Exploring Factors Influencing Open Innovation Adoption in SMEs: The Evidence from Emerging Markets

Wilert Puriwat, Suchart Tripopsakul


Open Innovation (OI) is among the vital innovation paradigms for assisting small and medium enterprises (SMEs) to effectively implement innovation initiatives. Drawing on the concepts of organisational agility and absorptive capacity with transaction cost theory, this study’s goal is to investigate factors affecting the adoption of an Open Innovation (OI) orientation in Thai SMEs. Using data from 214 SMEs in Thailand, structural equation modelling validated the model and analysed the proposed hypotheses. The results show that organisational agility, economic and financial readiness and absorptive capacity relate positively to OI adoption and innovation performance. Organisational agility (b = 0.553) had the greatest influence on OI adoption, then economic and financial readiness (b = 0.405) and absorptive capacity (b = 0.387) followed. The results of mediation analysis also reveal that OI adoption partially mediates the effects of organisational agility and absorptive capacity on innovation performance. Our study provides a trailblazing empirical analysis of the major factors influencing SMEs’ OI adoption and performance, extending knowledge of OI adoption by SMEs in emerging economies. The paper proposes a holistic framework for examining SMEs’ OI adoption and performance, through the integration of organisational agility, absorptive capacity and transaction-cost concepts.


Doi: 10.28991/esj-2021-01295

Full Text: PDF


Open Innovation; Organisational Agility; Absorptive Capacity; Innovation Performance.


Rasheed, Muhammad Athar, Khuram Shahzad, and Sajid Nadeem. “Transformational Leadership and Employee Voice for Product and Process Innovation in SMEs.” Innovation & Management Review 18, no. 1 (March 11, 2021): 69–89. doi:10.1108/inmr-01-2020-0007.

Indrawati, Henny, Caska, and Suarman. “Barriers to Technological Innovations of SMEs: How to Solve Them?” International Journal of Innovation Science 12, no. 5 (November 30, 2020): 545–564. doi:10.1108/ijis-04-2020-0049.

Wong, Poh Kam, Yuen Ping Ho, and Erkko Autio. “Entrepreneurship, Innovation and Economic Growth: Evidence from GEM Data.” Small Business Economics 24, no. 3 (April 2005): 335–350. doi:10.1007/s11187-005-2000-1.

Didonet, Simone, and Guillermo Diaz-Villavicencio. “Innovation Management in Market-Oriented SMEs: Learning and Internal Arrangements for Innovation.” International Journal of Organizational Analysis 28, no. 5 (April 21, 2020): 985–1003. doi:10.1108/ijoa-09-2019-1885.

World Bank. "Small and Medium Enterprises (SMEs) Finance. Improving SMEs’ Access to Finance and Finding Innovative Solutions to Unlock Sources of Capital." (2018). Available online: https://www.worldbank.org/en/topic/smefinance (accessed on March 2021).

Crema, Maria, Chiara Verbano, and Karen Venturini. “Linking Strategy with Open Innovation and Performance in SMEs.” Measuring Business Excellence 18, no. 2 (May 13, 2014): 14–27. doi:10.1108/mbe-07-2013-0042.

Chesbrough, Henry William. Open innovation: The new imperative for creating and profiting from technology. Harvard Business Press, 2003. Available online: https://www.nmit.edu.my/wp-content/uploads/2017/10/Open-Innovation-the-New-Imperative-for-Creating-and-Profiting-from-Technology.pdf (accessed on March 2021).

Christensen, Jens Frøslev. "Wither core competency for the large corporation in an open innovation world." Open innovation: Researching a new paradigm 35 (2006): 35-61.

Chesbrough, Henry W., and Melissa M. Appleyard. “Open Innovation and Strategy.” California Management Review 50, no. 1 (October 2007): 57–76. doi:10.2307/41166416.

Lichtenthaler, Ulrich. “Open Innovation in Practice: An Analysis of Strategic Approaches to Technology Transactions.” IEEE Transactions on Engineering Management 55, no. 1 (February 2008): 148–157. doi:10.1109/tem.2007.912932.

