Open innovation in SMEs: A process view towards business model innovation

Abstract

To be competitive, small and medium-sized enterprises (SMEs) need to transform their business models. To overcome the liability of smallness, SMEs often need to collaborate with external partners—implement open innovation. The complex processes behind business model transformation and open innovation combined remain unexplored. Linking the literature on business model innovation, open innovation, and SMEs, we examine how open business models can be a solution for SMEs. In particular, taking a process perspective, we study business model transformations in several European SMEs using a two-dimensional typology of SME business model innovation, considering the radicalness of the transformation and SME openness toward external partnerships. We identify the triggers for SMEs’ business model innovation: market turbulence, market immaturity, competition, prior failure in open innovation, and scaling production. We also signify how SMEs address the challenges related to the open business model transformation.