1. Introduction
Industry 4.0 is current challenge for most industries (
Maresova et al. 2018). It is enabled by the internet of things allows for the integration of people, environment and process within a company. It also fosters the integration of a company with its environment, potentially consisting of subcontractors, customers, suppliers and R&D partners. Major trends within Industry 4.0 are shorter lifecycles and therefore the need to speed up time to market. This will increase the need for innovation. Open Innovation is an approach to master the innovation game and to stay competitive in fast-changing markets (
Industry 4.0 and Open Innovation 2018).
Innovation encompasses not only new or improved products and processes but also new services, marketing, branding and design methods and new forms of business organization and collaborative arrangements. As previous authors (
Cooke 2011;
Hagedoorn et al. 2000) have pointed out, the importance of regional–national interactions, especially regarding each region’s eco-innovation system, its regional and national regulation, subsidy and incentive structures and eco-innovation outcomes in the sense of new products, processes and organizational changes implemented in the markets for eco-innovations. It is particularly important to identify the factors affecting national development through regional technology innovation. Furthermore, strengthening R&D in universities and research organizations, community associations and the business community, innovation and energy agencies, regional and national government can increase the capacity to effectively address both innovation and sustainability challenges and create capacities to act and find specific innovative solutions as and when needed. As previous studies (
Hagedoorn et al. 2000;
Gallié and Roux 2010) have pointed out that collaboration for open innovation can occur between private firms and between private firms and government research organizations. It is confirmed by study of
Hossain et al. (
2016) where the findings of significant studies are highlighted and a detailed picture of the progress of open innovation literature is described. Furthermore,
West and Bogers (
2017) summarized opportunities, which include more research on outbound open innovation, the role of open innovation in services and network forms of collaboration such as consortia, communities, ecosystems and platforms. The open innovation networks exhibited many of the same tensions discussed in innovation initiatives within organizations (
Jarvenpaa and Wernick 2011).
Cheng and Huizingh (
2014) studied the relationship between open innovation and innovation performance. The results indicate that performing open innovation activities is significantly and positively related to new product/service innovativeness, new product/service success, customer performance and financial performance.
Chaston and Scott (
2012) findings may suggest that firms operating in emerging economies need not necessarily rely on entrepreneurial behaviour to sustain business growth, although involvement in open innovation may enhance business performance.
The concept of open innovation is widely used in mostly high-tech industries (
Matulova et al. 2015a,
2015b,
2016). Different regions have competitive advantages in different industries depending on the geographical location and the size and nature of the firms operating within that area. Access to capital, labour and/or technology can be a major source of advantages for different firms. To foster the growth of the firm, the management has to be strategic in choosing its partners for collaboration. One of the three strategic themes of the Regional Programme of Innovative Actions initiative of the 2000–2006 cohesion policy (
Introducing the RIS of South Moravia | RIS JMK 2018) This is a government policy call Czech regional innovation strategy 2000–2006 was ‘regional economies based on knowledge and technological innovation.’ Regional development can be achieved through open innovation where knowledge transfer could occur in the form of technology transfer and/or expert assistance. Open innovation involves cooperation with external partners and cooperation with external partners can be an important challenge as both parties need to agree on their mutual benefits. Both parties need to benefit from cost- and risk-sharing opportunities (
Hagedoorn et al. 2000;
Lopez 2008). Through open innovation and cost- and risk- sharing strategy, the partners can achieve economies of scale as has been argued by (
Becker and Dietz 2004;
Arvanitis 2012). Although firms can increase value and attain efficiency through open innovation leading to regional development, it is easier said than done. Firms sometimes are concerned about the barriers to open innovation. Although, researchers have discussed the barriers to innovation, they have overlooked the firms’ actions to change the strategies within the firms to overcome these barriers and to implement open innovation practices within firms. This paper focuses on the changes in strategies of innovation of the 47 high-tech firms to overcome these barriers.
The most important barrier for open innovation is the concern about the secrecy of technology know-how as well as business policy. Both
Kaiser (
2002) and
Arvanitis (
2012) have argued that the extent of cooperation is associated with strategies to internalize knowledge that can leak out to competitors. Yet, companies decide to cooperate if they find it beneficial by upgrading capabilities, foreseeing opportunities to shape the competitive environment, learning to use new technologies, gaining understanding of the complexity of the solution and gaining access to new resources (
Caloghirou et al. 2003). While
Kaiser (
2002) and
Arvanitis (
2012) focused on the Industrial Organization’s point of view, which seeks to increase company value, as seen from the Management literature. Nonetheless, barriers need to be overcome for the successful implementation of open innovation. One of the best ways to overcome these barriers is through increasing absorptive capacity of the company. The importance of ACAP is well accepted and practised across the fields of strategic management, technology management, international business and organizational economics.
Cohen and Levinthal (
1989)’s definition of ACAP as the firm’s ability to value, assimilate and apply new knowledge is regarded as the widely accepted one.
