Synopsis: Security: Security concepts: Risk:

R&d, as decisions must survive several organisational layers of resistance, where an aversion to risk

Germany have not been able to overcome the risks inherent in a high degree of specialisation, and

larger share of the target market, risk diversification, or access to vital information about potential inputs or

professional risk evaluators for new technologies and new business; and rapid access to secondary markets

Financial institutions, as well as government bodies, have difficulty assessing the risk-profit trade offs of innovative ventures.

technological feasibility, commercial risk, and managerial capacity of an SME and its proposed innovative project.

rating that would help reduce the uncertainty that limits private sector investments in high risk innovation

-term investments that tolerate fluctuation and short-term risks, while shareholders advocate an avoidance of any risk.

This is particularly problematic, because investments in innovation and new projects involve higher short term risks. Fourthly, managers meet competitive threats by

increasing their cost-cutting investments to rationalize on the firm†s resources and by pushing for innovation in management and operational aspects.

innovation generally involves more risk (Green et al. 1995, Rice et al. 2001, O†Conner and 41

Creation of new knowledge in a firm involves risks (Teece and Pisano 1994, Howells and Michie 1997, Lei 1997),

such as those present in high-tech or dynamic environments, by taking risks, innovating, and exhibiting proactive behaviors,

However, there are risks and limitations of instability imbedded in the model, when input information is not intense enough.

identify bankruptcy risk of corporations. Journal of Banking and Finance 1 (1), 29†54 Altman, E. I.,Marco, G. and Varetto, F. 1994.

Entrepreneurs take risks and new technologies appear, leading to the creation of new enterprises. On the contrary, during the maturity phase--for example, the steel and

enhance the chances of policy success by eliminating the risks and costs of trial and error To take forward the programme†s key strategic task of sharing policy know-how, the new programme

SMES and Risk Sharing Finance Facility, RSFF 2. Those aimed at building greater European coherence amongst research projects in specific

innovation involved excessive economic risks •A 2009 Canadian survey37 found that 57%of world-first innovators judged a lack of skilled

Indeed, the vast majority of SMES do not take the risk to carry out in-house research as the process of

initiative, the Capital Investment and Risk management company of Andalusia INVERCARIA which is the first venture capital company at regional level

•Industrial leadership with initiatives like the KETS (Key enabling Technologies), access to risk finance, †SME instrument†(â 17 billion

•The second sub-programme is related to risk finance (â 2. 8 billion. It will consist in loans

and the relative risks for policy. It thus focuses on helping entrepreneurs identify their knowledge-based strengths at the regional level and in a more exploratory

Risks of policy induced specialisation While the central tenet of the concept of smart specialisation was accepted quickly by the EU policy

allocating resources in an environment of structural change and uncertainty, risk, and information asymmetries •Activities, not sectors per se are the level for setting priority setting for knowledge

over two decades stemming from a regional strategy based on risk sharing funding of original equipment manufacturer

This balance not only relates to risk; GRDC also strives to balance its research portfolio in terms of short

and ii) The high risk of lock ins due to the inertia of the chemical sectors innovation system

•Flexible production with competitive costs and risk sharing value chain •Sophisticated demand structure

demonstrating value and alleviating concerns about the risk of interaction  OECD 2013 99 •Buy in from industry:

and any risk of trying to excel at everything •Impact of data and diagnostic tools:

channels with risk-taking capabilities exist. The overall innovation service network and innovation infrastructure remain obscure.

i) Risk of loss of international market position of some Basque sectors ii) Risk of non-differentiation in the new scientific and technological niches;

and iii) Risk that the continuity of the economic crisis may pose to the economic sustainability of the Basque Innovation

System Lessons learned and conclusions for political action During the last decade the government of the Basque Country (Euskadi) has learned the importance of

•There is a widespread understanding amongst policy makers of the bottlenecks and risks of top -down government induced specialisation

process of assessing cluster potential to reduce risks in policy implementation and in the practice of smart

there is an important risk of government failure: hence it is crucial that smart specialisation strategies develop into outcome-oriented policies and that, accordingly,

what co-funding/risk-sharing scheme will be in place on the regional level? Which department (s is/are in charge of innovation policies and budgets

