SMEs and open innovation: Challenges and costs of engagement

Traditional literature in terms of Open Innovation broadly explored the potential benefits firms might achieve in collaborating with external partners. However, in such a recognized framework, the investigation of the costs firms face remains an underexplored field. Understanding the immediate economic impact of Open Innovation strategies is crucial, especially for SMEs that usually suffer from a structural lack of financial resources. To fill this gap, the present study explores the costs sustained by SMEs in the short run while implementing Open Innovation's strategies. Moreover, in line with the new challenges introduced by new technologies, the study explores how Open Innovation costs vary for digital and non-digital SMEs. In doing so, the study relies on a sample of 377 digital and non-digital European SMEs. In general terms, results show that Open Innovation represents a short-term cost for both types of SMEs. However, in investigating the different Open Innovation challenges addressed by SMEs, findings reveal that especially digital SMEs may limit costs by reducing their external activities and keeping their activity focused on the core business. These findings have implications for both SMEs and scholars, which are expected to lead to further investigations.