Open Innovation in Small Business

The business units of Islamic boarding schools known as pesantren in local terminology as part of the engines of the local economy in Indonesia are among the social enterprises hit hardest by the COVID-19 pandemic. Theoretical and practical observations in the Indonesian social enterprise sectors indicate that business model innovation (BMI) proves to overcome and recover the business during the pandemic whereby they have successfully transformed their business models. This study analyzes why and how changes in this BMI are conducted by those social enterprises by conducting case studies of three Islamic boarding schools’ business units. To explore the questions, this study conducted in-depth interviews with administrators, especially religious leaders (kyai) and business managers for each case, which we triangulated with secondary data for analysis. The results show that BMI has been employed during the crisis to create new sources of income and ensure sufficient levels of liquidity, with the key role of business unit managers and staff with the support of religious leaders. This research contributes to the scarcity of innovation-based model in the context of social business in developing countries like Indonesia.

Innovation is the main key to the sustainability of all industries. The fashion industry with traditional woven fabrics as the basic material is one of the complex industries due to its association with the social environment in terms of cultural value, market taste, chain value, life-cycle products, and even government policy. This study analyzes the problems and strategies in empowering women entrepreneurs in the context of indigenous peoples in Indonesia by boosting innovation based on the indigenous knowledge conversion. Focusing on the indigenous innovation created by the weaving community in West Nusa Tenggara, this study employs several concepts, namely, resource-based view and indigenous knowledge, knowledge conversion, and social innovation. Studies of indigenous knowledge in Indonesia are commonly drawn from the anthropological perspective and merely a small number of them use perspectives from business administration. This study applies mixed methods and collects data through questionnaires, observations, and in-depth interviews. The primary and secondary data are collected during several months of field study with a local partner as a gatekeeper. The questionnaire is derived from the concepts of knowledge conversion practice. Observation is also conducted to obtain a deeper understanding of the process of making traditional fabrics. In-depth interviews are conducted to explain the results of the survey. The informants for this study represent all kinds of stakeholder, namely, women entrepreneurs, associations, clusters of women weavers, financial intermediaries, local governments, small business employees, the local community, etc. According to the resource-based view, it is possible for the indigenous knowledge to be a source of competitive advantage because it can create the indigenous innovation to produce inimitable unique traditional fabrics. Each local area in Indonesia has its own distinctive characteristics. Indigenous knowledge is a tacit knowledge originating from the ancestors and is usually passed through generations. Indigenous knowledge is a knowledge-based local wisdom that is difficult to imitate. Innovative activities are done by the indigenous peoples as a part of human activities relatively rare. The results of this study indicate that empowering small businesses that create traditional fabrics and belong to local people, particularly women weavers, faces several problems. These problems include inadequate support from the local government, the limited capacity of local human resources, difficult access to capital, difficulties in marketing, limited supply of raw materials, and debates on local cultural values vs economic values. Therefore, this study proposes co-creation activities with outside stakeholders. The involvement of different relevant stakeholders is important to overcome the existing problems. The traditional woven co-creation in design requires the involvement of social actors in the social learning process. The indigenous co-creation of traditional woven fabrics is a social innovation learning activity that requires context and the adequate involvement of actors. This collaboration model emphasizes the important of an open innovation activity as a keyword for empowering the indigenous communities and boosting indigenous innovation. This policy recommendation is significantly valuable for decision-makers at the local government level.