Zahra and George (
2002) have drawn a seminal distinction between the firm’s potential absorptive capacity and its realized absorptive capacity. Potential capacity comprises knowledge acquisition and assimilation capabilities, whereas the realized capacity centres on knowledge transformation and exploitation.
Franco et al. (
2014) have analysed the antecedents of the firm’s potential absorptive capacity and its impact on the firm’s innovation. They have re-examined the role of innovation cooperation in triggering the firm’s capacity to scan and assimilate external knowledge, putting a novel focus on the manifold proximity between the firm and its partners. Similarly, (
Cohen and Levinthal 1989,
1990;
Zahra and George 2002;
Franco et al. 2014) also proposed mechanisms that enable companies to exploit externally acquired knowledge. Cooperation strategy largely depends on the firm’s ability to manage the trade-off between knowledge generation and gaining knowledge from partners and also depends on the absorptive capacity of the cooperating companies once the type of partner and innovation is agreed on (
De Faria et al. 2010).
The knowledge flow can be made effective through the introduction of Open Innovation Sessions (OIS). Putting OIS into practice is the most important aspect of the planning itself (
Matulova et al. 2015a,
2015b). These sessions can also have a considerable impact on the strategic management of the companies involved in open innovation. Strategic management involves internal and external communication practices as well as monitoring to ensure that the company can achieve its goals as outlined in its strategic management plan and open innovation is complementary to the toolset for strategic planning. Strategic management helps to increase the efficiency of institutions and plays an effective role in their success (
Amoli and Aghashahi 2016). William Darden of Hershey National Track Company admitted the success of the company was a result of proper strategic management. Alfred Thomas Chandler, a professor at Harvard University, conducted a survey of large American corporations and explained their senior executive managers’ strategic decision-making processes. He also demonstrated how strategic decisions and planning could lead to success in a competitive environment. As explained in (
Amoli and Aghashahi 2016), the use of strategic management increases the efficiency of car companies. For example, Bahman Khodro Company increased the number of cars produced by up to 6000 units in 2013 and the customer satisfaction level also increased to 73%. Dynamic, forward-looking and holistic discipline and strategic management are considered the way to overcome organizational issues (
Amoli and Aghashahi 2016). Blending the inflow of external information with the internal capabilities can help to boost the organization’s performance. OIS facilitates the exchange of information from stakeholders, rivals, partners, experts and technology owners into the organization and can help the management to formulate a strategic plan to increase efficiency and productivity. This in turn will lead the organization to overcome the barriers to open innovation.
Although the impact of open innovation and strategic management on firm performance has been discussed by many researchers, none has focused on the effect of the Open Innovation Session as a tool for the strategic management of high-tech firms. There are clear incentives in cooperating with potential partners for gains in terms of learning and knowledge spillovers, rather than searching for opportunities to minimize a loss or cope with a problem. This paper also considers how these open innovation sessions can be a way of overcoming the barriers to open innovation. The literature on the barriers to innovation has missed the opportunity to investigate whether and how firms can change their strategy in response to their perception of obstacles. While the literature on barriers has focused on the direct effect of these barriers on firms’ innovation engagement and performance, they have not explored the indirect effect that barriers might induce on performance through a change in the firm’s strategy. This paper focuses on the contribution of OIS, implemented by regional government, in formulating companies’ strategic management and to overcome barriers to innovation for high-tech companies in the South Moravian region of the Czech Republic.
2. Methodology
The Regional Innovation Strategy of the Moravian region in the Czech Republic included the design and implementation of a set of measures and tools called the ‘Open Innovation Session’ to foster innovations. After 7 years of implementing the OIS by the government, it is a suitable time to analyse the impact of these sessions and of governmental assistance in the regional economies through the changes in strategic management of the firms. The methodology adopted for this paper includes monitoring and analysing the activities of this programme over seven years, followed by a quantitative study using both primary and secondary data. This paper applied a combination of quantitative and qualitative research and the combination of these two methods, joint research plans.
2.1. Data Collection
The primary data for the research were gathered through questionnaires. These questionnaires were distributed in paper form to the individuals who are directly related to innovation strategy planning. The respondents for this study were the general managers of companies that had at least some experience of an innovation process. Fifty companies received the questionnaire and were personally interviewed to the survey and the collected data were sorted, tabulated, classified and analysed. This initial classification found that only 47 questionnaires were complete and so were subsequently used in the analysis.
2.2. Design of Concept
This study examines the impact of Open Innovation Sessions (OIS) on the strategic management process of high-tech companies in the South Moravian region of the Czech Republic. The design concept—called the Open Innovation Session (OIS)—was basically a tailor-made one-day meeting with potential high-technology partners focusing on the specific demands of both Czech SMEs and international corporations and large companies (Coca-Cola, Konica Minolta, GE Electronic, Meopta and many others). The aim of the OIS meeting was to effectively and quickly reach solutions to challenges and/or technological problems defined by the client corporation. One of the aims of the session was to connect the company with as well potential suppliers of solutions as suitable business partners. Companies were able to identify a partner from a long list of potential suppliers of solutions, make contact with them and organize the logistics of a meeting, including the location. Once the technological areas are matched, the firms identify the specific technological problems during the session and then discuss the possibility of cooperating to resolve them.
