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Innovation And Open up Innovation Principle Management Essay

The concept of innovation is now widely utilized by the organizations from many establishments. Open Invention is the approach where the businesses use external ideas of advancement from the community and society as well as inner innovation. This approach may be accomplished by the integration with customers, suppliers and also University-Industry collaboration. In Malaysia, open innovation paradigm is relatively new in adaptation event in manufacturing industry. The purpose of this research is to recognize the implementation of open innovation on this study is ICT, Automotive and Electronics sectors. The development process is the effective way of improving the company performances and at exactly the same time increase the financial growth of the entire industries. The research method use is based on quantitative method research procedure in term to identify types and methods applied to implementing the open technology in the production industries as well as the impact of the implementation to the business.

Keyword: Open Advancement, Malaysia, Manufacturing, Market sectors.


Background of study

Today, Open innovation are widely used and becoming the vital sources of improvement in term of enhancing the industry performance especially by using the external resources of creativity and creativity. HOWEVER IN Malaysia, this paradigm is relatively new and the approach of Open Invention continues to be difficult to accept. Technology is one of quite mechanisms to the organizations in term to improve economic expansion of the business and increase the competitive advantages.

Open Innovation is the paradigm that firstly identified by Henry Chesbrough in his ex - book named as Open Creativity: The New Essential for Creating and Profiting from Technology, released in 2003. Inside the simply words, wide open innovation described as a process where the firms use exterior ideas of development from the city and world as well as inside innovation.

By the approach of Open Innovation in developing industry, the process of creativity is become wider than using finished model of advancement where the company only give attention to the internal innovation and R & D rather than external resources. Out of this paradigm, the vacations of knowledge from the world and community as an exterior source to industry provides the forming of openness of offering ideas and development.

This research study is focus on the implementation of open advancement in Malaysian processing industry. This research is center on the degree of Open Innovation in manufacturing companies that only entail areas of ICT, Automotive and Electronics. Predicated on the open advancement paradigm, the study question is targeted to what types and methods of open innovation that implemented in developing industry? This research question is answered predicated on the Malaysian Creation Companies point of view.

Research question

These are the research question that certified for this research study:

What is the type of Open Innovation applied in these firms?

What is the method of open technology put in place in these companies?

To what magnitude is Open Advancement applied in these organizations?

Does the Open up Innovation implementation differ for each and every cluster of manufacturing companies?


Innovation is a substantial method of bettering and boost the performance and competitive advantages of the business and opening a change for the city and contemporary society to get involved in the advancement process.

The objectives of this research study are stated as:

To determine the sort of Open Innovation followed by Developing Industry.

To investigate the techniques for open innovation used by these businesses.

To determine the amount of Open Development execution in these creation firms.

To investigate whether the implementation of Open up Innovation differ for every clusters on processing firm.

Scope of study

This study is limited to only Malaysian Developing Market sectors from Automotive, consumer electronics and ICT. The range of topic discusses on this study is about the amount of open development execution on the Malaysian creation industry.

Limitation of study

Although this study has reached the aims, there have been unavoidable limits. First limitation of the study on this topic is the wide open innovation way itself. As know that open creativity paradigm is relatively new approach on the Malaysia industry but you may still find companies already applied the open development paradigm.

Second, the restriction considered is due to time period limit, this research was conducted in short amount of times to complete all the primary and secondary data. The last one is the lack of assistance from the respondent. The technique applied to this study is via review that distribute to the arbitrary respondent from the determined concentration group.

Importance of study

Manufacturing industry is the major entity of the economic growth alternatively than other industries. It is important to enhance the capabilities of developing industry by development. Open Innovation mechanism is the best way to help developing industry in term to improve their performance and competitive advantages.

The need for this analysis is to recognize the best methods applied to performing the open invention on the developing industries in Malaysia. This review also can discover the impact of Open Creativity to the organizations as well as ICT, Automotive and Consumer electronics industries.


The execution of open advancement is already become worldwide paradigm which changes the means of industrial and business to improve their competitive advantages and key competencies. Open technology also become medium and provides changes to community and population to get involved in writing ideas and understanding of innovation



On the section of books review, the researcher can discuss about the theory and the paradigm of the study study. According to (Saunders, et al, 2012), critical (books) review is the comprehensive and justified evaluation and commentary of the merits and faults of the literature within a chosen area, which demonstrates familiarity with what is already known about your quest topic. For this chapter, the resources of literature and ideas that relevant with the study study are collected from the catalogs, journals, newspapers, thesis, magazine and online articles.

