Causes of failure of open innovation practices in small- and medium-sized enterprises

Almeida, Fernando Article Causes of failure of open innovation practices in smalland medium-sized enterprises Administrative Sciences Provided in Cooperation with: MDPI – Multidisciplinary Digital Publishing Institute, Basel Suggested Citation: Almeida, Fernando (2024) : Causes of failure of open innovation practices in smalland medium-sized enterprises, Administrative Sciences, ISSN 2076-3387, MDPI, Basel, Vol. 14, Iss. 3, pp. 1-17, https://doi.org/10.3390/admsci14030050 This Version is available at: https://hdl.handle.net/10419/320873 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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Administrative Sciences 14: 50. https://doi.org/10.3390/ admsci14030050 Received: 13 February 2024 Revised: 1 March 2024 Accepted: 4 March 2024 Published: 6 March 2024 Copyright: © 2024 by the author. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/). administrative sciences Article Causes of Failure of Open Innovation Practices in Smalland Medium-Sized Enterprises Fernando Almeida Polytechnic Higher Institute of Gaya (ISPGAYA) and INESC TEC, 4200-465 Porto, Portugal; [email protected] Abstract: The adoption of open innovation poses significant challenges that are important to explore. Studies in this field have mainly focused on exploring the causes of the failure of open innovation among large companies. This study addresses this research gap by employing a sample of 297 Portuguese smalland medium-sized enterprises (SMEs) to explore, through a quantitative study, whether the dimensions and causes of failure differ between large organizations and SMEs. A total of seven dimensions of causes of failure are considered, including strategy-related, organizational structure, organizational culture, knowledge and intellectual property management, management skill and action, resources, and interfirm collaboration. The findings reveal significant differences in four of these seven dimensions: the main causes of failure are related to the resources and management processes of open innovation in SMEs, while large companies face more challenges in the organizational structure and culture components. This study offers theoretical insights into the gaps in the literature to better understand the challenges facing open innovation. Furthermore, this study offers practical guidelines for SMEs to identify and mitigate these main obstacles, promoting better innovation management practices. Keywords: open innovation; innovation management; failure; collaboration; SMEs 1. Introduction The ability to innovate is increasingly crucial in today’s rapidly evolving world. Various researchers, such as Ciocanel and Pavelescu (2015), Dempere et al. (2023), and Marto and Puertas (2023), have reported that innovation drives progress, competitiveness, and adaptability across various sectors including technology, business, healthcare, and education. In a constantly changing landscape, companies must innovate to stay ahead of the curve, meet customer demands, and solve emerging challenges. The ability to innovate allows businesses to differentiate themselves from competitors, creating unique value propositions and enhancing brand recognition. Beyond business, innovation plays a vital role in addressing societal issues such as climate change, healthcare disparities, and poverty (Fisher 2022;Guimarães et al. 2023). The open innovation model arose as a response to the limitations of the traditional closed innovation approach, which relied solely on internal R&D activities to generate new ideas and bring products to the market. Recognizing these challenges, Chesbrough (2003) popularized the concept of open innovation in his seminal book Open Innovation: The New Imperative for Creating and Profiting from Technology. In their book, Chesbrough (2003) argues that this closed approach was becoming increasingly unsustainable in an era of accelerating technological change and global competition. Open innovation challenges the traditional boundaries of organizations by advocating for the inflow and outflow of ideas, knowledge, and resources between internal and external stakeholders. It emphasizes collaboration, partnerships, and cocreation with customers, suppliers, universities, and even competitors. By leveraging external sources of innovation, companies can access a broader pool of expertise, accelerate the pace of innovation, and reduce R&D costs (Sáet al. 2023). Adm. Sci. 2024,14, 50. https://doi.org/10.3390/admsci14030050 https://www.mdpi.com/journal/admsci Adm. Sci. 2024,14, 50 2 of 17 The emergence of digital technologies and the internet facilitated the adoption of open innovation practices by providing platforms and tools for collaboration and knowledge sharing. One key aspect of digital technology’s impact on open innovation is its ability to connect individuals and organizations across geographical boundaries (Urbinati et al. 2020). Through online platforms, companies can easily collaborate with external partners, including other businesses, research institutions, and even individual innovators. This interconnectedness fosters a rich ecosystem of knowledge exchange and cocreation, enabling organizations to tap into a diverse pool of expertise and ideas. Moreover, digital technologies have democratized the innovation process by lowering barriers to entry. Crowdsourcing platforms, for