Open innovation in

Open innovation in
SMEs
SMEs
:
:
Trends, motives and
Trends, motives and
management challenges
management challenges
Jeroen P.J. De Jeroen P.J. De Jong Jong
EM Business and Policy Research EM Business and Policy Research
Wim Vanhaverbeke Wim Vanhaverbeke
Eindhoven University of Technology, & Hasselt University Eindhoven University of Technology, & Hasselt University
Vareska Vareska van de Vrande van de Vrande
Eindhoven University of Technology Eindhoven University of Technology
Maurice de Maurice de Rochemont Rochemont Paris Paris
Eindhoven University of Technology Eindhoven University of Technology Wednesday, May 16, 2007 Wednesday, May 16, 2007
OI: UsuaIIy about Iarge user firms
OI: UsuaIIy about Iarge user firms
Kirschbaum Rob, 2007; DSM Innovation Center
Why to taIk about OI in
Why to taIk about OI in
SMEs
SMEs
?
?

Definition of O!
Definition of O!
O is about O is about transactions transactions
User + Supplier: What's the supplier's story? User + Supplier: What's the supplier's story?

High tech
High tech
High High- -tech start tech start- -ups have (science based) ups have (science based) technoIogy technoIogy
capabiIities capabiIities which large firms need for their long which large firms need for their long- -term term
growth potential growth potential
External corporate venturing: External corporate venturing: win win- -win situation win situation after after
skillful negotiations skillful negotiations
Start Start- -ups are potentially ups are potentially powerfuI pIayers powerfuI pIayers, disrupting , disrupting
the positions of incumbents. Enabled by seed capital, the positions of incumbents. Enabled by seed capital,
VCFs VCFs, etc... , etc...
Why to taIk about OI in
Why to taIk about OI in
SMEs
SMEs
?
?

All
All
SMEs
SMEs
Scarce resources Scarce resources
Forced to use other firms' technologies (O " Forced to use other firms' technologies (O "avant avant la la
lettre lettre"!) "!)
MES of many innovation activities is small. MES of many innovation activities is small.
e.g. Creativity to make new toys, games, dolls (see: Big dea) e.g. Creativity to make new toys, games, dolls (see: Big dea)
Competitive advantage compared to large firms if Competitive advantage compared to large firms if
innomediaries innomediaries (technology/idea brokers) are established, (technology/idea brokers) are established,
shaping the market for ideas shaping the market for ideas

RQ: Analyze trends, motives and management
RQ: Analyze trends, motives and management
challenges of
challenges of
SMEs
SMEs
related to O
related to O
Research method
Survey
Only 'active innovators',
i.e. firms which have implemented at least one innovation
during the last three years and who claim that continuous
renewal is part of their corporate strategy.
Min. 7 years old : evolution
Stratified sample:
manufacturing and service industries
two size classes
No firms <10 employees (no in-house innovations
activities)
Research method
Research method
Survey
Data collected in December 2005 by means of
computer assisted telephone interviewing (CAT).
n total 2,230 firms were contacted
1,206 (54%) were willing to participate
Non-response bias?
The chi-square-tests revealed no significant differences at the
5% level (p = 0.23 for type of industry and p = 0.55 for size
classes)
605 respondents satisfied both criteria (active
innovator and long tenure)
Distribution of respondents across type of industry
Distribution of respondents across type of industry
and size class
and size class
Sizc c|ass
Tqpc cf indus|rq 10-99 cnp|cqccs 100-499 cnp|cqccs |c|a|
Manufacluiing:
1. food and leveiages (NACL codes 15-16) 4O 21
2. chenicaIs, iullei and pIaslics (NACL codes 23-25) 54 22
3. nachineiy and equipnenl (NACL codes 29-34) 19 32
4. olhei nanufacluieis (NACL codes 17-22, 26-28, 35-36) 47 53
16O 128 288
Seivices:
IT (NACL code 72) 53 17
lusiness seivices (NACL code 74) 59 24
olhei seivices (NACL codes 5O-71, 92-93) 1O4 6O
216 1O1 317
TolaI 376 229 605

