Open Innovation Strategies Applied by SMEs from Mexican Software Clusters. A Multiple Case Study Analysis

Master's Thesis, 2018

186 Pages, Grade: 82,0


Table of contents


Table of contents

List of exhibits

List of tables

1. Introduction

2. Literature review
2.1 Open innovation activities as an element of entrepreneurship
2.2 The role of clusters, the local buzz and global pipelines in terms of open innovation
2.3 Open innovation activities in the context of Mexican software clusters
2.4 The resulting research gap, the research question and corresponding propositions

3. Methodology
3.1 Key methodological choices
3.1.1 Research philosophy
3.1.2 Research approach
3.1.3 Research strategy
3.1.4 Data collection techniques
3.2 Sampling, data collection and analysis procedures
3.2.1 Sampling strategy
3.2.2 Interviews
3.2.3 Data analysis
3.3 Ethical considerations

4. Presentation of data
4.1 Case A1, Mexico City
4.1.1 Company profile
4.1.2 Internal approach towards innovation
4.1.3 Significance of the relationships between the company and its environment
4.2 Case B1, Monterrey
4.2.1 Company profile
4.2.2 Internal approach towards innovation
4.2.3 Significance of the relationships between the company and its environment
4.3 Case B2, Monterrey
4.3.1 Company profile
4.3.2 Internal approach towards innovation
4.3.3 Significance of the relationships between the company and its environment

5. Analysis and discussion
5.1 Cross-case analysis: observed commonalities across the cases
5.1.1 First thematic area: internal approach towards open innovation
5.1.2 Second thematic area: external dimension - the local buzz and global pipelines
5.2 Cross-case analysis: observed differences between the cases
5.2.1 First thematic area: internal attitude towards innovating
5.2.2 Second thematic area: external dimension - the local buzz and global pipelines
5.3 Discussion
5.3.1 Answer to the research question
5.3.2 Review of the original propositions

6. Conclusions
6.1 Lessons learned
6.2 Limitations of the conducted research
6.3 Recommendations
6.3.1 Managerial and political implications
6.3.2 Suggestions for future research




The centrepiece of this dissertation consists of the answer to the question how SMEs from the Mexican software industry take advantage of both local and external sources for knowledge exchange in order to promote the own innovation activities. The corresponding insights counteract some inconsistencies regarding the mainstream research on open innovation activities, which were spotted during the literature review and specifically refer to the niche existence of SMEs and knowledge-driven clusters from emerging economies of Latin America and a major lack of a holistic perspective on the local situation and context.

In structural terms, it is worth mentioning that the golden thread of this dissertation follows a specific structure, starting with a literature review as the basis for the research question and the propositions. Then, the track of thoughts is continued with the explanation of a justified methodological idea, the documentation of the results, the analysis of the collected data and the discussion of the analysis’ contribution to the current state of knowledge. The lessons learned from this case study and suggestions for future research form the closing element of this document.

For a thorough coverage of this research gap, the author deployed a methodological construct consisting of a multiple case study strategy, mixed with an interpretivist philosophy and a predominantly inductive approach. Additionally, he resorted to a qualitative mono method featuring semi-structured interviews with open questions, realised within a cross-sectional time horizon between the middle of February and the middle of March. The target group comprised the CEOs of three software SMEs from the clusters of Mexico City and Monterrey, who voluntarily participated in said interviews after having agree to the sent e-mail requests.

After the process of data collection, the raw information was coded and clustered according to two main subject areas of investigation. On the one hand, a portion of the data was attributed to the SMEs’ internal practices, routines and capabilities to manage open innovation activities. On the other hand, the second half of information was processed to describe the local and extra-local sourcing strategies fostering the mutual exchange, contextualisation and integration of the received knowledge, ideas, systems or technologies into the own goal-oriented innovation endeavours. In so doing, not only behavioural patterns could be detected across the cases, but also certain divergences from theoretical assumptions from the key literature.

Consequently, the results have shown that all three companies are endowed with a functional infrastructure for the initiation and implementation of innovation projects, which is additionally evidenced by a formal system certifications and a highly educated staff remarkable for the mixture of technical knowledge, soft managerial skills and the proficiency in a foreign language.

Furthermore, it was observed that the local and supra-regional ties, or the local buzz and the global pipelines, are utilised by these firms in a complementary manner to gain access to the key assets. While the former type is rather functional in terms of transdisciplinary alliances due to the intense rivalry among direct competitors, the latter alleviates that deficit either through the SMEs’ own initiative to scan the foreign markets for business partners with the necessary expertise or via comprehensive, international forums and fairs, where governmental, entrepreneurial and academic actors can freely gather.

Despite that, the superior flexibility of SMEs against large enterprises, as insinuated by some scholars, could not be confirmed in the majority of cases, where the financial health and the overall operational functionality were prioritised higher than the absolute commitment to innovation endeavours, thus suggesting a more selective approach towards the sourcing processes.

