Application of Open Innovation Paradigm in Small and Medium Enterprises in Russia

The objective of this study is to explore how the Open Innovation paradigm is applied in by small and medium-size enterprises in Russia. The focus of the study is to understand how the processes of research and development and commercialization proceed in these kind of companies and to which extent they apply open innovation principles. Russian leadership makes certain steps for transition from the export of raw materials to an innovative model of economic growth. The research aims to disclose actual impact of these attempts. The closed innovation model and the erosion factors which lead to the destruction of an old one and emergence of new model are described. Features of open innovation implementation and intellectual property rights protection in small and medium enterprises are presented. To achieve the objective, a qualitative case study approach was chosen. Research includes facts and figures, views and opinions of management of studied companies related to innovation process in the company and in Russia in general. The research depicts the features of Open Innovation implementation by SMEs in Russia. A large number of research centers with necessary equipment and qualified personnel allow case companies to use external R&D effectively. They cooperate actively with research institutes, universities and laboratories. Thus, they apply inbound Open Innovation. On the contrary, lack of venture capital, low demand for technologies within the domestic market and weak protection of intellectual property limit the external paths to new markets. Licensing-out and creation of spin-off are isolated cases. Therefore, outbound Open Innovation is not a regular practice.

Creating possibilities for collective creativity : Brokerage Functions in Practice-Based Innovation

In the network era, creative achievements like innovations are more and more often created in interaction among different actors. The complexity of today‘s problems transcends the individual human mind, requiring not only individual but also collective creativity. In collective creativity, it is impossible to trace the source of new ideas to an individual. Instead, creative activity emerges from the collaboration and contribution of many individuals, thereby blurring the contribution of specific individuals in creating ideas. Collective creativity is often associated with diversity of knowledge, skills, experiences and perspectives. Collaboration between diverse actors thus triggers creativity and gives possibilities for collective creativity. This dissertation investigates collective creativity in the context of practice-based innovation. Practice-based innovation processes are triggered by problem setting in a practical context and conducted in non-linear processes utilising scientific and practical knowledge production and creation in cross-disciplinary innovation networks. In these networks diversity or distances between innovation actors are essential. Innovation potential may be found in exploiting different kinds of distances. This dissertation presents different kinds of distances, such as cognitive, functional and organisational which could be considered as sources of creativity and thus innovation. However, formation and functioning of these kinds of innovation networks can be problematic. Distances between innovating actors may be so great that a special interpretation function is needed – that is, brokerage. This dissertation defines factors that enhance collective creativity in practice-based innovation and especially in the fuzzy front end phase of innovation processes. The first objective of this dissertation is to study individual and collective creativity at the employee level and identify those factors that support individual and collective creativity in the organisation. The second objective is to study how organisations use external knowledge to support collective creativity in their innovation processes in open multi-actor innovation. The third objective is to define how brokerage functions create possibilities for collective creativity especially in the context of practice-based innovation. The research objectives have been studied through five substudies using a case-study strategy. Each substudy highlights various aspects of creativity and collective creativity. The empirical data consist of materials from innovation projects arranged in the Lahti region, Finland, or materials from the development of innovation methods in the Lahti region. The Lahti region has been chosen as the research context because the innovation policy of the region emphasises especially the promotion of practice-based innovations. The results of this dissertation indicate that all possibilities of collective creativity are not utilised in internal operations of organisations. The dissertation introduces several factors that could support collective creativity in organisations. However, creativity as a social construct is understood and experienced differently in different organisations, and these differences should be taken into account when supporting creativity in organisations. The increasing complexity of most potential innovations requires collaborative creative efforts that often exceed the boundaries of the organisation and call for the involvement of external expertise. In practice-based innovation different distances are considered as sources of creativity. This dissertation gives practical implications on how it is possible to exploit different kinds of distances knowingly. It underlines especially the importance of brokerage functions in open, practice-based innovation in order to create possibilities for collective creativity. As a contribution of this dissertation, a model of brokerage functions in practice-based innovation is formulated. According to the model, the results and success of brokerage functions are based on the context of brokerage as well as the roles, tasks, skills and capabilities of brokers. The brokerage functions in practice-based innovation are also possible to divide into social and cognitive brokerage.