instance, allow companies to solicit ideas and solutions from a broad community, tapping into the collective intelligence of the crowd (Cricelli et al. 2022). Similarly, open-source software development has flourished, with developers worldwide collaborating on projects and freely sharing code. Furthermore, digital tools such as big data analytics and artificial intelligence enable organizations to extract insights from vast amounts of data, informing their innovation strategies and decision-making processes. By analyzing market trends, consumer behavior, and emerging technologies, researchers like Alghamdi and Agag (2023) and Capurro et al. (2022) have reported that companies can identify opportunities for innovation and adapt more quickly to changing market dynamics. Open innovation practices have gained significant relevance in smalland mediumsized enterprises (SMEs) due to their potential to enhance competitiveness and foster growth in today’s dynamic business environment (ACE 2012;Vanhaverbeke 2017). SMEs often face resource constraints, making it challenging to innovate internally (Bonanno et al. 2022;Istipliler et al. 2023). Open innovation allows them to tap into external expertise, ideas, and resources, leveraging collaboration with other firms, research institutions, and even customers. Open innovation is a double-edged sword, with a fine line between success and failure, as reported by Greco et al. (2022). Open innovation, while promising, comes with its share of failures, challenges, and risks. Several challenges and risks are identified in studies like Chaudhary et al. (2022) and Dabic et al. (2023), which report issues in managing intellectual property rights, loss of competitive advantage, leakage of sensitive information, and reputational damage in case of unsuccessful partnerships, among others. A systematic review of the literature on the causes of failure of open innovation was performed by Cricelli et al. (2023), who concluded that rigid structures and strict hierarchies prevent collaboration and the achievement of significant benefits in collaborative innovation processes. However, the research on open innovation failures remains relatively sparse, presenting a notable gap in the existing literature. Of particular note in this field are the studies carried out by Costa et al. (2023), who looked at the costs of engagement, and Bertello et al. (2022), who explored the challenges of university–industry–government collaboration. Consequently, while there is a growing body of research on open innovation and its benefits, the focus has often leaned toward successful cases or larger corporations. Understanding the factors contributing to failures in open innovation initiatives within SMEs is crucial for enhancing their innovation processes and overall competitiveness. Furthermore, Bertello et al. (2023) and Madanaguli et al. (2023) have highlighted this field as a relevant research agenda in the open innovation paradigm. This study responds to this challenge by conducting a quantitative analysis considering 297 Portuguese SMEs, identifying and exploring the extent of the shortcomings in the adoption of open innovation by SMEs. The rest of this paper is organized as follows: First, a theoretical background of the topic is given, and the research hypotheses that guided this study are defined. This is followed by a presentation of the characteristics of the sample and the methods used to explore the results. Next, the main findings are presented, and their relevance to understanding the differences between SMEs and large organizations is discussed. Finally, the main conclusions are summarized, the theoretical and practical contributions are addressed, and suggestions for future work are provided. Adm. Sci. 2024,14, 50 3 of 17 2. Theoretical Background Open innovation is a strategic approach that emphasizes the flow of ideas, knowledge, and resources both into and out of an organization. The concept of open innovation challenges the traditional closed model of innovation, which relies solely on internal research and development (R&D) efforts. Instead, it advocates for a more collaborative and inclusive approach to innovation, drawing on external sources such as customers, suppliers, partners, and even competitors (Meireles et al. 2022). In summary, open innovation recognizes that valuable ideas and technologies are not solely confined within the boundaries of a single organization. The increasing complexity and pace of technological advancements have made it challenging for any single organization to maintain a monopoly on innovation. As recognized by Delbono and Lambertini (2022), monopolies of innovation can stifle competition, limit consumer choice, and impede overall progress in various industries. Open innovation, on the other hand, promotes a more inclusive and participatory approach to innovation. One of the primary ways open innovation combats monopolies is by breaking down barriers to entry and democratizing access to resources and expertise. By encouraging collaboration between companies, research institutions, startups, and even individuals, open innovation enables a diverse range of actors to contribute ideas, skills, and resources to the innovation process. This democratization of innovation not only fosters competition but also encourages a wider distribution of the benefits of technological progress (Bogers et al. 2018). Moreover, open innovation facilitates the exchange