Open innovation in SMEs: investigating the motives and the perceived challenges during the process of open innovation in small and medium-sized enterprises that are active in the online industry

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Open innovation in SMEs: investigating the

motives and the perceived challenges during

the process of open innovation in small and

medium-sized enterprises that are active in

the online industry

By

Quinten Zondervan

University of Groningen

MSc BA Small Business & Entrepreneurship

Word count: 14034 (excl. tables, references and appendices) Supervisor: dr. W.W.M.E. Schoenmakers

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Abstract

This study investigates the possible motives and challenges that SMEs could perceive when engaging in open innovation. With the use of open innovation, companies share their ideas with the market and with the use of market knowledge, they can boost their internal innovation levels. Open innovations are often only associated with large companies, whereas small and medium-sized enterprises (SMEs) are excluded from the mainstream discussion in the literature about open innovation, because most research is done within large firms.

The data for this study was collected at multiple organizations in the north of the Netherlands. All companies were active in the online industry, including full service internet bureaus, app builders and optimization companies. The data for this qualitative research was collected during in-depth interviews with directors and innovation developers within the companies.

The expected motives (i.e. market considerations, innovation involvement and control) that were found in the literature of SMEs regarding open innovation are also found by this study. Yet, this study finds that attracting new customers, clients and employees is also a major motive to engage in open innovation. The majority of the interviewed companies see open innovation and spreading knowledge not as harmful for the company. The challenges (i.e. risk and competences) that were expected are partly found by this study. This study reveals that SMEs do not have issues with their scarcity of resources when it comes to engaging in open innovation.

A main contribution of this study is the finding that SMEs use open innovation practices by spreading their knowledge in several ways, and have different motives and challenges to engage in open innovation. In addition, this research found different types of openness, in particular a new way of knowledge sharing, namely a foundation of partners. Thirdly, this research is an addition to the field, because empirical data was lacking and the theme of open innovation within SMEs was underexposed in the literature.

Keywords:

Open innovations, SMEs, Tools of knowledge sharing, Transformation, Protection, Motivations & Challenges, Online industry, Qualitative research

Research theme:

Open innovations in Small and Medium-sized enterprises First supervisor:

dr. W.W.M.E. Schoenmakers Second supervisor

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1. Introduction

These day’s company strategies are characterised by a trend towards more open innovation practices, relying on outside information and collaborations with other companies (Laursen and Salter, 2006). Therefore, open innovation is a concept that is frequently used by scholars and researchers. However, open innovation is used and associated with large companies, whereas small and medium-sized enterprises (SMEs) are excluded from the mainstream discussion in the literature about open innovation. Although, recent studies underline the importance of open innovation for SMEs (Hemert et al., 2013; Wynarczyk et al., 2013). Spithoven et al. (2013) argue that SMEs are more inclined to use different sets of open innovation practices than large firms. SMEs are for example more dependent on open innovation practices and have a higher intensity for open innovation activities, because SMEs are generally considered to be more open and highly innovative (Cassiman and Veugelers, 2006). Although the bulk of innovation is realised by large firms, the importance of SMEs, regarding motives for engaging in open innovation, is still unquestioned (Bianchi et al., 2010). Furthermore, the use of open innovation comes with challenges for SMEs. Lichtenthaler (2008) for example, observed that the innovation processes of many small enterprises are increasingly marked by knowledge acquisition, but that knowledge exploitation, to commercialize that knowledge is more of a challenge: they often lack the capacity in terms of marketing channels and contacts to introduce them effectively to the innovation market (Narula, 2004). This research is trying to clarify and capture the motives and perceived challenges for SMEs when they are going to engage in open innovation practices.

SMEs are different from large firms regarding the ways, in which they can utilize open innovation activities for valuable outcomes. According to Spithoven et al. (2013), SMEs possess a much higher intensity for all types of open innovation activities than large firms. Moreover, SMEs are in general less bureaucratic and more flexible in decision making (Xiaobao et al., 2013). Furthermore, SMEs also possess limitations, such as resource scarcity, unstructured innovation processes and unstructured internal capabilities (Lichtenthaler, 2008).

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While earlier research has mainly stressed the benefits of open innovation and collaboration for innovating firms, there are also potential challenges inherent to opening up to the innovation processes. For example, engaging in open innovation can induce a higher dependence on external partners (Vanhaverbeke et al., 2002). In addition, Fosfuri (2006) found that firms engaging in open innovation contribute to the transfer of important know-how to competitors, which will increase competition in the market. Furthermore, SMEs have often one product or service they make or provide (Walker and Brown, 2004). Therefore, when SMEs are engaging in open innovation and showing their abilities to the market, the risk of leakage private information to competitors is likely to be higher. These risks may potentially be more challenging and demanding for SMEs than for large enterprises. Therefore, the kind of challenges could be different when comparing SMEs with large firms.

According to Van de Vrande et al. (2009), as for the motives and challenges of open innovation in SMEs, the open innovation literature has so far witnessed few attempts to explore this subject. Thus, the literature is in a nascent stage when it comes to SMEs for engaging in open innovation, although it is important from both a managerial and theoretical perspective. From a managerial perspective, with the use and knowledge of open innovation, companies can boost their innovation levels and overall performance (Spithoven et al., 2013). Consequently, the use of external sources to innovate can be important to improve or speed up innovation (Laursen and Salter 2006). From a theoretical perspective, SMEs have fewer human resources to screen the external environment for valuable information than larger firms (Dahlander and Gann 2010). Thus, it seems likely that SMEs differ from larger firms in engaging in open innovation, but within SMEs this type of research is not conducted yet.

To summarize, open innovation is a concept that is mostly studied within large enterprises and less in SMEs. Thus, empirical research on open innovation practices in SMEs remains relatively scarce (Wynarczyk, 2013). Although, the literature on open innovation in a SME context has received growing attention in the last decade, a number of less explored issues remain, such as the motives for an SME to engage in knowledge sharing, despite the higher risks because of lower amount of resources compared to larger firms. Considering the high relevance of open innovation in SMEs, the lack of studies is surprising. Researchers are repeatedly pointing out the need to explore in-depth open innovation in SMEs (Van de Vrande et al., 2009). The purpose of this study is to fill in the gap on the open innovation in SMEs. The main research question in this paper can be formulated as follows:

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1.1 Sub-questions

In accordance, sub-questions are made, in order to answer the multifaceted research question. Namely, the research question is composed in a way, to investigate both motives and challenges that SMEs could have and face in their open innovation process. The first and second sub-questions are related to the motives and the third and fourth sub-question to the challenges that a SME can perceive during open innovation practices.

