Open Innovation in Practice: Goal Complementarity and Closed NPD Networks to Explain Differences in Innovation Performance for SMEs in the Medical Devices Sector

Abstract

Cooperation with other organizations increases the innovation performance of organization, especially for small and medium‐sized enterprises (SMEs) as they encounter liabilities of “smallness” (e.g., limited financial resources, and manpower). In the medical devices sector, collaboration with external partners for NPD becomes increasingly important due to the complexity of the products and the development process. About 80% of companies in this sector are SMEs. These companies operate in a highly regulated sector, which affects the organization of the external network required for the new product development (NPD) process. SMEs are practicing extensively open innovation activities, but in practice face a number of barriers in trying to apply open innovation. This paper examines multiple network characteristics simultaneously in relation to innovation performance and thereby aligns with and builds further on configuration theory. Configuration theory posits that for each set of network characteristics, there exists an ideal set of organizational characteristics that yields superior performance. In this research, the systems approach to fit is used. Fit is high to the extent that an organization is similar to an ideal profile along multiple dimensions. This ideal profile represents the network profile that the 15% highest performing companies use. It is argued that the smaller the distance between the ideal profile and the network profile that is used, the higher the performance. The objective of this research is (1) to examine the relation between the ideal profile and innovation performance and (2) to examine which organization of the network profile is related to high innovation performance. Quantitative survey data (n = 60, response rate 61.9%) form the core of this research. The quantitative results are clarified and have been triangulated with qualitative interview data (n = 50). Our findings suggest the presence of an “ideal” NPD network profile (in terms of goal complementarity, resource complementarity, fairness trust, reliability trust, and network position strength): the more a company's NPD network profile differs from this ideal profile, the lower the innovation performance. In addition, the results of our study indicate that the NPD network profiles of successful and less successful SMEs in the medical devices sector significantly differ in terms of “goal complementarity,” while this is less the case for trust and resource complementarity labeled distinctive by previous research. Finally, results show that a relatively closed, focused, and consistent “business‐like” NPD networking approach, which is characterized by result orientation and professionalism, is related to high innovation performance. It is recommended that SMEs in the medical devices sector aiming to distinguish themselves from competitors in terms of innovation performance focus on goal complementarity while adopting such a business‐like attitude toward their NPD network partners.

L’analyse des réseaux dans les activités d’innovation des PME : le rôle oublié de l’homophilie1

“…Le constat le plus fréquent est à l'effet que cette relation est positive (Freel, 2000;Mancinelli et Mazzanti, 2009;Zeng, Xie et Tam, 2010;Lasagni, 2012;Pullen, de Weerd-Nederhof, Groen et Fisscher, 2012) 2 . Au plan de l'analyse, ces travaux partagent une caractéristique : ils sont centrés sur le dénombrement des relations externes des PME dans leurs activités d'innovation et sur l'identification de leurs partenaires.…”

A contingency view to novelty

“…In contrast to a conventional, narrow reductionistic approach, the contingency theory adopts a collective and holistic approach which has the potential to analyse the nonlinear, interactive and contingent interrelationships between different variables simultaneously (Pullen, et al, 2012). It implies that firms create value by virtue of fitting their strategies to the firms' internal and external contexts (Venkatraman and Prescott, 1990;Zott and Amit, 2008).…”

“…In this respect, there has been a massive amount of attention paid to the application of contingency theory to the study of novelty (e.g. Atuahene-Gima et al, 2005;Zott and Amit, 2008;Pullen et al, 2012).…”

A change in the importance of mortality factors throughout the life cycle stages of small businesses

“…analyze and interpretation of these articles in order to enhance the theoretical review to fulfil the objectives of this essay. Once concluded this second phase 15 articles were defined as high related to the objectives and became part of the literature review, such as Bates (2005), Gupta et al (2015), Headd and Kirchhoff (2009) and Pullen et al (2012). Further literatures were also included considering its relevance and importance for the construction of the theoretical review.…”

“…Their predominance reaches 95 % of all organizations in the world (Day, 2000). It is important to mention the great diversity existing within the category of small business; they differ widely in their structure, size, financial resources, access to external finance, management and learning style of the owner-manager, innovation performance and number of employees (Gupta et al 2015;Pullen et al, 2012). The criteria for size classification varies from one country to another, although there is a common understanding for the sake of research: everything that is not a big corporation is considered as a small business; that is, any independent company with less than 500 employees, and which does not dominate the market (Dandridge 1979;SBA 2008).…”