Critical Thinking and Managerial Decisions

Question: Discuss about the Critical Thinking and Managerial Decisions. Answer: Introduction: The primary purpose of this article is to place the open innovation is the small and medium enterprises (SMEs) in Korea. Moreover, another objective of the journal is to evaluate the role of intermediary in facilitating open innovation in SMEs. Conceptual underpinnings Francia et al. (2013) states that Small and medium enterprises (SMEs) are the driving forces of modern economies and they are associated with some aspects- employment generation, export promotion and technological innovations. In that journal, it is also mentioned that with open innovation these firms can use their external ideas as well as internal ideas to advance their technology. Rahman et al. (2016) thus depicts that organization's desires to include in their business model commercialize their idea along with the external ideas. However, Spithoven et al. (2013) argued that the concept of open innovation is easily studied in larger organization as they can exchange technological assets easily than the small and medium enterprises. Some of the factors that are associated with the journal are: Open innovation in SMEs The open innovation helps SME to maintain a competitive advantage and gain entry into new markets as SME are more flexible and have the ability to adopt the changes faster than the larger organization. In this context, the nature of the SME open innovation along with its concept will be illustrated. Nature of Innovation Yoo et al. (2012) also affirms that SME are more capable of adopting change as they do not have high-risk of loss in their organization approach. On the other hand, Yu and Hao (2014) also depicts that in the larger organization they have their operational functionality associated with their stakeholders so much that the innovation may influence their regular proceedings. These innovative moves may results in the dissatisfaction among their employees and the productivity of the entire organization may be reduced. It is also evident from findings that SMEs usually follows some the approaches adopted by the larger organization and then identify innovative ideas for formulating new methods to satisfy the customer needs in a different approach than the larger firms. Business model for open innovation in SMEs The primary objective of any innovation is to improve the organizational approach and enhance their market by proper commercialization. Spithoven et al. (2013) mentioned that SME uses their limited resources to achieve production economies of scale. SME can also associate with other organizations that have huge resources availability and both the larger and the small and medium enterprises can use each others strength as a complementary asset. Moreover, West et al. (2014) criticizes that this collaboration often restricts the opportunities and alternatives for SMEs and thus it is better to associate with other small sized enterprises. There are two different models for the SME through which the open innovation can be achieved- exploration model and exploitation model. Exploration model In the exploration model, Navinchandra (2012) stated that SME can opt for external partnership and thus so that they can attain concentrate on retaining high levels of internal competence with the limited resource of technology and organizational assets. Schneider and Spieth (2013) on the other hand, affirms by depicting that SME prefers to cooperate with public research institutes and universities so that they do not have to share their innovative technology with other competitors. Figure 1: Exploration model of open innovation for SME (Source: Spieth, 2013) Exploitation model On the other hand, Lin et al. (2013) illustrated that in the exploitation model, the SMEs take initiatives to collaborate with supplier customer relationship with larger firms and other SMEs. Moreover, more than one SME can also collaborate with other SME to share their innovative approach so that the best idea can be implemented for a significant benefit of the society. Markides (2013) depicts that this will not only enhance the productivity of the small enterprises but it will also help them to attain more profitability. Figure 2: Exploitation model of open innovation for SME (Source: Lin et al., 2013) An intermediated network model: KICMS case According to the statistics provided by the National Statistics Office of Korea, the number of SME in the concerned country is exponentially increased and is 3,542,350 in the year 2014 among 3,545,473 total organizations that make the SME leads the race by the ratio of 99.9 (Status of Korean SMEs, 2016). Image 3: Number of SME in Korea (Source: Status of Korean SMEs, 2016) Jung et al. (2016) further depicts that in Korea, KICMS that is an organization that collaborates other SME managers uses Cross-Functional Consortium Families (CF2s) that helps smaller firms to maximize their possibility of achieving business synergies compared to the larger company. This association helps the SME through four different procedures- collaboration research, supporting the construction of collaboration structures, providing consulting services during collaboration and lastly to make them aware of the open markets for SMEs. Strategy adopted by managers Love and Roper (2015) depict that the managers must possess the ability to present the innovative technology in Korean industry through some of the effective procedure. Managers should value the training session to their employee so that they can identify current market demands for developing innovative technology for the benefits of the organization. Moreover, some managers emphasize on the marketing for innovation lesser than the larger firms along with the Introduction of external knowledge do. The primary reason for this lesser investment in market innovation is that smaller firms in Korea face are that they cannot compete with the established organization and they have less financial resources. Madridà ¢Ã¢â€š ¬Ã‚ Guijarro et al. (2013) stated that maximum managers focus on the product innovation. The primary objective for adopting this strategy is that this organization values the market demand more than any other stakeholders do and the working personnel uses their training for customization of the products according to the customer's demand and hence defines as more flexible. Gourova et al. (2013) also highlights the external information usages at the significance level by illustrating three types of innovation- major product innovation, minor product innovation and service innovation. 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