1.1.1 Motives

In relationship with the motives that SMEs could have to engage in open innovation, it is necessary to look at the ways firms engage in open innovation. Spithoven et al. (2013) argue that SMEs are more inclined to use different sets of open innovation practices than large firms. SMEs are for example more dependent on open innovation practices and have a higher intensity for open innovation activities. Therefore, SMEs are generally considered to be more open and highly innovative (Cassiman and Veugelers, 2006). Moreover, the ways of knowledge sharing can cause additional contacts with partners, what will influence the motive to engage in open innovation (di Benedetto, 2010). Thus, the ways of knowledge sharing both can both reveal as influence the motives of a SME.

Ways of knowledge sharing

Thus, next to the argument that SMEs embrace open innovation differently than large firms, the ways of engagement in open innovation could also be different (Fu, 2012). Furthermore, Laursen and Salter (2006) found that the ways to communicate to with other sources could be a factor that accelerates open innovation in firms. In this way, openness to external sources allows SMEs to bring in ideas from outside, to deepen their knowledge of the technological opportunities available on the external market. This will lead to the following sub-question:

“In what way are SMEs engaging in open innovations?

Reasons for knowledge sharing

A leading research about the motives of SMEs, is the paper by Van de Vrande et al. (2009). Their research includes a survey on 1206 Dutch SMEs in manufacturing and service industries. These authors point out that the most important motive for SMEs are ‘market considerations’. Moreover, an article by Perida et al. (2012) found that the adoption of open innovation has an overall positive influence on the innovation performance of SMEs. Besides that, Teirlinck and Spithoven (2013), argue that SMEs that are engaging in knowledge sharing, will have a positive effect on the internal innovations of the firm. Although, the literature on open innovation in a SME context has received growing attention, the topic regarding motives for engaging in open innovation, is still underexposed (Bianchi et al., 2010). This will lead to the following sub-question:

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1.1.2 Challenges

As mentioned in the introduction, open innovation practices in SMEs come with challenges and risks. Spithoven et al. (2013) argue that to detect challenges within SMEs, research can look at the transformation process and the protection of certain innovation practices. Thus, the third sub-question relates to the transformation process, from closed to open, that a SMEs have to face when engaging in open innovation. This process is important to understand, since it may clarify where the challenges faced by the firms are coming from. Finally, it seems important to know how SMEs can protect certain parts of their innovation practices. Although in open innovation is knowledge sharing a central concept, protecting certain core assets is important (Lichenthaler, 2010). Otherwise, it is not interesting for SMEs to transform into an open innovation organization because the cost of the challenges will outweigh the benefits of engaging in open innovation. The willingness to change from a closed organization to an open organization are likely to be higher, if SMEs can protect specific parts easier, as it decreases the chance of knowledge spilling over to competitors in the market.

Transformation process

Lichtenthaler (2008) found that most SMEs are still pursuing closed innovation practices over open innovation. In this article, the author argues that in the long run, a firm’s closed approach weakens its competitive position substantially, whereas proactive openness may result in important strategic innovations. Furthermore, in smaller firms innovations normally emerge over time, whereas innovation practices of large firms are emerging of ‘cumulativeness of knowledge’ (Hossein and Kauranen, 2016). It can be argued that during the transformation process the challenges will change over time and the type of challenges will differ substantially when a firm is opening up its innovation practices (Kim and Park, 2010). This will lead to the following sub-question:

“What are the perceived challenges for SMEs during the transformation process from a closed to an open approach?”

Protecting core innovation practices

The study of Fosfuri (2006) found that open innovation may lead to stronger competitors, because externalising relevant know-how will add to the competiveness of direct competitors. In advance, protective measures could be taken into account, like patents. However, in the literature there is ambiguity about the role of patents. Patents could be seen as a factor to accelerate open innovation practices, in a way that patents could help to control the knowledge base to limit spill overs and that could accelerate open innovation but at the same time firms try to protect their intellectual properties, which hinders the adoption of open innovation (Lichenthaler, 2010). Thus, methods of protecting innovation practices need to be investigated more. This will lead to the following sub-question:

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2. Literature review

This section will elaborate on the most important terms and concepts that are relevant for this paper. Starting with the definition of the key concepts, the distinction between closed and open innovation practices, the advantages of open innovation and open innovation within SMEs. In the second part the most relevant literature is listed and assumptions are made about possible motives and challenges.

2.1 Open Innovation

The concept of open innovation is mainly started by Chesbrough (2003) and was investigated in large firms. An extensive number of studies are adopting the term open innovation, in order to describe the phenomenon where firms rely on external sources of innovation, which means that resources, ideas and individuals flow in and out of organizations (Chesbrough, 2003). The definition that is used in this article, is still the most relevant and cited in the contemporary literature. According to Chesbrough et al. (2006) open innovation can be defined as:

‘The use of purposive inflows and outflows of knowledge to accelerate internal innovation, and to expand the markets for external use of innovation, respectively.’

So with the use of open innovation, companies share their ideas with the market and with the use of the market knowledge, they can boost their internal innovation levels. But this definition is quite broad and current research is inadequate in determining specific open innovation measures (Dahlander and Gann, 2010). This research sees the ways of collaboration with external partners as the most important aspect to measure if companies are engaging in open innovation, because it can reveal possible motives and challenges (di Benedetto, 2010). Moreover, the ways of collaboration influence the distinction that company is open or closed. But this concept is not particularly new, there is evidence in the literature that innovation has always been open to some degree (Tidd, 1993). Therefore, a deeper and more specific investigation of companies and their sources of innovation is needed (Gassmann, 2006).

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Another difference is that in closed innovation practices, the companies try to have a particular product as first on the market. In an open organization, firms do not have to start the research to benefit from it. It is better to develop a better business model than to be the first on the market. With the best use of both internal and external ideas, the company will retain the best competitive position. Next to the distinction between closed and open, in the literature there is a difference between technology exploitation and exploration when it comes to open innovation (Van de Vrande et al., 2009). The distinction between exploitation and exploration is made to show that open innovation includes more activities and acquire additional benefits than only focussing on internal innovations as a closed organization. Technology exploitation could be described as a way to better profit from internal knowledge and technology exploration refers to the ways firms try to acquire external knowledge and technologies. Exploitation consists of intellectual property, which plays a relevant role in open innovation practices as a result of the flow of knowledge (Lichtenthaler, 2007). SMEs could trade their intellectual property in order to collect extra value from it (Gassmann, 2006).