The literature on innovation management indicates the rise of the green innovation topic recently, which emphasises how companies adopt and implement advanced friendly technology to achieve environmental sustainability as a part of sustainable development goals. Most of the studies were conducted in the context of large manufacturing companies. Little attention has been paid to the setting of small and medium-sized enterprises (SMEs) as the backbone of the economy in many countries (e.g. Takalo et al. 2021). In Indonesia, the contribution of SMEs is significant for absorbing 97% of the total workforce and generating 60.4% of total investment, according to the Coordinating Ministry for the Economy in 2021. Our study uses institutional theory as a point of reference. It aims to understand various factors that drive organisations to seek legitimacy or social fitness when they want to adopt or make a decision (Dimaggio and Powell, 1983; Oliver, 1991), which in this context is adopting green innovation. The study deployed qualitative multiple case studies by conducting in-depth interviews for 11 SMEs (14 participants) in batik sectors in Indonesia who were already implementing green innovation (from only green, a combination of brown and green and green until brown to green). SMEs in the batik sector were selected as a sample because batik is well known as traditional clothing from Java and is considered the original cultural heritage of Indonesia by UNESCO (Wang, 2019). Batik faces fierce competition due to mass and fast production from larger companies and the issue of chemical dyes and synthetic colours (Raya et al., 2021). Validity in this research was supported by the triangulation method combined with member checking. Data were analysed using a content analysis method referring to the procedure by Miles et al. (2014) to answer the research question. The current study shows the pressure of external forces, namely regulatory/coercive force, cognitive pressure and normative pressure, are the motives for organisational decisions and actions to adopt green innovation. Our findings substantiate and broaden the institutional theory (Bruton et al. 2010; Rui and Lu, 2020) by providing empirical evidence regarding SMEs in the batik sector in Indonesia. Limitations of the study are highlighted, which align with suggestions for future research avenues. Potential practical implications are also discussed.

Studies have shown that human nature is continuously evolving, and consumers are inevitably affected when it comes to adopting a new set of consumption behaviour. In the recent global pandemic notably termed as COVID-19, most consumers were fearful and forced to rely on new technological method of payments in the quest to acquire a safer method to buy goods and services. Entrepreneurs within the Micro, Small and Medium Enterprise (MSME) sector are no exception to such a phenomenon. The COVID-19 pandemic has given a huge socio-economic impact on many nations worldwide including Malaysia. According to the Malaysian Institute of Economic Research report, Malaysia’s GDP development would decline by 2.61% in 2020 (Bernama 2020). Such an indicator is alarming enough for most businesses, resulting in the need to enhance buyers’ spending power and stimulate socio-economic growth. One of the potential mechanisms is to analyse customers’ needs by leveraging on their technological and socio-psychological well-being issues considering COVID-19 fearful circumstances. This could then potentially impact their acceptance of alternative cashless transaction payment mechanisms from MSME business owners and respective stakeholders (Chin et al. 2022; Amer et al. 2020). The use of mobile contactless payments is ascending throughout the recent COVID-19 occurrence and Movement Control Order (MCO) in Malaysia, with certain business competitors perceiving an increasing number of support for such financial transaction payment adoption (Mokhtar 2019; The Star 2020). A contactless payment is an innovative programming application that utilises electronic gadgets such as personal computers, or portable mobile smartphones for online exchanges (Uduji 2019). It is an optional business strategy for merchandise or services’ payments, which include the use of Quick Response (QR)-based mobile payment platforms. Adjustments could potentially be made towards many consumers’ ‘new normal’ spending transaction payment procedure including propensity to use contactless payments and consider online platforms as an alternative shopping channel for necessities (Chin et al. 2022). Although gaining increased global acceptance, Malaysian MSMEs however, are still sceptical towards embracing contactless payment methods as a means of undertaking their business transactions (Aji et al. 2020). As such, it is thus pertinent to provide valid and explanatory reasoning for the potential adoption of QR-enabled contactless payments. Considering the pre-, during and post-COVID-19 pandemic fear, addressing these challenges could potentially be a novel approach towards investigating the extrinsic stimuli of MSME entrepreneurs and its implications on the nation’s economic system. Drawing from the seminal Technology Acceptance Model and Fear Motivating Theory, a proposed model that explains the use of QR-enabled contactless payments based on psychosocial and technological perspectives is developed that could potentially result in significant national economic and societal implications. A mixed method-based research design would be employed to gather the necessary data in addressing the identified issues amongst the targeted population of interest. Several potential contributions could potentially be observed such as technological diffusion, fear and need for personal hygiene preservation in proximity transactions, as well as ecological benefits such as promoting reduction of carbon footprint associated with printing and disposing of paper and plastic-based banknotes, respectively.

