analyzing the role of human resources and organizational practices to foster open innovation

107 Pages·2016·3.04 MB·English

LAPPEENRANTA UNIVERSITY OF TECHNOLOGY
School of Business and Management
Industrial Engineering and Management

Global Management of Innovation and Technology

ANALYZING THE ROLE OF HUMAN RESOURCES AND
ORGANIZATIONAL PRACTICES TO FOSTER OPEN
INNOVATION

MASTER’S THESIS

First supervisor: Prof. Marko Torkkeli

Second supervisor: Justyna Dabrowska

Date: 05.12.2016, Lappeenranta, Finland

Author: Valeriia Matvienko
ABSTRACT

Author: Valeriia Matvienko
Subject: Analysing the role of Human Resources and organizational practices to foster
open innovation
Year: 2016 Place: Lappeenranta
Type: Master’s Thesis. Lappeenranta University of Technology. School of Business and
Management.
Specification: 107 pages, 19 figures, 13 tables and 1 appendix.
First supervisor: Prof. Marko Torkkeli
Second supervisor: Justyna Dabrowska
Key words: Open innovation, Human Resource Management (HRM), HR practices,
organizational practices, large companies.
The objective of this study was to make the first step to cover the gap concerning Human
Resources in open innovation. It responds to the call, gave by the fundamental researchers
and scholars of open innovation paradigm.
This thesis examines the role of Human Resources and organizational practices to foster open
innovation in large organizations. It analyses the current position of Human Resources in
companies with open innovation approach, focuses on challenges of open innovation
implementation and reviews how Human Resources, and organizational practices, can help
to overcome those challenges, as well as it foresees the entire role of Human Resources in
open innovation process.
The theoretical part of the research consists of the literature overview devoted to open
innovation, Human Resource Management and application of Human Resource Management
to open innovation. The qualitative research method has been applied by conducting the in-
depth interviews from open innovation practitioners and the inductive data analysis
comparing the findings with the theoretical statements.
The results show ambiguous view on the role of Human Resources in open innovation: it
finds more support from the theoretical perspective than from the practical implication.
Human Resources does not participate in the process of open innovation currently, though,
some organizations have already recognized its necessity to join this process. However, the
organizations face many challenges to implement open innovation and many of them indicate
where Human Resources can be influential and which organizational practices can help to
overcome those barriers. Overall, the role of Human Resources in open innovation is an
emerging process with a prediction of strong impact in the nearest future. However, in order
to be involved in open innovation, Human Resources role has to be reconsidered and become
more innovative itself.

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AKNOWLEDGMENTS

First of all, I would like to thank Lappeenranta University of Technology (LUT) for providing
the unique chance of international experience, high-quality education and friendly study
atmosphere. I am very proud to be graduated from LUT and have its name in my CV.

Foremost, I am deeply indebted to my supervisors Marko Torkkeli and Justyna Dabrowska.
Special gratitude I wish to express to Justyna Dabrowska. The opportunities you provided to
me have opened new horizons in my life. Your professionalism, patience and attention to details
have been always valuable for me. Thank you very much for involving me in the project, for
your remarkable advice and your willingness for conversation. Without you this Thesis would
be impossible.

Also, I would like to thank my friends and colleagues Elizaveta Drobysheva and Can Erman.

Feeling your support and reliance made our working days effective and full of fun.

Most importantly, I would like to thank my beloved Javier Hernandez for keeping my life in
context, helping me to go through any challenges and inspiring me for new ideas.

