Open innovation as a driver of economic development in emerging markets: as assessment of two Triple Helix projects in Southern Africa

DANIËL NEL
The Research Institute for Innovation and Sustainability
North West University
South Africa
daniel.nel@riis.co.za
DAVIS COOK
The Research Institute for Innovation and Sustainability
North West University
South Africa
davis@riis. co. za

ABSTRACT

Open Innovation activities embedded in Triple Helix collaborations are a potential source of economic growth. Two Triple Helix projects in Southern Africa are evaluated by analysing their influence on the creation of social capital, network expansion, firm resilience and knowledge, and technology transfer. There is evidence that open innovation in Triple Helix configurations contributes to technological development , but only under specific circumstances. It was found that low absorptive capacity of firms and bad IP regimes negatively affects direct technology transfer.

1 INTRODUCTION

Copious amounts of research has been done thus far on the drivers of economic growth. Various models attempt to describe it and policies aim to stimulate growth through diverse avenues. Comparatively little has been done to measure the direct influence of open innovation on economic growth. In this paper two Triple Helix projects are analysed in terms of their economic impact with a specific focus on the open innovation within them.

The first of these is a collaboration between multiple government entities, academic institutions and an industry partner with the goal of economic development in Southern Africa. A web-based open innovation broadcast platform was used to source and disseminate technology throughout the region. This collaboration spanned several countries including South Africa, Namibia, Mozambique, and Zambia and was analysed in terms of its macro-economic impact.

The second Triple Helix collaboration is smaller than the first, consisting of a single industry-university-governmentcoupling. The aim of the collaboration was to develop the necessary tools for the effective management of open innovation in Southern Africa. The bulk of the collaboration outcome is localised within the boundaries of the industry partner. This partnership is analysed from the perspective of the micro-economic impact of open innovation, through Triple Helix collaboration, on small firms.

The authors have searched through the literature and could not find a satisfactory paper describing the direct influence of open innovation on economic growth. Many periphery studies exist (see section 2) that describe the performance contribution of open innovation within the firm but these do not go past mentioning innovation as an economic driver. One aim of this paper is to begin to address this shortcoming in the literature.

The two Triple Helix collaborations are analysed by assessing five possible ways they could potentially contribute to economic growth. These five methods of economic growth contribution are:

a. The creation of social capital through network expansion;
b. Increased firm resilience;
c. Fostering of human capital through knowledge transfer;
d. Improved competitive advantage through knowledge and
technology absorption; and
e. Multi-factor growth through NSI collaborations.

It is concluded that open innovation contributes to economic growth through all of the above stated avenues, but to varying degrees. The configuration and specific aims of a Triple Helix configuration shape the effect it has on organisations. Small firms with limited absorptive capacity draw little value from intermediated technology transfers; larger firms, with a greater absorptive capacity and available finances, can use it as an effective means to absorb external technology and so expand their competitive edge.

2 THEORETICAL BACKGROUND

2.1.1 The National State of Innovation

South Africa is a upper middle income country with some industries, infrastructure and capabilities that are on par with first world standards. On the other hand, poverty, stable power supply and education are retardant factors in South Africa’s development.

The Global Innovation Index ranks South Africa as the 53rd most innovative country out of 142 with a score of 38.2, as calculated from key economic indicators. To put this into context consider that Switzerland, the first ranked country on the list, has a score of 64.8. South Africa’s score is thus about 60% of that of the most innovative country. Compared to the other BRICS countries South Africa is more innovative than Brazil (61st) and India (76th), but less innovative than China (29th) and Russia (49th). (Cornell University, INSEAD, WIPO 2014). However, the same study shows that Namibia and Zambia are significantly less innovative, ranking at 125 and 121 respectively.

Innovation on a national level is bolstered by a well established National System of Innovation. As an illustration, in 2008 the TIA act (Act no 26 of 2008, Republic of South Africa) was passed with the objective:

“… to support the State in stimulating and intensifying technological innovation in order to improve economic growth and the quality of life of all South Africans by supporting the development and exploitation of technological Technology Innovation Agency innovations”.

Several grand challenges were defined to stimulate the economy (South Africa – Department of Science and Technology 2008). They include:

a. Farmer to Pharma challenge. This initiative’s goal is to utilise South Africa’s bio-diversity to stimulate growth in live sciences and so stimulate economic growth.
b. Expanding the limits of space science and technology.
c. Energy and energy security.
d. Climate change.
e. Human and social dynamics.

