A Theoretical Approach for Open Innovation Implementation in Knowledge-Intensive SMEs in the Middle East: A Dynamic Capabilities Perspective
Authors:   , Bani-Melhem Neveen 
Published: August 2022

Open Innovation (OI) is a relevant research topic in academia; however, its implementation remains a challenge for practitioners. This research proposes an analysis of open innovation organisational competencies and capabilities in Middle Eastern knowledge-intensive SMEs. This study defines open innovation from a philosophical perspective that entails strategy and IT-enabled knowledge. This study’s main goals are to identify organisational competencies and capabilities and how they interrelate to find ways in which knowledge-intensive SMEs can successfully obtain open innovation initiatives and sustain their implementation. It also aims to apply the dynamic capability perspective as a theoretical lens to analyse how these SMEs can improve these open innovation-related competencies. The dynamic capability perspective has received significant theoretical attention in recent decades, and its popularity has been reflected in its practical uses in a range of organisations. Several reasons led this thesis to focus on studying Arab countries in the Middle East. Firstly, the development of the innovation field and the emergence of open innovation as current debates exist on how it contributes to organisational performance. Secondly, the rising attention of scholars, businesses, and policymakers into the Middle East as its economy grows progressively during social and political developments and security related issues. Third, the recent emerging calls to undertake studies on the less-researched regions. Two theoretical approaches were adopted to ground the researcher's interpretations: the dynamic capability perspective and the value-focused-thinking approach. This thesis uses a qualitative, interpretative, case-based research approach. This approach was selected to capture the rich picture of organisational behaviour related to the open innovation phenomenon. Six case studies were conducted from Arab Middle Eastern knowledge-intensive SMEs drawn from across the region. This thesis contributes to the existing literature by developing a novel theoretical open innovation two-level capability framework. The theoretical contribution of this thesis was to analyse and propose open innovation as a dynamic organisational capability. This thesis proposed a theory to understand and identify related organisational competencies and capabilities. Deploying the dynamic capability perspective provided profound insights into how SMEs have been strategically managing their competencies and resource-base to deal with open innovation and how this implementation can be sustained and improved. Thus, this thesis suggests that an SME should develop capabilities at two levels: first, higher-level capabilities to strategically manage and sustain the implementation of open innovation (dynamic capabilities); thus, an SME is required to be able to sense, absorb, seize and reconfigure resources and competencies to capture value through the development of open innovation-related competencies. Second, develop operational level open innovation competencies to efficiently and effectively support the implementation of open innovation. Nine main open innovation organisational competencies were identified. Additionally, this thesis provides implications for practice and policymakers.