Technology exploration is in this research setting more important because it looks at the collaboration with external partners, which could be clients, supplier or competitors (Gassmann, 2006). Customer involvement is for example one important alternative to distinct from internal innovation processes (Gassmann, 2006). Drawing on the work of Von Hippel (2005), users are increasingly regarded not as just passive adopters of innovations, but they may rather develop their own innovations which producers can imitate. Next to this customer involvement, external networking is considered to be important for open innovation practices (Chesbrough et al., 2006).

Since open organizations do not have all the required knowledge within the company, they use external knowledge (Gassmann, 2006). In the open paradigm, firms can use external knowledge to deepen the internal knowledge and to expand the organizational knowledge boundary (Prencipe, 2000). Thus, in contrast to closed organizations, open innovation practices are more complicated, due to a variety of activities.

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2.2 Small and medium-sized enterprises

SMEs is a concept that is widely used and accepted in the literature. The small and medium-sized enterprises are crucial for a national economy, since they outnumber large firms by a wide margin and employ about 70 percent of the national workforce of most countries and play relevant roles in innovation (OECD, 2011). This is in line with Jones and Tilley (2003) who found that SMEs stimulate national economies on different levels and therefore should be centralized in governmental policies. SMEs are defined in various ways in practice and literature. Because of the geographical domain of this research, the definition of the European Union is followed, that SMEs are classified into three major groups as displayed below:

NUMBER OF EMPLOYEES TURNOVER BALANCE SHEET TOTAL

MICRO FIRMS <10 ≤ 2m ≤ 2m

SMALL FIRMS <50 ≤ 10m ≤ 10m

MEDIUM FIRMS <250 ≤ 50m ≤ 43m

Table 1: The classification of SMEs by European Commission 2012

This research will focus and investigate all three types of SMEs, because it is more interesting why these relative small companies will engage in open innovation. Especially, due to their scarcer resources, less product lines and less structured innovation practices than large firms (Teirlinck and Spithoven, 2013). In general, micro-enterprises collaborate less than small and medium-sized firms do (Van de Vrande et al., 2009) Moreover, there is evidence that medium-sized firms are more heavily involved in open innovation than small firms (van de Vrande et al., 2009). Thus, it seems that the size of a firm is positively related with the extent of collaboration.

According to Laursen and Salter (2004), it is not evident that larger firms are more effective than SMEs in innovation practices, but open innovation in SMEs may different from that in larger firms, since innovation processes differ between the two (Vossen, 1998), but these processes haven’t been analysed in the context of open innovation (West et al., 2006). As reported by Spithoven et al. (2013), SMEs possess a much higher open innovation intensity for all activities than large firms. Furthermore, SMEs are compared to their larger counterparts, in general less bureaucratic and more flexible in decision making (Xiaobao et al., 2013).

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2.3 Ways of knowledge sharing

Although SMEs innovate in various manners, Lee et al. (2010) concluded that there have been very few studies, concerning an innovation model that is specialised for SMEs. However, the literature indicates that in the innovation process, dealing with external sources is critical for any type of business (Cohen and Levinthal, 1990). Despite the fact that SMEs have the flexibility and specificity that can be advantageous in accelerating internal innovation, few of them have sufficient capacity to manage the whole innovation process by themselves, which leads to encouragement to collaborate with other firms (Edwards et al., 2005).

Laursen and Salter (2006) found that the ways to communicate with other sources could be a factor that accelerates open innovation in firms. In this way, openness to external sources allows SMEs to bring in ideas from outside to deepen their knowledge of the technological opportunities available. Next to that, the kind of collaboration also influences the open innovation practices in a firm. Spithoven et al. (2013) found that external collaboration with different partners increases the chance of launching new products and services. The right type of collaboration depends on the goals of the SME as Parida et al. (2012) found that vertical collaboration is relevant for radical innovation and horizontal collaboration for incremental innovation. In addition, Wynarczyk (2013) believes that SMEs prefer to collaborate in new product introductions, whereas closed innovation SMEs tend to collaborate to make incremental changes to their existing products.

2.4 Reasons for knowledge sharing

These days, the development and introduction of open innovation is more complex than before, increasing the need of relying on outside partners (Edwards et al., 2005). Thus, the use of external sources to innovate can be critical to improve or speed up innovation (Laursen and Salter, 2006). A leading research about the motives of SMEs, is the paper by Van de Vrande et al. (2009). Their research includes a survey on 1206 Dutch SMEs in manufacturing and service industries. These authors point out that the most important motive for SMEs are ‘market considerations’. Their recommendation is to study the motives and challenges related to open innovation in more detail.

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2.5 Assumptions about the motives

In this section, the assumptions of the motives that are based on the literature review are displayed. These assumptions will be taken into account when entering the field and will be elaborated more in the result section. In addition, this research combined the most frequently mentioned motives and labelled them into the three most relevant motives. These labelled motives are invented by this study and based on the contemporary literature, which is in a nascent and developing stage. This research sees that market considerations, innovation involvement and control as the most important motives to engage in open innovation. Table 2 consist of the assumptions about the motives for SMEs to engage in open innovation.

Market Considerations

The first assumed motive that an SME could have to engage in open innovation is market related. The literature provides several indicators to consider benefits on the market as an important motive. Van de Vrande et al. (2009) point out that the most important motive for SMEs are market considerations and to keep up with the market development. Besides that, Narula (2004) found that SMEs lack the capacity in terms of marketing channels and contacts to introduce innovations effectively to the market. That’s why SMEs may need to collaborate and engage in open innovation (Narula, 2004).

Moreover, firms can benefit from early involvement in new technologies or business opportunities, possibly leading to a first mover advantage and avoiding investing large up-front costs (Vanhaverbeke et al., 2008). The last argument for market considerations as a motive, is the statement that a firm’s closed approach weakens it competitive position (Lichtenthaler, 2008). These strategic and financial gains could be reasons to engage in open innovation.

