Openness and Sensing Capacity: The Case of Micro and Small Furniture Industries in Tanzania
Keywords:Dynamic Capabilities, Innovation, Open Innovation, Sensing Capacity
Mainstream open innovation (openness) research has directly linked it to innovation performance, leaving intermediary processes such as innovation opportunity recognition (sensing capacity) not fully explained. This study examined the relationship between openness (inbound and coupled openness) and sensing capacity. The study surveyed a quota sample of 213 micro and small furniture industries (MSFIs) in Tanzania’s cities of Arusha, Mbeya, and Dar es-salaam and applied a close-ended questionnaire to collect data from owners (managers) of the micro and small furniture industries. Subsequently, the study used partial least square structural modeling (PLS-SEM) to analyze the data and found that inbound openness positively affects sensing capacity directly and indirectly through coupled openness. Coupled openness partially mediates the effect of inbound openness on sensing capacity. Also, coupled openness positively affects sensing capacity. Openness and dynamic capabilities views are complementary; small business managers embracing inbound and coupled openness enhance their sensing capacity.
Ahn, M. J., Ju, Y., Moon, H. T., Minshall, T., Probert, D., Sohn, Y. S., and Mortara, L. (2016). Beyond absorptive capacity in open innovation process: The relationships between openness, capacities and firm performance. Technology Analysis and Strategic Management, 28 (9),1009-1028.
Ardichvili, A., Cardozo, R., and Ray, S. (2003). A theory of entrepreneurial opportunity identification and development. Journal of Business Venturing, 18, 105-123.
Basit, A. S., Kuhn, T., & Cantner, U. (2022). The role of market competition for knowledge competencies, R&D and innovation: an empirical analysis for German firms. European Journal of Management Studies, 27 (2), 229-253.
Bigliardi, B., Ferraro, G., Filippelli, S., and Galati, F. (2020). The influence of open innovation on firm performance. International Journal of Engineering Business Management, 12, 1-14.
Cassiman, B., and Valentini, G. (2016). Open innovation: Are inbound and outbound knowledge flows really complementary? Strategic Management Journal, 37, 1034-1046.
Chabbouh, H., & Boujelbene, Y. (2022). Open innovation, dynamic organisational capacities, and innovation performance in SMEs: Empirical evidence in the Tunisian manufacturing industry. The International Journal of Entrepreneurship and Innovation, 0 (0), 1-13. Available at https://doi.org/10.1177114657503211066014, accessed 20 January 2023.
Chabbouh, H., and Boujelbene, Y. (2021). Coupled open innovation and performance in SMEs: The role of knowledge capabilities and environmental dynamism. International Journal of Innovation Management, 25 (9). 1-34.
Chen, J., Jiao, H., and Zhao, X. (2016). A knowledge-based theory of the firm: Managing innovation in biotechnology. Chinese Management Studies, 10 (1), 41-58.
Chesbrough, H. (2003). Open innovation: The new imperative for creating and profiting from technology. Boston: Harvard Business Press.
Chesbrough, H., & Bogers, M. (2014). Explicating open innovation: Clarifying an emerging paradigm for understanding innovation. In H. Chesbrough, W. Vanhaverbeke, & J. West (Edns.). New frontiers in open innovation (pp. 3-28). Oxford University Press.
Chou, C., Yang, K., & Chiu, Y. (2016). Coupled open innovation and innovation performance outcomes: Role of absorptive capacity. Corporate Management Review, 36 (1), 37-68.
Cirjevskis, A. (2019). The role of dynamic capabilities as drivers of business model innovation in mergers and acquisitions of technology-advanced firms. Journal of open innovation: Technology, Market, and Complexity, 5 (2),1-36.
Creswell, W.J. (2009) Research Design: Qualitative, Quantitative, and Mixed Methods Approaches (3rd ed.). Sage Publications Inc.
D’Ambrossio, A., Gabriele, R., Schiavone, F., and Villasalero, M. (2017). The role of openness in explaining innovation performance in a regional context. Journal of Technology Transfer, 42, 389-408.
de Aro, R. E., & Perez, G. (2021). Identification of dynamic capabilities in open innovation. Innovation and Management Review, 18 (2),113-128.
Dinh, T. H. and Monga, C. (2013). Light Manufacturing in Tanzania: A Reform Agenda for Job Creation and Prosperity. Washington: The World Bank. Available at https://www.openknowledge.worldbank.org/, Accessed 08 July 2018
El-Hanchi, S., and Kerzazi, L. (2020). Startup innovation capability from a dynamic capability-based view: A literature review and conceptual framework. Journal of Small Business Strategy, 30 (2), 72-92.