Although the results underwent a triangulation and the conclusions may sound plausible, they still require an extensive reconfirmation in the given context, what might be attained via a series of additional inductive and qualitative multiple case studies covering more SMEs from several Mexican software clusters. A transition towards more deductive, longitudinal and quantitative studies would be only sensible if the previously mentioned kind of studies led to a basis reflecting the situation of these SMEs unambiguously.

List of exhibits

Exhibit 1: Key factors of the applied research approach according to the research onion model (Saunders et al., 2012) 34

Annotation: The remaining exhibits can be found in the appendix.

List of tables

Table 3: Utilised framework for theory building from case study research (adapted from the general roadmap developed by Eisenhardt (1989)) 38

Table 4: Skeleton of the semi-structured interviews comprising both ethical disclaimers and the asked questions (own elaboration including instructions by Saunders et al. (2012)) 53

Annotation: The remaining tables can be found in the appendix.

1. Introduction

Titled “Open Innovation Strategies Applied by SMEs from Mexican Software Clusters”, this dissertation investigates SMEs from a knowledge-based industrial branch of an emerging economy and the relationship between the practices of their internal innovation management and their outward inter-organisational, transdisciplinary process of sourcing knowledge and ideas for the optimisation of the own absorptive capacity (Cohen & Levinthal, 1990; Dahlander & Gann, 2010).

The exciting nature of this research topic stems from two facts. On the one hand, it is based on a relatively exotic setting, namely Mexico as one of the economically strongest countries of the fragmentarily documented Latin American region. On the other hand, it deepens the general conceptual understanding of open innovation strategies by touching a complex, multi-faceted research gap, as explained below.

In combination with a methodological framework consisting of both a cross-sectional multiple case study and semi-structured interviews with open questions, the author was able to contribute to the current state of literature as follows:

Firstly, as suggested by other studies, the dissertation includes SMEs as the principal object of observation, which have remained underrepresented in open innovation research in comparison with large corporations from advanced countries (Bianchi, Campodall’Orto, Frattini, & Vercesi, 2010; Chesbrough, 2003; Colombo, Piva, & Rossi-Lamastra, 2014; Hossain, 2015; van de Vrande, de Jong, Vanhaverbeke, & de Rochemont, 2009). Thus, the dissertation acknowledges their growing role in the mainstream discussion in this field (Brunswicker & Vanhaverbeke, 2015; Chesbrough, Vanhaverbeke & West, 2006).

Secondly, the dissertation tackles the dilemma that conclusions drawn from the synergistic environments of clusters situated in industrialised economies may hardly be conveyed to emerging economies of the likes of Mexico, whose entrepreneurial landscape is characterised predominantly by SMEs and clusters working under different dynamics (Lederman, Messina, Pienknagura & Rigolini, 2014; Marcotte, 2014; Yang, 2016).

Thirdly, most of the empirical quantitative studies carried out so far rarely pay attention to the different value of external sources of knowledge to the innovating firms (Brunswicker & Vanhaverbeke, 2015). Therefore, this dissertation promotes the specification of the notion of openness not through emphasising the number, but the composition and quality of the linkages between SMEs and their respective collaborators originating from various domains. By analysing three real-life cases, the multiple case study allowed the simultaneous inspection of the truth behind the assumption that SMEs are able to perform better at innovating than their larger contemporaries because of a higher willingness to take risks and a higher flexibility mirrored by shorter chains of command and less bureaucracy (Hossain, 2015; Parida, Westerberg & Frishammar, 2012).

These lacks in the consistency of research spotted during the review of the parent literature have heavily influenced the formulation of the resulting research question:

“How do SMEs from the Mexican software industry take advantage of both local and external sources for knowledge exchange in order to promote own innovation activities?”

In order to prevent additional ambiguity, which could have been caused due to the vagueness of the question and/or a possibly broad range of answers, the means of data collection and analysis were adjusted according to a three-part set of propositions derived from the cross-comparison of literature. Each of them is responsible for the provision of a part of the holistic answer, as explained below.

The internal dimension of the SMEs, i.e. their general features, organisational abilities, innovation management practices and procedural routines, was explored via the first proposition, which says:

“Even though professionally organised and competent in their field of activities, Mexican software SMEs do struggle with the typical resource deficiencies informing this type of company, which potentially constrains their innovation activities.”

The external dimension of these entities, however, was subdivided into two separate propositions. The former one is dedicated to the local external dimension of the knowledge sourcing strategies, which does also revisit the concept of the local buzz within the firms’ home clusters (Bathelt, Malmberg & Maskell, 2004), and is worded as follows:

“Mexican software SMEs engage in extensive and regular exchanges with software companies, their neighbouring peers and other institutions within the local cluster in order to overcome their resource deficiencies and access knowledge relevant to their innovation activities.”

