Fardapaper Top Management Knowledge Value Knowledge Sharing Practices Open Innovation and Organizational Performance
Fardapaper Top Management Knowledge Value Knowledge Sharing Practices Open Innovation and Organizational Performance
a
College of Business, Abu Dhabi University, Abu Dhabi, United Arab Emirates
b
Montpellier Business School, Montpellier Research in Management, 2300 Avenue des Moulins, 34185 Montpellier, France
c
University of Turin, Department of Management, Corso Unione Sovietica, 218 bis, 10134 Torino, Italy
d
Amity School of Business, Amity University, Noida 201313, Uttar Pradesh, India
Keywords: Open innovation as driver of organizational performance of small and medium-sized enterprises (SMEs) has
Top management knowledge value received relatively little scholarly attention. Drawing upon the resource-based view and the knowledge-based
Knowledge sharing practices view of firms, we examined antecedents and outcome of open innovation in SMEs. We collected multisource data
Open innovation from 404 SMEs and used structural equation modeling to test the hypotheses. Our study suggests that top
Organizational performance
management knowledge value and knowledge creating practices influence open innovation, which, in turn,
SMEs
influences organizational performance. Results of the study are discussed in the light of previous studies and
suggest implications for theory and practice of open innovation.
⁎
Corresponding author.
E-mail addresses: [email protected] (S.K. Singh), [email protected] (S. Gupta), [email protected] (D. Busso).
https://doi.org/10.1016/j.jbusres.2019.04.040
Received 30 November 2018; Received in revised form 18 March 2019; Accepted 25 April 2019
0148-2963/ © 2019 Elsevier Inc. All rights reserved.
Please cite this article as: Sanjay Kumar Singh, et al., Journal of Business Research, https://doi.org/10.1016/j.jbusres.2019.04.040
S.K. Singh, et al. Journal of Business Research xxx (xxxx) xxx–xxx
wherein the extant literature has scarce research-based knowledge on with knowledge-based resources (Marr, 2004), and knowledge re-
linkage between open innovation and organizational performance. sources are imperative to ensure sustained levels of open innovation
Third, this study supports emerging research interest in open innova- and organizational performance (e.g., Wiklund & Shepherd, 2003).
tion in SMEs and how to use internal knowledge sharing practices and These tangible resources facilitate a firm's competitive advantage and
external information and research collaborations for product innova- make it hard for rivals to imitate (Grant, 1996a, 1996b). Therefore, this
tion to stay competitive in their markets. Lastly, this study contributes study posits that SMEs' competitive advantage depends upon their
to the aims of the Journal of Business Research to apply theoretical capability to use their established and new knowledge for creating new
knowledge to actual business decisions, processes, and activities, processes and goods/products. In this sense, knowledge management
especially those of SMEs. favors identification and application of knowledge to support and
This paper is arranged as follows: Section 2 presents theoretical nurture open innovation in enterprises (Santoro, Ferraris, Giacosa, &
lenses and hypotheses, followed by the methods in Section 3. Then, Giovando, 2018; Santoro, Vrontis, Thrassou, & Dezi, 2018; Darroch,
Section 4 details the results followed by the discussion and conclusion 2005).