Risks of policy induced specialisation The global economic context for smart specialisation Key policy findings

The importance of entrepreneurial skills, such as innovation and risk taking should not be overlooked as essential ingredients to SME success

simple organizational structure, their low risk and receptivity were the essential features facilitating them to be innovative therefore,

and take risks. The finding on risk-taking was also confirmed by a study conducted among American SMES Blumentritt (2004),

showing that the most innovative firms were competitively aggressive and willing to take on greater degrees

of risk According to Massa and Testa (2004), benchmarking enabled a company to compare its practices and performances with others as well as to acquire external explicit and tacit

ï Manage the risk. He highlighted that strategy should be varied sufficiently to allow for organizational agility and flexibility

While many people fear the risk of illegal copies in this case as well, MIT Press has doubled apparently its sales of hard copies since its first

Depending on their risk adversity, they will innovate and exploit networks information differently 2. Industrial co-operation:

Thus, risk adversity may impede the innova -tion process. Following two types of behaviour are

innovation represents a large financial risk. So they only innovate under the pressure of their environ

innovativeness, proactiveness and risk-taking create the factors closely tied to an entrepreneurial firm 5, 10,11.

) Risk-taking propensity is expected to be crucial as well as innovation by definition requires an investment with an uncertain outcome.

Risks in using a likert scale are a The analysis concludes that innovation significantly depends on the position of

To overcome these risks indicators were tested thoroughly on validity and reliability 5 Regression analysis: innovation level explains a growth in number of buyers (Î=0. 001, r2=0. 106

and reduces risks. The aggregate of all innovations leads to a highly resilient growth sector, able to produce small and medium-sized orders of

age, willingness to take risks, gender, no other position, worked in craft firm, primary school unfinished, primary school finished, secondary not complete, vocational

Willingness to take risks is not a significant indicator, as all entrepreneurs are at least moderately

willing to take risks. Some very innovative firm consider themselves to be moderately risk taking

as they first study the market in order to reduce their risk. Respondent#25, a micro-scale

subcontractor, illustrates that willingness to take risk has enabled his firm to survive when competitors went bankrupt:

already sold. †The example illustrates that in a process of creative destruction firms that take risk

to this risk by quickly designing new products causing a speeding up of innovation processes

The highest risk is that they just sell the raw material. Therefore, this subcontractor always gets priority

methodology, 3m identifies both risks and opportunities for improvement at all stages in the innovation process

or application can increase market risk for the developers of the technology This problem can be seen readily in the

instance, the liability risks may be highly complex †the term †defective product†is used in the EU product liability directive

solutions, in order to lower the risk of collision by continuously monitoring driver behaviour and driving conditions †and

and the risks of distraction, systems were implemented inâ two vehicles and road-tested in real traffic situations

One of the areas currently most at risk is digital trade Policies that lead to

and computer systems that introduce new patient risks, staff frustration, and outcomes below expectation •The focus must shift from automation of clinical work to

There is a risk that these investments stem from political priorities, rather than from a real discovery process and

A potential risk of basing priority decisions mainly on future potential is that regional and national

sensible risks and trying new things Recommendation 10 †Research area Encourage research on the implementation process of ICT-ELI,

organisational risk aversion, conservative cultures and excessively hierarchical arrangements constitute key barriers for scaling up ICT-ELI (Kampylis, Law, et al.

and risk taking (73.3%).%)Changing practices i e. developing a culture of innovation) is a long and complex process that requires, among other

taking sensible risks and trying new things 120 73.3 32. Developing long-term strategies to advance the capacity of school leaders to adopt and

and other stakeholders when taking sensible risks and trying new thingsâ€, while for policy/decision makers and others it is:

when taking sensible risks and trying new things 73.3 120 21. Encouraging research on the implementation process of ICT-ELI, focusing on the

stakeholders when taking sensible risks and trying new things Promoting diversity in ICT-ELI by funding a number of pilots in different

other stakeholders when taking sensible risks and trying new things 8. 8 5. 0 5. 8 14.2 24.2 49 49.2 73.3

sensible risks and trying new things 6. 12 52 6. 19 27 5. 67 24 5. 88 17

risk of losing compatibility with historical data. However, if the definitions in the standards are not clear

procurement due to the difficult application procedures, a lack of awareness and the greater risk of

link in the risk-sharing chain, shares some of the risk with financial intermediaries in the participating

