A Narrative Literature Review on the Role of SME’s

3666 words (15 pages) Business Assignment

17th Apr 2020 Business Assignment Reference this

Tags: Business AssignmentsBusinessLiterature ReviewSMEsInnovation

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The Open Innovation, and has become one of the main factors in Strategic Innovation management, and the firms are rethinking the fundamental ways in which they help us to set up the ideas and bring them to the market. Open innovation briefs about the creative ideas which can arise from the firms or outside the firms. These innovative ideas can be effective by both internal and external medium of the firms. The open innovation paradigm has played a vital role in outlining and accessing, the extraneous sources and integrate the knowledge with the in-house study and development of the firms. Generally, open innovation paradigm has many communication resources are used to connect the potential inventors and to share the idea and to connect with each other, for example, Crowdsourcing is also called Open innovation, where the group activity can exchange the creativeness and ideas on a single platform. Open Innovation is used to broaden the markets in order to boost the access of external innovation capabilities. Finally, the objective of this narrative literature review is to understand the impacts, issues, and challenges of carrying out in SME’s development.

Keywords:  Open Innovation, Paradigm, Crowdsourcing, Open Innovation, Open Business model, Collaborative approach.


Open innovation has been defined as: the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation respectively. (Gassmann, Enkel, & Chesbourgh, 2010). Open innovation is a wider concept which involves a large number of practices and the process involved in implementing. (Spithoven, Vanhaverbeke, & Roijjakkers, 2013). Firms should merge the internal and external thoughts and technologies as effective pathways to market when advancing and commercializing technologies. (Wynarczyk, Piperopoulos, & McAdam, 2013). The practice of innovation is steadily growing which has become the most significant topics in the innovation theory. Open innovation integrates outbound innovation by contributing a framework in which any intermediate product of innovation method is designed as an economically good, which can be exploited internally or externally. (Huizingh, 2011). The adoption of Open innovation in SME’s is closely related to the market needs of the economy, SME’s perceive, organize, and manage open innovation through strong collaborative ties with other ecosystems members (Radziwon & Bogers, 2017). As open innovation in SME’s are like two interlinked dimensions, they are, inbound open innovation, which is the practice of leveraging the technologies of others by accessing their technical and scientific knowledge, the outbound open innovation, which is the practice through which firms transfer their technologies to external organizations for commercial exploitation. (bianchi, Campodall orto, Frattini, & Vercesi, 2010).

There are many firms like, telecommunications, pharmaceuticals, biotechnology and even military weapons and communications systems are moving from closed to open innovation. This type of approach goes beyond the technology like automotive, health care, banking, insurance, and consumer related products are now leaning towards open innovation. The goal of the paper is as follows:

      This purpose of this paper is to expand the boundaries of open innovation in SME’s.

      The impacts that SME’s face while in adopting the open innovation.

      The future of SME in open innovation.

(Drageanu, Feniser, & Lungu, 2015)

The above table gives the information about the Open innovation types by Knowledge Types flow direction. The In-bound Open innovation targets on the acquisition of the external knowledge like In-sourcing, R&D collaboration, Customer involvement and mergers & acquisitions. In Out-bound Open innovation indicates the knowledge exploitation in many ways like open sourcing, licensing-out and Spin-off.

RQ: What are the negative impacts of adopting open innovation in SME’s and how the boundaries of SME’s can be expanded in future?

After the reviews of the articles, aimed to explore some of the key issues around the opportunities and challenges brought about the open innovation practices and the process of SME’s. One of the co-existing point is extension of traditional boundaries of the open innovation in SME’s. By implementing the open innovation model for SME’s throughout a firm’s value chain. This path has provided the new insights to the inhibitors and enablers of open innovation and they are more likely to interacting with small firms. Therefore, that there will be a positive impact on implementing OI to the SME’s, finally it is measured by the turnover growth of the new business, and it’s not the number of new products or services introductions that count.


OI has become on one of the heated topic in innovation management, and it exist in individuals, group, business, ecosystems etc. and it encompasses, connects, integrates a large range of already existing activities. Open innovation will offer quite, enticing edges for firms, since it’s more profitable, and it is helps to reduce costs, drive to promote, open up new markets and finding a  new way to for revenue streams for the SME’s.

Steadily, the concept of OI will be adopted by SME’s, for expanding the business and to sustain in the current market for the development to progress further.

The above table explain about the types of OI adopted in SME’s, the chart explains that in-bound open innovation is more familiar than out-bound open innovation. Three types of open innovation is presented in the survey, namely in sourcing activities, R&D collaboration and customer involvement.