The utilization and implementation of Information and Communication Technology (ICT) for Micro-, Small and Medium-sized Enterprises (M-SMEs) is a widely discussed topic. MSMEs in Indonesia face a multitude of challenges that are not limited solely to the adoption and sophistication of technology. Furthermore, ICT needs to be developed in a way that increases its competitiveness and robustness, to effectively drive sustainable development and bridge the digital divide that exists in countries like Indonesia. The Indonesian government has conducted a public briefing through Law No. 19 of 2016 and Presidential Regulation No. 74 of 2017 on information and electronic transactions and the National Electronic-Based Trading System Roadmap, respectively. These two frameworks were created to emphasize the importance of leveraging ICT to achieve economic growth. Stakeholders are promoting ICT firm growth through formal measures. A review of government initiatives is needed for success. This research aims to fill gaps to reach desired outcomes, to understand the adoption and spread of innovation among MSMEs, and to help them thrive in a rapidly evolving global market. The study involves experts who provide guidance and insights. The findings show that MSMEs need support in implementing and deploying ICT, due to low technology literacy and inadequate technical and operational management. To make the best use of resources, ICT policies for MSMEs should embrace both proactive and reactive methods and foster strategic alliances for human capital innovation. Policymakers should prioritize a flexible environment, breaking down sectoral barriers, and enhancing collaboration between universities, research institutions, industries, and MSMEs.

Intense competition, unpredictability, and volatility are just some of the hallmarks of the current market scenario. The advent of COVID-19 is a prime example of the “perfect storm”, representing the sudden and unexpected environmental changes a firm can face. It has propelled digitalization into the spotlight for organizational change, warranting the implementation and integration of specific external resources of open innovations such as social media. This adaptive course of action is taken so that firms can continue to operate functionally but safely; amid movement restrictions, stringent Standard Operating Procedures, and Work From Home working arrangements. Especially for Small and Medium Enterprises (SMEs), social media is a cost-effective and easy-to-use open innovation resource with a multitude of potential benefits if and when utilized properly and effectively. While knowledge on the subject matter is still evolving, information regarding social media’s direct and indirect relationship with firm performance remains an important and pertinent opportunity for onward investigation. The assertion of Malaysia’s own Ministry of Finance (MOF) emphasizes this point, as it considers digitalization a means to make SMEs more resilient and competitive, a mitigating measure to address the issue related to SME mortality. This chapter describes the association of social media and firm performance operating under challenging circumstances; and certain elements that can facilitate or impede the decision to adopt social media. The conceptual framework positions social media adoption as an intermediary construct to examine deployment factors and synthesize their effects on firm performance. Based on the literature review, two factors have been identified and are singled out as antecedents: compatibility and security concern. The Resource-Based View is the theory premise for this research, where social media is slated as an essential resource to elevate competitive advantage. The discussions and conclusion presented in this chapter are intended to offer an updated perspective from an academic and real-world practice standpoint.

The recent pandemic has caused many negative effects on businesses across the world. However, at the same time, it has opened new business opportunity windows leading to accelerated and robust competition. The negative consequences of COVID-19 were observed primarily in service sectors and digital agencies. As agencies use media and technology, they are pushed to fierce competition. In order to sustain their businesses, digital agencies sought better ways for innovation that will lead to sustainable competitive advantage. In this context, the study aims to identify the value proposition design of digital agencies identified as startups in Indonesia by developing a value map and making it fit customer profiles. The research employs qualitative methods using a case study approach. It focuses on one of the cases of a digital agency that failed due to the unclear business model and the difficulty of creating a value map and customer profile. The results of the study reveal that there is a discrepancy between each value created and consumer complaints and expectations. This research contributes to the theory of better understanding the base of the value proposition. At the same time, the study proposes a new value for a startup business to increase business competitiveness.