in Section 5. However, the implementation and usage of knowledge sharing
practices in SMEs can be daunting and challenging tasks. Nevertheless,
2. Theoretical background we speculate that top management value for knowledge will drive
knowledge sharing practices to help achieve open innovation and de-
2.1. The resource-based view (RBV) and knowledge-based view (KBV) sired organizational performance.
Drawing upon the RBV and the KBV for the firms, this study ex- 2.2. Top management knowledge value
amines how SMEs use their strategic resources to support open in-
novation to influence organizational performance. Using the RBV, we Top management people have massive influence on the path and
argue that distribution of valued resources and capabilities by SMEs success of managing knowledge in the organization (Nguyen &
that are inelastic in supply results in improved OI and OP (Barney, Mohamed, 2011). The top management knowledge value (TMKV) in
1991) and that, in turn, enhances their competitive advantage over SMEs creates environments that allow employees across functions to
their competitors. SMEs should hold assets that are valued, rare, and exercise and nurture their knowledge manipulation skills (e.g.,
hard for the competitors to emulate (Barney, 1991). Furthermore, these Crawford, Gould, & Scott, 2003; Politis, 2002) in a manner that influ-
intangible resources of SMEs deliver competitive advantage, as their ences open innovation and organizational performance. Wang and Noe
values are difficult for competitors to duplicate and their functions very (2010) submit that top management support for valuing knowledge can
hard to replace (e.g., Hitt, Bierman, Uhlenbruck, & Shimizu, 2006). All create employee commitment along with knowledge sharing and ex-
that is required is the synchronization of varied resources, capabilities, change amongst the employees. Similarly, a study by J. Singh (2008)
and strategy implementation for SMEs to offer superior products/goods and S.K. Singh (2008) found that delegating rather than directive lea-
to customers and thus increases advantage over their rivals (Hitt, Xu, & dership style has a positive influence in knowledge management prac-
Carnes, 2016). To add to this, we posit that performance differential tices in technological settings. Furthermore, Lubatkin, Simsek, Ling,
between SMEs depends upon how their employees allow realization of and Veiga (2006) emphasized how the essential role played by top
the varied bundles of resources for potential value creation (e.g., management behavioral integration leads to dispensation of disparate
Bridoux, Coeurderoy, & Durand, 2011; Del Giudice, Scuotto, Garcia- demands vital for achieving ambidexterity in SMEs. Therefore, this
Perez, & Petruzzelli, 2018). Therefore, we deduce that managing and study posits that top management knowledge value facilitates knowl-
using cognitive capabilities of coworkers, in terms of critical knowledge edge sharing wherein the former motivates employees to share their
that they possess, become essential for firms to engage in open in- knowledge for organizational success (Lee, Shiue, & Chen, 2016; Yew
novation for superior organizational performance (e.g., Bridoux et al., Wong & Aspinwall, 2005) through both inbound and outbound in-
2011). Thus, RBV puts “employees” on the strategy radar monitor novation. However, what remains unclear is how top management
(Snell, Stueber, & Lepak, 2001) that helps align top management knowledge value supports knowledge sharing practices for open in-
knowledge value and knowledge sharing practices with organizational novation and SMEs' performance. Therefore, this paper examines how
processes (Teece, Pisano, & Shuen, 1997) to influence open innovation top management value for knowledge in SMEs may influence knowl-
and that, in turn, enhances organizational performance of SMEs. edge sharing practices for OI and OP.
The knowledge-based view (KBV), an extension of the RBV, offers
organizations strategies to attain competitive advantage through 2.3. Knowledge sharing practices
leveraging the potential of their knowledge workers to achieve orga-
nizational outcomes. The theory and research suggests that knowledge Knowledge sharing denotes making available relevant knowledge to
varies by organization and knowledge is generally associated with de- coworkers in the enterprise (Grant, 2016; Lin & Lo, 2015; Wang, Wang,
sired organizational outcomes (Grant, 1996a, 1996b). Furthermore, & Liang, 2014; Zhang & Jiang, 2015) for the purpose of attaining in-
knowledge as a unique strategic resource is at the core of knowledge- novation at the individual level (Bavik, Tang, Shao, & Lam, 2018;
based theory and views the organization as a dynamic entity that Huang, Hsieh, & He, 2014), the team level (Gong, Kim, Lee, & Zhu,
continuously evolves through knowledge production and utilization 2013), and the organizational level (Donnelly, 2019; Oyemomi, Liu,
(Spender, 1996). Therefore, if knowledge is the key strategic resource Neaga, Chen, & Nakpodia, 2019). Past research suggests that knowl-
and allows firms to compete in the dynamic environment (Grant, edge sharing increases the innovativeness of the organization (e.g.,
1996a, 1996b; Spender, 1996), it becomes imperative for top man- Chen & Huang, 2009; Del Giudice & Straub, 2011; Tsai, 2001). Simi-
agement to value knowledge, create and sustain knowledge sharing larly, other colleagues establish the vital role of knowledge sharing
practices that fuel open innovation and desired levels of organizational practices (KSP) in open innovation, and that depends upon adequate
performance. Furthermore, we argue that top management value for organization arrangements (Cavaliere, Lombardi, & Giustiniano, 2015;
knowledge and knowledge sharing practices are extremely valued in- Cunha & Orlikowski, 2008), but further research is required, as the
tangible resources (e.g., Grant, 1996a, 1996b; Grant, 2002) that SMEs literature on knowledge sharing practices vis-à-vis OI and OP in SMEs is
need to enhance open innovation and firm level performance to beat scant. In addition, there is scarce coverage in the extant literature on
competition in dynamic markets. This study posit that SMEs are filled explorative and exploitative innovation in SMEs rather than larger firms
2
S.K. Singh, et al. Journal of Business Research xxx (xxxx) xxx–xxx
(Lubatkin et al., 2006) and how top management support facilitates 3. Hypotheses development
sharing of knowledge (Lee et al., 2016; Wang & Noe, 2010; Yew Wong,
2005) for enhanced performance (Pittino, Martinez, Chirico, & Galvan, 3.1. Top management knowledge value and knowledge sharing practices
2018; Lee et al., 2016).