Finnish Institutional Innovation Support Policies from Russian Entrepreneurs' Perspective: Establishing Cross-Border Technology Oriented Start-Up Firm

The purpose of this thesis is to study how Russian entrepreneurs perceive Finnish institutional environment and innovation support policies provided in the country, as well as to present a practical example in form of a case study of one technology oriented start-up firm which was established in Finland by Russian entrepreneurs. The empirical research of the thesis is conducted qualitatively in two parts. First part is conducted through online questionnaire with open questions in order to review the perceptions of Russian entrepreneurs in general. Second part is based on personal interviews with case company’s founders with the focus on the process of establishing the company in Finland. In the first part of the empirical research, five Russian start-up firms were contacted, and four responses were received. All of these responses were qualified for further analysis. The findings of the first part of the research reveal that Russian entrepreneurs have rather positive attitudes towards Finnish institutional innovation support policies. However, most of the entrepreneurs stated that they are unlikely to create their presence in Finland. As an outcome of the second part of the research, the process of establishing a case company in Finland is illustrated. In order to be able to establish companies in Finland, Russian entrepreneurs who have a permanent residence outside European Economic Area (EEA) are required to apply for a permission to perform business operations in the country. In addition, the established company must engage in improving the economical stand of the country by creating new work places, raising tax revenues, develop technologies and generate innovations in the country.

The effect of dynamic capabilities on operational-level innovation – Empirical study in magazine publishing industry

This master’s thesis aims to examine the relationship between dynamic capabilities and operational-level innovations. In addition, measures for the concept of dynamic capabilities are developed. The study was executed in the magazine publishing industry which is considered favourable for examining dynamic capabilities, since the sector is characterized by rapid change. As a basis for the study and the measure development, a literary review was conducted. Data for the empirical section was gathered by a survey targeted to chief-editors of Finnish consumer magazines. The relationship between dynamic capabilities and innovation was examined by multiple linear regression. The results indicate that dynamic capabilities have effect on the emergence of radical innovations. Environmental dynamism’s effect on radical innovations was not detected. Also, dynamic capabilities’ effect on innovation was not greater in turbulent operating environment.

Improvement of open innovation processes: case Nokia

Open innovation is becoming increasingly popular in academic literature and in business life, but even if people heard about it, they might not understand what it really is, they may over-estimate it thinking that it is savior or underestimate it, concentrating on limitations and risks. Current work sheds light on most important concepts of open innovation theory. Goal of current research is to offer business processes improvement for both inbound and outbound modes in case company. It is relevant as open innovation proved to affect firms‘ performance in general case and in case company, and Nokia planned to develop open innovation implementation since 2008 but still competitors succeed in it more, therefore analysis of current situation with open innovation in Nokia and recommendations how to improve it are topical. Case study method was used to answer the question ―How open innovation processes can be improved?‖. 11 in-depth interviews with Nokia senior managers and independent consultants were used to reach the goal of the thesis, as well as secondary sources. Results of current work are as-is and to-be models (process models of today and best practices models) of several open innovation modes, and recommendation for case company, which will be presented to company representatives and checked for practical applicability.

The effectiveness of financial innovation support tools. Comparative study of Latvia and Finland

In the Innovation Union Scoreboard of 2011, Latvia ranked last amongst the EU countries in innovation performance. Even though there is sufficient scientific and technological basis, the results remain modest or low in most of the indicators concerning innovations. Several aspects influence the performance a national innovation system. In Latvia, the low effectiveness is often attributed to lack of financial support tools. As a comparison, Finland was chosen because of its well-established and documented innovation system. The aim of this study is to research the efficiency and effectiveness of the current financial innovation support tool system in Latvia from the point of view of an innovating company. It also attempts to analyze the support tool system of Latvia and compare to the relevant parts of the Finnish system. The study found that it is problematic for innovative companies in Latvia to receive the necessary funding especially for start-ups and SMEs due to the low number of grant programs, funds and lacking offer from banks, venture capital and business angels. To improve the situation, the Latvian government should restructure the funding mechanisms putting a bigger emphasis on innovative start-ups and SMEs. That would lay a foundation for future growth and boost research and scientific activities in Latvia.