Brunswicker, Sabine, and Vareska Van de Vrande. "Exploring open innovation in small and medium-sized enterprises." New Frontiers in Open Innovation 1 (2014): 135-156.

Lee, Sungjoo, Gwangman Park, Byungun Yoon, and Jinwoo Park. “Open Innovation in SMEs—An Intermediated Network Model.” Research Policy 39, no. 2 (March 2010): 290–300. doi:10.1016/j.respol.2009.12.009.

Spithoven, André, Wim Vanhaverbeke, and Nadine Roijakkers. “Open Innovation Practices in SMEs and Large Enterprises.” Small Business Economics 41, no. 3 (October 20, 2012): 537–562. doi:10.1007/s11187-012-9453-9.

Radziwon, Agnieszka, and Marcel Bogers. “Open Innovation in SMEs: Exploring Inter-Organizational Relationships in an Ecosystem.” Technological Forecasting and Social Change 146 (September 2019): 573–587. doi:10.1016/j.techfore.2018.04.021.

Hungund, Sumukh, and Venkatesh Mani. “Benchmarking of Factors Influencing Adoption of Innovation in Software Product SMEs: An empirical evidence from India.” Benchmarking: An International Journal 26, no. 5 (February 13, 2019): 1451–1468. doi:10.1108/bij-05-2018-0127.

Cai, Zhao, Hefu Liu, Qian Huang, and Liang Liang. “Developing Organizational Agility in Product Innovation: The Roles of IT Capability, KM Capability, and Innovative Climate.” R&D Management 49, no. 4 (December 22, 2017): 421–438. doi:10.1111/radm.12305.

Walter, Anna-Theresa. “Organizational Agility: Ill-Defined and Somewhat Confusing? A Systematic Literature Review and Conceptualization.” Management Review Quarterly 71, no. 2 (April 19, 2020): 343–391. doi:10.1007/s11301-020-00186-6.

Lu, and K. (Ram) Ramamurthy. “Understanding the Link between Information Technology Capability and Organizational Agility: An Empirical Examination.” MIS Quarterly 35, no. 4 (2011): 931-954. doi:10.2307/41409967.

Bessant, John, David Francis, Sandie Meredith, Raphael Kaplinsky, and Steve Brown. “Developing Manufacturing Agility in SMEs.” International Journal of Manufacturing Technology and Management 2, no. 1-7 (2000): 730-756. doi:10.1504/ijmtm.2000.001374.

Vázquez-Bustelo, Daniel, Lucía Avella, and Esteban Fernández. “Agility Drivers, Enablers and Outcomes.” International Journal of Operations & Production Management 27, no. 12 (November 13, 2007): 1303-1332. doi:10.1108/01443570710835633.

Zandi, Faramak, and Madjid Tavana. “A Fuzzy Group Quality Function Deployment Model for e-CRM Framework Assessment in Agile Manufacturing.” Computers & Industrial Engineering 61, no. 1 (August 2011): 1–19. doi:10.1016/j.cie.2011.02.004.

Sambamurthy, Bharadwaj, and Grover. “Shaping Agility through Digital Options: Reconceptualizing the Role of Information Technology in Contemporary Firms.” MIS Quarterly 27, no. 2 (2003): 237-263. doi:10.2307/30036530.

Chakravarty, Anindita, Rajdeep Grewal, and V. Sambamurthy. “Information Technology Competencies, Organizational Agility, and Firm Performance: Enabling and Facilitating Roles.” Information Systems Research 24, no. 4 (December 2013): 976–997. doi:10.1287/isre.2013.0500.

Pavlou, Paul A., and Omar A. El Sawy. “Understanding the Elusive Black Box of Dynamic Capabilities.” Decision Sciences 42, no. 1 (February 2011): 239–273. doi:10.1111/j.1540-5915.2010.00287.x.

Teece, David, Margaret Peteraf, and Sohvi Leih. “Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy.” California Management Review 58, no. 4 (August 2016): 13–35. doi:10.1525/cmr.2016.58.4.13.