The primary objective of the OIS is to create a platform where the firms are able to facilitate knowledge transfer. The typical users of OIS were mostly hi-tech companies. Firstly, the potential partners are selected from the list of potential companies/firms. The SMEs are, then, connected with the innovation centres of the external partners. At a later date, a joint meeting is organized where experts from the selected research organizations or companies present their technological solutions. At the OIS, the participants from each potential party, in turn, present their respective solution or technology, followed by a discussion. This allows the SME to compare the quality and acceptability of different parties and their technical solutions and their offerings, which allows them to plan for their future cooperation. Thus, the OIS not only leads to partnerships but opens up opportunities for creative problem-solving. The objectives of this study are:
O 1: To find industries that use the Open Innovation Session model as a tool of strategic management in the Czech Republic.
O 2: To identify the major barriers to the innovation process among the companies in the South Moravian region of the Czech Republic.
O 3: To find the factors that largely affect the implementation of innovation strategies within these companies.
Furthermore, based on the research objectives, we have developed the following research questions:
RQ 1: What are the industries that use the open innovation session model as a tool of strategic management in the Czech Republic?
RQ 2: What are the major barriers to the innovation process among the companies in the South Moravian region of the Czech Republic?
RQ 3: What are the factor(s) that largely affect the implementation of the innovation strategies within these companies?
2.3. Data Calculation
The prediction function from the SPSS Statistical Software provides advanced statistical analysis that can be used to answer the research questions. The SPSS Expert Modeler method is also employed for the analysis.
4. Discussion
The analysis of innovation cooperation mechanisms is based on different theoretical perspectives. The literature described that companies decide to cooperate if they see opportunities to create a competitive environment, gain access to new resources, improve their capabilities and learn to use new technologies (
Caloghirou et al. 2003). The decision to cooperate is based on how the company ‘manages the trade-off between generating and accepting knowledge to and from partners’ (
De Faria et al. 2010) and depends on the absorption capacities of the cooperating firm, the type of partner and the type of innovation. This paper contributes to the innovation literature by surveying and empirically testing whether experiencing open innovation is supportive to eliminating barriers to innovation and if there is any implementation of innovation connected with the strategy of management.
Figure 3 shows the process of Open Innovation Session.
It is found that participation in the Open innovation session led to a shift in the perception of the objectives, needs and conditions of the business; companies became more like partners or an initiator of open innovation. The literature on strategies in conjunction with current trends and changes, such as the concept of Industry 4.0, suggest that incentives to cooperate are linked to knowledge management strategies and competition with competitors (
Arvanitis 2012). Studies on the barriers to innovation mostly look at the characteristics affecting the perception of financial and non-financial obstacles to innovation (
D’Este et al. 2012,
2013,
2014;
Hölzl and Janger 2014,
2013;
Pellegrino and Savona 2017); the deterrent effect of obstacles on companies’ strategy to engage and invest in innovation activity and the propensity to innovate (
Mohnen and Rosa 2002;
Galia and Legros 2004;
Canepa and Stoneman 2008;
Savignac 2008;
Iammarino et al. 2009;
Mancusi and Vezzulli 2010;
Tiwari et al. 2008;
Baldwin and Lin 2002); and the direct and indirect impact of barriers on firms’ productivity and performance more generally (
Coad et al. 2016;
Hall et al. 2013). We have found that the major innovation barriers for implementing Industry 4.0 is
a lack of highly motivated people with the necessary technical and business experience. Unlike the hypothesis presented by (
D’Este et al. 2012,
2014;
Hölzl and Janger 2013,
2014;
Pellegrino and Savona 2017), where barriers to innovation are mainly seen affecting the perception of the financial aspect. Secondly, the
educational system is inadequately responsive to long-term societal and technological changes and thereby the new needs of companies. The
market competencies of most companies are less developed, such as technical competence.
A very interesting trend in business strategy was indicated; this trend can be referred to as stabilization strategy. This strategy is followed by many Czech companies generating changes that require stabilization. In the Czech Republic, there was a significant number of companies established after the revolution in 1989; the founders of these companies are currently mostly at retirement age and have to solve the problem of the handover of the company. Given that there is no significant experience in corporate and business transfers in the Czech Republic, this process requires considerable knowledge and a stabilization strategy. We can say that it is a phenomenon of post-communist countries that do not have a long-established tradition of private family businesses. It was very interesting to follow the aspect of the aspiration for innovation leadership. This seems to be a very important factor. This paper has found that the connection between aspiration for innovation leadership and expenditure for research and development is high. This result follows the perspectives that leadership tends to emphasize different activities that are essential to different perspectives on innovation. In general, a distinction is made between rational or transactional leadership perspectives. On the one hand, there is creating stability and transformational leadership perspectives and steering through change processes. Transactional leadership perspectives tend to stress the exchange between leaders and followers and the self-interest connected to these relationships but also monitoring and planning processes that have to be defined (
Van Wart 2012).