2.1.2 Open Innovation and the National System of Innovation

Henry Chesbrough defined the term ‘Open Innovation’ as a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology (Chesbrough, et al 2006). Furthermore, he states that the Open Innovation paradigm treats R&D as an Open System.

From a more fundamental theoretical perspective the effect of Open Innovation on National Systems of Innovation is profound and has been explored in a limited amount of studies (Wang, Vanhaverbeke and Roijakkers 2012). The ability of a firm to successfully implement open innovation is positively correlated to several external factors, most notably a continuous supply of outside knowledge, highly educated personnel, financial resources, effective legal systems and the institutional protection of IP wrights (Wang, Vanhaverbeke and Roijakkers 2012). These factors can all be correlated with those associated with a NSI. The most prominent of these correlations are explored below:

a. Open Innovation reinforces the importance of NSI. A well equipped and functional NSI supplements and directs the available amount external knowledge, which in turn enables the innovative firm to absorb it;

b. Technology markets, as an instance of open innovation practice, tap into under developed technology markets and allow firms to trade technologies. In this way open innovation aids the goals of the NSI by disseminating knowledge into new market spaces and creating new streams of revenue for firms through the selling of technology;

c. A key dimension in OI is the use of networks to gain and distribute knowledge. This is consistent with the core NSI concept whereby diverse efforts foster different kinds of collaboration and networking activity. Networked interaction between innovation networks and a NSI is critical for the development of OI practices;

d. A well-defined system of intellectual property protection can ease knowledge flows. Both Inbound and outbound Open Innovation are dependent on knowledge flows which, by virtue of their nature, will have some component rooted in intellectual property protection. In this context the IPR protection system and legal regime within the NSI framework is an important enabler of OI practices; and

e. Major public support for basic research is needed to foster a healthy open innovation ecosystem. Companies are shortening their R&D cycles to save costs and shifting their Internal focus from basic research to more immediate application orientated innovation. The NSI can act as A support system to breach the gap in support for basic research and so support OI.

2.1.3 Open Innovation in South Africa

Open Innovation is a growing field in South Africa. Consider the results of a 2012 survey of open Innovation in South African SMEs (Krause, Schutte and du Preez 2012). This survey found:

 63% of respondents report having implemented 1-3 innovations in-house or into the market over the previous year, 20% reported 4-10 innovations and 10% reported having no Innovations;
 The types of innovation implemented were mostly product related;70%oftherecipientsImplementedthese. About50% implemented business model innovations and the same number of organisations implemented strategy innovations;
 Respondents were asked if they considered themselves knowledgeableonthetopicofopenInnovation. About18% of the recipients agreed strongly, 37% agreed slightly, 27% had no opinion on the matter and about 20% disagreed in varying grades. Thesametrendwasvisiblewhenaskedtocomment on their organisation’s knowledge of Open Innovation;
 Most recipients agreed (76.5%) that Open Innovation is a viable method for innovating in their business; and
 Finance (61. 2%), resources (54. 1%) and organisational culture (30.6%) were identified as the three most prominent barriers to using open innovation.

It is clear from these results that most respondents agree that open innovation is a viable method for innovation within their businesses, but lack the resources to implement it. It should be noted that the poll questions were set up according to Chesbrough’s definition of Open Innovation.

2.1.4 Economic Growth

The endogenous growth theory states that “economic growth is an endogenous outcome of an economic system, not the result of forces that impinge from outside.” (Romer 1994) This theory implies that investment in innovation, human capital and knowledge generation are significant contributors to economic growth and that long run growth is dependent on policy measures. Although this is one of many models (eg. Classical, Neoclassical and Schumpeterian), its focus on and inclusion of innovation and knowledge generation renders it the most viable for the assessment of economic growth within the parameters of this study. This is, therefore, the basic theoretical model that was used to frame the impact of open innovation on economic growth, as a precursor to economic development (the two being related, but not identical).

2.1.5 Open Innovation and Economic Growth

The impact of Open Innovation on economic growth can be investigated from several vantage points. Prominent causal chains between the Open Innovation and economic growth are discussed in this section and include (1) the creation of social capital through network expansion, (2) increased firm resilience, (3) fostering of human capital through knowledge transfer, (4) improved competitive advantage through knowledge and technology absorption, and (5) multi-factor growth through NSI
collaborations.

Other avenues for economic development through open innovation might be possible, but for the purposes of this paper these will suffice.

