Open innovation and business model innovation intertwined: a dynamic capabilities perspective

Open innovation practices require firms to transform certain aspects of their organisational structures and processes to accomplish success. The level of openness determines how firms should adapt their business models to align with specific open innovation practices. Although open innovation and business model innovation are closely interconnected, the extant literature provides limited evidence on how firms embark on these two processes together, particularly in the context of smaller firms. To address this gap, we adopt dynamic capabilities (sensing, seizing, and reconfiguring capabilities) as a theoretical lens to explore this phenomenon in SMEs and startups. Using a multiple case study approach, we draw insights and identify key concepts from biotech SMEs and startups. This methodology enables us to uncover emerging theories related to the interplay between open innovation and business model innovation, as well as the critical role of dynamic capabilities. Our research advances the literature on open innovation, business model innovation, and dynamic capabilities by providing empirical evidence and developing theoretical frameworks. Additionally, we offer practical insights with managerial implications to guide firms navigating these complex processes.