Top management knowledge value (TMKV) is an essential pre-
condition for knowledge sharing practices in the organization.
2.4. Open innovation
Knowledge-oriented leadership emphasizes that knowledge manage-
ment practice plays a noticeable role in the organization, so that it can
The extant literature on innovation management suggests that or-
effectively sense and seize occasions for innovation (Teece, 2009) and
ganizations should and must innovate while leveraging their available
stay relevant in dynamic markets. Therefore, it becomes imperative for
internal and external knowledge sources (Ferraris, Santoro, & Bresciani,
the knowledge-oriented leaders in organizations to champion the cause
2017). Open innovation (OI) is best stated as the opposite of the old-
of development of knowledge sharing practices and initiatives for
style vertical integration model wherein internal innovation events af-
knowledge exploration and exploitation (Donate & Sánchez de Pablo,
fect internally developed products and services (Chesbrough, 2017;
2015) for open innovation and enhanced organizational performance.
Della Peruta, Del Giudice, Lombardi, & Soto-Acosta, 2016) that firms
Top management in organizations that values knowledge as competi-
sell in the markets. OI is a dispersed innovation practice that depends
tive advantage for firms' success, has a strong tendency to create the
on consciously monitored flow of knowledge across a firm's frontiers,
internal environment in a manner that allows coworkers to exercise and
using financial and non-financial instruments in sync with the firm's
nurture their knowledge manipulation abilities (Crawford et al., 2003;
business model to monitor and motivate the sharing of knowledge
Del Giudice & Maggioni, 2014; Politis, 2002), which can be leveraged
(Chesbrough, 2017). OI consists of inbound and outbound open innova-
by the firms for innovation and performance. Similarly, J. Singh (2008)
tion (Popa et al., 2017) that help firms to meet the needs of the custo-
and S.K. Singh (2008) argues that delegating, rather than a directive
mers and beat competition in the markets. Inbound OI (IOI) in SMEs
leadership style, has a positive influence on knowledge sharing prac-
comprises exploratory learning behavior (e.g., Popa et al., 2017) to
tices in technological settings. The top management value for knowl-
discover and seize new information and knowhow from the external
edge influences employee commitment along with high levels of
sources, namely research institutions, universities, consultants, com-
sharing and exchange of knowledge amongst employees (Wang & Noe,
petitors, governmental agencies, suppliers, and customers (Cheng &
2010). Therefore, we hypothesize that:
Shiu, 2015; Popa et al., 2017). Whereas, outbound OI (OOI) aims to
exploit internal ideas or knowledge through licensing, patenting or H1. TMKV positively influences KSP.
