employment & working conditions

Synopsis: Employment & working conditions:

Open innovation in small and micro enterprises .pdf

and external experts into their innovation processes (Mckinsey, 2008). It has been suggested that this open innovation approach,

under the Regional Competitiveness and Employment Objective, co-funded by the European Regional Development Fund (ERDF).

and management practices alike, there is a need for additional work to advance the knowledge regarding open innovation activities in the SME context (Colombo et al.,

and potential solution providers such as creative individuals, designers, retired employees, scientists, suppliers, or other enterprises for new ways to generate idea,

and the increasing contribution of SMES to the global economy in promoting growth and employment opportunities (Bednarzik, 2000;

and innovation in the EU and are thus crucial for fostering competitiveness and employment (European commission, 2005).

) Moreover, they rely on less human resources (Hausman, 2005) and therefore have to deal with a lack of a broad multidisciplinary competence base (De Toni and Nassimbeni, 2003;

medium-sized, small and micro enterprises, based on staff headcount, annual turnover and annual balance sheet (European commission, 2005.

we relied on the number of employees when selecting our interview partners. Five of our selected companies represent micro firms with less than 10 employees,

while ten of them employ between 10 and 50 employees. The sample of interviewees was selected in a way to provide a broad range of work fields in the area of craftsmen businesses including carpenters, mechanical engineers, metal workers, footwear producers, sports equipment technicians, electrical engineers, bricklayers and manufacturers

of refrigeration. Twelve of the interview partners are also the owners of the respective firms

and only three were did CEOS that not own the company. The interviewees were notified via phone

and the other was an expert in open innovation studies. To ensure that the insider's perspective did not bias the results,

For example, for the second research question, categories such as extensive bureaucracy, missing working time, and lack of experience in marketing and sales and others were defined.

Also, internal sources such as employees are considered still important sources of innovation: Interviewee 8: You have to consider that the majority of the ideas are generated by our employees,

who are working on the front line and who have gathered a tremendous amount of experience within their specific area of expertise.

our employees are involved actively in the development process of new ideas. I am the one responsible for condensing

Most of the decisions are made in collaboration with our employees, because without their involvement it is difficult to consequently succeed.

Moreover, this demonstrates that the market does not always offer qualified staff, and because of limited resources, there is no possibility to train the staff within the firm. 3. 2. 4. Financing.

The interviews also revealed that the high costs of technological development and limited financial resources are challenging the innovation efforts of small and micro firms.

and for promotions aimed at targeted customers. Interviewee 1: We are actively using our home page to illustrate our products

but also customers, employees and other corporations are accepted as sources for invention. This study supports theoretical assumptions

Open innovation in SMEs - Prof. Wim Vanhaverbeke.pdf

The last Community Innovation Survey in Belgium shows that large firms(>250 employees) are collaborating on average with more external partners than small firms.

when the number of collaborative deals is divided by the number of employees thus measuring the open innovation intensity.

Their limited financial and human resources and the lack of technological capabilities force them to look for different types of innovation partners.

Accordingly, they may have to work in several consecutive steps, which in some cases look like a bootstrapping strategy.

Some of them we found through publications, others by contacting a large European network of open innovation experts.

or size class (taking into account that small companies should have less than 500 employees). The companies are active in a wide range of industries.

and have 500 employees; other companies are just a few years old and have less than five employees.

The reader should thus not be surprised by the heterogeneity 13 of the cases. The diversity of the themes we will discuss illustrates how open innovation can take different shapes within each specific firm or industry.

cross-industry learning process led by sleep experts. The QOD case illustrates that developing a successful business model that ultimately changes the industry starts with nothing more than the conviction of a well-informed entrepreneur.

Curana is a micro-company (less than 20 employees) that is active in the bicycle accessory market.

and were thus more expensive when manufactured in countries with high-labour costs. A designer working at one of the bicycle manufacturers became a critical link.

It is a consortium of architects, manufacturers, professional organizations, user groups, social representatives, and teaching institutions that created a totally new concept for the patient hospital room:

his experience during the hospitalisation is the central concept around which the consortium works. The Patient Room of the Future is the result of intensive research into the needs of the medical world and the patients themselves.

Medical staff must care for more patients; patients stay for shorter hospitalisation periods; and the drive is strong to increase the medical staff's productivity.

