Open innovation strategy and performance of SMEs in the IT industry located in Korea’s innovation clusters: the role of government subsidies

Abstract

ABSTRACT This study examines the effect of small and medium-sized enterprises (SMEs)’ open innovation activities on performance, depending on the growth stage. It also studies the mediating effect of government subsidies on SMEs’ innovation performance. We collected data from 452 SMEs in the information technology (IT) industry located in Korea’s innovation clusters. The findings show that SMEs’ absorptive capacity and external network activities positively influence their performance, with stronger effects for SMEs in their mature growth stage. Moreover, a higher ratio of government subsidies in R&D investment positively mediates the relationship between external network activities and innovation performance. This study presents several implications for policymakers to support SMEs’ R&D activities using government subsidies.