Innovation involvement

The second motive that SMEs could have to engage in open innovation is innovation involvement. Engagement in open innovation could lead to benefits in terms of both internal as external innovation (Teirlinck and Spithoven, 2013). In the literature it is argued that to deal with the changing business environment, SMEs use external resources to shorten innovation time, reduce risks and costs and increase the flexibility of their innovation operations (Hagedoorn, 1993). Furthermore, the ways to communicate to with other sources could be a factor that accelerates open innovation in firms. In this way, openness to external sources allows SMEs to bring in ideas from outside to deepen their knowledge of the technological opportunities available (Laursen and Salter, 2006).

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external collaboration with different partners increases the chance of launching new products and services. In addition, Wynarczyk (2013) states that open SMEs prefer to collaborate in new product introductions. These findings in the literature underline that innovation involvement may an important motive for engagement for SMEs.

Control

The last assumed motive is control. SMEs possess different limitations, such as resource scarcity (Lichtenthaler, 2008). These limitations cause that SMEs are constrained in their innovation capabilities (Dahlander and Gann, 2010). Thus, few of the SMEs have sufficient capacity to manage the whole innovation process by themselves, which leads to encouragement to collaborate with other firms (Edwards et al., 2005). These collaborations will lead to a better control of the innovation capabilities, besides that, firms can spot changes in the market what makes them more aware and in control (Hausman, 2005). The literature indicates that in the innovation process, dealing with external sources is critical for any type of business (Cohen and Levinthal, 1990). The use of open innovation could lead to a better organization and control of complex processes (Chesbrough, 2003).

MOTIVES EXAMPLES

Market considerations

‘Keep up with market development’ (Van de Vrande et al., 2009).

‘Lack the capacity in terms of marketing channels and contacts to introduce innovations effectively to the market, SMEs need to collaborate’ (Narula, 2004).

‘A firm’s closed approach weakens it competitive position’ (Lichtenthaler, 2008). ‘Open innovation could lead to a first mover advantage and it avoids investing large up-front costs’ (Vanhaverbeke et al., 2008).

Innovation involvement

‘Integration of new technologies’ (Chesbrough, 2003).

‘External collaboration with different partners increases its chance of launching new products and services’ (Spithoven et al., 2013).

‘Open SMEs prefer to collaborate in new product introductions’ (Wynarczyk, 2013). ‘SMEs use external resources to shorten innovation time, reduce risk and cost and increase the flexibility of their operation’ (Hagedoorn, 1993).

‘SMEs engaging in knowledge sharing, will have a positive influence on the internal innovations of the firm’ (Teirlinck and Spithoven, 2013).

Control ‘Better organization of complex processes’ (Chesbrough, 2003).

‘Insufficient capacity to manage the whole innovation process by themselves, the need to collaborate with other firms’ (Edwards et al., 2005).

‘Firms can spot changes in the market what makes them more aware and in control’ (Hausman, 2005).

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2.6 Transformation process

One of the most important challenges for SMEs is to adjust to the changing business environment, from a closed to an open perspective (Vargas and Rangel, 2007). This process is important to understand, as it indicates where the challenges faced by the firms are coming from and resulting in. Lichtenthaler (2008) found that most SMEs are still pursuing closed innovation practices over open innovation. In this article, the author argues that in the long run, a firm’s closed approach weakens it competitive position substantially, whereas proactive openness may result in important strategic innovations. At the same time, Bianchi et al. (2010) found that engaging open innovation is challenging for SMEs due to their focused business portfolio, specialized knowledge base and resource scarcity. The article of Chiaroni et al. (2010) analyses the changes in a firm’s organizational structures and management structures that the shift from closed to open innovation entails. Their analysis shows that the journey from closed to open innovation involves four main dimensions of the firm’s organization, namely: ‘inter-organizational networks, organizational structures, evaluation processes and knowledge management systems’. It can be argued that during the transformation process the challenges will change over time and the type challenges will differ substantially when a firm is opening up their innovation practices (Kim and Park, 2010). A tool to smoothen this transformation process, is to communicate the highlights and benefits of open innovation among employees to overcome change resistance (Brunswicker and Ehrenmann (2013).

2.7 Protecting core innovation practices

Engaging in open innovation can induce a higher dependence on external partners (Vanhaverbeke et al., 2002). In addition, Fosfuri (2006) found that firms engaging in open innovation contribute to the transfer of important know-how to competitors, which will increase competition in the market. Furthermore, SMEs have often one product or service they make or provide (Walker and Brown, 2004). Therefore, when engaging in open innovation and showing their abilities to the market, the risk of leaking private information to competitors is much higher.

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2.8 Assumptions about the Challenges

In this section, the assumptions of the challenges that are based on the literature review are displayed. These assumptions will be taken into account when entering the field and will be elaborated more in the result section. In addition, this research combined the most frequently mentioned challenges and labelled them into the three most relevant challenges. These labelled challenges are invented by this study and based on the contemporary literature, which is in a nascent and developing stage. This research sees that resources, risk and competences as the most important challenges when engaging in open innovation. In table 3 the major challenges and the examples are displayed.

Resources

As mentioned in the introduction, the main challenge for SMEs that may withhold them from engaging in open innovation is their scarcity of resources (Kim and Park, 2010; Lichtenthaler, 2008). One of the few studies about the challenges of open innovation practices is conducted by Kim and Park (2010). The main challenges for the investigated firms in their study are resource scarcity for research and development and the lack of sufficient access to scientific excellence. A solution in overcoming these challenges, is that SMEs need to be very careful in selecting partners, observe markets closely and develop internal research and development capabilities to satisfy customers (Kim and Park, 2010). Furthermore, SMEs experience difficulties with open innovation practices, as they struggle with the liability of smallness, facing resource constraints and scale limitations and having fewer technological assets to bargain with (Dahlander and Gann 2010). Summarizing, it seems that due to their limited resources, SMEs find it more difficult to engage in open innovation.

Risk

Engaging in open innovation may lead to risks for the firm. For example, Fosfuri (2006) found that open innovation may lead to stronger competitors, because externalising relevant know-how will add to the competiveness of direct competitors. These risks may potentially be more challenging for SMEs than for large enterprises and the challenges could have a different impact. Other authors point out that firms engaged in open innovation may neglect to develop strong technological competences internally, which may result in a high dependence on external parties (Vanhaverbeke et al., 2002).

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Competences

Next to that, due to the in general limited competences of SMEs, the firms are not able to use their resources well and they cannot cope with the pace of time. Since the complexity of technology is increased in recent years, many firms become inadequate to control all the aspects of this innovation process (Chesbrough, 2003). Next to the kind of challenges SMEs have to face, smaller firms are weaker than large firms in overcoming challenges for open innovation, mainly due to inadequate coordination of innovation activities with operational functions (Hossein and Kauranen, 2016).