At the same time, the latter proposition addresses the supra-regional, even cross-border dimensions of the contacts between the SMEs in question and their foreign partners based on the notion of the global pipelines (Bathelt et al., 2004):

“Depending on their international orientation, Mexican software SMEs are not only committed to connecting with companies from the home market, but also to establishing global pipelines with partners endowed with auxiliary knowledge and state-of-the-art technologies.”

With this in mind, the definite clarification of the issues raised above is reflected through the structure of this dissertation. The literature review serves as a starting point for this document, whose first section provides a theoretical overview over open innovation activities by referring to the rudiments of innovation and innovative entrepreneurship first, before the focus shifts towards the distinction of the open innovation approach and the benefits and issues that it entails, if implemented at an SME. Afterwards, the role of clusters, the local buzz and global pipelines is explained in terms of said approach, followed by a historical outline of open innovation activities in the context of the Mexican software clusters of Mexico City and Monterrey. All this information leads to the final section, where the resulting research gap, the research question and corresponding propositions are presented explicitly.

The next chapter deals with the methodology as the practical part of this research project. The first section introduces justified key decisions regarding the research philosophy, approach and strategy, along with details on the selected multiple case study strategy, the qualitative approach, the planned number of cases against the real outcome and the data collection techniques. Following this, the chapter continues with the realised sampling, data collection and analysis procedures before being closed with a couple of paragraphs about the ethical considerations.

The subsequent chapter on the obtained results starts with a summary of the effectiveness of the applied data collection techniques. Then, the content proceeds to a neutral presentation of the characteristics of the captured cases A1 from Mexico City as well as of B1 and B2 from Monterrey, consisting of the respective company profile, information about the internal attitude towards open information and the significance of the relationships between the company and its environment.

Complementarily, the penultimate chapter encompasses the entire analysis and discussion of the commonalities and differences between the cases in respect of the previously mentioned subject areas of the internal attitude towards innovating and the external sourcing strategies. Based on these findings, their contribution to the covered theory and parent literature is discussed later on by giving an answer to the research question, which recapitulates the overlaps of the cross-case patterns of the explored companies with the key literature as well as their divergences, and by reviewing the original propositions.

Lastly, the concluding part of this dissertation summarises the quality of the total outcome in the form of learned lessons. That section is also intertwined with another brief discussion concerning the weaknesses and limitations of the conducted research and utilised methods. Afterwards, this chapter comes to its end with a collection of direct suggestions indicating under which aspects future research might be organised in order to close the given research gap even better, apart from enriching the scientific and entrepreneurial domain of open innovation activities as a whole.

2. Literature review

The purpose of this chapter is to present a critically analysed overview over the relevant parent literature and key theories informing the given topic as well as the resulting research question and propositions for the proper exploration of the corresponding gap.

With this in mind, the scope of the literature review below includes the following key themes:

The first sub-section starts with a definition of innovation as such, encompassing additional explanations on its linkage to entrepreneurship, another outline of the numerous forms of how enterprises may innovate openly and a listing of both the benefits and challenges of this approach.

Complementarily, the next sub-section pays attention to the role of clusters in terms of open innovation, including the notions of the local buzz and global pipelines.

Afterwards, both open innovation activities and industrial clusters are contextualised according to the Mexican software clusters, where the history of the investigated software clusters of Mexico City and Monterrey comes into play, along with their original strategies to spur open innovation activities.

Lastly, the aforementioned information leads to a precise depiction of the research gap, which subsequently leads to the core of the applied research design, namely the research question and the correlated propositions.

2.1 Open innovation activities as an element of entrepreneurship

2.1.1 Rudiments of innovation and innovative entrepreneurship

The term innovation became more widely understood as a series of processes involving the adjustment of features of an existing product, service, production sequence, marketing concept or (inter)organisational business practice with the goal of accomplishing a significant improvement compared to its previous condition (Amberg, Bodendorf & Möslein, 2011; Hauschildt & Salomo, 2007).

One of the originators of this term, Joseph Schumpeter, also pointed out that, in contrast to an invention, an innovation rather serves as a commercialised solution to an already existent problem within a specific market niche with known, specific customer needs (Amberg et al., 2011; Mota & Scott, 2014; Schumpeter, 1934).

Simultaneously, he popularised the common understanding of an entrepreneur as an innovator within a creative-destructive system in order to guarantee the competitive survival of his business by discovering and exploit information advantages (Amberg et al., 2011; Guerrero & Molina, 2012; Mota & Scott, 2014; Schumpeter, 1934, 1942, 1961). To be exact, he/she is forced to continuously refresh his/her knowledge about the latest states of the buying and the sales markets, from which the crucial tangible and intangible capital may be retrieved and the real customer issues may be recognised (Amberg et al., 2011; Schumpeter, 1934).

Over the course of the past decades, that popular school of thought was extended with other viewpoints partly questioning Schumpeter’s original philosophy.

