Chesbrough, 2003; Gassmann and Enkel, 2004; Chesbrough et al., 2006; West and Gallagher, 2006), Chesbrough and Bogers (2014: 17) offer the most recent: “… a distributed innovation process based on purposively managed knowledge flows across organisational boundaries, using pecuniary and non-pecuniary mechanisms in line with each organisation's business model”. Significant research has been conducted to advance our understanding of OI since its inception by Chesbrough (2003), however, much of its origins are within large scale, well-resourced enterprises (LSE), whereby OI has been adopted as an explicit enterprise strategy. As a result, there is an imbalance in our understanding of OI, with smaller scale, less influential enterprises (SMEs) only in recent years attracting the attention it warrants (Vanhaverbeke et al., 2018; Greul et al., 2016; Kraus et al., 2019). Whilst OI offers both pecuniary and non-pecuniary advantages (Dahlander and Gann, 2010), regardless of organisational size, the OI challenges can be more difficult to traverse for SMEs given their scale, resource constraints and managerial ambitions (Dooley and O’ Sullivan, 2018) and thus may influence how OI manifests itself within such firms.

As outlined, researchers have begun to address the SME OI research gap (Greul et al., 2016; Kraus et al., 2019; Usman et al., 2018) to advance our understanding of OI within this important sector. However, the ‘human’ micro-level perspective has received negligible attention (Ahn et al., 2017; Bogers et al., 2018; Gassmann et al., 2010; Bianchi et al., 2011), an important dimension in our understanding of the SME context given the scale and dominance of the individual entrepreneurial founder/CEO in both the operation and strategic development of the enterprise (Saunders et al., 2012). Thus, it is in recognition of the centrality of the SME leader as a pivotal decision maker, asking if, when, who and how to engage in OI – essentially acting as an OI conduit, coupled with the paucity of knowledge at the individual micro-level perspective (Salter et al., 2015), that this study seeks to explore the observable entrepreneurial founder/CEO managerial characteristics and the influence these characteristics have on the OI adoption dynamics1 within the SME. Ahn et al. (2017) called for increased research of this ‘human’ dimension through in-depth case studies exploring the identification of new upper echelons theory (UET) managerial characteristics. The adoption of UET theory is beneficial since it strengthens the connection between the entrepreneurial founder/CEO, the top management team (TMT) and the strategic focus of the enterprise (Hambrick, 2007; Hambrick and Mason, 1984). Thus, by focusing at the micro-level of the SME founder/CEO and their leadership role in OI adoption, this research seeks to deepen our understanding of why and how SMEs adopt OI. To achieve this, the research undertakes case study analysis of seven high-tech SMEs within the medical device (MD) sector, developing novel technological products and with an entrepreneurial founder/CEO at the helm. Given our modest understanding of OI within the SME context, the study seeks to explore the OI adoption dynamics within high-tech SMEs drilling down to the individual project-level unit of analysis (Bogers et al., 2017) within each SME to enrich our understanding. Once these SME OI adoption dynamics have been revealed, the research then focuses on the organisational leader i.e. the ‘human’ perspective (Ahn et al., 2017; Bogers et al., 2018; Bianchi et al., 2011), and asks the following research question: “How entrepreneurial founder/CEO characteristics influence the SME OI adoption dynamics?” This not only contributes to our understanding of the OI paradigm within this often overlooked, yet important sector but also identifies how SMEs can enhance their OI maturity and future competitiveness.

This research aims to make the following contributions. First, this study explores the OI adoption dynamics at the individual project level (Du et al., 2014; Vanhaverbeke et al., 2014; Bahemia and Squire, 2010) and provides evidence of the SME OI reality which is project led and operationally driven. Thus highlighting the dynamic and agile nature of SMEs and also contributing to a more comprehensive and precise understanding of how SMEs adopt OI (Chesbrough et al., 2006; Vanhaverbeke et al., 2014; Randhawa et al., 2016). The study also focuses on the temporality within innovation management (Ellwood and Horner, 2020) and reinforces the centrality of the organisation leader in determining the ‘competition switchbacks’ by which they advance their technology and grow their venture. Second, an exploration of the founder/CEO managerial characteristics influence on SME OI adoption is then conducted through the lens of West and Bogers (2014) – obtaining, integrating and commercialising model. Finally, our research contributes to our understanding of the SME OI maturity pathway and the management maturity amassed through a pragmatic ‘learn by doing’ approach (Revans, 1983; Enkel et al., 2011; Carayannis and Meissner, 2017). The research highlights the importance of learning from the OI experience whilst acknowledging the positive benefits for the SME to nurture progress along the OI maturity pathway. Our findings indicate the natural position of the SME is to revert to closed technology development unless constraints or opportunities at the project level drive them towards OI. In all, this study reveals the project dominant perspective of OI within SMEs and reveals how SME leader's managerial characteristics manifest within the OI adoption dynamics. This emphasises a strong literature connection between OI and entrepreneurship which facilitates a deeper understanding of SME OI adoption. The paper is structured as follows. First, we review the SME OI literature followed by the UET literature. We then present our case study research design. The findings and analysis are next presented. Finally, the limitations, conclusions and possible future research opportunities are discussed.