The Finnish Paper Workers' Union at a crossroads: Labor union representativeness in a changing environment, 1980-2008

This thesis consists of four articles and an introductory section. The main research questions in all the articles refer to the changes in the representativeness of the Finnish Paper Workers' Union. Representativeness stands for the entire entity of external, internal, legal and reputational factors that enable the labor union to represent its members and achieve its goals. This concept is based on an extensive reading of quantitative and qualitative industrial relations literature, which includes works based on Marxist labor-capital relations (such as Hyman's industrial relations studies), and more recent union density studies as well as gender- and ethnic diversity-based 'union revitalization' studies. Müller-Jentsch's German studies of industrial relations have been of particular importance as well as Streeck's industrial unionism and technology studies. The concept of representativeness is an attempt to combine the insights of these diverse strands of literature and bring the scientific discussion of labor unions back to the core of a union's function: representing its members. As such, it can be seen as a theoretical innovation. The concept helps to acknowledge both the heterogeneity of the membership and the totality of a labor union organization. The concept of representativeness aims to move beyond notions of 'power'. External representativeness can be expressed through the position of the labor union in the industrial relations system and the economy. Internal representativeness focuses on the aspects of labor unions that relate to the function of the union as an association with members, such as internal democracy. Legal representativeness lies in the formal legal position of the union – its rights and instruments. This includes collective bargaining legislation, co-decision rules and industrial conflict legislation. Reputational representativeness is related to how the union is seen by other actors and the general public, and can be approximated using data on strike activity. All these aspects of representativeness are path-dependent, and show the results of previous struggles over issues. The concept of representativeness goes beyond notions of labor union power and symbolizes an attempt to bring back the focus of industrial relations studies to the union's basic function of representing its members. The first article shows in detail the industrial conflict of the Finnish paper industry in 2005. The intended focus was the issue of gender in the negotiations over a new collective agreement, but the focal point of the industrial conflict was the issue of outsourcing and how this should be organized. Also, the issue of continuous shifts as an issue of working time was very important. The drawn-out conflict can be seen as a struggle over principles, and under pressure the labor union had to concede ground on the aforementioned issues. The article concludes that in this specific conflict, the union represented its' female members to a lesser extent, because the other issues took such priority. Furthermore, because of the substantive concessions. the union lost some of its internal representativeness, and the stubbornness of the union may have even harmed the reputation of the union. This article also includes an early version of the representativeness framework, through which this conflict is analyzed. The second article discusses wage developments, union density and collective bargaining within the context of representativeness. It is shown that the union has been able to secure substantial benefits for its members, regardless of declining employment. Collective agreements have often been based on centralized incomes policies, but the paper sector has not always joined these. Attention is furthermore paid to the changing competition of the General Assembly, with a surprisingly strong position of the Left Alliance still. In an attempt to replicate analysis of union density measures, an analysis of sectoral union density shows that similar factors as in aggregate data influence this measure, though – due to methodological issues – the results may not be robust. On this issue, it can be said that the method of analysis for aggregate union density is not suitable for sectoral union density analysis. The increasingly conflict-ridden industrial relations predicted have not actually materialized. The article concludes by asking whether the aim of ever-increasing wages is a sustainable one in the light of the pressures of globalization, though wage costs are a relatively small part of total costs. The third article discusses the history and use of outsourcing in the Finnish paper industry. It is shown using Hyman's framework of constituencies that over time, the perspective of the union changed from 'members of the Paper Workers' Union' to a more specific view of who is a core member of the union. Within the context of the industrial unionism that the union claims to practice, this is an important change. The article shows that the union more and more caters for a core group, while auxiliary personnel is less important to the union's identity and constituencies, which means that the union's internal representativeness has decreased. Maintenance workers are an exception; the union and employers have developed a rotating system that increases the efficient allocation of these employees. The core reason of the exceptional status of maintenance personnel is their high level of non-transferable skills. In the end it is debatable whether the compromise on outsourcing solves the challenges facing the industry. The fourth article shows diverging discourses within the union with regard to union-employer partnership for competitiveness improvements and instruments of local union representatives. In the collective agreement of 2008, the provision regulating wage effects of significant changes in the organization or content of work was thoroughly changed, though this mainly reflected decisions by the Labor Court on the pre-2008 version of the provision. This change laid bare the deep rift between the Social Democratic and Left Alliance (ex-Communist) factions of the union. The article argues that through the changed legal meaning of the provision, the union was able to transform concession bargaining into a basis for partnership. The internal discontent about this issue is nonetheless substantial and a threat to the unity of the union, both locally and at the union level. On the basis of the results of the articles, other factors influencing representativeness, such as technology and EU law and an overview of the main changes in the Finnish paper industry, it is concluded that, especially in recent years, the Finnish Paper Workers' Union has lost some of its representativeness. In particular, the loss of the efficiency of strikes is noted, the compromise on outsourcing which may have alienated a substantial part of the union's membership, and the change in the collective agreement of 2008 have caused this decline. In the latter case, the internal disunion on that issue shows the constraints of the union's internal democracy. Furthermore, the failure of the union to join the TEAM industrial union (by democratic means), the internal conflicts and a narrow focus on its own sector may also hurt the union in the future, as the paper industry in Finland is going through a structural change. None of these changes in representativeness would have been so drastic without the considerable pressure of globalization - in particular changing markets, changing technology and a loss of domestic investments to foreign investments, which in the end have benefited the corporations more than the Finnish employees of these corporations. Taken together, the union risks becoming socially irrelevant in time, though it will remain formally very strong on the basis of its institutional setting and financial situation.

