Does organizational structure facilitate inbound and outbound open innovation in SMEs?
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Does organizational structure facilitate inbound and outbound open innovation in SMEs? Simona Gentile-Lüdecke & Rui Torres de Oliveira Justin Paul
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Accepted: 17 April 2019 # Springer Science+Business Media, LLC, part of Springer Nature 2019
Abstract Based on the evolutionary theory of the firm, this paper examines how traditional variables that describe a firm’s organizational structure—formalization, specialization, and centralization—affect the adoption of inbound and outbound open innovation. Using a cross-sectional survey of Chinese small and medium enterprises, our study shows that organizational structure matters for open innovation and that formalization, specialization, and centralization have diverse effects on the OI practices implemented by SMEs. Results indicate that specialization and centralization have a critical role in open innovation practices as they both foster the use of inbound and outbound open innovation. Formalization negatively affects outbound, but it is positively associated with inbound open innovation.
Keywords Open innovation . SMEs . Evolutionary theory of organizations . Organizational structure S. Gentile-Lüdecke Heilbronn University of Applied Sciences, Reinhold-Würth-Hochschule, Campus Künzelsau, Daimlerstrasse 35, 74653 Künzelsau, Germany e-mail: [email protected] R. Torres de Oliveira (*) Business School, Australian Centre for Entrepreneurship, Queensland University of Technology, Brisbane, Queensland 4000, Australia e-mail: [email protected] J. Paul University of Puerto Rico, San Juan, PR, USA e-mail: [email protected]
JEL classification M10 . L26
1 Introduction Staying innovative over the years is a significant challenge to organization and to their managers. The idea that firms need to move from purely internal research and development (R&D) capabilities to an open innovation (OI) approach (Chesbrough 2006), accessing and using technological knowledge from external sources (Cohen and Levinthal 1990; Tsai and Wang 2008), inbound OI, and actively commercializing internal technologies outside their boundaries (Gambardella et al. 2007), outbound OI, represents an important shift on the daily activities of organizations. Under a rapidly changing business environment, firms can no longer afford to depend on their own innovation processes as internal R&D (Rigby and Zook 2002) but need to extend their innovation sources in order to improve their technology. Open innovation is important because it helps reduce costs, accelerates time to market, increases differentiation in the market, and creates new revenue streams for the firms (Chesbrough 2007). However, moving from a non-invented here syndrome (Katz and Allen 1982) to proudly developed elsewhere (Elmquist et al. 2009) is in practice a complex managerial exercise (Antons and Piller 2015). Small and medium enterprises (SMEs) represent a unique context in terms of OI (Usman et al. n.d., p. 3) because of their resource and capability endowments, skill sets, and the strong connection betwee
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