The study was conducted with the aim of exploring the factors that impact the implementation of BDA as well as the usage of BDA in two industries of interest, i.e., the manufacturing and construction industries. In particular, the study narrowed down the organizations in the research to only involve SMEs, thereby providing a fair base of comparison while truncating financial factors. The study adopted a modified technology-organizational-environmental (TOE) model. The study was conducted using content-based approaches. We expected that the study of SMEs in the manufacturing and construction industries may have positively and significantly influenced the strongest parameters for BDA adoption and ultimately contributed to enriching theoretical and practical development.

The focal point of this chapter is to explore the potential of social media-enabled crowdsourcing capabilities for new product development in small and medium-sized enterprises (SMEs). The proposed research methodology utilizes a content analysis approach to analyze the relevant literature. The study anticipates to establish the empirical relevance of crowdsourcing in new product development by leveraging the capability of social media platforms. In addition, the study seeks to explore the relationship between crowdsourcing capability and new product development while considering the moderating effect of company size and type of business. Through this comprehensive exploration, we intend to make a significant contribution to the existing knowledge on crowdsourcing in marketing from a theoretical perspective. The study is expected to present an initial framework for future research in this area.

Open innovation has emerged as a crucial strategic element for enhancing the efficiency and commercialization of innovation among large companies. However, the potential applicability of this concept to small- and medium-scale enterprises (SMEs) in Indonesia, particularly those based on digital technology, remains relevant. Although research on open innovation for SMEs has yielded important insights, it is relatively limited in scope, with a focus on inbound innovation activities and little consideration for medium- or small-scale enterprises, even though they are often seen as radical innovators in their fields. To address this gap, it is necessary to examine the potential of SMEs in the process of business innovation through digital platforms, with special attention given to their better specialization capabilities than larger companies. This specialization is more profitable when the market is open to innovative activities and when innovation is supported by SME owners–managers who create an innovation climate. Empirical analysis is required to answer the key research questions. The first question pertains to the extent of SME innovativeness, particularly in terms of their capacity to utilize internal, external, and hybrid knowledge sources in open innovation. The second question pertains to the extent to which the innovation climate supports SME owner–manager efforts to find creative ways to exploit and explore innovation sources. The ultimate goal of this study is to develop an extensive framework that elucidates the link between the innovation climate, open innovation, and firm innovativeness in the context of SMEs.

The aim of this study is to explore the link and distinction between market orientation, product innovation capability, and marketing performance in determining competitive advantage among small and medium-scale enterprises (SMEs). This study employs a quantitative methodology and involves business owners and managers in three categories. A Bayesian regression model is used to test the proposed research model. The study’s results show a positive correlation between all proposed constructs and competitive advantage. Although these constructs have led firms to become more competitive, there are notable differences between small and medium-scale enterprises in terms of their characteristics related to market orientation, product innovation capability, marketing performance, and competitive advantage, which demand attention. This study attempts to make a valuable contribution to the expansion of knowledge in the marketing field by investigating and analyzing the relationships between constructs that are essential for defining and establishing a competitive edge. The ramifications of this study are envisaged to assist entrepreneurs and managers in making appropriate decisions. Firms must capitalize on their unique strengths if they remain competitive in an ever-changing market. SMEs are viewed as promising sources for creating jobs and driving economic growth in the emerging markets.

This chapter aims to elaborate and discuss on audit and innovation through research database (Scopus). The study adopts content analysis technique where various sources are referred including reports, official documents and research articles. The chapter also explains on the auditor innovations during a pandemic as well as the artificial intelligence based audit integration. The research on audit and innovation has been done and became the concern by researchers around the globe particularly from the developed countries since 1973. Other opportunities and challenges on audit innovation are revealed and should be known by practitioners, academicians and other stakeholders, which to be used as valuable information for strategic planning and initiatives.

Almost half of the population of those who are employed are women. Nonetheless, they encounter several issues and difficulties juggling their family and job obligations. In Asian Pacific nations, men are expected to be the primary caregiver for their families, and women must be their subservient. Being in charge of their own business is one way for women to have more freedom with their family time. As a result, they have a very high level of drive to work for their business. A mixed-method quantitative and qualitative technique is used to gather research data for this study. Using a quantitative research method, IBM SPSS is used to do a descriptive analysis of the survey data. Most respondents in Vietnam, Thailand, and Pakistan are inspired to start their businesses by personal, family, social, market, networking, and legal considerations. Parallel to this, a quantitative study in Vietnam and Thailand identifies similar factors like personal, family, social, political, and economic factors. In addition to these elements, Muslim women in these two neighbouring nations confront personal, economic, political, and governance obstacles.