Based on this issue attended to, the major theories which used to complete the analysis are the open up innovation paradigm. Within the open innovation theory, there are several disciplinary under this term. For this chapter, the researcher will first identified the theories of innovation, available invention and overviews of Malaysian Processing Industry; ICT, Automotive and Electronics sector.

Innovation and open innovation concept

Innovation is one of the key catalysts to the ecological organizational growth and performance. The word of innovation is already used within the century ago and innovation interpretation is focus more on the changes or improvement made by the business either with their product/services, functions and paradigm.

In simple words, invention is referred to as a big change that was created to the product and services and to the process. Innovation has a significant marriage between technology and knowledge. To be able to create add values and changes predicated on the development, the component of new knowledge is a essential sources. Relating to Allan Afuah (2003), the new knowledge can be scientific or market related. Technological knowledge is knowledge of components, linkages between components, methods, processes, and strategy that to get into a product or services. Market knowledge is the knowledge about the distribution stations, product applications and customer expectation, choices, needs and wishes (Afuah, A. 2003: 13).


Innovation is the use of new technical and market knowledge to provide a new product or service that customer want and the new product must new, less expensive and the attributes of the merchandise are increased with the traits that never existed in the market before (Afuah, A. 2003). The concept of innovation also thought as the process of earning changes of something founded by presenting something new that offers value to customers and contributes to the knowledge store of the organization (O'Sullivan, D. and Dooley, L. 2009).

There are four (4) broad categories of innovation called as '4Ps' of Creativity (Tidd, J. et al, 2005): 1. Product Invention where classify as change in the things (products) which an organization offers, 2. Process Development is the changes in the ways that they are created and supplied, 3. Position Invention is the changes manufactured in the context in which the products are presented, 4. Paradigm Advancement is changes in the fundamental mental models which shape what the business does.

In innovation device, there are two (2) types of static model of creativity which is the Radical Invention and Incremental Invention. Radical development is thought as major changes that are created in something established (O'Sullivan, D. and Dooley, L. 2009) and incremental advancement is the technology that uses existing forms or systems as a starting place. Both types of incremental and radical technology affect the scientific and market-related competencies of a firm in several ways (Herzog, P. 2011: 10).

Open Innovation

For the open development theory, this theory is first of all described by Henry Chesbrough. Open innovation is a paradigm that assumes that companies can and really should use exterior ideas as well as internal ideas, and inside and external pathways to advertise, as the companies look to advance their technology (Chesbrough, H, 2006). The paradigm of open up innovation leads the study & development to a available system.

Open Technology denotes, on the main one hand, the utilization of external and interior knowledge sources to accelerate internal innovation and, on the other palm, the utilization of external pathways to market segments for internal knowledge (Chesbrough, H. 2006). On the modern worlds nowadays, most of everything in industry are created using machines and progress technology. In order that, the creation of services and services are fast and can also be stated in large sums. In retailing, the advances in computing and communications are bringing sellers into closer connection with their customers as well as their suppliers, allowing these to provide more variety with fewer inventories than ever before (Chesbrough, H. 2006).

On the modern era, Development paradigm has change from the closed down model of development to open development model (Chesbrough, H. et al. 2005). The closed down creativity model is the paradigm where the process leading to innovation is totally controlled; all the Intellectual property is developed internally and held within the company frontiers until the new products is released on the marketplace (Meige, A. 2009).

Figure : The model of Closed Innovation

In case of closed style of innovation, the company has to count heavily on the internal key competencies and potential therefore of right of intellectual property. Matching to Philipp Herzog (2011), the implicit guidelines of closed advancement referred to as follows:

A organization should work with the best and smartest people.

Profiting from ground breaking efforts requires a firm to find, develop, and market everything itself.

Being first to market requires that research discoveries originate within the own firm.

Being first to market also ensures that the firm will win the competition.

Leading the industry in R&D purchases results in coming up with the best & most ideas and finally in winning your competition.

Restrictive Intellectual Property management must prevent other companies from profiting from the firm's ideas and technologies.

Figure : The Style of Open Innovation

In open innovation models, the organizations used the external sources solutions and knowledge to improve the internal advancement process and the organization also capable to commercialize the internal advancement via their own distribution channel by exterior pathways.

The open technology rule is the contrast and shown to the shut invention model. The basic principle of open creativity is shown the following (Herzog, P. 2011: 22):

A firm doesn't need to hire all the smart people, but instead work with them inside and outside the company.

