Open Innovation adoption strategy enhancing performances in Malaysian SMEs

Abstract

Open innovation model is best suited to SMEs as it complements internal RD in enhancing performances and cost effectiveness through sustaining or gaining competitive advantage. This conceptual framework looks into the aspect of behavioral and cost to determine the adoption level. Aspect of study includes organizational citizenship behavior, managerial ties, organizational culture, transactional costs and appropriability regime to determine the relationship between these factors in manufacturing environment. OCB moots employees’ commitment as they are considered to be the most influential people in any organizations who are able to support innovations. The theories utilized in this research are drawn from multiple theoretical perspectives from Open Innovation theory, Social Exchange Theory and Actor Network theory. Collaboration among all the concerned external parties is crucial for SMEs in supporting innovation. External parties include external firms, R D organizations and government officials. Organizational culture affects the technology adoption through work practices as well as productivity and therefore management need to inculcate culture that promotes collaborations and supports to expedite open innovation. However the adverse culture may impact adoption negatively. External technology open doors for free riders and therefore protection mechanism must be enhanced through appropriability. Appropriability mechanism is important in protecting the innovative ideas from external parties through intellectual property rights especially in manufacturing sector as it impacts the innovation capabilities and revenues. The aim of the research is to evaluate the open innovation approach for SMEs with respect to the performances and sustaining the innovative development of productions in the long term. Quantitative techniques by adopting Partial Least Squares regression (PLS) utilized to explore the fundamental relationships and analyze linear regression model by projecting the predicted variables and the observable variables. The findings of this study will help SMEs to develop new tools and technologies that are driven by open innovation concept. It also broadens the body of knowledge of open innovation especially in providing new evidence on how performances can be achieved in the long run. From theoretical aspect, this study contributes by exploring the dimensions of various behaviors and providing guidelines to SMEs the behaviors that is positively associated to Open Innovation adoption.