A high risk of lending to SMES can emerge from the uncertainty of their invest -ments in certain knowledge-related activities,

-ary) exposure to risk, in order to stimulate the provision of debt finance to SMES at local level

It focuses on the fields of innovation and knowledge-based economy, environment and risk prevention

risks limiting the impact in any one area 5. 1. 2 Potential Regional Benefits Developing and implementing smart specialisation policies

them to generate individual credit risk profiles. This information could help many of the world†s unbanked to have access to

considered a business risk mitigation strategy for operators in emerging markets. However, such cooperation is predicated on opening up the

To mitigate the potential risks, all stakeholders must see tangible benefits from such data sharing. These stakeholders include

a balanced risk-based approach may be required in the context of what is under discussion here

minimal privacy risks •Restricting the use of probabilistic predictions: While the use of big data

Changes during Migration. 2011 IEEE Third Int†l Conference on Privacy, Security, Risk and Trust and 2011 IEEE Third Int†l

Rewards and Risks of Big data (B. Bilbao-Osorio, S. Dutta and B Lanvin, Eds References

risks as rapidly as new markets emerged The opportunity for digital technologies to create new businesses is real,

Risk aversion †â€oeit†s not worth the risk†What are the most significant cultural

-manded such speed that it is â€oeat risk of diluting employee morale. †metric systems more than half of companies fail to set key performance

5. Fighting poverty and social exclusion-at least 20 million fewer people in or at risk of poverty and

Reduction of population at risk of poverty or social exclusion in number of persons <580,000 8, 907,000 (2012

the risk of poverty Field of action 1 Field of action 2 Field of action 4

and proactive measures can include policies, concepts, standards, security guides, risk management training and awareness activities, implementation of technical solution to project the cybernetic

we will need to create a European forum for discussion between the national government to integrate risk

In this matter, at national level, we will consider implementing processes of security risk management in the public administration.

Risks of cyber incidents occurrence are caused by human or procedural reasons. Thus, some of the

vulnerabilities and cyber security risks and promotes Romania's interests, values and national objectives in cyberspace.

expertise in cyber risk, by fostering synergies between different action plans on cyber security (military and

vulnerabilities, risks, and those related to cyber incidents and attacks Responsible: Operative Council for Cyber security (COSC

risk management in cyber security and cyber incident response under a national program Construction of Data base with

minimizing risks related to the use of cyberspace Responsible: Operative Council for Cyber security (COSC Boost the Research & development

vulnerabilities and risks of using cyberspace Responsible: Operative Council for Cyber security (COSC Development of educational

Understanding and managing risks related to the adoption and integration of cloud computing capabilities into public bodies is a key

and some cases to rethink, their processes for assessing risk and making informed decisions related to this new service delivering model

ï Heterogeneous security solutions which reflect in greater security risk ï Granular purchase of hardware and software solutions does not provide transparency on

ï Reducing risk management costs Cloud computing Definition Cloud computing relies on sharing of resources to achieve coherence and economies of scale, over a

absence of financial resources for advertising and communication, have higher risks of becoming insolvent o Enabling the SME€ s to:

Personal lifestyle and environmental impact factors are the most significant risk factors influencing health status

decreasing the risk of fraud and preventing inappropriate medication electronic prescription Responsible: Ministry of Health with

In 201110,40. 3%of the Romanian population was facing the risk poverty or social exclusion, being a

%)To a total of 8. 63 million people at risk of poverty or social exclusion in 2011,4. 74 million people were facing the risk of poverty

