Relationships and partnerships in small companies: strengthening the business through external agents.
| Autor | Silva, Glessia |
| Cargo | Report |
Introduction
Small companies now account for a significant part of the economy (Nakano, 2010), representing almost 99% of all companies operating in Brazil (Greco, 2013). Although their share of the market has increased, these companies have experienced difficulties keeping a competitive innovation strategy, in part due to their limited structural and financial capacity to assume inherent risks in the decision to innovate (Bianchi, Campodall'Orto, Frattini, & Vercesi, 2010). In virtue of this, many innovations are adopted far too late by these firms and only after clear and safer opportunities demonstrate their potential in the market, or when pressure exists in the business environment to adopt them (Parida, Westerberg, & Frishammar, 2012).
This happens because the traditional model of innovation dictates that innovation is achieved through the internal competencies of the organisation (Lindegaard, 2011), which is difficult for small companies to achieve due to their particular features (Grapeggia, Lezana, Ortigara, & Santos, 2011). This situation affects the longevity of these companies in the market, knowing that innovation is a stepping stone to increase performance and competitive advantage (Crossan & Apaydin, 2009; Schumpeter, 1982; Smith, Busi, Ball, & Meer, 2008; Vargas, 2015).
Gassmann, Enkel and Chesbrough (2010), Ibarra, Rueda and Arenas (2015), Love and Roper (2015), Silva and Dacorso (2013a, 2013b, 2014a, 2014b) and Vanhaverbeke, Vermeersch and De Sutter (2012) argue that the open innovation model can assist the growth and development of small enterprises, as the utilization of external knowledge in the value chain of these small businesses can lead to cost reductions in research and development (R&D) and increases in the capacity for organisational innovation.
The open innovation model consists of the use of external knowledge as a valuable font in the innovation process. It is based on organisations working together with the goal of sharing the necessary resources for their development (Chesbrough, 2012). Thus companies can strengthen the innovation process through capturing external resources as well as strengthening their own routines and internal organisational competencies (Penin, Hussler, & Burger-Helmchen, 2011).
Despite this, small companies are under-researched within open innovation literature, which concentrates mainly on large or high-end technology companies (Gassmann, Enkel, & Chesbrough, 2010), and the results generated by these studies into open innovation are not easily applied to small companies, which exhibit differences when compared to large companies. This creates the need for specific studies which encompass the functionality of open innovation in the context of these organisations (Vanhaverbeke, Vermeersch, & De Sutter, 2012).
In relation to the above, this article's objective is to understand how the relationship between the small enterprises and external innovation agents as defined by the open innovation model can help to strengthen these organisations.
The article is structured as follows. First we discuss the new perspectives that arise with the use of open innovation by small companies, and proceed to examine the challenges and obstacles faced by such companies. Then, the methodology section presents a description of the field work, comprising the elaboration of analytical categories, as well as data collection and analysis. Finally, we present the results of the case study that was conducted.
Relationships and Partnerships in the Business Environment: New Perspectives with the Use of Open Innovation
Innovation takes place alongside developments in science and, according to the changing market demands, there is an evolution in the use of various sources of knowledge as an alternative development in the face of rapid changes (Fagerberg, Fosaas, & Sapprasert, 2012). Penin, Hussler and Burger-Helmchen (2011) and Chesbrough (2012) argued that companies previously kept internal knowledge as a form of competitive advantage, but this logic changed with the introduction of open innovation model, since then companies have started commercializing or sharing knowledge that was previously only for internal use.
Xia and Roper (2008), through a comparative study between American and European companies, affirmed there is a strong link between the capacity to innovate and the union of internal and external knowledge, resulting in the maximum usage of knowledge as an organisational competitive factor, so companies that use external knowledge tend to increase their internal capacity to innovate.
