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Many studies show that organizations’ innovation performance can be improved by use of knowledge from external sources, such as customers, competitors, universities, or consultants [1]. Developing abilities to tap on external resources is associated with challenges and costs, however, as it requires that organizations are able to identify, access, transfer, analyze and utilize external knowledge [2]. 

Research indicates that such processes can be facilitated by use of ICT, and results from various studies suggest that the following aspects should be given attention:

• Organizations should implement mechanisms and processes to stay up‐to‐date with the latest market trends and industry developments. The top management team should emphasize the value of updated knowledge of market trends and seek to enhance their sensing capabilities [3]. 

  • Organizations should value external knowledge and hence avoid the “not-invented-here syndrome”. Rather, seeking to build a culture based on the “proudly developed elsewhere” expression of Procter & Gamble [4,5], combined with corresponding incentives and structures, may increase their abilities to make use of external knowledge. The Kodak case [6] is an example of resistance of external knowledge with severe consequences. The company’s culture, bureaucratic structure and management perspectives and competence hindered a fast response to new technology which dramatically changed the major customer processes associated with photography. To improve their ability to undergo transition, organizations should emphasize change management competence and processes based on market knowledge, developmental trends and emerging technologies [3].

  • This has been highlighted in several studies, including Kranz et al. [7], who found that organizations with a narrow focus on identifying knowledge relevant to their established business model failed to recognise emerging customer needs and technology opportunities. Kranz et al. also emphasize the importance of developing the ability to align and relate market knowledge with technology knowledge, as this will help organizations to draw the right conclusions on when and how to respond to emerging disruptive innovations. They furthermore state that the ability to integrate and balance heterogeneous knowledge grows in importance because of the increasing pervasiveness of digital technologies.

• Organizations can use ICT to establish and enable social ties and by this improve their abilities to identify and access external knowledge [8].

  • IT-enabled communication infrastructures including social networking tools can be applied to organize both ad-hoc and scheduled meetings and interactions among organizational members.

  • Organizations can improve their access to external knowledge by connecting to internet-enabled, open knowledge communities that use collaborative technologies such as wikis, blogs, and discussion forums to facilitate the creation, diffusion, and sharing of knowledge among community members [9].

  • Organizations could benefit from using retrieval technology such as query software, expert finder or knowledge maps to identify, collect, and extract useful knowledge from a wide variety of knowledge resources [10].

• IT can be applied to establish and manage partnerships with organizations holding complementary expertise and skills, and by this co-create value by developing new products and solutions in response to new business opportunities. This may be particularly valuable/important in situations of resource constraints, which often is the case in SMEs [3], as these situations may cause organizational rigidity.   

  • Platform ecosystems enable core interactions between consumers, producers and third-party actors [11], and may be an important foundation for digital innovation in many industries and organizations. This requires development of appropriate governance structures and competence on platform thinking and management [12].

  • IT may improve an organization’s ability to coordinate, manage, and control external partners. It can also be applied to facilitate communication and create shared understanding among specialized from different fields [8]. This may be an important factor for creating a culture where external knowledge is valued and hence avoid the “not-invented-here syndrome”.

  • It is imperative that organizations analyze the obstacles associated with integrating external knowledge – e.g. intellectual property rights, informational asymmetries, steering and control problems [13], and investigate whether ICT can be applied to reduce such integration challenges.

• The ability to manage the processes of identification, assimilation and utilization of external knowledge influence the degree to which organizations succeed with open innovation initiatives [2]. They can therefore be applied as guiding categories or structures underlying IT investment strategies and decisions (concerning both physical assets and competence building initiatives) of organizations seeking to improve their performance by combining external and internal knowledge. Organizations should hence analyze their opportunities and challenges related to utilizing IT to reduce costs associated with these processes.

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References / sources

1. External knowledge and information technology: Implications for process innovation performance. 
   Trantopoulos, K., von Krogh, G., Wallin, M.W. & Woerter, M. (2017). Management Information Systems Quarterly, 41(1).
2. Does information technology improve open innovation performance? An examination of manufacturers in Spain. 
   Gómez, J., Salazar, I & Vargas, P. (2017). Information Systems Research, 28(3). 
3. Agility in responding to disruptive digital innovation: Case study of an SME. 
   Chan, C.M.L., Teoh, S.Y., Yeow, A. & Pan, G. (2018). Information Systems Journal, 29(2).
4. Opening the black box of “Not Invented Here”: Attitudes, decision biases, and behavioral Consequences.
   Piller, F.T. & Antons, D. (2015). Academy of Management Perspectives, 29(2).
5. Exploring the field of open innovation.
   Elmquist, M., Fredberg, T. & Ollila, S. (2009). European Journal of Innovation Management, 12(3).
6. Disruptive technology: How Kodak missed the digital photography revolution.
   Lucas Jr., H.C. & Goh, J.M. (2009). The Journal of Strategic Information Systems, 18(1).
7. Understanding the influence of absorptive capacity and ambidexterity on the process of business model change – the case of on‐premise and cloud‐computing software.
   Kranz, J.J., Hanelt, A. & Kolbe, L.M. (2016). Information Systems Journal, 26(5).
8. Mitigating diminishing returns to R&D: The role of information technology in innovation.
   Ravichandran, T., Han, S. & Mithas, S. (2017). Information Systems Research, 28(4).
9. Platform sponsor investments and user contributions in knowledge communities: The role of knowledge seeding.
   Huang, P., Tafti, A. & Mithas, S. (2018). Management Information Systems Quarterly, 42(1).
10. Changing the competitive landscape: Continuous innovation through IT-enabled knowledge capabilities.
    Joshi, K.D., Chi, L. Datta, A. & Han, S. (2010). Information Systems Research, 21(3)
11. Introduction — Platforms and infrastructures in the digital age.
    Constantinides, P., Henfridsson, O. & Parker, G.G. (2018). Information Systems Research, 29(2).
12. Embracing digital innovation in incumbent firms: How volvo cars managed competing concerns. 
    Svahn, F., Mathiassen, L. & Lindgren, R. (2017). Management Information Systems Quarterly, 41(1). 
13. Balancing internal and external knowledge acquisition: The gains and pains from R&D outsourcing.
    Grimpe, C. & Kaiser, U. (2010). Journal of Management Studies, 47(8).

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Tags

IT governance Digital innovation Small‐ and medium‐sized enterprises