Internal development activities are had a need to claim some of the significant value which may be created by exterior innovation attempts.

In order to gain the competition, it is more important to have the better business model than getting to market first.

Winning your competition will not require discovering the best and most ideas, but to help make the best use of internal and exterior ideas.

Proactive Intellectual Property management allows other companies to work with the firm's Intellectual Property. In addition, it considers to buy other organizations' Intellectual Property whenever it increases the own business design.

The model of closed technology on the present time are progressively eroded as a result of many of reason such as when the employees of some company changes their careers, they'll bring together the knowledge and the data then will moves from one firm to another. It is contrast to the open up innovation model where in fact the knowledge can be shared and gathered by the community and society that not directly involved with the organization.

Malaysian developing Industry

The rate of Malaysian financial progress on the creation industries increase rapidly since 1980's impact from the economical changeover from agriculture based economy to the industrial-based current economic climate. Economic changeover occurs as a result of awareness of the prevailing ability on the country. This mechanism can reduce the dependencies on the transfer sector of Malaysia to other countries and starting develop own nationwide based technology industries in term to bring a growth to the Malaysian overall economy.

Manufacturing market sectors is the one of effort by the Malaysian federal on their Ninth (9th) Malaysian Plan in term to focus on the value of up scaling manufacturing industry and related services. The government authorities that in-charge on leading and driving the expansion of making activities is the Ministry of International Trade and Industry (MITI). Others agencies and ministries are also participating in important assignments in bettering the national processing companies including Malaysia Exterior Trade Development Organization (MATRADE), Malaysian Investment Development Power (MIDA), Small and Medium Business Development Organization (SMDEC), Ministry of Business owner and Cooperative Development and Ministry of Science.

In this modern era, the development of manufacturing companies in Malaysia is enhancing a great deal especially on the sectors of ICT, Automotive and electronics sectors. There are lots of efforts added by the private and administration areas in term to boost improve the development of ICT, automotive and electronics sectors in Malaysia.

Adaptation of open development on Malaysian creation industry

This study is targeted on the investigation for open advancement implementation on the Malaysian manufacturing industry. The researcher is required to determine the production firms that involved in application of wide open innovation concept on the organizations. The random firms are chosen from three (3) different areas: ICT, Automotive and Consumer electronics.

In adapting the style of open innovation, there are various forms of collaboration identified for implementing the knowledge of advancement from the external resources. Eric von Hippel (1988) identified four external sources of useful knowledge: 1. Suppliers and customers, 2. University, Government and private laboratories, 3. Competitors and 4. Other countries.

For this study, the kinds of collaboration are centered to the three (3) varieties of collaboration specifically the Customer integration, distributor integration and university-industry cooperation (Parida, V. et al. , 2009).

Inbound versus outbound innovation

In the open innovation concept, inbound open technology refers to internal use of exterior knowledge and outbound wide open technology is the exterior exploitation of interior knowledge (Huizingh, E. 2011: 4) which mechanism relates to the three (3) knowledge process of exploration, retention and exploitation that may be performed either inside or outside the form's restrictions (Lichtenthaler and Lichtenthaler, 2009).

The inbound open up innovation or known as outside-in creativity process are using the idea of integration on external knowledge with the suppliers, customers, research institutes and colleges. The outbound open up creativity or called as inside-out differs than inbound theory where the businesses will retailing intellectual property and bringing their internal suggestions to market by showing them to external environment (Huizingh, E, 2011: 27).

The best exemplory case of inbound open invention activities are technology scouting, horizontal technology collaboration, vertical technology collaboration, and technology sourcing. For the outbound open advancement the example is external technology commercialization.

Conceptual Framework

Figure : conceptual construction of the research topic


On section of books review, the researcher is sensible to spell it out and clarify about the ideas that related to the topic of study. The researcher has discussed the definition and idea of traditional advancement and open advancement paradigm. This section also express about the partnership between the production industries and open up innovation.



On this chapter, the study design methodology used on this study will be described and explained. Research methodology identifies the idea of the way the research should be undertaken (Saunders et al, 2012). The researcher will discuss and illustrate all the information related with the technique used on the research study in term of obtaining and gathering the info collection.

On chapter 3 (technique), the technique used credited to gathering information of key and extra data are explained and described. Along with section 2, the researcher will driven the sort of design method used to get the data of primary data and extra data to answer the study question of the study study. Chapter 3 comprises six (6) parts; Research design, research design method, data collection, location of study, research strategy and trustworthiness, generalizability and validity.