Social capital is both a requisite for open innovation as well as an outflow from its implementation. A basic network is needed to initialise its working and as knowledge and technology disseminates more ties are forged between organisations. A study ( W estergren and Holmström 2012) on the transition of KLABS mineral group’s transition from a closed to a more open system of innovation reveals several preconditions for Open Innovation. Among them was the need for expertise in implementing a culture of knowledge sharing and building of a trustful environment. The transition has also resulted in the creation of new value networks.

Firm resilience can be created through several Open Innovation practices. Open practices, including OI and the adoption of open source software, have been suggested as tools to create public- good innovations. This has been studied in the context of the struggling Greek economy and deemed a viable method for cost reduction in the innovation process. As such OI can be deemed a valuable method to sustain innovation output while an economy is under pressure. (Papadopoulos, et al 2013)

In the context of software SMEs it has been shown that Open Innovation can be used to diversify product and service range. Allowing programmers and software engineers to allocate a portion of their workday to an open source project of their choice creates an environment where market opportunities are more easily identified. It also eases the absorption of new technology into the firm, and acts as a buffer preventing product stagnation. (Colombo, Piva and Rossi-Lamastra 2014)

The creation of firm resilience through product diversification is, therefore, a positive contribution of open innovation towards economic stability. This concept can be expanded to most high tech industries where technological turnover is high.

A study (Kafouros and Forsans 2012) on chemical firms headquartered in India showed that the performance contribution of in-house R&D remains higher than that of external knowledge sources. This does not negate the importance of external knowledge sourcing, especially in emerging economies where firms do not have strong innovative capabilities. It is shown that these firms can enhance their innovation performance by accessing frontier technologies and so become more competitive globally.

Furthermore, it was shown that incorporating external scientific knowledge has a varied effect, depending on the origin of the external knowledge. The performance effects of acquiring domestic scientific knowledge and technologies are small or negligible while foreign sources thereof improve firm performance

considerably (Kafouros and Forsans 2012) (Wang, Cao, et al. 2013). This was observed to the extreme where knowledge acquired from domestic sources can have an adverse effect on internal R&D. It is shown that knowledge acquired from foreign firms is more effective in enhancing R&D and firm profitability. Why then do firms invest so heavily in local knowledge? Two possible reasons are, the initial cost of acquiring foreign knowledge, or technology and the inability of firms to identify the frontier of technology.

This viewpoint is not universally excepted. A different study (Fu, Pietrobelli and Soette 2011) provides evidence that “despite the potential offered by globalisation and liberal trade regime, the benefits of international technology diffusion can only be delivered with parallel indigenous innovation efforts and the presence of modern institutional and governance structures and a conducive innovation system”. One of the stated arguments for this is that foreign technology remains only static technology in the form of imported equipment and do not evolve into real indigenous technological capability without indigenous innovation.

2.1.6 Triple Helix Collaborations

The Triple Helix model is a conceptual framework that describes the interaction of business, government and universities. Recently this model has been commended as a powerful tool in regional development (Etzkowitz and Ranga 2010).

For the purpose of this paper, the Triple Helix model should be seen as a highly calibrated instance of Open Innovation. This is justified by the symbiosis of knowledge creation between universities and organisations. The impact on government policy through the created knowledge is also a valid interentity information exchange.

According to (Etzkowitz and Ranga 2010) it is widely recognised that there are no universally applicable measures for knowledge- based regional development, given widely different conditions in different world regions. The crux of the argument is that recommended best practices are rarely attuned to the early development stages of knowledge development. It is thus better to adapt a model from the formative phases of successful cases, taking into account the region’s own weaknesses and opportunities.

Within the context of the Triple Helix model, one of the partaking institutions is usually the driving entity around which the other institutional spheres are arranged (Etzkowitz and Ranga 2010). In a statist regime ( Triple Helix I) government drives academia and industry . In a laissez-faire regime ( Triple Helix II) industry is the driving force, and in a mature knowledge based society, universities play a larger role, yielding a balanced model ( Triple Helix III).

3 METHODOLOGY

Although both projects under consideration can be classified as Triple Helix collaborations, their attributes differ considerably. The Regional Connect project has multiple academic and government partners. These partners are from various countries and the project is strongly aimed at stimulating innovation across Southern Africa. It is thus fitting to examine this project in terms of its innovation network and macro-economic impact.

In contrast to the Regional Connect project, the Data Value project has only three partner entities and is more strongly focused on industry capacity increases through technology adoption and academic outcomes. This project is thus better suited to be examined at a micro-economic level with special attention given to open innovation’s economic impact on the firm.