On the one hand, the scholars of the Kirznerian perspective argued that the outcome of capitalised market opportunities might be visible as a less radical innovation in reality, what may undermine Schumpeter’s principle of destroying a current economic equilibrium to create a frame-breaking innovation (Kirzner, 1979; Marcotte, 2014; Shane & Venkataraman, 2000).

On the other hand, innovation might also be interpreted as a mode of experimental behaviour resembling processes of invention to conceive especially novel, pioneering products, services or systems (Lumpkin & Dess, 1996).

In the wake of this divergence, the field-related terminology became more diverse and case-specific during the past decade, resulting in the following widely known differentiations:

Firstly, one may distinguish between radical and incremental innovations. While the first type is rather rare and denominates an utter change of the nature of a product, service or system, the latter one is more frequently observed and becomes apparent as an optimisation of existing products, services or organisational processes (Dodgson & Gann, 2010; Mota & Scott, 2014).

The second differentiation draws a line between open and closed innovations, as explained in more detail in the next section (Chesbrough, 2003; von Hippel, 2005).

2.1.2 Distinction of the open innovation approach

In their classical sense, innovation activities used to be considered closed, ergo bound to a self-sufficient in-house setting of one company, where the necessary knowledge and ideas were meant to be generated solely with the help of the expertise and imagination of internal researchers, developers and managers (Amberg et al., 2011).

From the current point of view, however, this approach might be regarded obsolete in comparison with the open innovation, if implemented in its pure form. The main reason for that is the fact that the original innovation strategies needed to be reorganised in correspondence with the new dimension of market turbulences in the 21st century. These circumstances allowed open innovation to emerge as an alternative cognitive framework based on democratised, network-based endeavours between companies and other external partners to promote both mutual inflows and outflows of knowledge speeding up the internal innovation process and the opening of new markets for a wider use of the created innovation (Amberg et al., 2011; Brunswicker & Vanhaverbeke, 2015; Chaston & Scott, 2012; Chesbrough, 2003; von Hippel, 2005).

At this point, the variety of information sources represents an essential pillar of open innovation, which ranges from contributions made by direct agents of a company’s value chain, e.g. the customers and suppliers, or indirect ones including consultants, universities, the government, private laboratories and competitors (Amberg et al., 2011; Chesbrough, 2003; von Hippel, 1986, 1988; Wynarczyk, Piperopoulos & McAdam, 2013). At the same time, the innovating company ought to develop an own absorptive capacity as another success factor, which characterises a firm’s ability to invest in in-house R&D facilities and capabilities in order to efficiently acquire, process and convert the fresh external knowledge into a viable and commercially successful concept (Cohen & Levinthal, 1990; Wynarczyk et al., 2013).

Apart from that, most research stressed different forms of open innovation, as demonstrated through the following subdivision:

A very common differentiation exists between inbound and outbound open innovation (Brunswicker & Vanhaverbeke, 2015). The former type describes the firm as the recipient of external technologies, ideas and knowledge sourced with the help of licensing contracts with other companies, M&As or collaborations with research-oriented institutions, whereas the latter refers to a firm as a possessor of said artefacts willing to exploit them commercially via spin-outs, licensing contracts or joint ventures (Chesbrough & Crowther, 2006; Wynarczyk et al., 2013). The respective transfers of knowledge and technology may be deemed either pecuniary or non-pecuniary, i.e. either they require a financial compensation for these processes or not (Brunswicker & Vanhaverbeke, 2015; Dahlander & Gann, 2010).

2.1.3 Benefits and issues of implementing open innovation activities at SMEs

Since their inception, the popularisation of open innovation strategies has been linked to the advantages achieved by implementing them in reality. Numerous scholars stressed their importance in relation to SMEs as well, especially in the light of their limited access to all the indispensable resources to conceptualise and realise an applicable, sound innovation individually (Birkinshaw, Bouquet & Barsoux, 2011; Brown & Eisenhardt, 1995; Dyer & Singh, 1998; Elmquist, Fredberg & Ollila, 2009; Huizingh, 2011; Laursen & Salter, 2006; Lichtenthaler, 2008).

In the context of knowledge-based SMEs, for example from the high-tech software sector, applied open innovation strategies might entail the following benefits:

- A huge number of external sources attained through a broad search for partners is likely to exert a positive influence on a company’s financial innovation performance, as underlined by the empirical evidence provided by Laursen & Salter (2006).
- Despite their aforementioned restrictions, SMEs in particular might leverage open innovation strategies even better than larger enterprises thanks to their shorter line of command, their greater openness to risk and their higher flexibility to react to fluctuating environmental conditions (Hossain, 2015; Parida et al., 2012).
- If managed appropriately, both the SMEs and their collaborators might set up an inter-organisational and transdisciplinary knowledge base (Lindsay, 2005; Niehaves, 2010; Ojala & Tyrvained, 2009; Palacios, Gil & Garrigos, 2009; Saussois, 2003).
- Consequently, an SME might seize the opportunity to adapt a hybrid approach towards value creation, where products and services originating from the firm itself as well as from several partners might be compiled to a bundled offer (Amberg et al., 2011). Alternatively, it could emphasise the interaction with clients on a voluntary basis for the same purpose of creating additional value through open innovation (Amberg et al., 2011). In the best case, the SME’s modernised products, services, technologies or systems would foster incremental sales and its overall business growth (Freel, 2006; Moensted, 2010; Mohannak, 2007).