PROF is an all-inclusive concept that tries to provide answers to these questions by focussing on the patient and his environment, with durability, functionality, usability,

and largely untapped approach to increasing value for the customer and enabling medical staff to deliver value by making their jobs more convenient using, for instance, smart and integrated information systems.

Furthermore, retailers can adapt their promotions to each customer's personal style. This approach not only provides extensive capabilities for the buying process,

In 1990, Paul Dingens started a glass works company that produced its own line of glass instruments.

and material experts. The third step is promotion. In this step Curana organized information sessions to promote its new ideas among potential customers.

In this way, the company received valuable feedback from potential customers. Realization is the fourth step.

and material experts. Using the so-called Original Strategic Management (OSM) model, Curana and its innovation partners started from a vision based on new opportunities derived from global trends,

After consulting with an examination board of sleep experts, QOD decided to produce a functional quilt that would reduce the temperature variation under the quilt to provide a healthy sleep.

Innovation in SMES is hampered by lack of financial resources, scant opportunities to recruit specialized workers

It combined valuable insights from sleep experts with the PCM technology which has required the characteristics to improve sleep.

and tested with the help of medical experts. QOD's first functional quilt branded as Temprakon was the result of linking PCM technology with insights about sleep comfort from the medical world.

Jaga also explored initiatives to spur the creativity of employees and external partners by setting up Jaga Product Days in 2007 (see p 47).

who complained that they only could do real nursing work during 50%of their working time.

If your partner leaves the company or secures another position, the joint project may stop

Adriaan Debruyne (now director of Saflot Creative Consultants) added: Our antennas are open to society and technologies,

Disciplining disloyal partners only works under certain circumstances. First, a strong leader must operate in the network,

Second, disciplining or excluding partners only works if the innovation network is instrumental in creating a competitive advantage for the companies involved.

Because partners in such an innovation network work in a mutually exclusive way, innovation networks can work only when there is a network-wide understanding among partners that upstream partners cannot misuse this exclusivity to earn monopoly rents

Some of the networks work with open books to ensure that all partners involved use fair overhead costs

Some of Curana's employees, for instance, did not understand why management was preoccupied with managing the network of partners

Intellectual property rights are owned usually contractually by the innovating firm in the case inventors are companies doing contract research, external designers, or employees.

Innovation in SMES is hampered by lack of financial resources, scant opportunities to recruit specialized workers, poor understanding of advanced technology, and so on.

Universities, research labs, crowds of experts, lead users, and knowledge brokers are just a few examples of potential external sources of knowledge.

and are eager to work with the venture. Finally, Toine also had to license the technology from DSM.

He detected that the existing turbo-fryers on the market did not work and his simple adaptation to the air-flow made air frying quite effective.

Therefore, the Airfryer is packaged with an inspiring recipe booklet, written by a culinary expert, which contains 30 easy-to-prepare recipes,

'o Licensing to small firms implies significant work in return for small licensing revenues. The venture manager,

and the work toward a win-win outcome. Let your partner pursue business opportunities in areas that do not fit your business model.

What works is a vision, not a dream. In most cases, the vision can be considered as a new value proposition,

or consultants develop. In contrast, they are spurred to take action when they are confronted with the testimonials of entrepreneurs who are using open innovation successfully to develop new businesses.

SMES are companies with less than 250 employees (N=792; lager companies(=250 employees; N=175.

The calculation covers the period 2002-2004. Open innovation can be measured in different ways. Developing a search strategy is one of the most important aspects of open innovation.

market sources (suppliers of equipment (i), customers (ii), competitors and other firms with similar activities (iii), commercial labs, private R&d organizations, and consultants (iv;

The search intensity is calculated by dividing the search strategy score by the employment of the firm.

The external R&d intensity reflects external R&d per employee. Collaborative innovation indicates whether innovating firms engage in collaborative innovation activities with six potential partners:

consultants and private R&d organizations (iv; universities (v; and public research organizations (vi. Collaborative innovation is captured by calculating the average score of the six questionnaire items registering the firm's use of cooperative agreements with innovation partners.

and the collaboration intensity measures the collaboration per employee. Variable Small and medium-sized enterprises (N-SME=792) Large firms (N-large=175) Mean Standard deviation Mean Standard deviation Difference Search intensity

Moreover, small contests can be held among employees, suppliers, and local communities of designers, engineers, and so on. 33 These value networks have been described by different authors.