The open innovation model also favours the task of joining complementary technologies that become hybrids and profitable, which Wang (2012, p. 4) defines as "fusion of innovation". The author reveals that companies with dynamic capabilities in only one part of a process, product, or technology, can overcome their lack of capacity through partnerships with outside agents who have skills in these areas. This allows organisations to develop jointly, absorbing the necessary inputs for their survival from other organisations (Woerter & Roper, 2010). As a consequence, companies reduce the risks and uncertainties that come with the acquisition of technologies, and make them more likely to launch new products and services (Kafouros & Forsans, 2012).
However, for the open innovation model to add value to the organisation, it is important for them to establish routines that allow them to absorb and jointly develop internal and external capacities (Xia & Roper, 2008). This occurs because the open innovation paradigm constitutes a radical innovation for the companies that adopt it, requiring changes to their entire organisational structure, in order to prepare the organisations to search for external knowledge (Christensen, Olesen, & Kjaer, 2005).
Denotations show a tendency to use alliances and partnerships in the development of innovations (Gassmann et al., 2010). Clausen, Pohjola, Sappraserty and Verspagen (2011) identified that the creation of innovation strategies is based on three sources of information: (a) Science: universities, research institutes, patents, consultants and computer networks; (b) Industry: clients, suppliers, competitors, and internal sources; and (c) Opportunistic: equipment suppliers, magazines, professional conferences, fairs and shows.
The main motivation for the formation of partnerships is mutual learning, in a way that all partners look to gain knowledge which assists them to maximize innovation towards their organisational performance (Xia & Roper, 2008). Nevertheless, the function of external knowledge sources within organisations is to create ideas that serve as a basis for innovation, helping to produce various alternatives that can be converted to value-adding solutions and opportunities for the business (Gallon, Ensslin, & Silveira, 2009).
Operation of Small Companies in the Market: Challenges and Obstacles Faced
In order for the organisation to become competitive through innovation, the company needs to consider not only the innovation process itself, but also to consider the factors that permit innovation management as holistic and interconnected elements (Smith et al., 2008). An innovative organisation is one that innovates systematically and can maintain an appropriated model of innovation (Crossan & Apaydin, 2009; Smith et al., 2008; Tang, 1998) which considers specific factors that increase its capacity for innovation (Hurley & Hult, 1998; Lawson & Samson, 2001; Teece, Pisano, & Shuen, 1997).
In the case of small enterprises, Jong and Marsili (2006) identified certain variables as being important in the capacity to innovate: (a) innovation inputs: practices and activities aimed at innovation; (b) innovation sources and powers acquired to innovate; (c) management attitude: ability to manage innovation processes or practices; (d) planning of innovation: developing strategies and innovative formats; (e) external orientation: market vision and cooperation; and (f) innovation outputs: generated products, processes and services.
This format is due to the high cost of R&D, which makes these companies innovate through the use of informal innovation practices (Forsman, 2011; Hirsch-Kreinsen, 2008; Santamaria, Nieto, & Barge-Gil, 2009). Allied to this, small companies do not have sufficient resources to expand their operations and invest in innovations (Esteves & Nohara, 2011). One of the alternatives available to small enterprises is cooperation via searching for support amongst public and private institutions, aiming to strengthen their own structures and competitive mechanisms (Maqaneiro & Cherobim, 2011).
Franco and Haase (2010) argue that small companies need to have characteristics that create competitive advantages. This can be achieved through the use of external knowledge (Parida et al., 2012; Silva & Dacorso, 2013a, 2013b, 2014a, 2014b). Vanhaverbeke et al. (2012) also point out that small companies are more confident about the use of the open innovation model than large companies. The studies developed by Silva and Dacorso (2013a, 2013b, 2014a, 2014b) also show positive results from the use of external knowledge sources in the innovation process of small enterprises, which have the potential to provide the most competitive performances for such organisations and also to serve and support the development of significant innovations for the businesses.
A study carried out by Van De Vrande, Jong, Vanhaverbeke and Rochemont (2009) identified that small companies used Open Innovation of inputs and outputs. In the first case there is the search and acquisition of external knowledge for the organisation which, when interacting with external agents, generates innovations more dynamically and faster than in an isolated form. In the second case, the knowledge from the technologies and processes belonging to the organisation, generated through use of the...
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