Business cycles or crises occur when the economy falls after prosperity (Schumpeter 1939) or when genuine insecurity increases volatility, uncertainty, and contradictions in several domains (Haralambie 2011). According to (Colander et al. 2009), crises have made mainstream economics a systemic failure. We use Islamic viewpoints to investigate the crises’ account. In this regard, many Muslim authors attribute the economic crisis to mainstream economic discipline's failure and suggest Islamic economics as a solution or alternative. We use a systematic literature review to evaluate 36 studies based on peer-reviewed journals and sources between 1990 and 2022. Banking and Finance, Economic Thinking, Spending and Consumption, and Human Resources and Governance were identified from the selected literature. It largely focuses on banking and finance, underlining the inherent flaws of the sector in the capitalist system and lessons for strengthening Islamic banking and finance to handle future cyclical shocks. The literature of other clusters in the review also shows that the lessons from the crisis have influenced Muslims’ consumption and spending decisions, including credit decisions, enrichment of Islamic economic thinking, and best practises to survive in crisis times for Muslims or Islamic institutions.

The Framework of Sustainability Assessment (FSA) in businesses is a topic of considerable pressing interest to the nation, academics, and business practitioners. Unfortunately, the field remains unstructured mainly, with no indicators framework for evaluating Malaysian defence industry offset performance. This study aims to construct a systematic indicator selection approach for sustainability, identify indicators suitable for measuring sustainability in defence industry offset programs and propose a new dimensional or categorisation of indicators to address sustainability in a holistic approach. This study executes systematic reviews by identifying common and consistently used sustainability indicators that are suitable for measuring defence industry offset programs. The selected indicators are organized and classified into different dimensions and sub-categories. The study has taken a holistic approach to defence industrial sustainability based on the bespoke approach, revising the three most common categories of Environmental, Financial and Social into three new dimensions—Community, Economy, and Organization (CEO). This study should provide an overview of the possibilities available to government agencies and businesses who wish to embed sustainability indicators to establish goals, monitor success, and assist managers in identifying what types of anticipation need to be emphasised in the future as part of a continuous improvement and iteration process.

This chapter aims to elaborate the history and root of research on innovation in small business. The study adopts content analysis technique where various sources are referred including reports, official documents and research articles. There are issues related to the innovation and SMEs which can be learned and analyzed. Opportunities brought by innovation to the SMEs are need to be revealed and used as valuable information for strategic planning and initiatives.

This study aims to elaborate the importance of family business and innovation based on the internationalisation process. Some important elements are discussed such as the nature of family business, characteristics of family business and critical success factors of family business. Then it is followed by the relationship of family business and internationalisation and finally on the family firm innovation. The content analysis is adopted to elaborate the subject of family business, innovation and internationalisation and refer it precisely to the previous literature.

This study attempts to examine current Shariah governance practices and propose a Shariah governance framework for Islamic donation-based crowdfunding (DCF) platforms in Malaysia. A series of interviews with six Islamic DCF platforms in Malaysia was conducted. For reporting purposes, this study employed a single-case study approach. The interview was conducted and completed at the end of August 2022 via an online approach through Google Meet. The findings highlight Shariah governance practices for Islamic DCF platforms covering Shariah governance structure, roles of the parties involved and types of Shariah contracts used in the operation. Based on these findings, a Shariah governance framework for Islamic DCF is proposed covering Shariah contracts, roles of parties, establishment of the Shariah committee as well as Shariah governance functions. This study is among the pioneer studies that explore Shariah governance framework for Islamic DCF platforms in Malaysia. The study findings and recommendations are useful for Islamic DCF platforms as well as related parties like regulators, funders, potential project managers and the public in general to understand Shariah governance framework for Islamic DCF platforms in Malaysia.