Open innovation in SMEs Trends, motives and management challenges.pdf

A thirdpracticetobenefitfrominternalknowledgeisto capitalizeontheinitiativesandknowledgeofcurrent employees, includingthosewhoarenotemployedatthe internal R&ddepartment. Severalcasestudiesillustrate that informaltiesofemployeeswithemployeesofother ARTICLEINPRESS V. vandevrandeetal.//Technovation29 (2009) 423 437 424 organizationsarecrucialtounderstandhownewproducts are createdandcommercialized (e g.

Drawingonthe work of Von Hippel (2005) users areincreasinglyregarded not asjustpassiveadoptersofinnovations, buttheymay rather developtheirowninnovationswhichproducerscan imitate. Usersforexampleregularlymodifytheircurrent machines, equipmentandsoftwaretobettersatisfyprocess needs, andbecauseproducersfailtoprovideanadequate supply (Von Hippel, 2005.

Inaworldofmobile workers, abundantventurecapital, widelydistributed knowledgeandreducedproductlifecycles, mostenter-prises cannolongeraffordtoinnovateontheirown. A further explorationofmotiveswasdoneby Chesbrough and Crowther (2006.

ARTICLEINPRESS Table 1 Distributionofrespondentsacrossindustriesandsizeclasses Type ofindustry Size class 10 99 employees 100 499 employees Total Manufacturing Food andbeverages (NACECODES15 16

Employee involvement Leveraging theknowledgeandinitiativesofemployees who arenotinvolvedinr&d, forexamplebytakingup suggestions, exemptingthemtoimplementideas, or creating autonomousteamstorealizeinnovations. Technologyexploration Customer involvement Directly involvingcustomersinyourinnovation processes, forexamplebyactivemarketresearchto check theirneeds, orbydevelopingproductsbasedon customers'specificationsormodificationsofproducts similar likeyours.

951 Employee involvement9342571 Technology exploration Customer involvement9738611 External networking9429674 External participation3216831 Outsourcingr&d5022735 Inward IPLICENSING20 5 932 Table 4 Incidence ofandperceivedtrendsinopeninnovationpracticesbetweenindustries

0. 02 0. 02 0. 1 Employee involvement94 93 0. 7 0. 41 0. 41 0. 2 Technology exploration Customer

/Technovation29 (2009) 423 437 429 Table 5 shows thatmedium-sizedenterprises (100 499 employees) aremorelikelytoengageinopeninnovation. On alltechnologyexploitationandexplorationpractices they aredoingslightlyorsubstantiallybetter.

Weconsideredarange of initialsolutionsfromthehierarchicalanalysiswitheither ARTICLEINPRESS Table 5 Incidence ofandperceivedtrendsinopeninnovationpracticesbetweensizeclasses Incidence Perceived trenda 10 99 employees (n 376)(%100 499 employees (n 229

)(%Mann Whitney Z (U) 10 99 employees (n 376) 100 499 employees (n 229) Mann Whitney Z (U) Technologyexploitation Venturing 27

. 5 Employee involvement 92 96 1. 7 0. 37 0. 48 2. 8*Technologyexploration Customer involvement 97 98 1. 1

Venturing 40 27 15 14.5*Outward IPLICENSING44 1 0 227.3**Employee involvement98 99 38 340.5**Technology exploration Customer involvement98 99 77

Venturing 0. 17 0. 11 0. 05 5. 2 Outward IPLICENSING 0. 11 0. 00 0. 00 26.0**Employee involvement 0

inter-organizationalnetworksandcustomerinvolvementare ARTICLEINPRESS Table 8 Motives toadoptopeninnovationpractices Category Examples Technologyexploitation Technologyexploration Venturing (n 83)(%Employee involvement (n 256)(%Customer involvement (n

Employee involvementistheonlyitemwheremotives are differentthanfortheotheritems. SMESCAPITALIZEON the knowledgeandinitiativesoftheir (non-R&d) employees foroptimaluseofhumancapitalandformarket considerations. However, employeeinvolvementisalsothe outcome ofan‘internalorganizationalpolicy'oritis stimulatedtoimprovemotivationandcommitmentof employees.

Thesetwomotivesarenotnecessarilydictated by innovationobjectives. Table 9 identifies themainmanagerialandorganiza-tional challengesthatsmesperceivewhentheyadoptopen innovationpractices. Weremindthatinterviewersfirst asked ifrespondentshadexperiencedanybarrierstoopen innovation. Ifrespondentsansweredpositively, theinter-viewer exploredthenatureofthesebarriersbyopen-ended questions.