of knowledge and ideas across organizational boundaries. By sharing insights, best practices, and even intellectual property, participants in open innovation ecosystems can collectively overcome challenges and accelerate the pace of innovation. This collaborative approach not only reduces duplication of effort but also enables participants to leverage each other’s strengths and capabilities (Pedersen et al. 2022). The rise of digital technologies and the internet has facilitated greater connectivity and collaboration among individuals and organizations worldwide. Online platforms and tools enable organizations to connect with external partners, including customers, suppliers, and even competitors, to cocreate solutions. Platforms like crowdsourcing websites, innovation marketplaces, and open-source communities provide avenues for diverse stakeholders to contribute ideas, expertise, and resources to innovation processes (Cano et al. 2022;Vignieri 2021). Schlagwein et al. (2017) described the digital technologies that support open innovation through open standards and application programming interfaces (APIs), allowing interoperability and integration between different systems and platforms. By engaging a broad range of industry players, academia, government agencies, and user communities, open innovation initiatives ensure that standards reflect the needs and perspectives of all relevant parties. This inclusivity helps to build consensus around standards, increasing their legitimacy and adoption across industries (Pilena et al. 2021). Researchers such as Osorno-Hinojosa et al. (2022) and Portuguez-Castro (2023) have indicated that open innovation facilitates cocreation by breaking down traditional barriers between organizations, allowing for the pooling of diverse perspectives and knowledge. It is also recognized that open innovation facilitates cocreation by expanding the innovation ecosystem. By involving a broader range of stakeholders, including customers, suppliers, academia, and even competitors, organizations can access a rich diversity of ideas and insights. This inclusivity fosters creativity and generates novel solutions that may not have emerged within the confines of a single organization. Moreover, open innovation encourages transparent communication and knowledge sharing. By openly sharing information and resources, organizations can build trust and collaboration among participants. This exchange of ideas stimulates iterative feedback loops, enabling continuous improvement and the refinement of solutions through collective effort (Adamides et al. 2023). Additionally, open innovation promotes agility and adaptability. By tapping into external networks, organizations can quickly identify emerging trends, market demands, and technological advancements. This agility allows for rapid iteration and adjustment, ensuring that cocre- Adm. Sci. 2024,14, 50 4 of 17 ated solutions remain relevant and competitive in a dynamic environment (Almeida 2021; Andriyani et al. 2024). Open innovation also promotes the exchange of information about research, development, and best practices. By leveraging external expertise, organizations gain access to new perspectives and insights, leading to more informed decision-making processes. This exchange of knowledge reduces the likelihood of duplicating efforts and encourages the dissemination of valuable information across industries (Weissenberger-Eibl and Hampel 2021). Chiu and Lin (2022) added that open innovation enhances the transparency of product development and supply chains. By involving stakeholders at various stages of the innovation lifecycle, organizations can address potential issues early on and respond to changing market demands more effectively. This collaborative approach also enables greater traceability and accountability, as participants have insight into the origins and processes involved in creating products and services. For SMEs, open innovation offers several advantages. Firstly, it allows them to access a broader pool of expertise and resources that they may not possess internally. SMEs often have limited R&D budgets and human resources, making it challenging to compete with larger firms in terms of innovation. By tapping into external networks, SMEs can gain access to specialized skills, technologies, and funding opportunities that can accelerate their innovation process (Annamalah et al. 2022). It was also advocated by Farjam et al. (2023) that open innovation enables SMEs to mitigate the risks associated with innovation. Collaborating with external partners allows them to share the financial burden of R&D investments and reduces the likelihood of failure. Additionally, by involving customers and other stakeholders in the innovation process, SMEs can ensure that their products or services meet market needs and are more likely to be adopted. Recent studies like Bekata and Kero (2024) and Ta’Amnha et al. (2023) have suggested that open innovation cultivates an entrepreneurial mindset within SMEs by promoting collaboration and networking with external partners such as startups, research institutions, and other businesses. Through these partnerships, SMEs can tap into new markets, technologies, and business models that they might not have explored otherwise. This exposure to external ecosystems nurtures an entrepreneurial spirit within the organization, fostering a culture of risk taking, experimentation, and agility. Moreover, open