Furthermore, in adjusting to the changes business environment, many firms are unable to change from a closed to an open perspective (Vargas and Rangel, 2007). This phenomenon may be explained by the specialized knowledge based (Bianchi et al., 2010), what makes the SMEs unable to switch to other perspective. Moreover, the limited competences lead to unsystematic innovation practices (Kim and Park, 2010). Another way to overcome challenges, is to let social capital play a role for SMEs in transferring and exchanging knowledge (Padilla-Melendez et al., 2013). As a component of that, SMEs need to embrace new management paradigms to meet the challenges of open innovation (Abouzeedan et al., 2013; Tranekjer and Knudsen, 2012).

CHALLENGES EXAMPLES

Resources ‘Resource scarcity’ (Lichtenthaler, 2008).

‘Fewer technological assets to bargain with’ (Dahlander and Gann 2010). ‘Lack of scientific excellence’ (Kim and Park, 2010).

‘Focussed business portfolio’ (Bianchi et al., 2010).

Risk ‘SMEs have often one product of service they make or provide’ (Walker and Brown, 2004).

‘High dependence on external parties’ (Vanhaverbeke et al., 2002).

‘Smaller firms have to open up more than their larger counterparts’ (Mesquita and Lazzarini 2008).

‘Open innovation may lead to stronger competitors’ (Fosfuri, 2006). ‘Dependence of external technology is higher’ (Lichtenthaler, 2005).

Competences ‘Unsystematic innovation practices’ (Kim and Park, 2010).

‘Inadequate coordination of innovation activities’ (Hossein and Kauranen, 2016). (Too) ‘Specialized knowledge base’ (Bianchi et al., 2010).

‘Unable to change from closed to open perspective’ (Vargas and Rangel, 2007).

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3. Methodology

This methodology section contains five parts, namely the data collection, the participants, the interviews, the quality criteria and the data analysis.

3.1 Data Collection

As explained in the literature review, most of the research about open innovation practices is done within large organizations. Therefore, the literature among open innovation in SMEs is in a nascent stage. The best methodological fit, when the literature is in a nascent stage, is using a qualitative research method (Edmondson and McManus, 2007). The choice for theory development, was also in line with van Aken et al. (2012), because little is known about the phenomenon open innovation in SMEs and the current perspective seems inadequate as mentioned in the introduction. Furthermore, the option to go in-depth fits better with the scope and feasibility of this research.

Due to time constraints, the entire study took about five months, a long attitudinal study was not possible. Therefore, the selection for qualitative research was both theoretically as practically grounded. The data was collected by means of in-depth interviews with several organizations in the north of the Netherlands. The province of Groningen is well-known for its innovativeness and has lots of small and medium-sized technology companies (Paper CBS: 2016: Measuring the internet economy in The Netherlands: a big data analysis). That fits with open innovation practices, because they were more likely to occur in businesses who were oriented in the technology sector (Chesbrough and Crowther, 2006).

3.2 Participants/Procedure

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COMPANY NUMBER OF

EMPLOYEES

FUNCTION RESPONDENT (S) TIME INTERVIEW

A 25-50 Manager new business & innovation 45-50 minutes

B 50-75 Business development 50-55 minutes

C 10-25 Business development 50-55 minutes

D 25-50 Director 55-60 minutes

E 10-25 Director 60-65 minutes

F 75-100 Creative director 45-50 minutes

G 1-25 Creative director 45-50 minutes

H 75-100 Creative director 60-65 minutes

I 10-25 1.Director 2.Developer 65-70 minutes

J 1-25 Director 50-55 minutes

K 1-25 Director 50-55 minutes

L 1-25 Director 50-55 minutes

M 1-25 Director 50-55 minutes

Table 4: List of participating firms

3.3 Interviews

Conducting interviews was the main source of data collection for this research. Doing interviews has several advantages. Firstly, Burgess (1982) addresses the importance of a direct conversation, in order to get a better understanding on the issues of the respondent, which was favourable with difficult and abstract subjects like open innovation. Secondly, it creates space for unique conditions of applicability (Robson and Foster, 1989), which was useful when companies have to talk about their difficulties with engaging in open innovation. Another advantage was that there was control of the respondent selection, which creates depth, context and flexibility in the process of the research (Cassell and Symon, 2004).The respondents were leading executives and managers who understood the innovation processes of the company.

In addition, the interview questions were open and the interview had a semi-structured character. The interview questions were in Dutch, in that way, the respondent were able to answer in their native language. The interview questions were previewed by the supervisor and were specified after the first interview. The full questionnaire has been added to the appendix 1.

3.4 Controllability, validity and reliability

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presented as precise as possible. During the execution, field notes were made about the research activities. The second quality criteria is reliability, which states that study results are reliable if they are independent of the particular characteristics of the study. The method of standardization was used to reach that condition. In this case, the use of explicit procedures, for example semi-structured interviews and analyses. Furthermore, the interviews were recorded and analysed by the same researcher to lower to chances of biases. The condition of validity can be reached if the study results are justified by the way they are generated. The internal validity was increased by using theoretical triangulation: viewing the problem from several theoretical angles and only using articles from well-known magazines in the literature. External validity or generalizability is never high in a master thesis, due to the scope of the research, but I tried to increase the generalizability by increasing the number of objects studied. In this case, the number of companies that will be interviewed is thirteen.

This study used the framework of Kanter (1977), suggesting that different sources of data cause higher validity. Instead of only asking open questions, the respondent completed a checklist. The interviews lasted from forty-five minutes to over one hour. All the companies were relatively new online based organisations with different specialisms, providing multiple views on the phenomenon. It is worth mentioning that this qualitative approach involved fewer respondents and respectfully less data than an average quantitative study. On the other hand, the study captured more in-depth and tacit knowledge by doing interviews instead of surveys (van Aken et al., 2012). Furthermore, the interviewer spotted different perspectives and was able to guide the interview towards the relevant direction.

3.5 Analysis strategy

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4. Results

This section is used for the results after the coding of the transcripts. I will elaborate first on the different ways companies share their knowledge, then the key findings on the motives, to conclude with the challenges perceived with open innovations for SMEs.