contractual arrangements (Hung & Chou, 2013; Lichtenthaler, 2009) to
enhance organizational performance. Moreover, OI repeatedly starts
with subcontracting to service firms (Gassmann, Enkel, & Chesbrough,
3.2. Knowledge sharing practices and open innovation
2010) and it relates to how firms should cooperate with outside parties
to boost process and product innovation (Huizingh, 2011). We note that
Knowledge sharing is a vital constituent of innovation (Brachos,
OI has curvilinear association with the development and launch of the
Kostopoulos, Eric Soderquist, & Prastacos, 2007; Chiang & Hung, 2010;
newest products (Greco, Grimaldi, & Cricelli, 2016) and OI moderates
Gächter, von Krogh, & Haefliger, 2010) and innovation depends how
the influence of dynamic innovation on breakthrough innovation
firms use employees' knowledge, ability, and experience during orga-
(Cheng & Chen, 2013). However, past studies on OI have been con-
nizational value creation processes. A firm's capability to renovate and
ducted mainly in medium to large organizations, and inquiry in the
use knowledge may influence innovation levels, for instance, how firms
context of SMEs is still in its infancy (Santoro, Ferraris, et al., 2018),
use the latest tools, techniques and methods of problem-solving (Du
though attempts have been made to investigate how SMEs engage in
Plessis, 2007). However, firms can only begin to efficiently deal with
knowledge sourcing (Burnswicker & Vanhaverbeke, 2015). Therefore,
knowledge when workforces are eager to be involved in knowledge
our study is an endeavor to plug the knowledge gap and advance un-
sharing activities. Knowledge sharing practices in firms is essential for
derstanding of open innovation in SMEs.
idea generation for innovative organizational actions to respond to
evolving business opportunities in the markets (Lundvall & Nielsen,
2.5. Organizational performance 2007) and results in quick reactions to customer requirements at
minimum costs (Sher & Lee, 2004). Similarly, Lin (2007) found
Organizational performance (OP) is a key construct in management knowledge sharing as an essential element of firm's learning tasks, re-
research and it has received much attention (Kirby, 2005). Organiza- sulting in the development of market innovation activities (Lin, 2007).
tional performance relates to three precise areas of organizational Several studies suggest a new topology of innovation based on the
outcomes - financial performance, market performance, and return to conceptualization of knowledge using three facets, namely implicit-
shareholder (Pierre, Timothy, George, & Gerry, 2009). Several studies explicit, general-independent and simple-complex (Gopalakrishnan &
indicate that open innovation positively influences different measures Bierly, 2001) and knowledge sharing practices help increase relative
of organizational performance (Carayannis & Grigoroudis, 2014; innovation performance of organizations (Ritala, Olander, Michailova,
Chiang & Hung, 2010; Popa et al., 2017). Therefore, SMEs can benefit & Husted, 2015). Abou-Zeid and Cheng (2004) propose different in-
from outside knowledge, as they are more responsive to the needs of the novation types and link them with knowledge formation and exploita-
markets and are also flexible compared to large organizations tion activities. Similarly, Wang and Wang (2012) suggest that the
(Spithoven, Vanhaverbeke, & Roijakkers, 2013) and likely to increase sharing of knowledge amongst coworkers positively influences in-
their overall performance through open innovation (Popa et al., 2017). novation, which augments superior firm performance. Therefore, SMEs
OI practices are strategic assets that drive sustainable competitive ad- should effectively harness potential benefits of knowledge sharing
vantage and enhanced firm level performance (Camisón & Villar-López, through the use of varied combinations of organizational and man-
2014) in SMEs too. Previous studies suggest that OI helps firms to attain agerial practices to reward employees for exhibiting knowledge sharing
competitive advantage (Goldman, Nagel, & Preiss, 1995) and results in behaviors in the workplace (Foss, Laursen, & Pedersen, 2011). There-
enhanced organizational performance (OECD, 2005) and both the RBV fore, we predict that:
and the KBV consider differential organizational performance as an
H2. KSP positively influences IOI.
outcome of an organization's internal characteristics (Camisón & Villar-
López, 2014). H3. KSP positively influences OOI.
