Fostering Innovation: the Case of Sri Lanka

Introduction

The Global Innovation Index serves as a pivotal marker, gauging the innovation prowess of countries, influencing investors as they make pivotal business decisions. Nations perched at the summit of this index typically enjoy high income, while those languishing near the bottom, like Sri Lanka—ranked 91st out of 128 countries in 2017—are often categorized as low-income countries. This ranking suggests that Sri Lanka's innovation practices are not robust, potentially deterring investment and stifling business growth.

Innovation is not a monolithic concept but rather a multifaceted field encompassing several sub-disciplines, such as innovation management, front-end innovation, back-end innovation, closed innovation, and open innovation.

Innovation management involves the strategic planning of what, how, and when to innovate, while back-end innovation focuses on the internal processes that bring identified innovations to fruition within an organization. Closed innovation revolves around utilizing a company's internal resources for innovation, whereas open innovation encourages collaboration with external entities to achieve innovation goals. This collaborative approach, championed by Chesbrough (2006), suggests a purposeful inflow and outflow of knowledge to expedite internal growth—a principle also known as the technology acquisition and exploitation framework (Lichtenthaler, 2008).

Literature Review

While open innovation, with its reliance on external partnerships, has proven beneficial, it is not without challenges (Naqshbadi & Kaur, 2014). These challenges vary across industries, company sizes, and cultural contexts. To harness the full potential of open innovation, companies must develop new practices (Dahlar & Gann, 2010). Traditional innovation, often conducted in-house, aimed to safeguard successful innovations. However, the rapid pace of change in today's business environment has underscored the need for faster innovation, making collaborative efforts more appealing. Yet, collaboration often requires outsiders to work seamlessly with internal teams, necessitating changes in company practices to facilitate effective partnerships. Successful commercialization efforts must align with a company's business model, which may require matching aspects of the business models of collaborating partners (Cherbourg & Rosenbloom, 2002).

A study by Chesbrough and Kevin (2007) highlighted the potential hazard of mismatched objectives between partners. Business objectives vary widely based on circumstances, targets, and goals. In collaborations, differing objectives can hinder outcomes, presenting the challenge of ensuring these discrepancies do not compromise the quality of the partnership. Understanding the root causes of these challenges and the underlying disciplines that can provide solutions is vital. The integration of external knowledge and diverse partners during the innovation process can be beneficial (Faems et al., 2010; Laurse & Salter, 2006). However, conflicts may arise between external partners and internal stakeholders, necessitating strategies to address these conflicts and optimize open innovation outcomes. Team dynamics are influenced by the cultural backgrounds of members, as noted by Tajfel and Turner (1979), emphasizing the importance of understanding social identity in collaborative efforts.

Previous studies have primarily focused on managing open innovation, uncovering various management aspects but often overlooking why open innovation remains unpopular in certain contexts. Research in global settings has explored open innovation practices, business model alignment, and the adoption of new practices. In Sri Lanka, studies on open innovation are scarce, with Jayewardene and Surangi (2010) examining open innovation practices among female business owners in SMEs. Despite the numerous advantages of open innovation, such as early involvement in new technologies, delayed financial commitment, and reduced losses (Vanhaverbeke et al., 2008), its adoption in Sri Lanka remains limited.

Research Problem

The Sri Lankan government established the "Sri Lanka Inventor's Commission" in 1979 to promote inventions. While inventions focus on technological advancements, innovations involve the commercialization of new or existing technologies, processes, or business models. Open innovation, a term rarely used in Sri Lankan businesses, encompasses collaborative approaches like joint innovation and co-development. Despite some universities and institutions engaging in collaborative research, open innovation is not widespread in Sri Lanka, contributing to its lower ranking in the global innovation index.

Globally, companies recognize the benefits of open innovation, such as lower costs and faster results, yet Sri Lankan firms have been slow to adopt these practices. This study aims to uncover the reasons behind this reluctance. Despite the absence of journal articles on open innovation in Sri Lanka, this research will contribute valuable insights by exploring open innovation practices among small and medium-sized companies and addressing the knowledge gap regarding their limited adoption.

Methodology

The study will involve a sample of approximately 50 Sri Lankan companies that utilize services from technology development entities. Interviews with top officials in these companies will gather data on any open innovation projects undertaken and the reasons for not implementing open innovation practices. This research will provide a comprehensive understanding of the barriers to open innovation in Sri Lanka and offer recommendations for overcoming these obstacles.

Conclusion

In conclusion, fostering innovation is crucial for economic growth, and open innovation offers a pathway to achieving this goal. By understanding the challenges and exploring new practices, Sri Lanka can enhance its innovation capabilities and improve its standing in the global innovation landscape. This study aims to provide insights that will benefit Sri Lankan companies, enabling them to address the barriers to open innovation and embrace collaborative efforts for successful innovation outcomes.

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