Themainbarrierstoinnovationmentionedby the respondentsarerelatedtoventuring (mentionedby 48%oftherespondents), externalparticipation (48%),and outsourcingofr&d (43%.%Table 9 shows theextenttowhichthebarriersmentioned abovematterforeachofthedifferenttypesofopeninnova-tionactivities.

Governmentalsupportisexperienced ARTICLEINPRESS Table 9 Hampering factorswhenadoptingopeninnovationpractices Category Examples Technology exploitation Technology exploration Venturing (n 40)(%Employee involvement (n 88)(%Customer involvement (n

Fortechnology exploitation, ourdatasuggeststhatmanysmesattempt to benefitfromtheinitiativesandknowledgeoftheir (non-R&d) workers. Fortechnologyexploration, byfar most SMESSOMEHOWTRYTOINVOLVETHEIRCUSTOMERSIN innovationprocessesbytrackingtheirmodificationsin products, proactivelyinvolvingtheminmarketresearch, etc.

Open innovation in SMEs Trends- motives and management challenges .pdf

Customers, employees and other firms are the most common sources of new ideas, but the use of venture capital, outsourcing of R&d and the licensing of other firms'IP are also becoming more common nowadays.

Not only customers but also firms'employees can contribute to a firm's overall innovative performance. Both in closed and open innovation paradigms, individual employees play a crucial but different role.

Thus, a firm should foster a culture in which these knowledge workers are motivated to continuously search for new ideas.

In addition, firms that embark on open innovation should stimulate interorganizational networking between employees of different firms.

Several case studies illustrate that informal ties of employees with employees of other organizations or institutions are crucial to understand how new products are created and commercialized (Chesbrough et al.,

2006). ) Morgan (1993) observed in the early nineties already that the role of formal reporting structures and detailed work processes had diminished a role in favor of informal networks of employees.

These networks were in many cases cross-boundary linking employees of (locally bounded) 10 networks of firms.

The strength and dynamics of these connected groups of employees has a significant impact on firms'knowledge creating capability.

1 Another important dimension of technology exploration is inter-organizational networking. For instance, R&d alliances between noncompeting firms have become a popular vehicle for acquiring

However, there has been much less attention paid to how informal networks of employees in networked organizations may facilitate

Chesbrough (2003) provides evidence that small firms (firms with less than 1000 employees) continually increased their share of total industrial R&d spending in the US during the last two decades.

The larger firms with more than 25.000 employees were still responsible for 38%of total industry R&d spending in 2005 compared to 71%in 1981 (National Science Foundation

Although service firms, on the other hand, will be inclined to use networks and customer and employee involvement in the innovation process,

SMES are defined as firms with up to 500 employees. However, there is still great difference in the innovation strategies of small firms (up to 100 employees) and medium sized enterprises (100-499 employees.

The innovation processes of larger firms are structured typically more and professionalized, and larger firms typically have more resources than small firms.

Although the use of interorganizational networks, the involvement of employees and that of customers in the innovation processes seems to be equally feasible for both small and large SMES, the extent to

defined as all firms with no more than 500 employees. Firms with less than 10 employees (i e. micro-firms) were excluded from the sample,

because in general they have no or very limited in-house R&d activities. Besides, the population of micro-firms contains a relatively high share of start-ups.

Table 1. Distribution of respondents across type of industry and size class Size class Type of industry 10-99 employees 100-499 employees total Manufacturing:

To measure the role of employees, respondents had to indicate to which degree employees were stimulated to contribute to innovation processes,

e g. by investing in employees'ideas and initiatives, creating autonomous teams with own budgets to carry out innovations,

or stimulating employees'external work contacts in order to enhance opportunity exploration. The survey data allowed distinguishing between employees that belong to the R&d department

and those that are coming from other organizational parts of the company. Furthermore, the survey also investigated

whether firms collaborated with the different types of partners as described above, including complementors, competitors,

%2%License IP to other firms 10%3%95%1%Technology exploitation Customer involvement 97%38%61%1%Employee involvement 93

customers and employees in innovation processes is fairly 21 common among Dutch SMES. Licensing IP,

This is the case for all indicators in Table 2. Especially employee involvement, customer involvement, the use of network partners and (to a lesser extent) outsourcing of R&d have experienced a substantial increase in popularity in the last three years. 5. 1 Type of industry Table 3 shows the share of manufacturing

Customer involvement, employee involvement, and the usage of networks in the innovation process appear to be the main types of open innovation practices used by both manufacturing and services firms.