3
S.K. Singh, et al. Journal of Business Research xxx (xxxx) xxx–xxx
3.3. Open innovation and organizational performance H5. OOI positively influences OP.
4
S.K. Singh, et al. Journal of Business Research xxx (xxxx) xxx–xxx
2006), such that it increases the effectiveness of IOI and that, in turn, automobile accessories, communication equipment, detergents and
influences firm performance (Wang et al., 2015). Furthermore, firms disinfectants, electrical switchgears, firefighting equipment, lubricants
that engage in different forms of financial and non-financial IOI and and grease, perfumes, pipes and pipe fittings, plastic accessories, steel
OOI prefer activities such as venturing or spinoffs, and outward IP li- fabrication, telephone equipment, and water purifiers. Furthermore, as
censing (Chesbrough, 2003; Dahlander & Gann, 2010; Van De Vrande per Table 1, the average age of the CEOs, the production managers, and
et al., 2009) to satisfy customer needs and enhance their financial and the HR managers were 43.4, 36.28, and 35.84 years respectively.
market performance. Drawing upon both RBV and KBV, we predict that Table 1 also shows that 86.4% of the CEO participants were male, while
open innovation practices facilitate the influence of knowledge sharing 93.07% of the production managers and 84.65% of the HR managers
practices on SMEs' performance. Therefore, we hypothesize that: were male. Similarly, In terms of educational qualifications, 82.18% of
the CEOs, 75.25% of the production managers, and 69.80% of the HR
H8. IOI mediates the influence of KSP on OP.
managers had minimum bachelor level degrees in management, sci-
H9. OOI mediates the influence of KSP on OP. ences, or technology disciplines (see Table 1).
Fig. 1 depicts the hypothesized framework.
4.2. Measures
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S.K. Singh, et al. Journal of Business Research xxx (xxxx) xxx–xxx
Table 1
Sample and organization details.
CEOs (n = 404) Production managers (n = 404) HR managers The SMEs (N = 404)
(n = 404)
Average age (in years) 43.40 Average age (in years) 36.28 Average age (in years) 35.84 Year when born
2000–2005 64 (15.8%)
2006–2010 211 (52.3%)
2011–2016 129 (31.9%)
Gender Gender Gender Employee counts
Male 348 (86.14%) Male 376 (93.07%) Male 342 (84.65%) 115–200 55 (13.6%)
Female 56 (13.86%) Female 28 (6.93%) Female 62 (15.35%) 201–250 166 (41.1%)
251–300 168 (41.6%)
> 301 15 (3.7%)
Education Education Education Industry
Bachelor degree 332 (82.18%) Bachelor degree 304 (75.25%) Bachelor degree 282 (69.80%) Manufacturing 404 (100%)
Master degree 72 (17.82%) Master degree 100 (24.75%) Master degree 122 (30.20%) Others None
5. Results Table 3
Assessment indices for causality.
5.1. Data analysis Sympson's paradox ratio 1.000
R-squared contribution ratio 1.000
We tested for non-response bias before analyzing the data to ex- Statistical suppression ratio 1.000
amine the hypotheses of our study. The test was performed to ensure Nonlinear bivariate causality direction ratio 0.800
that the sample of our study had the same characteristics with sampling
frame wherein we used an independent sample t-test to compare the
Table 4
responses of early respondents with responses of the late respondents
Latent variable coefficients.
after the cut-off date. The results suggest no significant differences in
the responses of the early and the late respondents. Thus, our study TMKV KSP IOI OOI OP
does not have problems related to the non-response bias.
R-squared – 0.312 0.038 0.007 0.187
Yunis, Tarhini, and Kassar (2018) employed partial least squares Adjusted R-squared – 0.311 0.036 0.005 0.183
structural equation modeling (PLS-SEM) in their theory-backed re- Composite reliability 0.934 0.937 0.918 0.894 0.929
search and we have employed the same to analyze the standardized Cronbach's alpha 0.934 0.937 0.918 0.894 0.93
Average variances extracted 0.704 0.679 0.691 0.678 0.686
data of the 404 respondents. Hair, Sarstedt, Pieper, and Ringle (2012)
and Ali, Kan, and Sarstedt (2016) suggest that PLS-SEM is more ap-
pealing in cases where the research objective focuses on prediction. In
Table 5
this study, WarpPLS version 6.0 was used to perform PLS-SEM. Factor-
Testing for discriminant validity.
