Academic journal article Innovation: Organization & Management

Effects of SME Collaboration on R&D in the Service Sector in Open Innovation

Academic journal article Innovation: Organization & Management

Effects of SME Collaboration on R&D in the Service Sector in Open Innovation

Article excerpt

(ProQuest: ... denotes formulae omitted.)

Firms typically envision being successful through innovation at the international level. Some of the major factors influencing the success and innovation of firms include R&D and commercialisation based on internal resources (Chesbrough & Crowther, 2006; Lichtenthaler, 2008). Resources developed through internal R&D can act as a formidable barrier preventing potential competitors from entering the same market (Chesbrough, 2003; Schilling, 2008). However, firms face various problems such as limited amounts of time available for R&D and rapid market changes arising from fluctuating customer needs (Chan, Kensinger, Keown, & Martin, 1997). Internal R&D efforts can be inefficient and wasteful in that such efforts require the use of many resources and substantial amounts of time, making it intractably difficult to capture growth opportunities and manage the firm's innovation activity (Kuemmerle, 1997; Lane & Lubatkin, 1998; von Hippel, 1988). Consequently, the firm's organisation and R&D strategies have to be designed such that they can satisfy diverse global needs. Further, its R&D process must increase the likelihood of R&D outputs becoming both technically and commercially successful.

To survive in increasingly competitive markets, firms have started to incorporate external resources from other firms for the growth and success of their business. In particular, the expansion of boundaries between firms has contributed to this phenomenon. Because of the abundance of external ideas in the global market and increasing collaboration among firms, an increasingly large number of multinational firms have been pursuing innovation activity in partnership with other firms (Dodgson, Gann, & Salter, 2006). Noteworthy is the use of both internal and external ideas through collaboration for coping with rapid market changes and developing new growth engines. Such initiatives have sparked growing interest in new R&D paradigms for exploring how firms manage their collaborative efforts. In the wake of these changes, the concept of open innovation has been highlighted with collaborative activities such as technology acquisition, R&D collaboration, and joint venture activity.

The concept of open innovation embraces the strategic intent behind the use of both internal and external resources and is defined as the dynamic capability to manage technology both within and outside firms. Collaborative activities for the use of external resources reflect the core role of open innovation, that is, the enhancement of the performance, productivity, and sales of firms (Lichtenthaler, 2008). Open innovation can be achieved by integrating strategic activities such as technology acquisition and transfer, R&D collaboration, joint venture activity, and networking. A number of empirical studies have examined the R&D efficiency by analysing strategy of technology acquisition and commercialisation and evaluating technologically innovative activities (Amara & Landry, 2005; Arora, Fosfuri, & Gambardella, 2001; Gassmann & Reepmeyer, 2005; Kline, 2003). In addition, some studies have reported that goals and determinants for successful R&D cooperation vary according to partners (Belderbos, Carree, & Lokshin, 2004; Fritsch & Lukas, 2001; Tether, 2002). To sum up, collaboration has been referred to as one of the most important factors in open innovation.

However, three key issues remain largely unexplored and unexploited: types of collaboration, target industrial sectors, and methods. First, the question of whether R&D performance varies according to the type of collaborative activity has remained in the context of open innovation. Previous studies of collaborative activities have typically examined their effects on R&D performance by focusing on only one particular type of collaborative activity (Belderbos et al., 2004; Criscuolo & Haskel, 2003; Lhuillery & Pfister, 2009; Sampson, 2007). …

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