Innovation management of biorefineries in Finnish forest sector

The aim of this report is to give a comprehensive overview of the opportunities integrated biorefining can offer to Finnish forest industry companies and to assess what changes it would require from these companies to implement biorefining into their business. Also the strengths and weaknesses of the Finnish forest industry companies connected to biorefining are examined through innovation management theory frames, industry comparisons, company examples and couple of case-examples. The conclusions of the report include the statement that the Finnish forest industry has a good starting point for biorefinering and many advantages compared to other countries and industries. Unfortunately the history of the industry is holding it back and the thinking patterns would have to be altered to a more innovative and co-operational direction.

Innovation Project Portfolio Management

Companies today are forced to innovate in order to remain within business. Such innovation projects undertaken by the companies are defined in this study as creative ideas which have been managed through “Stage-Gate” innovation process. This process is used to manage innovation projects as they proceed from being newly created to ready for launching/implementing. This has ensured that the companies manage the innovation project right. However, with so many new creative ideas the companies can come up within limited resources, the companies must rely on Innovation Project Portfolio Management (IPPM) to ensure that they are managing only the right innovation projects. Although, there are many tools and techniques available for use within Project Portfolio Management, there is still no consensus on which are the most effective and no standard framework has been established especially for IPPM. Thus, this study proposes a practical framework for which individual innovative organization can follow as a guideline to manage its innovation project portfolio. The study theoretically first addresses the key differences between project portfolio management of innovation projects and other traditional projects - one of which is the stage nature of innovation projects due to their unclear objectives from the beginning compare to clearly established objectives of traditional projects. Secondly, different tools and techniques which can be used are examined based on the three goals of IPPM: (1) Maximizing the Value of Innovation Project Portfolio: Financial Methods, Decision Trees, Scoring Models and Checklists; (2) Balancing Innovation Project Portfolio: Visual Representations; and (3) Aligning Innovation Project Portfolio with Strategy: Bottom-Up (Scoring Models with Strategic Criteria) and Top-Down (Strategic Buckets). Finally, the two approaches in which IPPM can be integrated with Stage-Gate innovation process are discussed: (1) Gates- Dominated; and (2) Portfolio Reviews-Dominated. Practically, this study investigates IPPM of a case organization, and through analysis of the case study results proposes a practical framework for case organization to improve its current management of innovation project portfolio. This framework is then generalized to propose a final practical framework or guideline for which an innovative organization can follow to manage its innovation project portfolio.

Reflexive model of research-based theatre – processing innovation at the crossroads of theatre, reflection and practice-based innovation activities