Liao, Suqin, Zhiying Liu, and Chaoliang Ma. “Direct and Configurational Paths of Open Innovation and Organisational Agility to Business Model Innovation in SMEs.” Technology Analysis & Strategic Management 31, no. 10 (March 31, 2019): 1213–1228. doi:10.1080/09537325.2019.1601693.

Scuotto, Veronica, Gabriele Santoro, Stefano Bresciani, and Manlio Del Giudice. “Shifting Intra- and Inter-Organizational Innovation Processes towards Digital Business: An Empirical Analysis of SMEs.” Creativity and Innovation Management 26, no. 3 (August 16, 2017): 247–255. doi:10.1111/caim.12221.

Hu, Yansong, Peter McNamara, and Damien McLoughlin. “Outbound Open Innovation in Bio-Pharmaceutical Out-Licensing.” Technovation 35 (January 2015): 46–58. doi:10.1016/j.technovation.2014.07.004.

Mikalef, Patrick, and Adamantia Pateli. “Information Technology-Enabled Dynamic Capabilities and Their Indirect Effect on Competitive Performance: Findings from PLS-SEM and fsQCA.” Journal of Business Research 70 (January 2017): 1–16. doi:10.1016/j.jbusres.2016.09.004.

Overby, Eric, Anandhi Bharadwaj, and V Sambamurthy. “Enterprise Agility and the Enabling Role of Information Technology.” European Journal of Information Systems 15, no. 2 (April 2006): 120–131. doi:10.1057/palgrave.ejis.3000600.

Arias-Pérez, José, Nelson Lozada, and Edwin Henao-García. “When It Comes to the Impact of Absorptive Capacity on Co-Innovation, How Really Harmful Is Knowledge Leakage?” Journal of Knowledge Management 24, no. 8 (July 13, 2020): 1841–1857. doi:10.1108/jkm-02-2020-0084.

Aboelmaged, Mohamed, and Gharib Hashem. “Absorptive Capacity and Green Innovation Adoption in SMEs: The Mediating Effects of Sustainable Organisational Capabilities.” Journal of Cleaner Production 220 (May 2019): 853–863. doi:10.1016/j.jclepro.2019.02.150.

Spithoven, André, Bart Clarysse, and Mirjam Knockaert. “Building Absorptive Capacity to Organise Inbound Open Innovation in Traditional Industries.” Technovation 30, no. 2 (February 2010): 130–141. doi:10.1016/j.technovation.2009.08.004.

Tsou, Hung-Tai, Ja-Shen Chen, and Ya-Wen (Diana) Yu. “Antecedents of Co-Development and Its Effect on Innovation Performance.” Management Decision 57, no. 7 (July 8, 2019): 1609–1637. doi:10.1108/md-04-2018-0421.

Wang, Yi-Shun, Shun-Cheng Wu, Hsin-Hui Lin, Yu-Min Wang, and Ting-Rong He. "Determinants of user adoption of web''Automatic Teller Machines': an integrated model of'Transaction Cost Theory'and'Innovation Diffusion Theory'." The Service Industries Journal 32, no. 9 (2012): 1505-1525. doi:10.1080/02642069.2010.531271.

Hsieh, Ching-Tang, Hao-Chen Huang, and Wei-Long Lee. “Using Transaction Cost Economics to Explain Open Innovation in Start-Ups.” Management Decision 54, no. 9 (October 17, 2016): 2133–2156. doi:10.1108/md-01-2016-0012.

Williamson, Oliver E. “Transaction Cost Economics.” Handbook of New Institutional Economics (2008): 41–65. doi:10.1007/978-3-540-69305-5_4.

Aboelmaged, Mohamed. “The Drivers of Sustainable Manufacturing Practices in Egyptian SMEs and Their Impact on Competitive Capabilities: A PLS-SEM Model.” Journal of Cleaner Production 175 (February 2018): 207–221. doi:10.1016/j.jclepro.2017.12.053.

Lacity, Mary C., Leslie P. Willcocks, and Shaji Khan. “Transaction Cost Economics and After: Addressing the New Theory Challenge.” The New IT Outsourcing Landscape (2012): 89–126. doi:10.1057/9781137012296_3.