In practice, however, most SMEs need to develop an internal basis for such endeavours first, what challenges them in unique ways, specifically in comparison with large corporations:

Firstly, SMEs pertaining to knowledge-intensive industrial branches of the likes of the software industry face the disadvantage of coping with the general complexity of the field under scarcer resources. In other words, they are regularly being confronted with the task to strike a balance between coordinating their general operational functionality and looking out for vital supplementary resources and access to information regarding the latest scientific and economic developments in order to keep up with the ever-evolving industrial standards (Abouzeedan, Klofsten & Hedner, 2013; Hossain, 2015). With this in mind, the SME’s willingness to start an inter-organisational collaboration might depend on the question whether it is self-sustaining enough to deal with the dynamic changes of the costs of technology in the affected industrial sector, its relative competitive position in the market system and the relative position of its products according to the Product Life Cycle (Chaston & Scott, 2012; Chesbrough, 2003; Christensen, Olesen & Kjaer, 2005).

Secondly, smaller and medium-sized enterprises are forced to create their network of co-operators in a different fashion than MNEs for the fact alone that their commitment to the global market is usually smaller and their resources to build relationships all over the world within a short period are limited as well (Colombo, Laursen, Magnusson & Rossi-Lamastra, 2012). Considering that such a firm would rather rely on inbound open innovation strategies, it would need to establish internal organisational practices to facilitate the subsequent absorption of external knowledge and its alignment with the intentions behind the own innovation projects (Brunswicker & Vanhaverbeke, 2015; Cohen & Levinthal, 1990; Huizingh, 2011).

In precise terms, it needs to design an innovation search strategy clarifying the breadth and the depth of detecting and utilising external knowledge channels, i.e. the number of partners and the extent to which their key competencies would be useful (Laursen & Salter, 2006).

Additionally, said SME must also analyse what kind of proximity it is sharing with a prospective collaborator, so that the closer ties would be sensible. The commonalities in that regard might be either resourced-based, for instance including valuable tangible or intangible resources worth sharing between the firm and a university, or relational by belonging to the same or similar market niche as direct or indirect competitors (Boschma, 2005; Bouba-Olga & Grossetti, 2008; Crespin-Mazet, Goglio-Primard & Scheid, 2013; Katila & Ahuja, 2002).

2.2 The role of clusters, the local buzz and global pipelines in terms of open innovation

Industrial clusters represent another important concept, which not only permeates the research design applied for this dissertation, but also accompanies the previously mentioned framework of open innovation.

Referred to as agglomerations of production factors such as labour, facilities and other tangible and intangible capital, clusters allow the formation of a strong linkage between the participating companies and industrial branches by sharing the respective core competencies within the region (Harrison, 1992; Marshall, 1890; Park, Amano & Moon, 2012).

In addition, other third parties, specifically private local associations and public organisations, are also worth highlighting due to their influence on the support of synergistic innovation processes (Crespin-Mazet et al., 2013; Longhi & Rainelli, 2010). Also known as the “tertius iungens” orientation, they might offer help by acting as strategic mediators between two previously disconnected actors willing to gather for joint endeavours as well as by creating and coordinating a start-up friendly environment with an organised funding system and assisting technology programmes (Crespin-Mazet et al., 2013; Dougherty, 2015; Obstfeld, 2005; Pietrobelli & Rabellotti, 2004).

Apart from that, the social embeddedness of the companies constitutes another relevant feature, as the geographical proximity of the partners enables the building of social structures and personal relations for trustworthy co-operations dedicated to open innovation (Boschma, 2005; Crespin-Mazet et al., 2013; Granovetter, 1985; Park et al., 2012). In an optimal scenario, these activities would spur an intense and continuous local buzz based on organised meetings or accidental encounters between peers to update each other frequently on technical news and information and to assist each other at establishing new routines to master common challenges (Bathelt et al., 2004; Brown & Duguid, 1991; Wenger, 1998).

In the context of open innovation, there are two further potential benefits of industrial clustering at a local level:

Firstly, it can solidify the labour market thanks to shared resources and core competencies, which might enable a more flexible division of labour and possibilities to develop in a specialised direction (Basco & Calabrò, 2016; Li & Geng, 2011; Marshall, 1920; Piore & Sabel, 1984).

Secondly, the close trans-disciplinary interconnections between scientific institutions and industrial companies could allow bits of knowledge to spill over and be recombined whilst generating new ideas together, thus enriching a firm’s practices to receive and process knowledge (Basco & Calabrò, 2016; Becattini, 2004; Crespin-Mazet et al., 2013; Delgado, Porter & Stern, 2010; Niu, 2010; Park et al., 2012).