4.1 Ways of knowledge sharing

The industry had a major influence on the way knowledge was shared. The data for this study was collected at multiple organizations that are active in the online industry, including full service internet bureaus, app builders and optimization companies. The online industry, which is characterized by rapid changes, is starting to open up and is less protective towards their innovation practices. As company I clarifies:

“In comparison with the past, there has been a culture of sharing knowledge. In the past, much more was protected and everything you wanted to know had to be paid for. I also notice that in several other industries, more knowledge is shared. […] In the past there was less interaction online and communicating to other parties went in different ways. […] These days it is almost impossible to keep up with all the changes.” (Company I director, 18 may 2017).

Therefore, the belief is changed that competitors are not directly a danger for the organization, but the exchanged knowledge is needed to keep up with the market developments. This is a reason that a company will share knowledge earlier. The concept of competition is noteworthy. The interviewed SMEs do not see each other too much as competitors, rather as partners with their own disciplines. Company A’s way of thinking about the competition is described as follows:

“Next to knowledge, we also trade cases in the market. If there are cases where we cannot find solutions ourselves, we give it to firms who can. […] Of course there is always overlap with other companies, being each other's competitor, but competition is relative. The online industry is a very big market and everyone has its specialties and is operating in different niches. The difference between the parties is usually the experience factor over another.”

(Company A director, 26 April 2017).

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SMEs is that there is both real and online contact with other parties. In that way, the companies can interact and share their knowledge in different ways. Company H describes what happened when they first started with making blogs:

“These days, we also make blogs to share information and to get interaction with partners for example. We started with the blogs a year ago, but there is definitely a response from the market and our positioning is also clarified to the market. […] With the blogs, we showed our expertise and suddenly other parties recognized their own expertise in our story. Consequently, the parties came into contact with each other. So sharing knowledge is also a way to get in touch with partners, clients and potential customers.” (Company H director, 16 may 2017).

Furthermore, next to company-level knowledge sharing, such as network events, also individuals who are personally picking things up, are sharing the new information in the organization. As the owner of company E states: “Also, what I personally pick up, I share of course within the organization, unless I have signed a secrecy agreement. As one of us goes somewhere, he or she gets a list of things to be left behind at other partners. It is also good that you need to exchange information, so it really goes on both sides.”

WAYS OF KNOWLEDGE SHARING USED BY COMPANY

OFFLINE

BOOKS A

EVENTS B,D,E,F,G,H,I,J

KNOWLEDGE SESSIONS D,H,I

NETWORK A,B,D,E,F,G,J

PAPERS/MAGAZINES A,F,I,J,K,L,M

ONLINE

BLOGS E,H

COMMUNITY D,E,K,L,M,I,J

OPEN SOURCE D,E,F,I,J,K,L,M

WEBINARS/SEMINARS H,J,K,L,M

Table 5: Ways of spreading knowledge

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only possible within an open system, therefore a distinction must be made, between open source and closed source systems. As company I underlines:

[…] “We use an open source system, that's a new line of activity than a closed source system. But we do not want to build in a closed environment. With open source, you have a lot more online communities, in that way, you expand the system itself into the market. A closed source uses has a different approach. Then the inventing party has to make the product improvement. There are, therefore, contacts with other parties but much less about the content which is the case with open source.” (Company I director, 18 May 2017).

From this quote is derived, that even though both ways have advantages, the differences between them are significant. The interviewed companies showed a clear difference between using a closed or open sourced network/community. On the one hand, as a company, you need to make all the improvements by yourself within a closed environment. In an open environment there are communities where everything is shared and improvements are made by developers from all over the world. So sharing knowledge to the market goes beyond country boundaries. Nevertheless, also a completely different interesting method was discovered in this research.

The companies J, K, L and M worked in a completely different way. Their way of interacting could be described as an eco-system of companies, whereby there is a network of companies who all have their own specialty. This network of companies all contribute to a certain “foundation” where all knowledge, ideas and intellectual properties are stored.

In this eco-system there is a subset of stakeholders who each create value, autonomy and innovations. It looks like an economy whereby all companies have their own place within the eco-system. Within the eco-system, firms can still involve stakeholders from outside the system. With the network of partners, companies are able to solve a problem with all the innovation that is in the foundation. Furthermore, companies are getting a high level of specialization because firms can quickly form a network and connect it to the firm with the right companies, to solve any problem. This way of sharing knowledge and innovating seems to be flexible and scalable. The director of company J explains this rather unique method:

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4.2 Motives

The interviewed companies had different motives to engage in open innovation. The most relevant motives are summarised in table 6, which represents a framework of motives. Every motive is supported by an example and an explanation for the companies it applies to. The table distinguishes between motives that were assumed in the literature (i.e. market considerations, innovation involvement and control) and also found in the results of this study, besides that, it shows motives that were additionally found and not were expected in the literature beforehand.

Market considerations

The first motive that was mentioned by the interviewed company’s was that open innovation helped to attract new customers and employees. Thus, attracting customers is placed under the initial motive of market considerations because it nursed the company to grow and led to a better innovation performance throughout. Next to the fact that helped to attract new customers, the use of open innovation also supported to attract new development talent. Furthermore, the variety of ways in which knowledge was shared, influenced the chance of attracting new talent. For example the more content wise blogs helped to attract new development talent and webinars and seminars were used to get the interest of new clients.

The second motive found motive was that the interviewed SMEs used open innovation in order to survive and to innovate, which was necessary as a result of the shorter survival age of firms within the industry. Due to more innovations, transparency and a reduced secrecy, for the interviewed firms it was innovating as or die. Thus, innovate or die was placed on the assumed motive market considerations. The importance of open innovation is underlined by the director of company J:

“Keep innovating is a necessity for our company, otherwise we do not survive and the company just stops. Innovative ideas helps us further as a firm. With the use of open innovation and knowledge sharing, we can adjust our innovations in order to keep going. […] It is easy to spot if your companies innovates enough: they need to develop enough and make good discussions about the content of the innovations.” (Company J director, 26 may 2017).

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Furthermore, the interviewed firms mentioned that the engagement in open innovation caused a variety of innovation improvements within the company. For example, in optimizing the processes, open innovations helped to fine-tune the innovation practices. Thus, a motive to share information was that it leads to service improvements within the firms. This statement is confirmed by Company I:

“You should see the knowledge sharing as fine-tune. Through the knowledge sharing, you are constantly improving your service. I personally also share my knowledge and get things back for that. […] An open source is a good example, which has varieties of people who come up with solutions every day. Knowledge sharing also makes you stronger as an individual but definitely as a company. […] I always say: “Companies who are not able to share will never grow.”