Exposito, A., Fernandez-Serrano, J., and Linan, F. (2019). The impact of open innovation on smes’ innovation outcomes: New empirical evidence from a multidimensional approach. Journal of Organizational Change Management, 32 (5), 558-577.
Filiou, D. (2021). A new perspective on open innovation: Established and new technology firms in UK bio-pharmaceuticals. R&D Management, 51 (1), 73-86.
Flor, L. M., Cooper, Y. S., and Oltra, J. M. (2017). External knowledge search, absorptive capacity, and radical innovation in high-technology firms. European Management Journal, 36 (2),183-194.
Gesing, J., Antons, D., Piening, D., Piening, P. E., Rese, M., and Salge, O. T. (2015). Joining forces or going it alone? On the interplay among external collaboration partner types, interfirm governance modes, and internal R&D. Journal of Product Innovation Management, 32 (3), 424-440.
Greco, M., Grimaldi, M., and Cricelli, L. (2016). An analysis of the open innovation effect on firm performance. European Management Innovation, 34, 50-516.
Hair Jr., F. J., Tomas, G., Hult, M., Ringle, M. C., and Sarstedt, M. (2017). A primer on Partial Least Square Structural Equation Modeling [PLS-SEM] (2nd ed). Los Angeles: Sage.
Ham, J., Choi, B., and Lee, J. N. (2017). Open and closed knowledge sourcing: Their effect on innovation performance in small and medium sized enterprises. Industrial Management & Data Systems, 117 (6), 1166-1184.
Hartono, A., and Abdur, R. (2022). Linking open innovation, innovation barriers, and performance of Indonesian firms. International Journal of Innovation Science, 14, (3-4), 713-732.
Hinteregger, C., Durst, S., Temel, S., and Yesilay, B. R. (2018). The impact of openness on innovation in SMEs. International Journal of Innovation Management, 23 (1), 1-30.
Hodgkinson, P. G., and Healey, P. M. (2011). Psychological foundations of dynamic capabilities: Reflexion and reflection in strategic management. Strategic Management Journal, 32, 1500-1516.
Hottenrott, H., and Lopes-Bento, C. (2016). R&D partnerships and innovation performance: Can there be too much of a good thing? Journal of Product Innovation Management, 33 (6), 773-794.
Hutton, S., Demir, R., and Eldridge, S. (2021). How does open innovation contribute to the firm’s dynamic capabilities? Technovation,106, 1-15.
Jugend, D., Jabbour, C. J. C., Scaliza, A. A. J., Rocha, S. R., Junior, G. A. J., Latan, H., and Salgado, H. M. (2018). Relationships among open innovation, innovative performance, government support and firm size: Comparing Brazilian firms embracing different levels of radicalism in innovation, Technovation, 74, 54-65.
Kline, B. R. (2011). Principles and Practice of Structural Equation Modeling (3rd ed). New York: The Guilford Press.
Kobarg, S., Stumpf-Wollersheim, J., and Welp, M. I. (2019). More is not always better: Effects of collaboration breadth and depth on radical and incremental innovation performance at the project level. Research Policy, 48, 1-10.
Kock, N. (2015). Common method bias in PLS-SEM: A full collinearity assessment approach. International Journal of e-collaboration, 11 (4), 1-10.
Krause, W., & Schutte, L. S.C. (2015). A Perspective on open innovation in small and medium-sized enterprises in South Africa, and a design requirement for an open innovation approach. South African Journal of Industrial Engineering, 26 (1), 163-178.
Kump, B., Engelmann, A., Kessler, A., and Schweiger, C. (2019). Toward a dynamic capabilities scale: Measuring organisational sensing, seizing, and transforming capacities. Industrial and Corporate Change, 28 (5), 1149-1172.
Laursen, K., and Salter, A. (2006). Open for innovation: The role of openness in explaining innovation performance among UK manufacturing firms. Strategic Management Journal, 27, 131-150.
Lee, K. and Yoo, J. (2019). How does open innovation lead to competitive advantage? A dynamic capability view perspective. PLoS ONE 14(11). Available at https://doi.org/10.1371/journal.pone.0223405, Accessed on 08 November 2021
Mazzola, E., Bruccoleri, M., and Perrone, G. (2016). Open innovation and firms’ performance: State of the art and empirical evidence from the biopharmaceutical industry. International Journal of Technology Management, 70 (2/3), 109-134.
Moen, Ø., Tvedten, T., and Wold, A. (2018). Exploring the relationship between competition and innovation in Norwegian SMEs, Cogent Business & Management, 5 (1), 1-15.