innovation encourages SMEs to be more flexible and adaptive to changes in the business environment. By continuously scanning the external landscape for emerging trends and opportunities, SMEs can stay ahead of the curve and seize new growth avenues. This proactive approach to innovation instills a sense of empowerment and ownership among employees, inspiring them to contribute ideas and take initiative in driving the company forward. Employees can actively participate in idea-generation sessions, brainstorming meetings, and innovation workshops to share their insights and contribute to the development of new products, services, or processes (Gama et al. 2019). Encouraging a mindset of experimentation and risk taking enables employees to explore unconventional solutions and challenge the status quo. 3. Hypothesis Development As a theoretical lens, this study followed the work carried out by Cricelli et al. (2023), who provided a comprehensive framework to identify the causes of failure of open innovation. Seven main dimensions of open innovation failures were identified, as reported in Table 1. The causes reported in each dimension and the frequency of their occurrence were identified, which corresponded to the number of themes identified in the systematic review reported by Cricelli et al. (2023). The causes of failure in open innovation were not all equally prominent. For instance, knowledge and IP management was the most frequent dimension (n= 111), while strategy-related issues dimension was only reported in 46 studies. Martinez-Conesa et al. (2017) also indicated that SMEs often lack the resources and expertise to effectively manage the flow of knowledge both within and outside their organization, which can lead to difficulties in identifying valuable external knowledge sources and integrating them into their innovation processes. In this sense, it was important Adm. Sci. 2024,14, 50 5 of 17 to explore a first research hypothesis that aimed to determine whether the relevance of these dimensions is also the same in the SME segment. Accordingly, the first hypothesis was established: H1. The dimensions of the causes of failure in open innovation are different for SMEs. Table 1. Causes of open innovation failures (adapted from Cricelli et al. 2023). Dimension Frequency No. of Causes Cause Strategy-related 56 4 Misalignment between partners’ goals Prevalence of closed innovation model Lack of dynamic capabilities Lack of an adequate business model Organizational structure 74 4 Inadequate coordination and communication mechanisms Inadequate reward and control systems Misalignment between partners’ organizational structure Rigid organizational structure/excessive bureaucracy Organizational culture 70 3 Not invented here/not sold here syndromes Misalignment between partners’ organizational cultures Individual level resistances Knowledge and IP management 111 3 Loss of know-how/competitive advantage Inadequate appropriability systems Lack of absorptive/desorptive capacity Management’s skills and actions 76 3 Lack of experience in OI management Incorrect cost–benefit assessment Ineffective scan of environment Resources 88 4 Inadequate technology/ICT Inadequate IPs and asset Management Inadequate HR management Lack of economic/financial resources Interfirm collaboration 96 3 Opportunistic behavior/free Riding High transaction costs Lack of trust Furthermore, it is important to deepen our knowledge of each dimension and analyze the relevance of the specific causes that make up these dimensions for SMEs. Exploring these factors is relevant because an SME possesses several distinctions from larger corporations. SMEs and large companies differ significantly in their approach to strategy due to their size, resources, and organizational structure. SMEs often exhibit flexibility and agility in their strategy formulation and execution, leveraging their ability to adapt quickly to market changes (Arsawan et al. 2022;Puriwat and Tripopsakul 2021). Furthermore, organizational agility and open innovation are symbiotic forces driving competitiveness in today’s dynamic business landscape. Organizational agility fosters adaptability, allowing firms to swiftly respond to market shifts, technological advancements, and customer needs. This flexibility enables firms to embrace open innovation practices, collaborating with external partners, such as startups, academia, or customers, to co-create value (Zhang et al. 2023). Accordingly, they tend to focus on niche markets or specialized products/services, aiming for differentiation to compete effectively. H2. The strategy-related dimension is different for SMEs. Organizational structure and culture vary significantly between SMEs and large companies. SMEs typically have a flatter organizational structure, with fewer hierarchical levels and a more informal communication flow. As pointed out by Kindström et al. (2022), decision making in SMEs tends to be decentralized, allowing for quick responses to market changes and employee empowerment. Hassi et al. (2022) found that empowering Adm. Sci. 2024,14, 50 6 of 17 employees involves granting them the autonomy and authority to make choices relevant to their roles. In contrast, large companies often have complex hierarchical structures with multiple layers of management, leading to slower decision-making processes and greater bureaucracy. H3. The organizational structure dimension is different for SMEs. H4. The