%of Romanian Population facing poverty and social exclusion Source: http://www. fonduri-ue. ro/res/filepicker users/cd25a597fd-62/2012

The main informatics risks and threats can be classified based on several criteria. So, a first criterion

highlights the risks and the threats related to the following ï Data integrity †intended alteration of the stored data or

All the risks and threats mentioned above represent critical situations which can affect in a first instance

of risks and mitigation actions ï Evaluate †This phase will assess the effectiveness of an initiative and its efficiency during and

as well as averting the risks of misuses that inevitably accompany any step of human evolution I am thankful to the authors for this startling journey into a nascent field,

Smart Cities project risks being dominated by US companies such as IBM, Google and Ciscos, partly because of the lack of

A major risk for the Future Internet is the realisation of the †Big Brother†scenario, with big industrial

there is a risk that the innovation ecosystem will become more closed, favouring incumbents and dominant players, thereby in time constraining

ï We found that the Authority actively monitors its exposure to risks related to technology approaching end-of-life.

engagement with stakeholders regarding risk, cost, prioritisation and funding 1 ttp://www. nhsbsa. nhsh. uk/Prescriptionservices/809. aspx

relocation in order to provide further assurance that risks arising from the move could be mitigated ï The information governance arrangements are thorough and in line with NHS

accreditations to deal with the risks of cyber threat, fraud and other security threats 6 Part One NHS Prescription Services:

1. 2 Public services that rely on legacy systems face a number of risks. Availability can be impacted through unreliability or failure of worn components.

face the risks and costs of replacing them. This was made clear in a response to the

performance over time, with associated costs and risks; and an enterprise analysis8 measuring how mature the organisation is in managing,

and to address impending risks relating to technology approaching end-of-life 2. 8 To meet the capacity demands, CIP implemented high-speed scanning

submissions enhancements systems that could combat the risk of such frauds. Such matters are excluded therefore from the scope of our investigation

and address impending risks relating to technology approaching end-of-life. The Authority then took a sensible approach

corporate risk register, which describes strategic risks, their probability, potential impact and the agreed mitigations.

A prescription pricing service programme board which includes representatives from the business and the IT group meet monthly to

discuss service issues, enhancements and risks, and ICT is discussed during these meetings 4. 10 Risks discussed at the service area programme board feed into the corporate

risk register. An'end-of-life technology'risk register is maintained also that logs the risk and impact of a technology component that is approaching,

or is already end-of -life. This ensures that the Authority is monitoring its exposure to risks related to

technology that is approaching end-of-life in current systems 43 NHS Prescription Services: the impact of legacy ICT Part Four 23

4. 11 The Authority has adopted an enterprise architecture approach to ensure alignment of IT and business services,

further assurance that risks arising from the move can be mitigated 4. 26 The information governance arrangements are thorough and in line with the NHS

accreditations to deal with the risks of cyber threat and fraud and other security threats Technology

ownership of IT risk leads to proactive decisions being made regarding the replacement or retention of

and address risks created by legacy systems The legacy issues and risks identified in the CIP business case that led

to the decision to implement CIP still exist. The inability to scale the system to meet demand;

capabilities, risks and issues, opportunities and threats Enterprise architecture There are clear links and strong alignment between

Risk management Risk management processes ensure that the business risk appetite is documented and legacy ICT and information assurance related

risks are identified and regularly reviewed, documented and managed at a sufficiently senior level, with mitigating arrangements agreed.

have clear visibility of the level of risk exposure Implementation Lifecycle management The system is readily adaptable to changing business

with risks and issues managed effectively Management of supplier services Outsourced services are managed actively and regularly market tested to ensure value for money,

risk assessments are carried out regularly. No bespoke security systems or processes are required Technology Applications The legacy ICT system fully integrates with the wider ICT

investments in skills, organisation and innovation and investment and change entails risks and costs as well

organisational and management changes which may entail proportionally greater costs and risks for SMES In addition, smaller firms may have fewer incentives to integrate their business processes than larger firms

and avoid the risks associated with new investments and new business models. Strong links with customers and suppliers along the value chain as well as the lack of competition

with the risk of computer viruses and other system failures. If ICT support services, especially in an

loans, lack of sufficient collateral and high risk in innovative start-ups and micro-enterprises. To the extent

first place, they should help SMES self-assess the costs and risks as well as opportunities related to e

new sales channels can often better meet the needs of at-risk social groups such as the elderly