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TABLE OF CONTENTS

1. INTRODUCTION ................................................................................................................ 8
1.1. STUDY BACKGROUND AND RESEARCH PROBLEM .................................................................. 8
1.2. RESEARCH GAP ..................................................................................................................... 8
1.3. RESEARCH QUESTIONS AND OBJECTIVES ............................................................................... 8
1.4. ORGANIZATION OF THE STUDY .............................................................................................. 9
2. LITERATURE REVIEW .................................................................................................. 12
2. 1. THE CONCEPT OF OPEN INNOVATION ................................................................................. 12
2.1.1. UNDERSTANDING OF OPEN INNOVATION ......................................................................... 17
2.1.2. Open Innovation Criticism and Challenges ............................................................ 18
2.1.3. Implementation of Open Innovation in Industries .................................................. 20
2.2. HUMAN RESOURCES AND ORGANIZATIONAL PRACTICES .................................................... 23
2.2.1. Human Resources Function .................................................................................... 23
2.2.2. ORGANIZATIONAL PRACTICES ......................................................................................... 27
2.2.3. Human Resource Management practices ............................................................... 29
2.3. THE ROLE OF HUMAN RESOURCES IN OPEN INNOVATION PROCESS ..................................... 32
2.3.1. Organizational practices and capabilities required for Open Innovation ............. 37
2.3.2. Challenges to foster Open Innovation from Human Resource Management
perspective ........................................................................................................................ 39
2.3.3. Skills and competences required for Open Innovation ........................................... 45
3. METHODOLOGY ............................................................................................................. 50
3.1. RESEARCH DESIGN .............................................................................................................. 50
3.2. DATA COLLECTION AND THE INTERVIEWS ........................................................................... 51
4. RESULTS AND FINDINGS .............................................................................................. 53
4.1. THE CONCEPT OF OPEN INNOVATION .................................................................................. 53
4.2. MANAGING OPEN INNOVATION ........................................................................................... 56
4.3. IMPLEMENTATION OF OPEN INNOVATION ........................................................................... 59
4.4. HUMAN RESOURCE MANAGEMENT IN OPEN INNOVATION PROCESS ................................... 64
4.5. OPEN INNOVATION AS A JOB ROLE ...................................................................................... 69
5. DISCUSSION ...................................................................................................................... 74
5.1. THE CONCEPT OF OPEN INNOVATION ................................................................................. 74
5.2. MANAGING OPEN INNOVATION FROM HUMAN RESOURCES PERSPECTIVE .......................... 77
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5.3. CHALLENGES AND PRACTICES TO FOSTER OPEN INNOVATION IMPLEMENTATION ............... 78
5.4. OPEN INNOVATION AS A JOB ROLE ...................................................................................... 82
5.5. SUMMARY AND FUTURE PREDICTIONS ................................................................................ 84
6. CONCLUSION ............................................................................................................... 91
6.1. MANAGERIAL IMPLICATIONS .............................................................................................. 92
6.2. LIMITATIONS AND FURTHER RESEARCH .............................................................................. 93
REFERENCES ........................................................................................................................ 94
APPENDIX I ......................................................................................................................... 106

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LIST OF ABBREVIATIONS

OI Open innovation
HR Human Resources
HRM Human Resource Management
KPI Key Performance Indicator
NIH Not Invented Here Syndrome
NSH Not Sold Here Syndrome
R&D Research and Development
IP Intellectual property
OIIT Open innovation Implementation Team
NGO Non-Governmental Organization

LIST OF TABLES

Table 1. Research questions and objectives ................................................................................ 9
Table 2. Chronological order of open innovation definitions and structures ........................... 14
Table 3. Classification of open innovation activities (Chesbrough and Bogers, 2014) ............ 17
Table 4. The understanding of open innovation openness/closeness by different researchers . 18
Table 5. Human Recourse function (Bakke, 1958) ................................................................... 24
Table 6. HRM practices and its influence on organizational performance ............................... 31
Table 7. HRM practices for knowledge transfer in MNCs (Minbaeva et al., 2003) ................ 37
Table 8. Open innovation practices Torres et al. (2015) ........................................................... 38
Table 9. Challenges to foster open innovation from HRM perspective ................................... 43
Table 10. The framework of open innovation specialist profile according to the results of
Dabrowska and Podmetina (2016) ............................................................................................ 47
Table 11. General description of the interviewed specialists ................................................... 52
Table 12. Positive and negative aspects of open innovation implementation .......................... 60
Table 13. The framework of the role of Human Resources in open innovation process .......... 86

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LIST OF FIGURES

Figure 1. The research design ................................................................................................... 11
Figure 2. Scopus analytics of open innovation by title, abstract and key words (Scopus, 2016)
................................................................................................................................................... 12
Figure 3. The principles of open innovation (Chesbrough, 2003) ............................................ 13
Figure 4. Three core archetypes of open innovation process (Gassman and Enkel, 2004) ...... 14
Figure 5. Classification of models of open innovation (Chesbrough and Brunswicker, 2013) 16
Figure 7. The OI strategy matrix: general characteristics of the approaches taking by companies
adopting OI (Mortara et al., 2009) ............................................................................................ 21
Figure 8. An open innovation implementation framework (Mortara and Minshall, 2014) ..... 22
Figure 9. Human resource functions/activities (Safi, 2013) ..................................................... 26
Figure 10. The Five Ps model of organizational attributes (Margolis, 2016) ........................... 27
Figure 11. Internal organizational practices (Margolis, 2016) ................................................. 28
Figure 12. External organizational practices (Margolis, 2016) ................................................ 29
Figure 13. Model of the influence of HRM practices on organizational performance ............. 31
Figure 14. The relation between HR and OI effectiveness (InnovationManagement, 2013) ... 33
Figure 15. Motivation methods of overcoming NIH syndrome (Mortara et al., 2009) ............ 42
Figure 16. Future core-work related skills (WEF, 2016) .......................................................... 45
Figure 17. The open innovation skills set (Mortara et al., 2009) .............................................. 50
Figure 18. Source of knowledge about open innovation .......................................................... 54
Figure 19. Companies’ open innovation main activities .......................................................... 55