organizational culture dimension is different for SMEs. Knowledge management and IP processes are also another factor to explore. SMEs often rely heavily on tacit knowledge, which resides in the minds of employees and is informal in nature. Cerchione et al. (2015) stated that knowledge sharing in SMEs tends to be organic, happening through interpersonal communication and experiential learning. However, formalized knowledge management systems may be lacking due to resource constraints. In contrast, large companies typically have structured knowledge management systems, including databases, intranets, and collaboration tools to capture, store, and disseminate knowledge across the organization. SMEs often operate with leaner teams, where employees need to perform several tasks and possess a diverse set of skills to fulfill various roles. Cross-functional training and on-the-job learning are common in SMEs, fostering a culture of versatility and adaptability (Efstathiades et al. 2016). However, SMEs may struggle with formalized skill development programs due to limited resources, as reported by Deschênes (2023) and Panagiotakopoulos (2011). H5. The knowledge and IP management dimension is different for SMEs. H6. The management’s skills and actions dimension is different for SMEs. H7. The resources dimension is different for SMEs. Finally, SMEs often lack the resources and capabilities to compete effectively on their own in increasingly complex and dynamic markets. Collaborating with other firms allows them to pool resources, share expertise, and access new markets or technologies that may be beyond their individual reach. Furthermore, collaboration enables SMEs to mitigate the risks associated with market uncertainties, economic fluctuations, and rapid technological advancements by diversifying their networks and spreading the burden of innovation and investment (Mthiyane et al. 2022). Additionally, Audretsch et al. (2023) and Castellani et al. (2023) have revealed that partnering with other firms can facilitate knowledge exchange, learning opportunities, and synergistic innovation, fostering a culture of continuous improvement and competitiveness. H8. The interfirm collaboration dimension is more relevant for SMEs. 4. Materials and Methods This study adopted a quantitative methodology to quantify and explored the relative relevance of the causes of failure of open innovation among SMEs. Quantitative methods provide a structured framework for data collection and analysis. Furthermore, this approach contributes to identifying patterns and correlations among different variables. Quantitative approaches also facilitate the identification of causal relationships, helping to pinpoint specific factors that significantly impact the success or failure of open innovation initiatives. This can guide organizations in focusing their efforts on addressing critical issues and implementing targeted interventions to improve future outcomes. This study also aimed to explore the prevalence of these causes among SMEs in contrast to the findings identified by Cricelli et al. (2023), in which the causes for identifying failures in open innovation resulted from secondary sources mainly made up of large organizations. Adm. Sci. 2024,14, 50 7 of 17 As such, this study applied hypothesis testing for the difference between two means, as indicated in expression (1), t=X1−X2 qS12 n1+S22 n2 (1) where X1 and X2 are the means of the two samples, S1 and S2 are the standard deviations, and n1 and n2 are the sample sizes. It is a statistical method used to determine whether there is a significant difference between the means of two populations or groups. Jean (2017) stated that hypothesis testing for the difference of two means provides a systematic and objective approach for making inferences about population parameters based on sample data, helping researchers draw conclusions about the effectiveness of interventions or the presence of differences between groups. Data were explored and analyzed using the IBM SPSS software v.27. Data were collected from SMEs registered in Portugal that implemented open innovation practices with activity reported for 2021. Open innovation could have been practiced at both the level of the entire businesses and as individual projects within those businesses. In an open innovation business, the entire organization adopts principles and practices of open innovation across all departments, functions, and activities. This means that the company actively seeks and incorporates external ideas, technologies, and partnerships into its overall strategy and operations. Open innovation projects, on the other hand, refer to specific initiatives or endeavors within a company where open innovation principles are applied. These projects may involve collaboration with external partners, sharing of knowledge and resources, and leveraging external expertise to achieve specific goals or develop particular products/services. An online survey was created and disseminated between October and December 2022. Two response reminders were sent out at the end of November and at the end of the second week of December. A total of 366 responses were received, but only 297 responses were considered valid after eliminating null and duplicate responses from the same company. Table 2presents the territorial distribution of the sample in Portugal adopting the NUTS II framework. Information about the absolute frequency (AF), relative frequency (RF), cumulative absolute frequency (CAF), and cumulative relative frequency (CRF) is given. NUTS is a hierarchical classification system developed by the European Union for dividing the territory of its member states and other countries into regions. It provides a standardized framework for collecting and reporting statistical data across different administrative levels, facilitating comparability and harmonization of statistical information for various purposes such as economic analysis, policy planning, and regional development. NUTS divides territories into three hierarchical levels: NUTS 1 regions (major socioeconomic regions), NUTS 2 regions (basic regions for the application of regional policies), and NUTS 3 regions (smaller administrative units). The InformaDB database was used to extract information regarding the location and activity of each company. InformaDB is a comprehensive database designed to provide detailed information on SMEs. It serves as a repository of data encompassing various aspects of SMEs, including their financial performance, market dynamics, operational metrics, and industry-specific insights. For studies concerning SMEs, InformaDB holds significant importance due to several reasons like its relevance for economic development, employment generation, and innovation (Curado et al. 2022;Picas et al. 2021). Table 2. Sample characteristics. NUTS II AF RF CAF CRF North 93 0.3131 93 0.3131 Algarve 21 0.0707 114 0.3838 Center 56 0.1886 170 0.5724 Setúbal Peninsula 18 0.0606 188 0.6330 Lisbon Metropolitan Area 61 0.2054 249 0.8384 Alentejo 10 0.0337 259 0.8721 Adm. Sci. 2024,14, 50 8 of 17 Table 2. Cont. NUTS II AF RF CAF CRF West and the Tagus Valley 21 0.0707 280 0.9428 Azores 4 0.0135 284 0.9562 Madeira 13 0.0438 297 1 5. Results and Discussion This study first explored whether were differences in the causes of failure between the data obtained from the systematic review carried out by Cricelli et al. (2023) and the data obtained in this study from the survey of SMEs. It was necessary to standardize the scales to [0–100] to ensure the data from both studies were comparable, and two new metrics were obtained: the relative weight of the dimension in the systematic review (SLR-CF) and the relative weight of that dimension in the SME survey (SME-CF). The findings shown in Figure 1answered H1 and showed that • The resources dimension was the main cause of failure of SMEs, while the systematic review identified the knowledge and IP management dimension as the main cause. • In SMEs, the organizational structure and organizational culture dimensions were less important. They were the two least important causes. • The management skill and actions dimension was more relevant for SMEs, emerging as the second most important cause of failure. • The relative importance of the causes related to strategy, intellectual property management, and interfirm collaboration were identical in both studies. Adm. Sci. 2024, 14, x FOR PEER REVIEW 9 of 18 could implement a more flexible and decentralized organizational structure that encourages cross-functional collaboration and facilitates communication across different departments or teams. This structure allows for greater agility and responsiveness to external opportunities and challenges, enabling SMEs to engage in open innovation initiatives more effectively. Pierre and Fernandez (2018) suggested the creation of dedicated innovation units or teams within their organization to focus specifically on exploring and pursuing open innovation opportunities. These teams can be tasked with scouting for external partners, monitoring industry trends, and managing collaborative projects, thereby streamlining the innovation process, and ensuring that it receives the necessary attention and resources. In terms of organizational culture, SMEs can cultivate a more open and inclusive environment that values creativity, experimentation, and risk taking. This involves fostering a culture of trust and transparency where employees feel empowered to share ideas, challenge the status quo, and collaborate with external partners. It emerged that implementing idea sharing and collaboration in SMEs was often easier than in larger organizations due to several key factors. Firstly, SMEs typically have fewer layers of hierarchy and less bureaucratic red tape, which facilitate faster decision making and communication. This agility allows ideas to be shared more freely and acted upon promptly, without being bogged down by extensive approval processes or departmental silos. Secondly, the smaller size of SMEs fosters a more close-knit and cohesive work environment. Employees often have direct access to management and feel more comfortable voicing their opinions and contributing ideas. This accessibility encourages a culture of openness and innovation, as recognized by Rumanti et al. (2023), where everyone’s input is valued and considered. Figure 1. Comparative analysis of the causes of failure in open innovation. Figure 1. Comparative analysis of the causes of failure in open innovation. Adm. Sci. 2024,14, 50 15 of 17 Annamalah, Sanmugam, Kalisri Logeswaran Aravindan, Murali Raman, and Pradeep Paraman. 2022. SME Engagement with Open Innovation: Commitments and Challenges towards Collaborative Innovation. Journal of Open Innovation: Technology, Market, and Complexity 8: 146. [CrossRef] Arsawan, I. 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