Linkages between CEO Characteristics and Open Innovation Adoption in Innovative Manufacturing SMEs

Abstract

In small and medium-sized enterprises (SMEs), where typically the decision making process is highly centralised, important decisions, such as open innovation (OI) adoption, will be strongly influenced by their chief executive officers (CEOs). Using upper echelon theory, this paper attempts to explore how the top executive’s demographic characteristics and personal traits influence the adoption of OI. A regression analysis on 306 innovation-oriented Korean manufacturing SMEs shows that the adoption of OI can be better understood by considering CEO characteristics as important OI determinants. However, the findings also show that the CEO traits affect the adoption of OI in different ways according to the nature of OI, i.e., knowledge flow direction and required skills and experience. This study has practical implications for CEOs who are in the process of implementing OI and for policy makers who are interested in stimulating SMEs’ innovation performance.

Keywords: Open Innovation, SMEs, Chief Executive Officer, Upper Echelon Theory, Korea

JEL Classification: O31, O32, O33, O34, O38, L25, L26