NTD procedures do not exclude a risk that wrongful notices are provided to intermediaries (in good faith or bad faith) and that intermediaries, acting on such notices, take down legal

Any filtering approach brings the risk of a technological"arms race"between those imposing filters and pirates.

technology used, risk restricting freedom of speech by blocking legal content by mistake. On the other hand, filtering techniques such as deep packet inspection could restrict the right of

with all the attendant health risks The public consultation on e-commerce triggered a limited number of responses to online

addition, it will continue to analyse the risks related to the online sales of medicines in the

or extra risks linked to having to comply with rules different to those of the Member State of establishment.

higher risk of fraud and non-payments in cross-border transactions, and the difficulty of

First of all, risk aversion tends to make investors and banks shy away from financing firms in their start-up and early expansion stages.

entails new harmonised rules on the passing of risk in sales contracts and the default time

The cost of payments can be correlated partly to the risk of fraud, which seems to be very

In addition, the delivery deadline for goods and the question of who bears the risk of loss or

risk of loss or damage of the goods occurring before he has acquired the physical possession

passing of risk. These rules in the Common European Sales Law also apply to B2b contracts

for delivery and transfer of risk are resolved only to a certain extent at EU level (see Chapter

because the Internet continues to be perceived as a risk area generating potential disputes which cannot be solved easily partly because of the nature of

NTD procedures do not exclude a risk that wrongful notices are provided to intermediaries (in good faith or bad faith) and that

the benefits and the barriers these but the studies focusing on the risks of open

but also the diversity of risks entailed, raising awareness of this framework of uncertainties. Within the study, our work highlights that open innovation in is impeded by risks related to

technology, market place, collaboration among partners, financial sources availability, clients needs, workforce knowledge and intellectual property rights

By undertaking this study we aim to contribute to the scarce literature on open innovation risks and to shed

open innovation, risk management, innovation performance, collaboration, resource availability JEL classification: O310 INTRODUCTION AND PURPOSE OF THE RESEARCH

many researchers, we found few studies addressing open innovation from the risk management perspective, especially in Central and Eastern europe

and especially on their potential of efficiently managing the risks this cooperation involves. To our

knowledge, there is a limited amount of empirical research on the risk management of open innovation processes. This paper aims to address these research gaps

drawbacks that such partnerships entail and thirdly to define a comprehensive structure of risks residing in open innovation,

by raising awareness on the factors that help mitigate the risks met by companies in their innovation process.

The research results support the importance of risk management in the open innovation environment Given the overall sparse attention given to the dark side of open innovation form the risk

management perspective, we consider worth addressing this deficiency through the challenge of defining a theoretical framework of risks encountered in external partnerships.

In order to build this we used the extensive support literature written on open innovation, since Chesbrough (2003) until

today and the relatively scant literature affiliated to open innovation risks. Additional research sources were case studies

We intend our study to make the path for future researches in the risk management area of

customer and supplier expertise outside the organization, sharing risk in product and service development, and enhancing company image and reputation (Wallin and Von Krogh, 2010.

market, and the risk involved with the development of new products and services (Chesbrough 2003; Reichwald and Piller 2009

reduced risk as others put their human capital to work on risky propositions; and accelerated time-to-market as innovation is freed from the shackles of the

to effectively exploit diversity and to share risk. Innovation collaboration allows organization to gain needed skills, technologies, assets,

and risks will be reduced by shared partnership ACTORS ON THE OPEN INNOVATION STAGE In the new models of innovation, different actors are collaborating together to turn a new

