Open innovation as a strategy for small high–tech companies

Little academic research has been conducted in the area of open innovation as a strategy used by SMEs in their innovation process. In addition, small companies are subjected to liabilities to smallness and newness, for which open innovation could be the solution. This thesis focuses on two small Swedish high– tech companies. On the one hand we concentrate our studies on a software consultancy company providing programming services, on the other hand, the thesis also look on a small nano–technology company creating their product around material science innovation. The purpose of this study is to investigate what strengths, weaknesses, opportunities and threats these specific high-tech companies perceive in using open innovation in their business model. For accomplishing the investigations we have conducted two case studies. Through a review of relevant literature, a theoretical framework was first constructed, up on which we based the formulation of open-ended questions, to serve as a foundation for further data gathering. For the first case study, data was collected by interviewing the case firm’s CEO and for the second case study we used the participant observation method. The collected data was analysed and discussed in comparison to the literature. Additionally, the findings of each case were schematically evaluated by performing a SWOT analysis on open innovation, as observed by each of our two case firms and related to literature findings. Conclusions. We conclude that small firms are hampered in their innovation and commercialisation process is limitations related to smallness and newness. It was identified that, although limited by financial and structural constrains, small companies are able to use a considerable amount of open innovation aspects in their business model. These being especially those that are less resource demanding, such as employee involvement and co-creation with the customer or with other sources to innovation, like universities. It was also recognized that, while being open when capitalizing on certain aspects of open innovation to boost their innovation and commercialization process, the case firms also recognize the importance for especially small firms to protect the core technology knowledge from being leaked externally, as this is the vital component of their existence