eThesis - School of Business electronic theses

Trend in product development and R&D activities has been an increasing external orientation to leverage external sources of knowledge and other inputs for innovation, which has been conceptualized by the open innovation paradigm. Nevertheless that SMEs are an important group of companies, contributing substantially to economy, employment and innovation, their innovation processes are not extensively researched. The aim of this thesis is to find out how SMEs can utilize external sources of inputs in their innovation processes, concentrating specifically on how end-users can contribute to the process.

The literature review combines insights from open innovation, SME innovation, customer co-creation and user innovation literatures and introduces the main conceptual discussion around open innovation, under which the contribution of this thesis locates, discusses open innovation in SMEs and focuses on the relationship between companies and end-users in innovation. The empirical section of the research consists of a single case study of a Finnish SME with two embedded units of analysis, co-operations the company's R&D department had with two voluntary associations and their members, who are also end-users. The data of the case is collected primarily through semi-structured interviewing of employees and end-users who participated in the co-operations, augmented with secondary data from web, email correspondence and additional documents received from the actors of the co-operations. The analysis aims at explaining which factors are motivating and enabling the co-operations and what kind of challenges are involved.

The findings of the research indicate that an SME is able to leverage inputs for its R&D activities from end-users with lead-user characteristics through voluntary associations and is motivated by quite similar factors than companies in general involving end-users. The motivation for end-users to co-operate with a company, in this case with an SME, was found to be varied. This specific case also shows that informal human focused approach enables the co-operation with end-users, with various factors supporting that approach, while conflicting interests on the other hand seem to be the main source of challenges. Main implication for managers, at least in B2C SMEs but possibly in other contexts too, is that voluntary associations should be considered in the future as a point of access for specialized knowledge that can be leveraged in R&D activities.