Despite these promising theoretical prospects, further research on the effectiveness of spatial proximity between actors proved that this factor alone is not sufficient to underpin the initiation of local, interactive projects (Crespin-Mazet et al., 2013; Longhi & Rainelli, 2010). At this rate, global pipelines emerge as a sensible, complementary alternative in the face of a weak local buzz in a firm’s home cluster, which might outweigh that disadvantage by expanding the reach of cross-organisational collaboration possibilities. This, by implication, includes cross-border strategic partnerships with representatives of the academia, companies from (un-)related industrial segments, customers and/or suppliers who might provide crucial external knowledge spurring a firm’s in-house implementation of a product, service or system innovation (Bathelt et al., 2004; Harrison, 1992; Owen-Smith & Powell, 2002).

2.3 Open innovation activities in the context of Mexican software clusters

Apart from the theories about the aforementioned concepts, the existent case studies and reports on the investigated software clusters played an important, supplementary role in order to familiarise oneself with the origins and the current state of the explored context, let alone to specify the research gap with regard to open innovation, clusters, the local buzz and global pipelines.

In the past, some scholars assumed in the past that the industrialisation efforts demonstrated by some emerging countries from the Latin American region might culminate by reaching a higher plateau of regulated, technological standards. Indeed, Mexico itself used to be deemed the only pretender to claim the position of a forerunning regional innovator at the end of the 1990s (Alcorta & Peres, 1998).

In fact, evidence for good initial conditions can be found in the development of the national software industry at that time. During the 1990s, it took a positive turn thanks to a more active commitment of experienced MNCs of the likes of Microsoft, IBM and SAP as well as via a policy shift in favour of privatisation, which in turn provided opportunities for the foundation of numerous innovation-oriented microenterprises (Ruiz Durán, 2003).

In this regard, the history of the Mexican software clusters has confirmed this general observation, including Mexico City and Monterrey as main objects of analysis for this dissertation (Pérez, Ozuna & Arriaga, 2011; Ruiz Durán, 2003; Ruiz Durán & Dussel, 2002; see also table 1 in the appendix). In the former case, Mexico City became more remarkable for the setup of a knowledge-based community, where the SMEs specialised themselves in software packaging according to Mexican standards of accounting and legislation. In fact, the foreign software firms were not fully aware of this aspect while starting to penetrate the Mexican market, which made them reliant on the smaller local peers and fostered the first knowledge exchange between these two types of actors (Pérez et al., 2011; Ruiz Durán, 2003; Ruiz Durán & Dussel, 2002).

Simultaneously, the cluster of Monterrey grew through a combination of two incentives. On the one hand, both local and US companies took the initiative to form alliances encouraging near-shore outsourcing, mutual learning and the full usage of lower labour costs in Mexico, as exemplified through the cooperation between General Electric and Softtek, the then-national leader in software development (Pérez et al., 2011; Ruiz Durán, 2003; Ruiz Durán & Dussel, 2002).

On the other, the government of the state of Nuevo León embraced this idea by initiating a software industry development programme as a means of attracting foreign investors and supporting the prospective elevation of the organisational and qualitative standards of the local players according to the Capability Maturity Model (Pérez et al., 2011; Ruiz Durán, 2003; Ruiz Durán & Dussel, 2002).

Moreover, both locations shared the commonality of including renowned inner-city institutions of higher education such as the Monterrey Technological Institute of Advanced Studies and the University of Nuevo León as two key alma maters of most highly-skilled system engineers (Pérez et al., 2011; Ruiz Durán, 2003; Ruiz Durán & Dussel, 2002). The resulting collective actions were meant to foster the creation of novel technologies, the perfection of managerial capabilities to gain and sustain a competitive advantage, and the achievement of economies of scale as well as of an optimised national and international competitive position (Pérez et al., 2011; Ruiz Durán, 2003; Ruiz Durán & Dussel, 2002).

In retrospect, however, most of these opportunities to innovate openly through industrial agglomerations seem to have been missed instead of being leveraged, as more recent analyses from the past two decades on the Mexican economy show. Although studies could not deny that the number of owned, innovating SMEs kept increasing (Lederman et al., 2014; Marcotte, 2014; Yang, 2016; see table 2 in the appendix), this fact does not overshadow certain lasting impediments, for instance:

- The small public investment in R&D and a difficult access to credit for local start-ups,
- The overreliance on the assembly of products commissioned mostly by foreign international companies, which undermines the companies’ intention to boost the own technological absorption for the sake of truly own core competencies, know-how and innovations (Altenburg & Meyer-Stamer, 1999; Dougherty, 2015; Marcotte, 2014; Mortimore, 1998; Rocha, 2015), and
- An inconsistent interaction between the aforementioned non-economic institutions and the entities, as observed in the software industry, where the fieldwork by Isaksen & Holmes (2006), Linton (2000), Meyer (2006) and Pérez et al. (2011) revealed that the asked companies preserved closer ties rather with their own clients and competitors.