(Company I director, 18 May 2017).

Control

The last motive that was assumed but also found is control. With the use of open innovation, firms were able to spot trends in the industry. The interviewed firms argued that open firms automatically interact more and notice what is going on the market when they were engaging in open innovation practices. Besides that, information is also exchanged with customers and partners. A large base of partner’s caused that companies made connections on a very situational basis, based on demand. It seems like a very flexible and controllable way of organizing knowledge spreading and looks like a logical development for the future.

Additional motives

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Motives Sample Explanation Mentioned

by company

Market considerations

1. Attracting new customers/ employees

“It boosted the number of customers by attracting large-scale relationships with companies” (Company B)

“Our blogs help to eventually attract new talent” (Company D)

Companies do not mind spreading knowledge because it attracts potential customers.

Consequently, sharing knowledge is also a way to get in touch with new client or employees.

A,B,D,F,H,G,J

2. Innovate or die “Open innovation is necessary otherwise you're just gone, companies have a shorter lifespan these days” (Company A)

The average survival age of the companies is 15 years, due to more competition, information and reduced secrecy.

A,D,E,J,K,L,M

1. More innovations, better innovations

“You create by default, by constantly sharing, there will be increased innovations standards”

(Company E)

When people share their knowledge, they think about it better. That will lead to better innovations, because

mistakes will be corrected earlier.

E,F,J,K,L

2. Fine-tuning “One reason to share knowledge is to get bug fixes out of the market, creating more fine- tuning of services in that way”

(Company D)

In addition, features will be added to make the extra tools available. This is a reason that a company will share knowledge earlier. Open innovation leads to continues improvement of the services of the firms.

D,E,F

Control

1.Spot trends

“It is definitely important to see what is going on in the market in order to respond well to the changes.”

(Company G)

Companies that are open automatically interact more with customer or

partners and see trends earlier, what contributes to the pro-activeness of the firms.

C,E,G

Additional motives found by this study

1. Saves time

“Some things that other parties can eventually find out, you can share as well. That's going to save a lot of time overall”

(Company F)

It can save a lot of time due to

optimization and you are up to date on new knowledge and changes of new innovations. So the use of open innovation is very valuable.

C,E,F

2. Create community “The main advantage is the continuous input from the community” (Company H)

An open community in which

knowledge is shared, which facilitates the conversation between multiple customers.

C,D,H

3. Not harmful “Because we all understand that knowledge and intellectual property is a very small part of the innovation story” (Company A)

Occasionally sharing about what you do and invented is not at all harmful to the functioning of companies.

A,E,J,K,L,M

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4.3 Transformation process

The results of the analyses of the challenges showed that all the different firms were transforming from closed to open or are open since the beginning. Some interviewed companies were partially open but use closed source technologies, what could be argued as a closed approach. The differences between both methods are explained earlier. Moreover, it seems clear that the industry had a major influence on the transformation. The owner and director of company E provides a clear example:

[…} “I did not share that kind of information when we just existed, as it was really a secret back then. […] However, 10 years ago there was a turning point, when the app companies started to grow. Now there is a new generation of companies that are much more open than before.”

(Company E owner, 10 May 2017).

In addition, the size of the company also influenced the transformation. The bigger the firms became, the more knowledge seem to be shared. This looked like a logical development, considering the increased network over time. The transformation from closed to open seemed to go automatically as the companies evolve. In summary, the most interviewed firms were opening up their practices. The transformation towards open innovation seems to accelerate by the influence of the industry, company’s size and experience.

4.4 Protection core innovation practices

The first question that the interviewed firms asked themselves with open innovation is related to the protection of their knowledge: what can be shared with the market and what not? It seems logical that the information that companies gave away is related to the relationship with the partners, but also to the kind of knowledge. Companies invest lots of time and money to have specific knowledge within the firm. The more specific knowledge, the more unique you are as a company. So it is important to consider what to give away and what not. Company G provides underlines this:

“You should not keep spraying out knowledge, because everything you tell your partner is potential profit for them. The purpose of spreading knowledge is to convince people. It gives an impression of your knowledge and that is what you want as a firm. […] But it is always a slippery slope, what do you share and what not.” (Company G director, 18 May 2017).

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4.5 Challenges

The interviewed companies experienced different challenges with the use of open innovation. The most relevant challenges are summarised in table 7, which represents a framework of challenges. Every challenge is supported by a sample, an explanation and for which companies it applies. The table distinguishes between challenges that were assumed in the literature (risk and competences) and also found in the results of this study, besides that, it shows challenges that were additionally found and not were expected beforehand.

Resource

The most striking was the absence of resources as a challenge. This study reveals that SMEs do not have issues with their resources when it comes to engaging in open innovation since they innovate more from their core businesses. Another explanation could be the speciality of the industry that the respondent are in, as they were providing services instead of making products. The online industry is not bound to the physical world, because of this, the SMEs do engage in open innovation despite their lack of resources in comparison with large firms. Furthermore, these SMEs may relatively suffer less from the lack of resources in comparison with their non-digitally oriented counterparts.

Risk

The first challenge that is related the risk challenge, is the transfer of ideas. A small group of the interviewed firms sees open innovation as dangerous, because they do not know who will use their knowledge if it is shared on the internet. Sharing information of the internet makes it accessible for every firms which is interested. Therefore, some companies choose offline ways of knowledge sharing. Next to that, a major challenge was when the companies produced a product instead of a service. Most of the interviewed companies only provided services, but when the customer wanted a real product, the businesses tend to close their innovation practices. So, with the product approach, companies were more in a competitive position and is the risk of spill over too high. Company A clearly explains the difference between both below.

“A clear example is the manufacturing industry, where are often technical inventions. Those inventions can make the difference between life and death for those companies. You have the technique that is all yours, so you do not to give away your money maker.” (Company A manager, 26 April 2017).

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“So there is a limit when it comes to sharing knowledge. Some firms have built techniques, which are so important that it cannot leak to competitors. […] For that reason, firms protect their knowledge by removing software when customers are leaving to competitors.”

(Company D director, 9 May 2017).

For company D, which is specialized company in building websites, their main challenge with open innovation was that they normally signed confidentially contracts with partners, because otherwise the risk of spill over was too big. Thus, sharing knowledge was sometimes difficult, as the firm argued that large penalties are imposed if companies fail to keep the knowledge private.