Contemporary organisations have to embrace the notion of doing ‘more with less’. This challenges knowledge production within companies and public organisations, forcing them to reorganise their structures and rethink what knowledge production actually means in the context of innovation and how knowledge is actually produced among various professional groups within the organisation in their everyday actions. Innovations are vital for organisational survival, and ‘ordinary’ employees and customers are central but too-often ignored producers of knowledge for contemporary organisations. Broader levels of participation and reflexive practices are needed. This dissertation discusses the missing links between innovation research conducted in the context of industrial management, arts, and culture; applied drama and theatre practices (specifically post-Boalian approaches); and learning – especially organising reflection – in organisational settings. This dissertation (1) explores and extends the role of research-based theatre to organising reflection and reflexive practices in the context of practice-based innovation, (2) develops a reflexive model of RBT for investigating and developing practice-based organisational process innovations in order to contribute to the development of a tool for innovation management and analysis, and (3) operationalises this model within private- and publicsector organisations. The proposed novel reflexive model of research-based theatre for investigating and developing practice-based organisational process innovations extends existing methods and offers a different way of organising reflection and reflexive practices in the context of general innovation management. The model was developed through five participatory action research processes conducted in four different organisations. The results provide learning steps – a reflection path – for understanding complex organisational life, people, and relations amid renewal and change actions. The proposed model provides a new approach to organising and cultivating reflexivity in practice-based innovation activities via research-based theatre. The results can be utilised as a guideline when processing practice-based innovation within private or public organisations. The model helps innovation managers to construct, together with their employees, temporary communities where they can learn together through reflecting on their own and each others’ experiences and to break down assumptions related to their own perspectives. The results include recommendations for practical development steps applicable in various organisations with regard to (i) application of research-based theatre and (ii) related general innovation management. The dissertation thus contributes to the development of novel learning approaches in knowledge production. Keywords: practice-based innovation, research-based theatre, learning, reflection, mode 2b knowledge production

On Innovative Search: the use of internal and external sources of innovation among Finnish innovators

This dissertation explores the use of internal and external sources of knowledge in modern innovation processes. It builds on a framework that combines theories such as a behavioural theory of the firm, the evolutionary theory of economic change, and modern approaches to strategic management. It follows the recent increase in innovation research focusing on the firm-level examination of innovative activities instead of traditional industry-level determinants. The innovation process is seen as a problem- and slack- driven search process, which can take several directions in terms of organizational boundaries in the pursuit of new knowledge and other resources. It thus draws on recent models of technological change, according to which firms nowadays should build their innovative activities on both internal and external sources of innovation rather than relying solely on internal resources. Four different research questions are addressed, all of which are empirically investigated via a rich dataset covering Finnish innovators collected by Statistics Finland. Firstly, the study examines how the nature of problems shapes the direction of any search for new knowledge. In general it demonstrates that the nature of the problem does affect the direction of the search, although under resource constraints firms tend to use external rather than internal sources of knowledge. At the same time, it shows that those firms that are constrained in terms of finance seem to search both internally and externally. Secondly, the dissertation investigates the relationships between different kinds of internal and external sources of knowledge in an attempt to find out where firms should direct their search in order to exploit the potential of a distributed innovation process. The concept of complementarities is applied in this context. The third research question concerns how the use of external knowledge sources – openness to external knowledge – influences the financial performance of firms. Given the many advantages of openness presented in the current literature, the focus is on how it shapes profitability. The results reveal a curvilinear relationship between profitability and openness (taking an inverted U-shape), the implication being that it pays to be open up to a certain point, but being too open to external sources may be detrimental to financial performance. Finally, the dissertation addresses some challenges in CISbased innovation research that have received relatively little attention in prior studies. The general aim is to underline the fact that comprehensive understanding of the complex process of technological change requires the constant development of methodological approaches (in terms of data and measures, for example). All the empirical analyses included in the dissertation are based on the Finnish CIS (Finnish Innovation Survey 1998-2000).

Service innovation development and knowledge integration practices - a comparative case study on KIBS sector

Academic research on services and innovations on services has significantly grown during recent years. So far research concerning management of knowledge intensive work on service development activities is very limited. The objective of this study was to examine knowledge integration practices that support service innovation development and to the best of knowledge such studies have not been previously published in academic literature. In the theoretical part of the study a review of state‐of‐the‐art literature was conducted, research gap was indicated and a framework for analysis was built. In the empirical part an explorative comparative multi‐case study was carried out in KIBS sector. Four companies were selected and four service development projects were inspected. The service development activities and knowledge integration practices were identified. The cases were carefully compared and results formed. The empirical results indicated that service innovation development is partly linear and partly incremental flow of activities where knowledge integration practices have important role supporting the planning and execution of tasks. Knowledge integration practices supporting planning and workshops are close interaction, interpretation, project planning and sequencing of work tasks. The identified knowledge integration practices supporting building service solution were careful role and competence management, routines and common knowledge. The main implication is that to manage knowledge intensive service innovation development a firm should carefully develop and choose relevant knowledge integration practices to support the service development activities.