based SEM with the common factor model assumptions method was
employed as compared to the use of the conventional PLS Regression TMKV KSP IOI OOI OP
algorithm (Kock, 2017). In Table 2, the model fit and quality indices are
TMKV (0.839)
showcased. It is evident that APC and ARS have significant values. The KSP 0.545 (0.824)
AVIF value is within the ideal limit of 3.3. IOI 0.144 0.057 (0.831)
Table 3 shows the causality assessment which suggests that the di- OOI −0.028 −0.013 0.297 (0.824)
OP 0.145 0.052 0.364 0.296 (0.828)
rections of the hypotheses are correctly posited. The four indices ob-
tained and depicted in Table 3 affirm that the model that we tested was Note: Diagonal bold value shows square roots of AVEs (SQAVEs).
appropriate. Here, the values of these four indices are more than the
acceptable limit and this suggests that the direction of the hypotheses 0.50 as suggested by Hair et al. (2012). Furthermore, Table 5 suggests
that were considered in this study is correct. that all the constructs in the study had discriminant validity, as the
The reliability and validity of the model can be tested by employing correlations amongst the constructs are less than squared roots of the
confirmatory factor analysis. In Appendix B, the factor loading of items AVE (Fornell & Larcker, 1981).
from each of the constructs in the study is more that 0.50 as per the
recommendations of Hair et al. (2012). Table 4 illustrates that R-
5.1.1. Testing for direct effect
squared coefficients of exploration, exploitation and organizational
Table 6 illustrates that the path coefficients (direct effects) on the re-
performance suggest that these variables have been well explained by
lationships amongst the hypothesized constructs were supported, and
the factors that we considered in this study. In addition, the value of R-
significant at 0.05 level of significance. Specifically, the hypothesized re-
squared coefficients and adjusted R-squared coefficients is similar and
lationship between TMKV→KSP (H1), KSP→IOI (H2), KSP→OOI (H3),
this re-affirms the extent of the explanation of the variables by their
IOI→OP (H4), and OOI→OP (H5) were significant, with beta (β) values of
factors. The value of composite reliability and Cronbach's alpha for
0.56, 0.20, 0.08, 0.32, and 0.22 respectively, and significant at
each variable is more than the threshold value of 0.70 (Tellis, Yin, &
p = 0.01 < 0.05, p = 0.01 < 0.05, p = 0.04 < 0.05, p = 0.01 < 0.05,
Bell, 2009). The average variances extracted of the constructs were >
and p = 0.01 < 0.05 of 95% BCa CI. This means that hypotheses 1, 2, 3,
4, and 5 (i.e., H1, H2, H3, H4, and H5) were supported.
Table 2
Quality indices and model fit. 5.1.2. Testing for indirect effect
We tested for the indirect effect to determine the role of the KSP
Average path coefficient 0.276, p < 0.001
construct as mediator in the relationships TMKV and IOI, and TMKV
Average R-squared 0.136, p < 0.001
Average block VIF 1.063 and OOI. Also, we examined for the mediating influence of inbound OI
and outbound OI on the linkage between KSP and OP. Table 6
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S.K. Singh, et al. Journal of Business Research xxx (xxxx) xxx–xxx
Table 6 open innovation were established in past research on large firms (Lee
Hypotheses testing. et al., 2016; Wang & Noe, 2010). A possible reason may be that
Hypotheses β and p-value Decision knowledge-oriented leaders support the development of knowledge
sharing practices for making SMEs effectively sense and seize oppor-
H1: TMKV positively influences KSP. β = 0.56, p < 0.01 Accepted tunities to innovate (Donate & Sánchez de Pablo, 2015; Teece, 2009)
H2: KSP positively influences IOI. β = 0.20, p < 0.01 Accepted
and stay competitive in dynamic markets. Furthermore, previous stu-
H3: KSP positively influences OOI. β = 0.08, p = 0.04 Accepted
H4: IOI positively influences OP. β = 0.32, p < 0.01 Accepted
dies also report that knowledge sharing practices influence inbound and
H5: OOI positively influences OP. β = 0.22, p < 0.01 Accepted outbound open innovation (Lee, Ooi, et al., 2010; Lee, Park, et al.,
H6: KSP mediates the influence of TMKV on β = 0.109, p < 0.001 Accepted 2010; Brockman & Morgan, 2006; Liu, Chen, & Tsai, 2005). Therefore,
IOI. our study confirms that top management knowledge value and
H7: KSP mediates the influence of TMBV on β = 0.047, p = 0.088 Rejected
knowledge sharing practices also support open innovation in the con-
OOI.