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1. Introduction

1.1. Study Background and research problem

Formulated by Chesbrough in 2003, open innovation (OI) has become very popular concept
among the researchers and it is gathering momentum among the industries. The reason for that
– is a new way to perceive business relationship and create innovations. As any innovation, it
goes through many stages of its diffusion (Rogers, 1983).

The research of open innovation is growing every year exponentially and adding new
classification and structure to understand this phenomenon. Despite of struggling with OI
understanding, its challenges and criticism, already more than 60% of European companies
consider themselves as adopters of OI approach (Podmetina et al., 2016).

Since companies decide to open up their boundaries, possessing technical or scientific
knowledge is not enough. According to Bredin and Soderlund (2006); Huston and Sakkab
(2006) people should poses specific skills, competences and be properly trained, and here the
Human Resource (HR) function comes as an aid.

1.2. Research gap

However, while many research scholars and practitioners speak about the need of OI adoption
and refers to different aspects of OI process, only a few authors mention HR to be part of this
process. Nevertheless, there is enough literature showing the positive effect of HR practices on
organizational performance, including the methods to make company more “open innovative”,
but there is lack of qualitative research that could reveal whether this process happens on
practice and how. This research gap was also noticed and emphasized by Vanhaverbeke,
Chesbrough and West (2014) as a call and encouragement for the researches to investigate more
about HR and OI implications. This Master’s Thesis aims to shed the light on the stage of HR
involvement in the process of OI and find the practices to foster it.

1.3. Research questions and objectives

The main goal of this research is to determine the role of HR and the possible organizational
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practices to foster open innovation in the organizations. The sub-questions and the objectives
of the research have been developed accordingly (Table 1).

Table 1. Research questions and objectives

Research question Objective

What is the current place of HR in the To identify the involvement of HR in OI
1. process of OI? process and areas of this involvement.

To find the activities that organizations use
What are the barriers of open innovation
2. to implement OI and challenges they
implementation?
struggle during the implementation of OI.

Which HR and organizational practices To elicit HR and organizational practices
3. can help to foster implementation of that can help to overcome mentioned barriers
open innovation in organizations? along the process of OI implementation.

The first question aims to identify the current place of HR in the process of OI implementation,
whether HR function is involved in this process and how, and what are the reasons if it does
not.

The second question is called up to find what actually organizations are doing to implement OI
and how they are doing it, and consequently to find the barriers the organizations meet during
this process.

The third question is presented to understand which HR and organizational practices can help
to overcome mentioned barriers of implementation and as the result to shed the light on the
range of possible roles that HR can perform to foster open innovation.

1.4. Organization of the study

This paper consists of six parts including 1). Introduction; 2). Literature review; 3).
Methodology; 4). Results and findings; 5). Discussion and 6). Conclusion with the list of
references and appendix. The research design is presented on Figure 1.

The Introduction describes the research background, research gap, denotes the research
questions and objectives and draws the research structure. The Literature review observes
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theoretical aspects of open innovation, Human Resources Function and Organizational
Practices and finds the connection between these three notions. open innovation is observed
through its understanding, classification, challenges and criticism. HR function is explained
from the scholar’s view, and organizational practices are differentiated from HR practices. The
role of HR in OI has been found from the organizational and individualistic perspectives
expressed in organizational capabilities and skills and competences required for OI. The
challenges regarding HRM in OI are also have been investigated.

The Methodology was chosen as an exploratory qualitative research, with the primary data
collection from semi-structured and in-depth interviews, and inductive method of analysis. The
data collection process, the content of the interview guide and the general information about
the interviewees are also described there.

The Results and Findings have been grouped according to the primary data in five sub-chapters,
presenting the insights about the Concept of open innovation, Managing open innovation,
Implementation of open innovation, HRM in OI process and OI as a job role.

The discussion part compares findings with the literature context. Following the logic of the
Results and Findings, it reflects the outcomes from the HR point of view, and answers the
research questions. As the result, it builds the framework of HR implications in OI process,
giving the recommendations to managerial implications.

The Conclusion summarizes the research findings, mentions the limitations and provides the
insights for the future research. The list of references and the Interview Guide in Appendix I
are finalizing the Master’s Thesis.

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