Williamson, Oliver E. “Transaction Cost Economics and Organization Theory.” Industrial and Corporate Change 2, no. 2 (1993): 107–156. doi:10.1093/icc/2.2.107.

Rørstad, Per Kristian, Arild Vatn, and Valborg Kvakkestad. “Why Do Transaction Costs of Agricultural Policies Vary?” Agricultural Economics 36, no. 1 (January 2007): 1–11. doi:10.1111/j.1574-0862.2007.00172.x.

Chedrawi, Charbel, Bissane Harb, and Mariam Saleh. “The E-Banking and the Adoption of Innovations from the Perspective of the Transactions Cost Theory: Case of the Largest Commercial Banks in Lebanon.” ICT for a Better Life and a Better World (2019): 149–164. doi:10.1007/978-3-030-10737-6_10.

Anderson, James C., and David W. Gerbing. “Structural Equation Modeling in Practice: A Review and Recommended Two-Step Approach.” Psychological Bulletin 103, no. 3 (May 1988): 411–423. doi:10.1037/0033-2909.103.3.411.

Kline, Rex B. "Principles and practice of structural equation modeling (3. Baskı)." New York, NY: Guilford (2011).

Felipe, Carmen M., José L. Roldán, and Antonio L. Leal-Rodríguez. “Impact of Organizational Culture Values on Organizational Agility.” Sustainability 9, no. 12 (December 17, 2017): 2354. doi:10.3390/su9122354.

Oduro, Stephen. “Exploring the Barriers to SMEs’ Open Innovation Adoption in Ghana.” International Journal of Innovation Science 12, no. 1 (February 3, 2020): 21–51. doi:10.1108/ijis-11-2018-0119.

Flatten, Tessa Christina, Greta Isabell Greve, and Malte Brettel. “Absorptive Capacity and Firm Performance in SMEs: The Mediating Influence of Strategic Alliances.” European Management Review 8, no. 3 (September 2011): 137–152. doi:10.1111/j.1740-4762.2011.01015.x.

Hameed, Waseem Ul, Muhammad Farhan Basheer, Jawad Iqbal, Ayesha Anwar, and Hafiz Khalil Ahmad. “Determinants of Firm’s Open Innovation Performance and the Role of R & D Department: An Empirical Evidence from Malaysian SME’s.” Journal of Global Entrepreneurship Research 8, no. 1 (October 5, 2018): 1-20. doi:10.1186/s40497-018-0112-8.

Hoonsopon, Danupol, and Guntalee Ruenrom. "The impact of organizational capabilities on the development of radical and incremental product innovation and product innovation performance." Journal of Managerial Issues 24, no. 3 (2012): 250-276.

Hair, Joseph F., William C. Black, Barry J. Babin, Rolph E. Anderson, and R. Tatham. "L. (2010). Multivariate Data Analysis." Multivariate Data Analysis. Pearson (2010).

Fabian, Tomas. "Fostering innovation through organizational agility in the technology-driven firm: an exploratory case study in the media industry." Master's thesis, 2019. Available online: https://openaccess.nhh.no/nhh-xmlui/bitstream/handle/11250/2678797/masterthesis.pdf?sequence=1 (accessed on March 2021).

Bočková, Kateřina, Jana Škrabánková, and Michal Hanák. “Theory and Practice of Neuromarketing: Analyzing Human Behavior in Relation to Markets.” Emerging Science Journal 5, no. 1 (February 1, 2021): 44–56. doi:10.28991/esj-2021-01256.

Liu, Sen, Yang Yang, Wen Guang Qu, and Yuan Liu. “The Business Value of Cloud Computing: The Partnering Agility Perspective.” Industrial Management & Data Systems 116, no. 6 (July 11, 2016): 1160–1177. doi:10.1108/imds-09-2015-0376.

Gassmann, Oliver, Ellen Enkel, and Henry Chesbrough. “The Future of Open Innovation.” R&D Management 40, no. 3 (February 23, 2010): 213–221. doi:10.1111/j.1467-9310.2010.00605.x.

Full Text: PDF

DOI: 10.28991/esj-2021-01295


  • There are currently no refbacks.

Copyright (c) 2021 Suchart Tripopsakul, Wilert Puriwat