Competences

A few respondents argued that their firm have difficulties with open innovation due to their competences. For example, to integrate the new knowledge in the firm. An open organization is less stable than a closed organization, due to a constantly input of improvement, the integration process is for open organizations more complex. Further, some interviewed SMEs had limited organizational competences, as they lacked to transfer all the new knowledge throughout the whole organization.

Additional challenges

Next to the assumed challenges, this research found additional challenges that firms hinder in their open innovation process. Firstly, some companies experienced that the transfer of knowledge is sometimes unilateral. What makes that firms were not getting enough information back from the market or partners. A solution for this problem was to create or work with an open source technology. In that way, knowledge sharing goes more both sides, that the firms receive more feedback for example. But this does not apply for specialized company, because there were less partners to exchange the knowledge with.

Secondly, the respondent firms argue that open innovation takes more time than expected. Sharing information and integrate knowledge within the company takes a lot of time. Due to internal persistence or that ways of knowledge sharing consumes more time than to only discuss about solutions internally. Managements systems can help to smoothen the process, but until today these systems are not really common within SMEs.

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Challenges Sample Explanation

Confirmed by Company

Risk

1.Transfer of ideas

“We are afraid of throwing our knowledge on the internet, because it makes it available for everybody” (Company B)

Although the knowledge is legally protected, firms do not know who will use their knowledge. The ways of knowledge sharing influence the transfer of ideas. Online methods are more easily imitated and the level of spill over seems higher.

A,B,D

2. Make Vs Service “You come to us, to buy our service. But if build a product for the customer then we tend to close our business more”

(Company H)

That's the difference between a product and a service. As a web agency that has strategies and optimization, the firm is sharing its services. The more you share, the bigger the chance of a match with a potential customer. But form at a product approach, firms are more in a

competitive position and the risk of spilling knowledge is higher.

A,H,K,L,M

3.Protect important core assets

“If the customer goes to a competitor, we delete our built features, because we have invested in our knowledge, to deliver the best product to our customers”

(Company D)

So there is a limit when it comes to sharing knowledge. Some firms have built techniques, which are so important that it cannot leak to competitors. For that reason, firms protect their knowledge by removing software when

customers are leaving to competitors.

D,E

4. Confidentiality contracts

“In our industry it is quite normal that secrecy contracts have to be signed.

Sometimes a signature is necessary, otherwise we will not even talk to each other.

(Company D)

Large penalties are imposed if companies fail to keep the acquainted information and

knowledge secret. Sometimes, firms built certain features, whereby other companies get huge competitive advantage through new technology. D Competences 1. Integrate in organization & Remain stable

“A closed system is a very stable system. We prefer stability instead of new features from an open community”

(Company B)

Although SMEs have few organizational structures, it is not always the case all new information is transferred throughout the whole organization. In a closed system, information is easier to transfer throughout the organization.

B,C

Additional challenges found by this study

1. Knowledge transfer unilateral

“Unfortunately, we are not getting enough information back at the moment”

(Company F)

Companies do not always get enough

information back as they wanted. A solution is to work to engage in open source technology. Then it goes on both sides, so firms are getting more information and feedback.

F,G

2. Takes time “Change is not easy, despite we are small, internal persistence is a thing that always will happen” (Company C)

Sharing knowledge seems very logical, but it takes more effort than simple sharing information. Senior management can help to show the importance of open innovation and to make it a success.

C,F

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5. Discussion

This section is dedicated to the interpretation of the results. Firstly, the key findings will be displayed, then the motives and challenges are discussed.

The key findings

The findings further clarify that smaller businesses indeed use open innovations practices, as the interviewed companies collaborate and share knowledge in several ways. Sharing knowledge is part of the strategy of the researched organizations, since they consciously choose to share specific knowledge. Moreover, the transformation from closed to open innovation seems to go automatically as the interviewed companies evolve over time. The interviewed firms are opening up their practices and are influenced by the industry, company size and experience. Next to the transformation, firms try to protect specific knowledge. The first question that firms ask themselves with open innovation is related to the protection of their knowledge: what can be shared with the market and what not? Although the surveyed companies are open in running their business, there are some themes that are secret to other parties. Sharing information also depends on the relationship with the partner and the type of subject. Nevertheless, the responding firms argue that the value of an organization is in the employees of the firm, which is difficult to replicate by other companies.

Besides that, this study reveals that there are clear differences between the methods used for knowledge sharing and innovation. Closed source companies try to solve problems and invent new solutions by themselves. Most closed companies also have challenges with the integration of new knowledge and with the transfer of knowledge. Open sourced firms are participating in online communities, sharing knowledge and use that to fine-tune their innovations and often try to protect their knowledge when they are actually building a product. The most open method of knowledge sharing is the way of creating an eco-system within the network, whereby there is a network of companies, which all have their own specialty.

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5.1 Motives

In this section, the predefined assumptions are compared with the results of this study. The result section showed that the interviewed companies collaborate and share knowledge in different ways. The tools of sharing are influenced by the increased openness of the industry. In addition, the distinction between closed sources, open sources and an eco-system of partners is important, because the distinction shows that each group has different motives to engage in open innovation practices.

Thus, SMEs that are active in the online industry use both traditional methods of knowledge sharing as well as sorts of knowledge sharing methods like webinars, online blogs and online communities. By means of these methods, the exchange of information intensity has increased. This is in line with the research of Spithoven et al. (2013), stating that SMEs possess a high intensity for all types of open innovation activities. Moreover, the partner variety is high because the interviewed companies are in contact with many different partners and using multiple tools of knowledge sharing (Lanzarotti and Manzini, 2009).

Moreover, the online industry changed the opinion and the ways of interacting about open innovation for the interviewed SMEs. This is in accordance with the research of Laursen and Salter (2006), who found that the industry influences the way to communicate with other sources. The online world, which is characterized by rapid changes, is starting to open up. Therefore, the belief is now that competitors are not directly a danger for the organization. Companies in the online sector see each other less as competitors. The interviewed firms argue that every organization has his own disciplines, in their own niche. Furthermore, Perida et al. (2012) found that the adoption of open innovation has an overall positive influence on the innovation performance of SMEs. The cooperation between competitors seems to be the major component of successful open innovation practices, since several respondents argued that if competitors work together, it will lead to a better innovation performance throughout.

Open innovation in SMEs: investigating the motives and the perceived challenges during the process of open innovation in small and medium-sized enterprises that are active in the online industry