Symbiosis in Open Innovation: Small Firms' Dance with Large Companies

Abstract: Purpose: The purpose of this study is to explore the challenges that small firms face when engaging in open innovation by out-licensing to larger companies. Additionally, it aims to investigate the strategies that these small firms use to manage the challenges. Methodology: The study employs a qualitative expert interview design conducted with semi-structured interviews and a thematic data analysis. Theoretical perspectives: The study’s theoretical foundation is based on previous literature on open innovation between small and large companies, licensing, and Resource Dependency Theory. Result: The challenges identified are inertia, self-serving, contractual concerns, uncertainty, limited independence, limited influence, scarce resources, and limited partner options. The management strategies identified are navigating exclusivity, being structured and professional, leveraging unique resources, relationship building, acquiring and utilizing external expertise, creating commitment, establishing control mechanisms and regulations, and decreasing dependency. Conclusions: The study identified challenges experienced by small companies, stemming from large firm characteristics, inter-organizational dynamics, and small firm characteristics. Furthermore, ways to manage these challenges were identified, which can be summarized as hard measures, soft measures, and unique resources. The study contributed by filling several literature gaps regarding open innovation through licensing between small and large companies.