2, 2 Employee involvement 94%93%0, 4 0. 41 0. 41 0, 1 Network usage in innovation processes 95%94%0, 3 0. 24 0. 26 0

Table 4 shows that larger SMES (100-499 employees) are on average much stronger involved in outsourcing R&d

as compared to the small SMES(<100 employees). Both size categories show no significant differences with respect to customer

and employee involvement, networking with partners because these are practices that have no discriminating power

and perceived change across size classes Use Perceived change (1) Open innovation indicator 10-99 employees (n=376) 100-499 employees (n=229

) F-value 10-99 employees (n=376) 100-499 employees (n=229) F-value Technology exploitation Venturing 27%32%1,

Technology exploration Customer involvement 97%98%1, 2 0. 30 0. 50 22,8**Employee involvement 92%96%3, 0 0

**Technology exploration Customer involvement 98%99%77%66,5**Employee involvement 98%99%38%388,9**Network usage in innovation processes 99%100

The firms in this cluster rely mainly on the involvement of network partners, customers and employees in their innovation processes.

This is a relatively small group of companies that mainly rely on customer involvement and to a minor extent on employee involvement and network partners.

13,0**Technology exploration Customer involvement 0. 52 0. 38 0. 05 19,5**Employee involvement 0. 53 0. 43 0. 07

Share of manufacturing firms (versus service firms) 58%45%43%3, 7 Share of firms with 100-499 employees (vs. 10-99 empl.

-R&d employees in the innovation process. The different answers of the respondents to the question what drives them to get involved in open innovation practices were coded,

and ideas of current employees Policy*Organization principles, management conviction that involvement of employees is desirable Motivation*Involvement of employees in the innovation process increases their motivation

and commitment*Only used for coding motives related to employee-involvement Table 8 below shows that for almost all open innovation practices pursued by SMES,

The only exception is improving the involvement of non-R&d employees in the innovation process:

(n=94) Network usage (n=175) Customer involvement (n=232) Employee involvement (n=256) Control%1 1 3 1 1

Policy%--15 Motivation%--22 Other%8 19 14 11 10 11 Total%100 100 100 100 100 100 Employee involvement

Almost 30%of the respondents that involve non-R&d employees in their innovation process do

so because they feel that the skills of their employees can be utilized in a more efficient way,

In addition, many companies involve employees for motivational reasons. Up to 15%of the respondents is convinced of the added value 32 of employee involvement for innovation;

often this is part of the firm's policy in this case. Another 22%sees the involvement of employees mainly as a way to motivate them.

The direct impact on the bottom-line in that case is less important as employees are engaged primarily in the innovation process to increase their overall performance on the job.

Finally, market considerations are also important: after all, employees may be closely related to the market and therefore have a better idea than managers or engineers about the potential success of products and the problems they experience with customers.

In this case, employee involvement is a valuable source of knowledge in the innovation process. Finally, there are also motives that are primarily related to specific types of open innovation.

For instance, 8%of the respondents list the corporate brand reputation as a reason to engage in venturing activities.

innovation appears not to fit the market Competent employees Employees lack knowledge/competences, not enough labor flexibility Commitment Lack of employee commitment, resistance to change Idea management Employees have too many ideas,

no management support Table 10 shows the extent to which the barriers mentioned above matter for each of the different types of open innovation activities.

employees who leave the organization. These inter-organizational relationships frequently lead to problems concerning the division of tasks and responsibility, the balance between innovation and day-to-day management tasks,

) Customer involvement (n=68) Employee involvement (n=88) Administration%28 13 10--Finance%10 0 5--Knowledge%5 5---Marketing

--User acceptance%--13-Customer demand%--28-Competent employees%--24 Commitment%--51 Idea management%--8 Other%8 3-8-Total%100 100

When involving employees, it often turns out that they do not have required the 35 capabilities

management decides not to take up any of the ideas provided by employees or that the number of ideas coming from individual employees just gets too large to handle in an efficient way.

This, in turn, poses new challenges to managers when they want to get the most out the creativity of large numbers of individuals.

AND CONCLUSION SMES play an increasingly important role in innovation and job creation, but are nevertheless left out of the research on open innovation,

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