How to operationalise OI?
Operationalization Operationalization by focusing on 5 different by focusing on 5 different
dimensions of open innovation: dimensions of open innovation:
1. 1. Open innovation strategies Open innovation strategies
outsourcing R&D, spinning out new ventures, and participation in outsourcing R&D, spinning out new ventures, and participation in
new and or existing companies in the past two years new and or existing companies in the past two years
2. 2. Networking, Networking,
nnovation with the different types of partners: complementors, nnovation with the different types of partners: complementors,
competitors, public knowledge competitors, public knowledge centers,customers centers,customers, suppliers, and , suppliers, and
investors investors
3. 3. The role of customers The role of customers
4. 4. The role of employees, and The role of employees, and
5. 5. ntellectual property strategy ntellectual property strategy
Does the firm own P? Does it out (in) license P? Does the firm own P? Does it out (in) license P?
OI practices and their perceived change
OI practices and their perceived change
over time
over time (n=605)
Pcrccitcd cnangc
cpcn inncta|icn indica|cr Usc
incrcasc nc cnangc dccrcasc
Oulsouicing R&D
5O 22 73 5
Venluiing
29 14 85 2
Iailicipalion in olhei fiins
32 16 84 1
Nelvoik usage in innovalion piocesses
94 29 67 4
Cuslonei invoIvenenl
97 38 61 1
LnpIoyee invoIvenenl
93 42 57 1
License II lo olhei fiins
1O 3 95 1
License II fion olhei fiins
2O 5 93 2

Open innovation practices across three
Open innovation practices across three
cIusters
cIusters
c|us|cr1 (n=133) c|us|cr2 (n=411) c|us|cr3 (n=61) |-ta|uc
Oulsouicing R&D 7O 48 21 22,2**
Venluiing 4O 27 15 7,4**
Iailicipalion in olhei fiins 44 31 11 1O,5**
Nelvoik usage in innovalion piocesses 99 1OO 44 317,7**
Cuslonei invoIvenenl 98 99 77 66,5**
LnpIoyee invoIvenenl 98 99 38 388,9**
License II lo olhei fiins 44 1 O 181,6**
License II fion olhei fiins 86 O 5 351,5**

Perceived change of open innovation
Perceived change of open innovation
practices across three cIusters
practices across three cIusters
c|us|cr1 (n=186) c|us|cr2 (n=262) c|us|cr3 (n=157) |-ta|uc
Pcrccitcd cnangc.
Oulsouicing R&D O.21 O.18 O.O7 1,9
Venluiing O.17 O.11 O.O5 3,5^
Iailicipalion in olhei fiins O.23 O.14 O.O2 7,4**
Nelvoik usage in innovalion piocesses O.29 O.27 O.O5 5,1*
Cuslonei invoIvenenl O.52 O.38 O.O5 19,5**
LnpIoyee invoIvenenl O.53 O.43 O.O7 18,2**
License II lo olhei fiins O.11 O.OO O.OO 13,O**
License II fion olhei fiins O.17 O.OO -O.O3 24,4**
Scc|cr and sizc dis|riou|icns..
Shaie of nanufacluiing fiins (veisus seivice fiins) 58 45 43 3,7^
Shaie of fiins vilh 1OO-499 enpIoyees (vs. 1O-99 enpI.) 55 34 25 12,O**

Mean score with increase coded 1, no change coded 0 and decrease coded -1
** p < 0.001, * p < 0.01, ^ p < 0.05
CIassification of open innovation motives
CIassification of open innovation motives
InvoIvenenl of enpIoyees in lhe innovalion piocess incieases lheii nolivalion
and connilnenl
Molivalion*
Oiganizalion piincipIes, nanagenenl conviclion lhal invoIvenenl of enpIoyees
is desiialIe
IoIicy*
OplinaI use of laIenls, quaIilies, and ideas of cuiienl enpIoyees UliIizalion*
Keep up vilh cuiienl naikel deveIopnenls, cusloneis, inciease giovlh and/oi
naikel shaie
Maikel
Cannol do il aIone, counleilaIance Iack of capacily Capacily
Cosl nanagenenl, piofilaliIily, efficiency Cosls
Cain knovIedge, liing expeilise lo lhe fiin KnovIedge
Inpioved pioducl deveIopnenl, piocess-/ naikel- innovalion, inlegialion of
nev lechnoIogies
RenevaI
Iil vilh coie conpelencies, cIeai focus of fiin aclivilies Iocus
Incieased conlioI ovei aclivilies, lellei oiganizalion of conpIex piocesses ConlioI
Descrltlon Descrltlon Categor Categor
* OnIy used foi coding nolives ieIaled lo enpIoyee-invoIvenenl
Perceived change of open innovation
Perceived change of open innovation
practices across three cIusters
practices across three cIusters
Tqpc cf cpcn inncta|icn
Mc|itc
Oulsouicing
R&D
(n=134)
Venluiing
(n=83)
Iailicipalion in
olhei fiins
(n=94)
Nelvoik
usage
(n=175)
Cuslonei
invoIvenenl
(n=232)
LnpIoyee
invoIvenenl
(n=256)
ConlioI 1 1 3 1 1 9
Iocus 3 8 O 1 O -
RenevaI 8 23 24 21 19 -
KnovIedge 44 4 6 35 5 -
Cosls 9 13 11 2 2 -
Capacily 13 O 5 7 3 -
Maikel 14 31 36 22 61 13
UliIizalion - - - - - 3O
IoIicy - - - - - 15
Molivalion - - - - - 22
Olhei 8 19 14 11 1O 11
Tnta! 1OO 1OO 1OO 1OO 1OO 1OO