Research Design

Research design is the overall plan of the way on answering the research questions. Matching to Saunders et al. , (2012) research design is the framework be employed by the collection and evaluation of data to answer research question and meet research objectives providing reasoned justification for selection of data options, collection methods and research techniques.

Figure : Framework and Put together of the research study

Research Design Method

For this research matter study, the technique of study integrated is the mono approach to quantitative analysis. The quantitative examination method as well as survey on this study is significant in order to obtaining the main data from the respondents. Quantitative method is

The respondents are randomly selected from the primary emphasis group (ICT, automotive and electronics) to answering the question related to the implementation of Open Advancement on Malaysian production industries.

Primary and Extra Data Sources

Primary data is the info collected specifically for the research project that being performed by the researcher (Saunders et al, 2012). The primary data mostly gathered from the several ways such as observations, experiments, surveys and interviews (Pervez Ghauri and Gronhaug, K. 2005: 102). The method employed by the researcher in acquiring the principal data is by the survey which will be allocated to the random respondents of the concentration group. The info and information are then gathered and analyze by researcher to acquire result.

According to the Uma Sekaran and Roger Bougie (2010), the extra data is the info that have recently been gathered by past researchers, data shared in statistical and other journals and information available from any released or unpublished source available either within or outside the organization, which might be beneficial to the researcher. For the extra data collection, researcher gathers the info from the reading of the related previous study, catalogs, and journals and the as articles. The extra data also being collected from the web sources.

Location of Study

The focus of the review is on Malaysian creation Industry that implements the Open Innovation approach. The positioning of research is narrowed further to the ICT, Automotive and gadgets companies in Malaysia. The locations that are decide for this research is not given because the organizations of ICT, Automotive and Gadgets in Malaysia are pass on around. The arbitrary of respondents are determined based on the focus areas of review (ICT, Automotive and Electronics) to answer the research question related to the research review. The respondents are choosing from the various divisions of the organizations.

Research Strategy

Based on (Saunders et al, 2012), research strategy is the general plan of how the researcher will go about to answering the research question of the topic. For this study, the method used to gather the info collection is via the study method. The details of research strategy are shows as follows:

Survey Method

On this research study, survey approach is utilized for data collection. The surveys will be distributed following the specified of sample to the respondents from the emphasis groups of the research topic. By using the study method, the researcher can accumulate many different kinds of information related to this issue study and this method also quick, low priced in comparison to observation and experimental method.

Preparing the Survey

The research study is using the quantitative method where the survey is used to get the information and data. The question on the review is constructed based on the research question and aims of the study. This survey is conducted to recognize the implementation of open creativity in ICT, motor vehicle and consumer electronics industry. The respondents are personnel or employees from the business.

Survey research design

The way of using study method is ideal for this study for gathering descriptive information and data. For survey method you can find several way of executing the review such as: 1. Structured studies - the formal list of questions use and asked all the respondents in the same way, 2. Unstructured surveys - the researcher investigate the respondents and guide the interview relating to respondent's answers (Kothari, C. R. , 1985).

The study research method also can be conducted either direct or indirect. The immediate approach of review is where in fact the researcher asks direct questions about tendencies and considered the respondents. In the meantime the indirect methodology, the requester will asks indirect question and the researcher then may be able to discover the main point.


Sample is a section of population chosen to represent the population all together. The researcher must determine the sample design for review method based on type of information is necessary, who will be the target group and which test size reliable for the result (large sample or small samples). For sampling, the researcher may choose sample members randomly from the whole population (possibility sample) or the researcher may choose people who are better to obtain information from the population (nonprobability).

Reliability, validity and generalizability

Reliability is the level to which data collection technique or techniques will deliver consistent findings, similar observations would be made or conclusions come to by other experts or there is transparency in how sense was made from the natural data (Saunders, M. 2012).

According to Draw Saunders, Philip Lewis and Andrian Thornhill (2012), generalizability is the degree to which the findings of a research study are applicable to other adjustments.


In conclusion, this chapter talks about about the technique employed by the researcher in research study to obtain data and information. Experts using quantitative method in this study where the data and information are accumulated by the survey that allocated to the respondents and then your data will be analyze to obtain result. This chapter also includes the research design and research strategy also. The validity, generalizability and dependability of this study is being reviewed.

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