Oi in sme's remarks


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Oi in sme's remarks

  1. 1. 1 Research Proposal Open Innovation management strategy& implementation in SMEs. Companies consider innovation as a major engine to enhance their performance and to strengthen their competitive position in the market. Many firms have paid most of their management attention to a greater focus on internal efficiencies of the development process, team structures, decision making and cross functional interaction. However, as more and more companies bring innovation straight to the heart of their corporate strategies, developing internal innovation capabilities is no longer sufficient to gain and sustain competitive advantage. Since innovation strategies look increasingly similar and commoditized, more and more organizations try to further improve their innovation performance through intensifying collaboration across industry networks and partnerships, opening up their innovation processes in line with the open innovation framework. Chesbrough defines open innovation as: “the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. Open Innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology” (Chesbrough, 2003). Open innovation is characterized by the involvement of all company functions, at different stages of the innovation process, not just R&D. Ideas are investigated at the research stage and the best and most promising of these make it to development and commercialization phases. Less promising ideas are dropped. Open innovation as a management model is currently gaining grounds in many industries. For instance, open innovation modes have been identified as one of the main trends in pharmaceutical innovation today. Since it is too costly to have all competences in-house, pharmaceutical companies have started to concentrate on core competencies evolving around technology platforms and therapy areas, in the same time as collaborations with the right partners is increasingly important. Balancing the right size and structure of
  2. 2. 2 R&D is one of main objectives in R&D management today to analyze the impact of open innovation on several parts of the organization. For example Procter & Gamble is a company that has been a pioneer in this field of innovation. They are global manufacturers and marketers of consumer products with complex operational networks. P&G have been able to maintain their position in the market by adopting various innovation techniques and strategies. The ideas of open innovation originated from experiences from open source software (OSS) development where new principles for development projects were identified and initially a lot of literature was based on technology transfer and spin out/spin in, but the scope has rapidly broadened. Today, open innovation is becoming a paradigm that connects research from various parts of management sciences. The term is still being debated and many authors agree that open innovation has a much broader application than first proposed by Chesbrough. The research field is expanding in many directions and the ongoing debates cover a multitude of areas connected through the overall aim of understanding how firms can become more innovative. Open innovation has received increasingly attention in scientific research, but so far it has mainly been analyzed in large, high-tech multinational enterprises (MNEs) drawing on in-depth interviews and case studies. A few studies have demonstrated that open innovation also exists in early stage of implementation in smaller organizations. Prior studies have not yet systematically analyzed the notion of open innovation in SMEs. Hence, it still remains to a large extend an unanswered question how small firms adopt to open innovation. In spite of increasing interest in open innovation management strategy, discussion about the concept and its potential application to the SME sector has been excluded from mainstream literature. SMEs are the largest number of companies in an economy, but they are under researched in the open innovation literature. Open innovation research recognizes that small firm’s plays a prominent role in the contemporary innovation landscape because are by nature more open. In addition Open innovation strategies are discussed in the context of large R&D intensive firms However, good practices from large organizations cannot be transferred to SMEs directly. Finally there is limited conceptualization of open innovation strategies. In existing research openness is regularly treated as a binary variable. Despite a
  3. 3. 3 large body of literature on innovation, there is little said on how the process of innovation actually takes place. When attempts have been made, they have often ended in descriptions and analyses on how you prepare for, and what the contingency factors are. Although the era of open innovation has begun for many firms, we still lack a clear understanding of the mechanisms, inside and outside of the organization, when and how to fully profit from the concept. It might be helpful to address some of the research questions – knowledge gaps in an interesting field – to develop such a theory: firstly, we know that intellectual property will play a core role in open innovation, but the determinants of successful tradable patents still need to be identified. Patent valuation remains quite problematic, as most patent transactions are not reported publicly, and patents are highly idiosyncratic by their very construction. Secondary markets require better information on valuation if they are to advance materially in the medium term. A longitudinal analysis of an auctioning firm’s patents or of a patent fund might be very helpful. Secondly, the next logical open innovation step is trading intellectual property and, especially, patents, which holds huge potentials for both patent owners as well as traders. But the crucial question for policy makers remains whether this is good for the economy. It seems clear that some minimal protection is essential to stimulate risk-taking, and it seems equally clear that extremely strong patents strangle any follow-on inventions that build on them. Balancing risk-taking and promoting cumulative innovation are challenging social questions. Thirdly, SMEs are the largest number of companies in an economy, but they are under researched in the open innovation literature. There are large sample studies that show that open innovation policies benefit (Laursen and Salter, 2006), but these same studies also show that larger size benefits. A crucial question for SMEs is how they can manage open innovation despite the liability due to their smallness. This is especially relevant when a firm is dependent on a few strong customers, such as the automotive sector. Fourthly, the existing work does not focus sufficiently on open innovation’s spatial aspect. Opening up the innovation process creates a challenging situation of managing dispersed virtual R&D teams. These teams are more difficult to energize, coordinate and enable in their knowledge creation. The operational functioning of open innovation depends on firms’ ability to
  4. 4. 4 manage decentralized innovation processes and often includes participants who are not even on the company’s payroll. At the same time, large firms internationalize their own R&D with two dominant motives: to be closer to their markets and lead users and to access the best talents worldwide by increasing their absorptive capacity. A great deal of management research has to be carried out to merge these two young research fields. Last, but not the least, there is as yet no holistic model of open innovation that includes the innovation process’s determinants and industry specifics, as well as the limits to opening it up. The field of open innovation is still at an early stage; it offers a wide field in which academics, practitioners and policy makers can be active. This proposal will be focused on the development of open innovation management strategy support tools for Small and Medium Enterprises (SMEs) in order to: • Design and develop sustainable products and processes • Service customers better through more sustainable business models Today, open innovation has changed its status from the research interest of a few to a mainstream research area. Initiated by scholars in the field technology and innovation management, it is currently often also cited in strategy, general management and organization behavior journals. The question is: How far will open innovation go and how long will it last? A real paradigm shift is irreversible and differs from fashion and science hypes in terms of its long-term impact.