CIassification of open innovation barriers
CIassification of open innovation barriers
LnpIoyees have loo nany ideas, no nanagenenl suppoil LnpIoyees have loo nany ideas, no nanagenenl suppoil
Idea nanagenenl Idea nanagenenl
Lack of enpIoyee connilnenl, iesislance lo change Lack of enpIoyee connilnenl, iesislance lo change
Connilnenl Connilnenl
LnpIoyees Iack knovIedge/conpelences, nol enough Ialoi fIexiliIi LnpIoyees Iack knovIedge/conpelences, nol enough Ialoi fIexiliIily ly
Conpelenl enpIoyees Conpelenl enpIoyees
Cuslonei denand loo specific, innovalion appeais nol lo fil lhe Cuslonei denand loo specific, innovalion appeais nol lo fil lhe naikel naikel
Cuslonei denand Cuslonei denand
Adoplion piolIens, cuslonei iequiienenls nisjudged Adoplion piolIens, cuslonei iequiienenls nisjudged
Usei acceplance Usei acceplance
Iailnei does nol neel expeclalions, deadIines aie nol nel Iailnei does nol neel expeclalions, deadIines aie nol nel
QuaIily of pailneis QuaIily of pailneis
Ovneiship of deveIoped innovalions, usei iighls vhen diffeienl p Ovneiship of deveIoped innovalions, usei iighls vhen diffeienl pailies ailies
coopeiale coopeiale
Iiopeily iighls Iiopeily iighls
Cosls of innovalion, line needed Cosls of innovalion, line needed
Resouices Resouices
aIancing innovalion and daiIy lasks, connunicalion piolIens, aIancing innovalion and daiIy lasks, connunicalion piolIens,
aIigning pailneis, oiganizalion of innovalion aIigning pailneis, oiganizalion of innovalion
Oiganizalion/cuIluie Oiganizalion/cuIluie
Insufficienl naikel inleIIigence, naikel affinily, naikeling pio Insufficienl naikel inleIIigence, naikel affinily, naikeling piolIens lIens
vilh nev pioducls vilh nev pioducls
Maikeling Maikeling
Lack of lechnoIogicaI knovIedge, Iack of conpelenl peisonneI, Ia Lack of lechnoIogicaI knovIedge, Iack of conpelenl peisonneI, Iack of ck of
IegaI/adninislialive knovIedge IegaI/adninislialive knovIedge
KnovIedge KnovIedge
Ollaining financiaI iesouices Ollaining financiaI iesouices
Iinance Iinance
uieauciacy, adninislialive luidens, confIicling iuIes uieauciacy, adninislialive luidens, confIicling iuIes
Adninislialion Adninislialion
Descrltlon Descrltlon Categor Categor
Barriers to different types of open
Barriers to different types of open
innovation
innovation
Tqpc cf cpcn inncta|icn Mc|itc
Venluiing
(n=4O)
Iailicipalion in
olhei fiins
(n=45)
Nelvoik
usage
(n=53)
Cuslonei
invoIvenenl
(n=68)
LnpIoyee
invoIvenenl
(n=88)
Adninislialion 28 13 1O - -
Iinance 1O O 5 - -
KnovIedge 5 5 - - -
Maikeling 1O 5 - - -
Oiganizalion/cuIluie 35 75 48 3O -
Resouices 5 O 7 1O 17
Iiopeily iighls - - 5 1O -
QuaIily of pailneis - - 24 - -
Usei acceplance - - - 13 -
Cuslonei denand - - - 28 -
Conpelenl
enpIoyees
- - - - 24
Connilnenl - - - - 51
Idea nanagenenl - - - - 8
Olhei 8 3 - 8 -
Tnta! 1OO 1OO 1OO 1OO 1OO

Practicing Open Innovation
Practicing Open Innovation
Websites
http://www.openinnovation.net
http://www.openinnovation.eu
http://www.openinnovatie.nl
Seminars
Customized management courses about O
Cases and management tool development
European Center for O (platform) July
2007
Summercourse CE and O at High Tech
Campus (8-14 November 2007)
Implementing
open
innovation
Implementing open Implementing open
innovation innovation
Management oriented
European based
companies as examples
Topics that have not
been analyzed in
Chesbrough (2003; 2006)
Focus on implementation
and organization of O
Chesbrough,
Vanhaverbeke,
Gassmann, Clarysse,
Late 2008
Case studies,
management tools, etc.