Factors That Motivate or Prevent Adoption of Open Innovation by SMEs in Developing Countries and Policy Suggestions

Today's highly competitive and rapidly changing environment makes innovation more challenging, costly and risky for companies. To overcome these challenges and to decrease the cost and the risk of innovation, companies, including SMEs, have adopted a new approach called Open Innovation, which was proven by academic studies to be useful for SMEs to improve their innovativeness. However, studies about the openness of SMEs or the adoption level of open innovation approach by SMEs give conflicting results. We argue that these conflicting results stem from the different conditions in developing countries and developed countries. Main aim of this paper is to define factors that motivate or prevent the adoption of open innovation approach by SMEs operating in developing countries, and to suggest policy requirements and actions need to be taken to ease the creation of an open innovation ecosystems that support SMEs. Incentive to leverage SME-university and SME-LE collaboration, creating innovation hubs to improve networking ability of SMEs, free IP consulting, conducting external search on behalf of SMEs are some of the actions suggested in this paper.