Section snippets

Open innovation

Organisations are changing and adopting a more open and collaborative approach to achieving their objectives (Barringer and Harrison, 2000; Hagedoorn and Duysters, 2002; Van De Vrande et al., 2009; Lewis et al., 2010) due to the increase in globalisation, technological complexity, increased competition and resource deficits. The OI paradigm has been described as a “wide umbrella” (Stanko et al., 2017) consisting of three modes of knowledge flows (Gassmann and Enkel, 2004) and a multitude of

Data methodology

A qualitative, multiple case study was selected due to its ability to provide a holistic view of the importance of the founder/CEO's role in OI adoption (Berends et al., 2014; Gummesson, 2000; Yin, 2009). This approach is useful because OI theory is largely dispersed (Gassmann et al., 2010) and few SMEs define an explicit OI strategy but rather evolve towards one. Thus, a qualitative approach is deemed most suitable to reveal the dynamics, intricacies and rich insights of OI adoption (Mortara

Findings

The seven SME cases studied were all established MD enterprises achieving high growth ambitions at an international level. Whilst our primary research focus was to explore how the founder/CEO's observable managerial characteristics influenced the adoption of OI practices within the SME context, we first had to determine the OI adoption dynamics within the case firms to support their innovation process. Thus, the initial part of the findings section explores the OI dynamics within the SME

Discussion

In this study, we sought to explore SME OI adoption from the ‘human’ perspective i.e. the SME founder influence on their organisation's OI choices. This research study highlights the active leveraging of OI by MD SMEs across all three modes of the paradigm with a diverse partner base to support their internal innovation activities (both explorative and exploitative) and the strategic development of the venture. While, the realities and experience of OI adoption in each case is unique, all

Concluding remarks

This research study asked the question how entrepreneurial founder/CEO characteristics influence the SME OI practices engaged in? The study first demonstrates that high-tech SMEs are capable of and do leverage OI practices to advance their core technology towards market adoption. Evidence is presented of OI practices with a large concentration of outside-in and coupled modes of interaction across a relatively narrow range of partners. This study demonstrates that SME OI adoption is exemplified

Gillian Barrett (MSc, PhD) is a College Lecturer in Management and Entrepreneurship at Cork University Business School (CUBS), University College Cork (UCC) since 2016. She completed her PhD entitled “Open innovation adoption in global high-tech SME firms: a qualitative multiple case study” in 2017 and her core research interests lie at the intersection of open innovation, the global high-tech SME and the entrepreneurial founder. Other research interests include entrepreneurial education and

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    Gillian Barrett (MSc, PhD) is a College Lecturer in Management and Entrepreneurship at Cork University Business School (CUBS), University College Cork (UCC) since 2016. She completed her PhD entitled “Open innovation adoption in global high-tech SME firms: a qualitative multiple case study” in 2017 and her core research interests lie at the intersection of open innovation, the global high-tech SME and the entrepreneurial founder. Other research interests include entrepreneurial education and business model innovation. Prior to academia, she worked for fifteen years' in industry in a variety of senior management and leadership roles primarily in innovation, technology and project management. During this time, she worked with Ireland's largest retailer and wholesaler and managed many strategically important projects in Ireland, UK and Spain.

    Lawrence Dooley (MComm, PhD) is a College Lecturer in Enterprise and Innovation at University College Cork (UCC) since 2004. Prior to joining UCC, he was based at the Centre for Enterprise Management in the University of Dundee, Scotland. He undertook his doctoral thesis entitled “Systems Innovation Management” at the National University of Ireland, Galway. His core research interests focus on organisational innovation and issues related to inter enterprise collaboration and value creation from the SME perspective. Other related interests include knowledge exchange and discovery and the unique demands of lower-tech firms when engaging in innovation. He has published widely over recent years, actively liaises with industry both through applied research projects, consultancy and research seminars, and is also Associate Editor of the R&D Management journal.

    Joe Bogue is a Professor with the Department of Food Business and Development at CorK University Business School. His research interests include: market-oriented new product development, strategic food marketing, knowledge management and new product development, health-enhancing foods and functional foods, new product development strategies, food choice and consumer acceptance in relation to novel products, dairy supply chains and entrepreneurship. He received his BSc in Science from UCC in 1985. His postgraduate qualifications include an MSc in Food Science and Technology (1992, UCC) (Food Marketing and Entrepreneurship) and an MA in Teaching and Learning in Higher Education (2007, UCC) (Entrepreneurship Education). He graduated from The University of Newcastle-upon-Tyne, United Kingdom with a PhD in 2002. His PhD. research entailed an analysis of market-oriented NPD within the food industry and included consumer and industry research. He has conducted funded research on behalf of the Department of Agriculture and Food (FIRM), the Higher Education Authority, Enterprise Ireland and the European Union. He has current EU funded research projects on international dairy supply chains and the role of contracts in international supply chains. In 2014, with Dr Brian O′ Flaherty (Business Information Systems), he was successful in a Horizon 2020 grant application worth €1.8 million to co-ordinate a project on European Entrepreneurship.

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