The scarce literature written about risk management dimension in open innovation projects is focused more on highlighting the barriers for a firm to approach open innovation rather than on

depicting the risks which accompany such collaborative arrangements. In our review of literature we show what impedes a company to perform

potential risk because the organization may lose its competitive edge over its competitors Additionally, this knowledge exposure could provide the rival organizations with added advantages

2009) shows that risks such as loss of knowledge, higher coordination costs, as well as loss of control and higher complexity are mentioned as frequent risks

connected to open innovation activities. In addition, there are significant internal barriers, such as the difficulty in finding the right partner, imbalance between open innovation activities and daily

cost reduction, knowledge gain, sharing risks and diversification of resources. We found that knowledge acquisition is perceived both as the highest

Since innovation is closely related to higher risks, the choice of involvement in external partnerships is a means of sharing the risks of the firm†s projects.

However, as later detailed, this open innovation projects may also entails a wide range of risks

which need to raise awareness of Internal resources are limited often, insufficient and unavailable for large innovation

While an open innovation strategy targets to decrease the risk related to the innovation process, it may also entail an increase of risk related to collaboration among different partners

However, there is a scarcity of research regarding the costs and barriers of open innovation A number of both internal factors (within individual companies or single industries) and

inherently brings along risks and costs. Our research distinctly points out to a paradox: even if the

An open innovation strategy aims at decreasing the risk inherent to the innovation process but at the same time it may increase the risk inherent to collaboration with different partners

Tantau and Coras, 2013 Our study reflects that open innovation is hampered commonly by constraints related to

Figure 2. Open innovation risks Source: the authors The USV Annals of Economics and Public Administration Volume 14, Issue 1 (19), 2014

Figure 3 depicts in further detail the major risk drivers (internal and external) for a company

Knowledge sharing risks are correlated strictly with the lack of trust in the partner and poor communication among collaborators about common

Retention risk acts as a major constrain since turnover among work force can alter the quality of the partnerships and lead to major

People related risks are regarded as highest threats, since they are the major actors and assets in collaboration projects.

innovation, acts as a major risk and its impact is even greater when it is a translation of the top

which shows little support for innovation and low awareness of risks Undertrained workforce is a threat for a small firm

Figure 3. Details of open innovation risks Source: the authors The USV Annals of Economics and Public Administration Volume 14, Issue 1 (19), 2014

Collaboration among partners, the core process of open innovation, entails a variety of risks that alter the purpose.

Collaboration risks are highly connected with knowledge loss and opportunistic behaviour, if partners allow each other to

The risk of technology leakage to rivals and a loss of control over the innovative process

outsourcing partners in order to avoid possible outsourcing risks. Highly specific to emergent countries, unethical behaviour is common and acts a major business risk.

Open innovation is also impeded by a high level of bureaucracy and firms find it harder to cover the administrative costs

partnership holds significant risks residing not only in the failure of collaborations but also in potential loss of competitive advantage should the critical internal competencies

ability to access external knowledge resources efficiently and overcoming the risks encountered in the process can become a huge competitive factor for companies

This paper has explored empirically the risk agenda companies encounter in the process of open innovation. Within the research, our work highlights that companies are allured to enter

pool of resources otherwise insufficient, to share risks that go along with their businesses While collaborating, we conclude that firms are impeded by risks related to workforce

knowledge sharing, complexity of collaboration, market tensions, client pressures, access to finance, technology advances and demands related to intellectual property rights protection

While generally scholars have focused their research of risks in open innovation on large companies rather than SMES, there is little knowledge on how the magnitude and impact of

we consider critical for further research the development of risk mitigation models for open innovation risk

REFERENCES 1. Arnold, R. 2008. Microeconomics. 9th ed. Mason: Southwestern Cengage Learning 2. Brunold, J. and Durst, S. 2012)" Intellectual capital risks and job rotation",Journal of

Intellectual Capital, Vol. 13 (2), pp. 178 †195 3. Chesbrough, H. 2003) â€oeopen Innovationâ€, Harvard Business school Press, Boston, pp. 43

Tantau, A. And Coras, E. 2013) â€oea risk mitigation model in sme†s open innovation

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