Open Innovation in SMEs of Developing and Transitional Economies

Open Innovation in SMEs of Developing and Transitional Economies

Hakikur Rahman (BRAC University, Bangladesh) and Isabel Ramos (University of Minho, Portugal)
DOI: 10.4018/978-1-4666-1619-6.ch017
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Abstract

Despite being accepted by corporate entrepreneurs and large business houses around the globe, the adaptation of strategies and concepts belonging to the newly evolved dimension of entrepreneurships, and the open innovation (OI), countries in the East, West or Southare yet to accommodate open innovation strategies in their business practices - especially in efforts to reach out to the grassroots communities. By far, firms belonging to the small- and medium-sized enterprises (SMEs), irrespective of their numbers and contributions towards their national economies, are far behind in accepting open innovation strategies for their business developments. While talking about this newly emerged business dimension, it comprises of complex and dynamically developed concepts like management of intellectual property aspects, administration of patents and copyright issues, or supervision of market trend for minute details related to knowledge acquisition. All these issues are largely responsible for adding value to the business proposition in terms of economy or knowledge gain, and organizations or entities acting in this aspect deserve comprehensive investigation. As most of the developed countries have already adopted open innovation strategies, finding this as a weak link in terms of entrepreneurships in less developed countries, this chapter intends to seek answers related to the mentioned issues focusing adaption of open innovation strategies in developing and transitional economies. It is a longitudinal study on business houses or national efforts from countries belonging to these categories, deducting from a literature review. The chapter goes on looking into various aspects of business development incorporating OI concepts, synthesizes building a reasonable framework to be applicable in the target economies, points out to some future research aspects, and concludes the finding of this research. This study is supposed to enhance the knowledge of entrepreneurs and researchers by gaining specific knowledge on the trend of open innovation strategies in developing and transitional economies.
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Background

Joseph Schumpeter (1883–1950), one of the first theorists who studied the economy through the innovative eye, stated that innovation is about new ways of doing things by combining existing elements into new products through a creative process (De Jong, Vanhaverbeke, Kalvet & Chesbrough, 2008). Along the way, innovation through the creation, dissemination and utilization of knowledge has become a key driver of economic growth. However, factors influencing innovation performance have changed in this globalized knowledge based economy, partly due to the advent of new information and communication technologies (ICTs), and partly due to the increased global competition. Innovation results from increasingly complex interactions at the local, national, regional and global levels among individuals, firms, industries and other knowledge institutions. Moreover, governments exert a strong influence on the innovation processes through financing and steering of public bodies which are directly responsible for knowledge creation and dissemination (universities, public and private labs, research houses or intermediaries), and through the provision of financial and regulatory inducements (Carayannis, Popescu, Sipp & Steward, 2006).

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