H8: IOI mediates the influence of KSP on OP. β = 0.017, p = 0.364 Rejected text of SMEs. As a result, we contend that knowledge-oriented leaders
H9: OOI mediates the influence of KSP on β = 0.003, p = 0.820 Rejected have the tendency to install and support knowledge sharing practices
OP. and initiatives to facilitate knowledge exploration and exploitation
(Donate & Sánchez de Pablo, 2015) for open innovation and enhanced
organizational performance in SMEs.
illustrates the relationships between TMKV→KSP→IOI (H6) as Secondly, our study advances the existing knowledge that open
β = 0.109, p < 0.001 and was found significant, whereas the re- innovation predicts organizational performance (Popa et al., 2017;
lationship between TMKV→KSP→OOI (H7) as β = 0.047, p < 0.088 Wang et al., 2015; Lichtenthaler, 2011; Dahlander & Gann, 2010; van
and was found non-significant. Therefore, H6 was supported and H7 de Vrande et al., 2009) in the context of SMEs, as there is a dearth of
was not supported in this study. On the other hand, we also tested for research-based knowledge on the linkage between open innovation and
the mediating role of both inbound OI and outbound OI on the influ- organizational performance. Therefore, our study suggests that open
ence of knowledge sharing practices on organizational performance innovation requires integration of both inward and outward knowledge
(Table 6). We found that relationships between KSP→IOI→OP (H8) as transfer (Chesbrough, 2006) to benefit from the amalgamation of SMEs'
β = 0.017, p < 0.364 and KSP→OOI→OP (H9) as β = 0.003, renewed problem-solving capabilities, knowledge, and new opportu-
p < 0.820 were non-significant. Therefore, H8 and H9 were not sup- nities (Hung & Chou, 2013; Zahra et al., 2006) in dynamic markets. Our
ported in our study. study advances the existing literature that inbound (Chesbrough, 2003;
Dahlander & Gann, 2010) and outbound open innovation (Popa et al.,
6. Discussion and conclusions 2017) bring pecuniary and non-pecuniary benefits to SMEs especially
when they operate in a dynamic business environment.
Drawing on the RBV and the KBV, our study focuses on the ante- Thirdly, we found evidence that knowledge-sharing practices med-
cedents and the outcomes of open innovation in SMEs. The findings of iate the influence of top management knowledge value on open in-
our study confirm that organizations with strong knowledge sharing novation – inbound and outbound. These findings of our study are
practices are more competent in chasing open innovation. The results of supported by previous studies, which found knowledge sharing prac-
our study support the findings of previous studies where top manage- tices to mediate the influence of top management knowledge value on
ment knowledge value influences knowledge sharing practices (Del inbound and outbound open innovation in SMEs (Brunswicker &
Giudice & Maggioni, 2014; Donate & Sánchez de Pablo, 2015; Wang & Chesbrough, 2018; Jarvenpaa & Majchrzak, 2016). We believe that top
Noe, 2010) and knowledge sharing practices affect open innovation management in consonance with formalized organizational processes
(Veronica, Del Giudice, Bresciani, & Meissner, 2017; Wang & Wang, play an important role for knowledge sharing practices for open in-
2012; Lee, Ooi, Tan, and Chong, 2010; Lee, Park, Yoon, and Park, novation (Brunswicker & Chesbrough, 2018), where top management
2010). Our study also supports previous studies that suggest that open purposefully weigh tension between sharing and protection of knowl-
innovation benefits organizations in terms of enhanced organizational edge (Jarvenpaa & Majchrzak, 2016) for SMEs to reap the benefits of
performance (Popa et al., 2017; Wang et al., 2015). Furthermore, our open innovation. At the same time, our study concurs with the findings
study suggests that top management knowledge value indirectly affects of Von Krogh et al. (2018) that SMEs could really benefit when they
open innovation through knowledge sharing practices and finds some search for ideas and knowledge beyond their factory gates together
support from previous studies (e.g., Brunswicker & Chesbrough, 2018; with knowledge sharing practices amongst their internal organizational
Jarvenpaa & Majchrzak, 2016), and that is the unique contribution of members.
