Abstract

Background: Small and medium-sized enterprises (SMEs) are increasingly leveraging Open Innovation (OI) strategies to stay competitive in rapidly evolving markets. This transition from traditional closed innovation models to more open frameworks, integrating external knowledge and partnerships, necessitates specific dynamic capabilities within organizations.

Research Problem: Despite the recognized benefits of OI, there is limited understanding of the knowledge based  dynamic capabilities required for SMEs to effectively implement these practices, particularly in emerging economies where unique challenges exist.

Purpose: This thesis explores the dynamic capabilities crucial for SMEs to successfully adopt Open Innovation strategies, focusing on their ability to integrate and utilize external innovations in conjunction with internal resources. The study aims to identify key factors that enhance SME competitiveness and innovation potential in these settings.

Research Question: The guiding research question for this thesis was: How do knowledge-based dynamic capabilities influence SME’s open innovation efforts?

Method: A qualitative case study of a Turkish SME was conducted, utilizing semi-structured interviews and the Gioia method for data analysis. The study identified essential first-order concepts, second-order themes, and aggregate dimensions related to dynamic capabilities in OI.

Conclusion: The findings highlight that absorptive, desorptive, and connective capacities are critical for SMEs implementing OI. These capabilities enable SMEs to effectively assimilate external knowledge, share innovations externally, and sustain strong collaborative relationships, thereby enhancing their innovation capacity and competitive edge in dynamic markets.