A short glance of Literature Review
S.No Title Author Year Keywords Abstract Methods Key findings
1 The Era of Open Innovation (Chesbourgh, The Era of Open Innovaton, 2003) 2003 Open innovation, closed innovation, funding innovation, generating innovation, commercializing innovation The basic research to get new ideas Qualitative method Ideas to advance the business while leveraging their internal ideas outside their current operations will likely thrive in this new ear of open innovation
2 The Evolution of Open Innovation (Curley, 2015) 2015 Patterns, Adoption, Shared Value the patterns observed in this new non-linear paradigm. Qualitative method The collision of 3 mega trends are increasing digitalization, mass collaboration & sustainability.
3 A comprehensive review of open innovation literature (Hossain, Islam, Sayeed, & Kauranen, 2015) 2015 Content analysis, Research & development The purpose of this study is to suggest the review on the progressive open innovation literature. The study covers both qualitative and quantitative method of selected articles about open innovation and on quantitative analyses of extant literature on open innovation. The future areas of research should be focused on the field of study, user’s perspective, materials and methods & scholars should focus on the other countries open innovation strategies too.
4 Open innovation: State of the art and future perspective’s (Huizingh, 2011) 2011 State of art,context dependency,open innvovation practices,Future of open Innovation Open innovation is a valuable concept Qualitative method The future of open innovation
5 Why Companies should have business model (Chesbourgh, Why companies should have open business model, 2007) 2007 Open business Model Open business model is called as the next frontier in the innovation Qualitative method It provides a potential pathway to greater innovation and increased growth
6 Open innovation in small and medium sized enterprises An Overview (Wynarczyk, Piperopoulos, & McAdam, 2013) 2013 Collabarative approach, Open innovation, SME’s The firms should combine external and internal ideas and technologies to market the product Qualitative method To expand the boundaries of open innovation
7 Open Innovation Practices in Small and Medium Enterprises (Spithoven, Vanhaverbeke, & Roijjakkers, 2013) 2013 Product innovation, Innovative performance To investigate the OI dimensions impact the innovative performance of SME. Qualitative method The positive impact on implementation of new offerings on SME’s
8 Enabling open innovation in SME’s:how to find alternative applications for you technologies (bianchi, Campodall orto, Frattini, & Vercesi, 2010) 2010 TRIZ Identification of viable opportunities for out-licensing a firm’s technologies. TRIZ instrumnets in combination with non-financial weighting and ranking techniques & portfolio management tools Qualitative method To integrate the ATA identification process with ex-ante evaluation methods To organize the process of ATA identification & to allocate the   responsibilities
S.No Title Author Year Keywords Abstract Methods Key findings
9 Specifics of Open Innovation in SME’s (Drageanu, Feniser, & Lungu, 2015) 2015 Management SME’s The aim of this study is to find the idea for open innovation in SME’s and the key factors in implementing a management strategy, the companies which are involved in such strategy and have experience in open innovation Qualitative Research, Questionnaire-based survey This study is based on the open innovation in SME’s is done by selecting countries, the future research has been narrow-down.
10 The future of Open Innovation (Gassmann, Enkel, & Chesbourgh, 2010) 2010 Spatial perpespective Here the abstract focuses on the nine perspectives to develop an open innovation theory completely Qualitative method Future research areas in SME’s is to implement the innovation process determinants and industry specifics.


The overall study of this literature review is about the term “Innovation” and how it’s effectively used in the business in various areas and to sustain in the market. The first article starts with, the era of open innovation – from closed to open innovation model and the different modes of innovation are Funding Innovation (Mode – 1) – focuses on innovation investors and benefactors, Generating Innovation (Mode – 2) – there are four types of organizations involved they are innovation explores, merchants, architects and missionaries, Commercializing Innovation (Mode -3) – it targets the innovation marketers and one-stop centers, Long Live Innovation (Mode – 4) this innovation gives way to create value –  with the new opportunities to claim the value of the work (Chesbourgh, The Era of Open Innovaton, 2003). The further step of innovation is moved to the evolution of open innovation describes about the emergence of a new paradigm open innovation and the patterns introduced are reusable solutions to the reoccurring problems and opportunities which is observed in the non-linear paradigm, by adopting this technology which can help faster innovation progress. The below image is the development of new paradigm is a carried by the EU Open Innovation Strategy and policy Group, which motivates to work on Open Innovation.

The evolution of Innovation,Bror Salmelin,EU OISPG

(Curley, 2015)