2.4 The resulting research gap, the research question and corresponding propositions

2.4.1 The research gap

Based on the material reviewed above, it was possible to deduce a variety of assertions in terms of open innovation activities executed at SMEs hailing from software clusters of an emerging economy.

Consequently, the research gap identified could be characterised as follows:

Firstly, large corporations from advanced countries, e.g. IBM, Philips and Procter & Gamble, have predominantly been used to embody the principal object of observation in the context of open innovation, whereas SMEs in general have remained underrepresented (Bianchi et al., 2010; Chesbrough, 2003; Colombo et al., 2014; Hossain, 2015; van de Vrande et al., 2009).

Secondly, it can be suggested that the lessons learned from studies of open innovation and knowledge-driven clusters in industrialised economies might not necessarily be directly transferable to emerging economies contexts. This includes Mexico, one of the economically strongest countries in the fragmentarily investigated region of Latin America, where SMEs are most prevalent in the entrepreneurial landscape and clusters are subject to different dynamics and degrees of innovativeness due to the aforementioned deficiencies (Lederman et al., 2014; Marcotte, 2014; Yang, 2016).

Thirdly and lastly, it is necessary to explore whether the openly innovating SMEs from Mexican software clusters might be following different strategies in order to counteract these limitations, be they produced from the inside and/or by their surroundings. At this point, it is opportune to examine the firms’ entrepreneurial orientation towards productive open innovation approaches, which, in the ideal case, manifests itself through numerous characteristics, for example:

- An efficient, non-redundant organisational system facilitating a short process of decision-making in the light of fluctuating market conditions (Friestsch, Neuhausier & Rothengatter, 2013; Smallbone, Welter, Nina & Slonimski, 2001; Terziovski, 2010),
- A sound, goal-oriented combination of tangible and intangible resources, i.e. of machinery, human resources, a unique contact network, financial capital and legally safeguarded intellectual property (Galunic & Rodan, 1998; Harris, 2008),
- Investments in own R&D activities, resulting in new knowledge informing the development of novel products or processes (Karlsson & Olsson, 1998), and
- A mixture of linkages between the demand-oriented SME, its end-users and external, possibly research-driven institutions for the sourcing and exchange of skills and capabilities to smoothen the open innovation process (Acosta, Nabi, & Dornberger, 2012; Brunswicker & Vanhaverbeke, 2015; Cohen & Levinthal, 1989; Dahlander & Gann, 2010; Fukugama, 2006; Gans & Stern, 2003; Gassmann, 2006; Rehman, 2016; Wang, Chen, Wang, Lutao, & Vanhaverbeke, 2014).

2.4.2 The research question and propositions

With the theoretical background and the detected gap in mind, the research conducted for the sake of this dissertation finally revolved around the following research question:

“How do SMEs from the Mexican software industry take advantage of both local and external sources for knowledge exchange in order to promote own innovation activities?”

In order to provide a satisfactory answer to this broad question, the superordinate framework for the methodology and analysis of the findings comprised three theory-based propositions paying attention to the internal, the local external and the extra-local external dimensions of the research question, respectively:

- Proposition no. 1: “Even though professionally organised and competent in their field of activities, Mexican software SMEs do struggle with the typical resource deficiencies informing this type of company, which potentially constrains their innovation activities.”
- Proposition no. 2: “Mexican software SMEs engage in extensive and regular exchanges with software companies, their neighbouring peers and other institutions within the local cluster in order to overcome their resource deficiencies and access knowledge relevant to their innovation activities.”
- Proposition no. 3: “Depending on their international orientation, Mexican software SMEs are not only committed to connecting with companies from the home market, but also to establishing global pipelines with partners endowed with auxiliary knowledge and state-of-the-art technologies.”

3. Methodology

The content of this chapter is focused on explanations and justifications of the utilised methodological techniques to cautiously retrieve, organise and contextualise the necessary data in line with the purpose behind this research project.

The following sections comprise three specific aspects defining the framework for the practical implementation of research:

Firstly, the basic methodological choices are introduced, i.e. the research philosophy, approach, strategy and data collection techniques in correspondence with the components of the research onion model by Saunders, Lewis & Thornhill (2012). In this case, the author resorted to a construct of a multiple case study strategy mixed with an interpretivist philosophy and a predominantly inductive approach, along with a qualitative mono method featuring semi-structured interviews with open questions, realised within a cross-sectional time horizon.

Secondly, the description of the research design shifts towards the preparatory phases before and after the data collection. Therefore, the entire sampling process is displayed, which supported the detection of adequate target subjects for the realisation of open, semi-structured interviews. Moreover, the decision in favour of both interviews as such and this particular type is reasoned as well, along with a separate outline of the work steps concerning the data analysis.

