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Openness and innovation performance: are small firms different?

Author

Listed:
  • Priit Vahter

    () (Birmingham Business School, University of Birmingham)

  • James Love

    () (Birmingham Business School, University of Birmingham)

  • Stephen Roper

    () (Small and Medium Sized Enterprise Centre, Warwick Business School, University of Warwick)

Abstract

Traditionally, literature on open innovation has concentrated on analysis of larger firms. We explore whether and how the benefits of openness in innovation are different for small firms (less than 50 employees) compared to medium and large ones. Using panel data over a long time period (1994-2008) from Irish manufacturing plants, we find that small plants have on average significantly lower levels of openness, a pattern which has not changed significantly since the early 1990s. However, the effect of ‘breadth’ of openness (i.e. variety of innovation linkages) on innovation performance is stronger for small firms than for larger firms. For small firms (with 10-49 employees) external linkages account for around 40 per cent of innovative sales compared to around 25 per cent in larger firms. Small plants also reach the limits to benefitting from openness at lower levels of breadth of openness than larger firms. Our results suggest that small firms can gain significantly from adopting an open innovation strategy, but for such firms appropriate partner choice is a particularly important issue.

Suggested Citation

  • Priit Vahter & James Love & Stephen Roper, 2012. "Openness and innovation performance: are small firms different?," The Centre for Small and Medium Sized Enterprises Research Paper Series 113, Centre for Small and Medium Sized Enterprises, Warwick Business School, University of Warwick.
  • Handle: RePEc:sme:wpaper:113
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    File URL: http://www2.warwick.ac.uk/fac/soc/wbs/research/csme/research/working_papers/working_paper_no._113.pdf
    File Function: First version, 2012
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    1. repec:kap:sbusec:v:48:y:2017:i:3:d:10.1007_s11187-016-9795-9 is not listed on IDEAS
    2. Heuschneider, Sara & Herstatt, Cornelius, 2016. "External search for exploration of future discontinuities and trends: Implications from the literature using co-citation and content analysis," Working Papers 92, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.

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    Keywords

    Open innovation; SMEs; boundary-spanning linkages; learning effects; Ireland;

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