Knowledge strategy and business model conditions for sustainable growth of SMEs

Abstract

Purpose – The purpose of this study is to figure out the factors for sustainable growth of small- and medium-sized enterprises (SMEs). Design/methodology/approach – In all, 27 SMEs in the area of IT (Information Technology) in Korea were analysed through interview method basically. Findings – It is found that sustainable development of SMEs requires two kinds of open innovation which are knowledge strategy and business model. According to developing process, SMEs change their open innovation strategy in knowledge strategy and business model. The highest growth limit of SMEs depends on open innovation in knowledge strategy and business model in sequence from closed innovation in both, through open innovation in both, to open innovation in knowledge strategy and closed innovation in business model and to closed innovation in knowledge strategy and open innovation in business model. Research limitations/implications – First, the present study was conducted with IT sector SMEs in Korea. It is true that the IT sector is one of the most rapidly changing industrial sectors and is one of representative business types of SMEs in which manufacturing and service industries coexist and diverse sizes of SMEs exist (Malerba, 2002). Second, the present study relies on case study methods. It is true that case study is a method that gives excellent qualitative analysis in firm studies (Yin, 2008). Practical implications – SMEs cannot survive if they do not accept open innovation in knowledge strategy and business model. SMEs that show absolute limitations in resources and manpower should absolutely implement open innovation strategies to secure more diverse resources from markets and external knowledge bases rather than preparing all resources and capabilities by themselves (Van de Vrande et al., 2009; Yun and Mohan, 2012a, 2012b). Social implications – SMEs should bear in mind the two different levels of open innovation, such as knowledge strategies and business models (Chesbrough, 2007; Chesbrough and Appleyard, 2007). Originality/value – SMEs should not confuse between temporally sustainable development and infinite sustainable development. Firms that take closed innovation strategies in both knowledge strategies and business models can also grow for some time. However, because of the deepening of knowledge-based economy, not only the amount of knowledge existing in the world and the speed of knowledge distribution increased but also the customers’ demands and expectations have been observed to increase in the market immediately through social networking sites (SNS), etc. (Yun and Ryu, 2012).

Firm Size and the Business Model for Sustainable Innovation

“…Large companies and SMEs have different perspectives on partners in their supply chains [32]. For SMEs, collaboration and coopetition are fundamental mechanisms in innovation towards sustainability [3, 6,17,33,36,[41][42][43][44][45]. Thanks to the increased decision-making power of the owners, small businesses are dynamic and respond quickly to changing environments.…”

“…However, unlike large companies, they lack the personnel with specific skills to innovate. Cooperation helps to overcome these limitations [3,36], and to integrate external knowledge [5,45,46] in order to increase their capacity for innovation. Similarly, partnering helps SMEs to reduce costs in co-production [42] and to obtain more profits, particularly when they are part of networks, R&D consortia, or innovation clusters together with brokers or technology institutes and universities [39,45].…”

Sustainable Growth in SMEs: A Review from the Malaysian Perspective

“…Few attempts to conceptualize certain specific factors affecting long-term or sustainable growth have also been proposed in various models such as the four factors of learning, culture, relationship and management (Geus, 1997), durability, autonomy and profitability (Bivona, 2000), entrepreneurs' characteristics, innovation, strategic networking, and strategies (Mazzarol & Reboud, 2006), the psychological traits (Ali et al, 2014), capital structure (Rahim & Saad, 2014), and resources, innovative capability, culture, system and strategy (Khan, 2015). Few other studies include relationship between sustainable growth and entrepreneur's profile (Berry & Taggart, 1998), integration of skills with resources (Teixeira & Fortuna, 2004), innovative capability (Ismail, Rose, Uli, & Abdullah, 2012), management team (Kraemer, 2004), management practices (Fuller, Warren, & Argyle, 2008), growth strategy and growth capability (Amouzesh et al, 2011), business quality management (Tarek, 2011), knowledge strategy and business model (Yun, Jung, & Yang, 2015) and the entrepreneur's intention to grow (Berry & Taggart, 1998;. Knowledge on continuous growth or growth over longer period of time is limited (Achtenhagen, Naldi, & Melin, 2010).…”

Business Process Management and Digital Innovations: A Systematic Literature Review

“…Sustainable development through change in business operations depends on open innovation in business processes [11]. In response, to let the BPM discipline better prepare for a digital knowledge economy, Ref.…”