Thirdly and lastly, the ethical considerations informing the research design as well as the data collection and analysis close this chapter, whose argument follows the instructions from the university’s research ethics checklist.

3.1 Key methodological choices

Before determining any concrete instruments, the author started drafting the research strategy by examining the actual nature of the planned research with the help of Saunders’ research onion model in order to approach the gap in a smooth and realistic manner afterwards.

As illustrated in exhibit 1 below, the overall research tactic can be characterised as a sum of the following elements: an interpretivist philosophy, a predominantly inductive approach, a multiple case study strategy, a qualitative mono method featuring semi-structured interviews with open questions and a cross-sectional time horizon (Saunders et al., 2012).

Abbildung in dieser Leseprobe nicht enthalten

Exhibit 1 : Key factors of the applied research approach according to the research onion model (Saunders et al., 2012)

3.1.1 Research philosophy

In regard of the analysed phenomenon, the interpretivism became apparent as the most suitable research philosophy for the following reason, namely its acceptance of various individual and subjective perceptions of the reality surrounding the SMEs from software clusters of an emerging economy as the object of investigation (Burrell & Morgan, 1982; Saunders et al., 2012).

In the light of the fact that the author’s most acceptable source of primary data was limited to a small sample of CEOs of the target companies within the given four months, the emphasis of the used qualitative methods was put on the lived experiences of the interviewees, which used to be unknown to the author himself. Consequently, the researcher was aware of being value-bond, i.e. immersed in the subjective dimension of research because of his role as an interviewer willing to capture the diverging experiences and meanings behind the open innovation activities from the perspective of the interlocutors (Bryman & Bell, 2007; Burrell & Morgan, 1982; Saunders et al., 2012).

Moreover, the interpretivism proved to be the most fitting philosophy in practice, as the questions developed for the interviews are formulated in a manner eliciting a descriptive, detailed answer corresponding with the principles mentioned above, for example:

- Question no. 3: “What priority do investments in R&D (…) have at your company ?”,
- Question no. 9: “How intense is the local competition in the sector within the cluster of (…) in your opinion ?”, along with its probing question: “How ready are you and your peers to exchange information and give advice to each other (…)?”, and
- Question no. 10: “How deeply are you involved in co-operations with (…)?”, along with its probing question: “How would you assess these transdisciplinary interactions (…)?” (see also table 4 in subchapter 3.2.2).

3.1.2 Research approach

At a first glance, the propositions might suggest a deductive approach, where these statements and the question catalogue for the conducted interviews are backed by parent literature and contextually relevant case studies. To a certain extent, it is true that these assertions were tested against the primary data and the subjective insights provided on the part of the interviewees.

However, the implemented research approach evidently tends towards an inductive method for the following reasons:

Firstly, the general inferences were induced from particular instances, and not the other way around (Saunders et al., 2012), as three cases represented the source to compare the given data with some of the subsequently included typologies such as the classification of “searchers” by Brunswicker & Vanhaverbeke (2015). Simultaneously, said cases served as a reference to confirm or deny the original value of the propositions, which stems solely from the parent literature, which in turn did not solidly mirror the state of the SMEs from the Mexican software clusters and their specific approach towards open innovation.

Thus, the inductive theory building was vital in order to close the research gap with the help of these cases, whose content was treated as a collection of separate and multi-case patterns replicating, contrasting or extending the emerging theory, as exhibited in form of tables 9 to 12 in the appendix (Eisenhardt, 1989; Eisenhardt & Graebner, 2007; Yin, 1994).

Secondly, it needs to be stressed that the implemented research strategy has never sought to explain casual relationships between variables, as it is typical of quantitative research studies under the usage of larger samples (Saunders et al., 2012). Instead, the focus was supposed to rest on the social context and human actions provided by the primary data shedding light on the insufficiently explored phenomenon via a smaller, yet profound sample.

3.1.3 Research strategy The multiple case study strategy

Following the intention to resort to a guideline facilitating the deduction of new findings from the empirical data, the multi-case study was incorporated into the research design as the main strategy, whose structure is bound to a clear sequence of work steps, which are shown in table 3 below:

Abbildung in dieser Leseprobe nicht enthalten

Table 3: Utilised framework for theory building from case study research (adapted from the general roadmap developed by Eisenhardt (1989))

The motives behind the choice in favour of multi-case studies can be summarised as follows:


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Open Innovation Strategies Applied by SMEs from Mexican Software Clusters. A Multiple Case Study Analysis
Sheffield Hallam University
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innovation management, software industry, software, smes, mexico, mexican, open innovation, strategies, knowledge management, software clusters, inductive case studies, local buzz, global pipelines, local ties, supra-regional ties, qualitative interviews, english, spanish, mexico city, monterrey, multiple case study, r&d, research, development, research and development, small and middle-sized companies
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Axel Capalbo (Author), 2018, Open Innovation Strategies Applied by SMEs from Mexican Software Clusters. A Multiple Case Study Analysis, Munich, GRIN Verlag,


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