Impact of Open Innovation on the Competitive Advantage of Hospitality Sector SMEs

Introduction

Open innovation became an increasingly established topic in the management literature at the beginning of this century (Lee et al., 2010). Alexy et al. (2016) argue that one of the leading academic discussions about this topic is the explanation of the differences in competitiveness in organizations with similar characteristics and operating under equivalent market conditions. For Aranha et al. (2017), the considerable increase in the number of academic studies on open innovation in recent years does not reflect robustness in the concept, which still needs understanding and deepening of the principles of open innovation aimed at SMEs.

Regarding the relationship between open innovation and competitive advantage, firms’ management competence depends on the ability of top managers to mobilize and distribute the available resources, which includes knowledge about the development of business ecosystems (Alavi & Leidner, 2001). The impact of the open innovation management model has currently been one of the topics of significant discussion within the management (Huizingh, 2011). Positively, this allows the leverage of firms’ value chains, with strategic business objectives aligned through management innovation (West et al., 2014). It intentionally uses knowledge input and output flow to accelerate internal innovation and expand markets for retention of external knowledge, taking on the contours of the paradigm of closed innovation (Chesbrough & Crowther, 2006).

In contrast to the traditional view of closed innovation, open innovation is based on a solid prior knowledge developed in the innovation management literature, including approaches related to R&D outsourcing, i.e., outsourcing, inter-firm collaboration, and organization-environment interaction (Ferreira & Teixeira, 2018). Open innovation thus emerges as an emerging paradigm to replace the previous paradigma of closed innovation (Chesbrough, 2003a).

The nature of open innovation suggests that a greater openness facilitates the generation of innovative products to external sources of knowledge in organizations, which encourages the flow of knowledge and information between firms (Chesbrough & Crowther, 2006; Crescenzi et al., 2016; Shearmur & Doloreux, 2016). Huizingh (2011) recognizes the evolution of the concept in its various perspectives, concluding that further discussions are needed for its understanding and implementation due to the scarcity of academic studies, particularly related to SMEs. In this context, SMEs’ top managers practices are particularly vital to ascertain (1) whether there is an effective relationship between management innovation activities and its environment and (2) whether they are driven by technological developments, which correspond to the growing trend towards the interconnectedness of people, solutions and organizations (Martins & Lino, 2014).

Firms expect responses in business environments marked by uncertainty and vulnerability, where top managers are required to have the flexible and diversified capacity to overcome market instability to adapt to highly competitive market dynamics in a globalized environment (Lião et al., 2015). Simultaneously, these organizations use integrated business strategies as a compass to orient themselves in the face of business competition. Fayoumi and Loucopoulos (2016) argue that organizations have several business languages proposing to meet some business aspects (e.g., rules, decisions, goals, processes, organizational structure, etc.). More profitable returns on their investment are derived from these, regardless of their nature, thus maximizing the increase in the firm’s value chain to the extent of the qualifications and skills that human resources can effectively put into practice.