Challenges in Adopting Open Innovation Strategies in SMEs: An Exploratory Study in Portugal

Abstract

Introduction The evolution of the Internet technologies has allowed the small and medium scale enterprises (SMEs) to compete successfully and competently in both local and international markets (Schmid, Stanoevska-Slabeva and Tschammer, 2001). But in terms of adopting open innovation (OI) strategies, majority of them are facing challenges in many regions (Rahman, 2010), especially in the European region where over 99% of the enterprises are comprised of SMEs (European Commission, 2008). Further, it has been observed from other researches that despite OI's widespread applications, SMEs are struggling with its implementation due to their relatively low level of absorptive capacity, policy and financial constraints, and perceived management challenges (Van de Vrande et al., 2009; Saguy, 2011). The main aim of this research is to find a focus area to empower SMEs through adaptation of open innovation strategies. However, due to the open and collaborative nature of this newly evolved concept, the focus has been given to strategies belong to popularly known, open innovation, but not limited to other collaborative innovation, in spite of difficulties in putting any restrictive boundaries in between them. Further, due to the researchers' contemporary research environment, initial target area included a few selected SMEs in Portugal (main due to time, funding and networking), which has been expanded in a few other countries as the research grows. Similar surveys are being carried out in India, Israel, and Turkey through fellow research colleagues, who are trying to gather information in those countries and we like to make a comparative study based on the finding, which will be another research paper in near future. For now to carry on this researches pertaining to the adoption of innovation strategies in Portugal, effort has been given to discuss some issues of innovation and open innovation in the area of business development, or enterprise development. We found researchers from various schools of thought have different opinion about defining business house, corporate business house, large business house, or even businesses belonging to small and medium scales. These we learned from reviewers' recommendations and remarks regarding development of the definition of enterprise during submission of our research papers in various journals and conference proceedings. To us, as long as the business brings out any value addition, either in terms of finance or knowledge, we are terming it as an enterprise which in the long run is beneficial to the community or society or nation or region. An enterprise in our view is an entity, who brings out value addition, either in terms of financial gain, or in terms of knowledge addition through any form of intervention, either products, processes, or services, or management orientations. Henceforth, a few points are being discussed on the effect of innovation, and especially open innovation strategies in the enterprise development. Innovation Innovation, being latent within the product, process and service in an enterprise as it grows naturally, and if these three could be intermingled further, such as incorporating new idea and changes through product, process and or service development, bond of innovation increases (Rahman & Ramos, 2012a). In broad sense, there are quite a few means in the literature that support innovation in organizations (Caetano & Amaral, 2011). In addition to the above three inherited parameters of an organization, due to the prevailing nature of innovation, often the entire organization may need to be manipulated, such as organizational reforms or organizational infrastructure management, and these would involve tools far beyond the control of the management of a single entity. They demand collaborative efforts of entities as a whole or individuals from different entities to act towards attaining the goal. However, thus going along, processes remain uncertain, especially looking into the very intricate nature of the business, and especially when the issue comes to the small and medium enterprises, where the decision making is very narrow as the ownermanager in almost in majority of the cases has to take care of each and every decision. …