Investigating predictors for the successful implementation of open innovation: A case of small and medium enterprises in KwaZulu-Natal, South Africa.

Abstract

Small and medium enterprises (SMEs) play a major role in South Africa’s economic growth. These entities are faced with managerial issues that pose dangers to their survival. Open innovation (OI) emerged as a critical business strategy used predominately by large businesses to improve performance. It is defined as a distributed innovation process based on purposively managed knowledge flows across organisational boundaries, using pecuniary and nonpecuniary mechanisms compatible with the organisation’s business model. Studies shows that the OI concept is not widely used by SMEs in South Africa. Specifically, the study aimed at understanding whether internal knowledge, external knowledge, and strategic networks influence the successful implementation of OI in SMEs in KwaZulu-Natal, South Africa. A case study approach was used to study SMEs in Pietermaritzburg. Convergent parallel mixed methods approach was adopted where qualitative and quantitative methods were used to collect data. Purposive and convenience sampling were utilised as non-probability approaches to select participants from a sample of 260 SMEs owners, managers/supervisors, and employees. The findings indicated that there is correlation between internal knowledge, external knowledge, and strategic networks in influencing the successful implementation of OI in SMEs. The findings also identified dominant factors that affect full adaptation of OI by SMEs. The factors include lack of leadership, adaptation capacity, patent and motivation issues, lack of finance, and lack of collaboration. Given the findings of this study, SMEs are encouraged to embrace OI principles where collaborative and strategic partnerships are formed with other businesses to complement internal innovation processes for sustainable growth. Further research should be done to identify strategic and sustainable partnership models for the application of OI in SMEs. Government and policy makers are encouraged to craft and enact policies that incentivise and encourage SMEs partnerships through OI initiatives. Given the inter-relationships between internal knowledge, external knowledge, and strategic networks in predicting successful application of OI in SMEs, the study encourages SMEs owners to adopt OI to deal with failure rate and improve their innovation processes. Embracing OI will assist SMEs deal with sustainability issues as innovative processes and new partnerships are forged to boost operations.