The new paradigm was created based on the principles of integrated collaboration, shared value, ecosystems, new technologies, which focus on innovation adoption.  The live examples of IT sector is Apple and Amazon for its shared vision, values. The three trends which evolve the open innovation is digitalization, mass collaboration & sustainability (Curley, 2015). The Era and the Evolution of open innovation has brought the significant changes internally and externally, now it is moved to SME’s sector is adopting the Open Innovation Sector and to expand across the boundaries. The companies has started trying to use the business model for the organizational growth. The business model plays an effective role in the success of the organization, it is also said as a small road map for the success of the business. Companies like IBM & Procter & Gamble are the examples creating a new business model open innovation and making the transition. By adapting the business model innovation organization can develop unique customer experience and revenue growth. The open innovation model aims to combine the external and internal ideas and technologies as a unique way for marketing with the help of current technology. Here the article briefs about the business model for the SME’s will be effective for the growth and to sustain in the market. By focusing on the business model innovation on SME’s the growth rate has been increased in the last few years, there are some ways to keep the success for a long term growth are by employing the right people at the right work will keep the organization stable, creating agile structures for the entire organization, jointly working and growing with the digital partners. As per the article review there are very few companies who try to adapt OI for the SME’s, due to lack of resources the implementation OI is a barrier (Spithoven, Vanhaverbeke, & Roijjakkers, 2013). The future research in the article (Wynarczyk, Piperopoulos, & McAdam, 2013) has to be concentrated on the few areas like managerial competence – the role of managerial capacity & human capital are the significant areas for practicing open innovation practices and for the success. Entrepreneurial characteristicsthere are some inadequacy on the research are characteristics, nature and the decision taken by the entrepreneurs will influence the SME’s engagement in the open innovation practices. Internationalization – Exporting is one of the important measures for the economic growth, competitiveness & international success. Here in this review (Drageanu, Feniser, & Lungu, 2015) the investigation helps to define the motives for the open innovation in SME’s and the various key factors included in implementing the management strategy of open innovation. SME’s should be often linked with the external sources to innovate successfully to obtain a successful position. Overall the study has been narrow down in various criteria like location, choosing limited articles, questionnaire method, etc. almost the article mentioned here all were of qualitative and quantitative. Finally the future of open innovation indicates the nine perspectives which aims in developing the open innovation theory, the perspectives are the spatial perspective – the research which leads to the globalization of innovation, structural perspective – the work division has increased in innovation, Users Perspective – are integrated into innovation process to use the freedom available in the early phases, supplier perspective – early adoption of innovation process can increase innovation performance in the industries, leveraging perspective – the involvement of business model thinking looks to be a crucial created technology and intellectual property’s external commercialization during a future with high potential, process perspective – the three main processes perspective in opening the innovation process are outside-in, inside-out and coupled tool, tool perspective – enabling the customers to improve or configure this own product with the help of tool kits or to enable companies to integrate external problem solvers or idea creators via websites, institutional perspective –  OI is considered as a private-collective innovation model, cultural perspective – creating culture value outside the world and know-how is crucial (Gassmann, Enkel, & Chesbourgh, 2010). The era of OI has just started, all the industries are now started focusing on a new paradigm. The possibility of starting the innovation process are steadily growing, on the other side due to the lack of improper metrics systems are not yet adapted to track and value the activities. The motives of OI in companies are as follows:

Strategic motives

  • Time taken to enter the market is reduced
  • Concentrating on potentially disruptive technologies
  • Accessing the features of merchandising
  • Improvising the internal innovativeness by leveraging
  • External sources

Financial motives

  • Crossing boundaries across the globe
  • Raising the product margins and decreasing the risk in technology development

Technological motives

  • Employing the skilled people for the development areas which helps to create and build new ideas
  • Trying to use a variety in product development.
  • Utilizing new or supplementary product or new technologies

Operational motives

  • Deduction of technical problems

Future Research

Overall the research is focused on the SME’s is directed towards the qualitative and quantitative research techniques, in few areas there are some limitations in analyzing the research like geographical conditions, and the journal & articles choose are very limited. By researching and apply practical implications in the organizations on wider angle will helps to get the better results, which helps to adapt the OI in SME’s


Open innovation is a balanced method by combing internal and external resources to enhance the innovation process of the company. Adapting the closed innovation to open innovation gives better results to perform the SME’s. The business model innovation is just a start up for the organization to find the weaker areas, by progressing towards the open innovation for SME’s will helps to identify the problems in the early stages, which will be an example for the future new product launching and to cross across the boundaries.


  • bianchi, M., Campodall orto, S., Frattini, F., & Vercesi, P. (2010). Enabling open innovation in small & medium sized entreprises : how to find alternative applications for your technologies. Reserach & Management, Vol 40: No:4 – 414 -430.
  • Chesbourgh, H. W. (2003). The Era of Open Innovaton. MITSloan Management Review, Vol.44 No.3 – 35-42.
  • Chesbourgh, H. W. (2007). Why companies should have open business model. MIT Sloan Management Review, Vol 48. No:2 – 24- 29.
  • Curley, M. (2015). The Evolution of Open Innovation. Journal of Innovation Management, 9-16.
  • Drageanu, C., Feniser, C., & Lungu, F. (2015). Specific of open innovation in SME’s. Technology,Innovation and Industrial Management, 27-29.
  • Gassmann, O., Enkel, E., & Chesbourgh, H. (2010). The future of Open Innovation. R & D Management, Vol 40 , No:3 – 213 – 220.
  • Hossain, M., Islam, Z., Sayeed, M. A., & Kauranen, I. (2015). A comprehensive review of open Innovation literature. Journal of Science & Technology Policy Manageent, Vol 7 No:1 – 2- 25.
  • Huizingh, K. (2011). Open Innovation: State of art & future Perspectives. Technovation, 2-9.
  • Spithoven, A., Vanhaverbeke, W., & Roijjakkers, N. (2013). Open Innovation practices in SME’s and large enterprises. ResearchGate, 1-27.
  • Usman, M., Roijakkers, N., Vanhaverbeke, W., & Frattini, F. (2018). A systematic Review of the Litereature Review on Open Innovation on SME’s. 3-30.
  • Wynarczyk, P., Piperopoulos, P., & McAdam, M. (2013). Open innovation in small and medium-sized enterprises: An Overview. International Small Business Journal, 1-16.

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