our study. However, in a dynamic business environment, organizational Finally, we contend that our study supports emerging research in-
knowledge quickly becomes outdated (Jansen, Van Den Bosch, & terests on open innovation in SMEs (Dahlander & Gann, 2010;
Volberda, 2006; Popa et al., 2017), but open innovation policies and Huizingh, 2011), as they need to rely on both internal knowledge
practices (Cheng & Shiu, 2015) help SMEs to stay relevant and com- sharing practices and external information and research collaborations
petitive in the markets. Therefore, the findings of this study have the- (Popa et al., 2017) for innovation in processes and products to stay
oretical and practical implications. competitive in their markets.
The findings of our study suggest an association between top man- We found that top management commitment to value of knowledge
agement knowledge value, knowledge sharing, open innovation and helps create and sustain knowledge sharing practices so as to increase
organizational performance of SMEs. The findings of our study offer organizational ability for OI and organizational performance.
three key contributions to theoretical development on the antecedents Therefore, our study has three implications for practice too.
and the outcomes of the open innovation. Firstly, our study suggests that SMEs depend upon how top man-
Firstly, the roles of top management knowledge value and knowl- agement teams value knowledge creation and sharing amongst orga-
edge sharing practices as critical for influencing inbound and outbound nizational members in value creation processes to beat competition
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from their rivals and stay relevant in their markets. Therefore, we posit management knowledge value impacts knowledge sharing practices,
that top management in SMEs should engage and direct collective knowledge-sharing practices influence open innovation and open in-
minds of organizational members in a manner that motivates their novation, in turn, influences organizational performance. Furthermore,
employees to share knowledge amongst themselves for SMEs to develop we found that top management knowledge value indirectly through
processes and products to satisfy the changing needs of their customers. knowledge sharing practices influences open innovation. The findings
Secondly, the findings of our study suggest that SMEs that believe in of our study supports previous studies in the field, advance theory and
knowledge sharing practices have a competitive advantage over their influence practice of open innovation in SMEs. Lastly, but not the least,
rivals in the markets, as knowledge sharing practices enhances open our study suggests that open innovation benefits SMEs, as it enhances
innovation - quick actions to customer requirements at minimum costs. their organizational performance.
Therefore, our study recommends the top leadership team of SMEs to However, like any other study in the management science dis-
install and support knowledge sharing practices essential for them to be cipline, our study has limitations. Firstly, we tested the conceptual re-
market oriented in terms of their products and services that are valued, search framework of our study in the manufacturing sector, which
rare, and tough to duplicate by their rivals. limits its generalization to the service sector SMEs in the UAE.
Thirdly, our study suggests that SMEs' open innovation practices are Therefore, we suggest that future research should extend our research
their strategic asset to attain sustainable competitive advantage and framework and make comparative study of both service and manu-
enhanced organizational level performance. Therefore, we suggest that facturing sector SMEs for a bigger picture to advance knowledge and
SMEs should endeavor to install functional processes and systems to help policy makers develop suitable policy to help support SMEs that
support inbound and outbound open innovation to seize market op- have open innovation practices in the UAE. Secondly, our study tested
portunities to outperform their competitors. Our study offers sugges- the role of macro level variables on open innovation and SMEs' per-
tions to SMEs' top management to embrace the philosophy of open formance. Therefore, we suggest that future research in this area should
innovation to make their firms responsive to the needs of their custo- explore how micro level variables (i.e., trust, personality character-
mers and to be quick enough to incorporate customer's demands in the istics, employee engagement and involvement) operate in the work-
offerings to outperform the competitors in their markets. place to support or obstruct open innovation in SMEs. Thirdly, our
study used quantitative inquiry, which has its own limitations, to study
6.3. Conclusions, limitations and direction for future research open innovation in SMEs. Thus, the future research should use mixed
methods to investigate what makes open innovation thrive in SMEs.
Based on the findings of our study, we conclude that top
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