Mulyono, H., and Syamsuri, R. A. (2023). Organisational agility, open innovation, and business competitive advantage: Evidence from Culinary SMEs in Indonesia. International Journal of Social Science and Business, 7 (2), 268-275.
Ovuakporie, D.O., Pillai, G.K., Wang, C., and Wei, Y. (2021). Differential moderating effects of strategic and operational reconfiguration on the relationship between open innovation practices and innovation performance. Research Policy, 50, 1-17.
Pihlajamaa, M. (2021). What does it mean to be open? A typology of inbound open innovation strategies and their dynamic capability requirements. Innovation: Organisation and Management, 25 (1), 1-24.
Pinarello, G., Trabucchi, D., Frattini, F., and Latilla, M. V. (2022). How firms use inbound open innovation practices over time: Evidence from an exploratory multiple case study analysis. Research and Development Management, 52 (3), 548-563.
Rangus, K., Drnovsek, M., Di Minin, A., and Spithoven, A. (2017). The role of open innovation and absorptive capacity in innovation performance: Empirical evidence from Slovenia. Journal of East European Management Studies, 22 (1), 39-62.
Roper, S., Lovea, H. J., and Bonner, K. (2017). Firms’ knowledge search and local knowledge externalities in innovation performance. Research Policy, 46 (1), 43-56.
Rudolph, K. (2017). Analysing dynamic capabilities in the context of cloud platform ecosystems: A case study approach. Junior Management Science, 2 (3), 124-172.
Saunders, M., Lewis, P., and Thornhill, A. (2009). Research methods for business students (5th ed.). Pearson Education Limited.
Schoemaker, H. J. P., Heaton, S., and Teece, D. (2018). Innovation, Dynamic Capabilities, and Leadership. California Management Review, 61 (1), 15-42.
Seo, H., Chung, Y., and Yoon, H. (2017). R & D Cooperation and unintended innovation performance: The role of appropriability regimes and sectoral characteristics. Technovation. Available at, http://dx.doi.org/10.1016/j.technovation.2017.03.002, Accessed 26 March 2020.
Seyfettinoglu, K. U. (2015). Analysis of relationships between firm performance and open innovation strategies, and levels in Turkish food and beverage industry. Econ World 2015, 18-20 August, 2015. IRES & Torino& Italy.
Shamudeen, K., Keat, O. Y., and Hassan, H. (2017). Entrepreneurial success within the process of opportunity recognition and exploitation: An expansion of opportunity recognition model. International Review of Management and Marketing, 7 (1), 107-111.
Spithoven, A., Vanhaverbeke, W. and Roijakkers, N. (2013). Open innovation practices in SMEs and large enterprises, Small Business Economics, 41 (3), 537-562.
Sprakel, E., and Machado, A. (2020). Open innovation strategies and appropriability in knowledge-intensive business services: Evidences and implications in the Brazilian Context. Brazilian Business Review, 18, 62-81.
Tabachnick, G. B., and Fidell, S. L. (2007). Using multivariate analysis (5th ed). Boston: Pearson Education Inc.
Teece, J. D. (2007). Explicating dynamic capabilities: The nature and micro-foundations of sustainable enterprise performance. Strategic Management Journal, 28 (13), 1319-1350.
Teece, J. D. (2020). Hand in glove: open innovation and the dynamic capabilities framework. Strategic Management Review, 1 (2), 233-253.
Teplov, R. (2018). A Holistic Approach to Measuring Open Innovation: Contribution to Theory Development. PhD Thesis, Lappeenranta University of Technology: Lappeenranta.
Vanhaverbeke, W. (2017). Managing Open Innovation in SMEs. Cambridge: Cambridge University Press.
West, J., and Bogers, M. (2017). Open innovation: Current status and research opportunities. Innovation: Organization & Management, 19 (1), 43-50.
Yun, J. J., Lee, M., Park, K., and Zhao, X. (2019). Open innovation and serial entrepreneurs. Sustainability, 11. Available at http://doi:10.3390/su11185055, Accessed 26 May 2022.
Zajkowska, M. (2017). Open models for innovation processes as a future management challenge for small and medium-sized enterprises in Poland. Journal of Management and Business Administration.Central Europe, 25 (4), 193-208.
Zhao, X., Lynch, J. G., and Chen, Q. (2010). Reconsidering Baron and Kenny: Myths and truths about mediation analysis. Journal of Consumer Research, 37, 197-206.
How to Cite
Copyright (c) 2023 Yohana Jacob Sesabo, Mushumbusi Paul Kato, Emmanuel James Chao
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.