A fundamental assumption in this study is that the Endogenous Growth Model holds true and, therefore, that technological growth implies economic growth, and then further that economic growth is a necessary prerequisite for economic development. In the previous section five avenues were identified whereby open innovation can contribute directly to economic growth or to technological growth.

These are used as a criterion to qualitatively assess the two Triple Helix projects and so evaluate their economic impact.

4 THE TRIPLE HELIX PROJECTS

The two Triple Helix configurations studied are presented here. The two projects presented in this paper differ considerably in their structure and goals. The first Triple Helix collaboration, the Regional Connect project, is aimed at stimulating innovation over a large region. The second Triple Helix project, the Database Development Project, has a smaller focus and aims to produce the tools necessary for effective Open Innovation management. RIIS is the industry partner on both these projects. Figure 1 illustrates the configuration of the two projects

4.1 The Regional Connect Project

The first project, Regional Connect, is a collaboration between:

a. The Research Institute for Innovation and Sustainability (RIIS).
– RIIS is an innovation intermediary located in Pretoria, South Africa. Its core services includes the development and management of Open Innovation exchange platforms and innovation consultation. RIIS is the managing partner on the project.
b. The University of Namibia (UNAM)
– The largest national institution of higher education in Namibia. UNAM supports a student population of 19 000.
c. The Southern Africa Innovation Support (SAIS) programme
– The SAIS programme is a four year pilot project which seeks to promote innovation in Southern Africa. The programme supports collaboration between the innovation systems of African countries in order to create a positive impact on economic and social development in the region and is funded by the Finnish Ministry of Foreign Affairs.
d. The National Business T echnology Centre in Zambia (N TBC) NTBC was established in 2002 with the objective of linking development, and already commercialised, technologies form both local and international sources with local technology seekers for the creation of wealth and employment.
e. The Eduardo Mondlane University in Mozambique (EUM)
The UEM is the oldest and largest university in Mozambique. The UEM is located In Maputo and has about 35 000 students. The university is only an observing partner in this project.

The Regional Connect project utilises an Open Innovation broadcast platform (www.oiregionalconnect.com) to connect technology seekers with providers. Business needs are published in the form of a “Challenge” that is then brought to the attention of a large number of possible solution providers. Proposals are collected and filtered and the most promising ones are presented to the challenge owner.

Figure 1:
Configuration of Triple Helix Partnerships

f1

Figure 2: Potential Knowledge influx for Namibia and Zambia
f2

Over the course of twelve months, a total of 75 organisations were contacted and engaged in order to undertake a Challenge. It is important to note that the service offered to these clients cost them (the clients) nothing directly, though indirect costs such as time should be counted. The zero-cost of these challenges is due to the fact that SAIS, backed by the Finnish Ministry of Foreign Affairs, subsidised each of these challenges. Despite, therefore, having the opportunity to benefit from an essentially zero-cost, international technology search, only five organisations accepted the offer. It is unlikely that economic or financial reasons were the motivating reason for the lack of interest. Indeed, the Regional Connect business development team noted several important reasons for restraint:

a. A desire to see the process work elsewhere in their market.
b. An inability to identify an internal business process that could
be improved.
c. A lack of buy-in from an executive decision maker.
d. Reluctance to engage with foreigners.

These reasons point to a few underlying factors – a risk averse nature, technical competence to identify areas for improvement, awareness of the benefits of open innovation (although the attitude was more broadly around innovation), and a very ‘closed’ culture. These point to a general characterisation of many of these firms as likely to have a low technological absorptive capacity, a point to which we will return.

Five of these challenges are analysed to demonstrate the economic impact of the project. The first economic effect of Open Innovation to consider is that created by network expansion. Figure 2 illustrates the potential influx of novel technology and knowledge due to the Regional Connect project. The five challenges elicited 68 responses from 13 countries. Although only a small sub-set of these will be formally implemented, every challenge response shared with a challenge owner creates value in three different ways:

a. The technology landscape, relevant to the challenge industry, is revealed and provides the challenge owner with a holistic perspective on possible problem solving avenues;
b. Direct collaboration creates possibilities for technology absorption which in turn bolsters the participating firms’ competitive advantage; and
c. Insight in the market landscape makes it easier to identify potential product innovations.

South Africa is the largest contributor of challenge proposals, contributing 43 out of the total 68. This can be explained by the fact that the project was managed out of South Africa and that most of the participating solution providers are located here. It should also be noted that South Africa is a technology leader compared to Zambia and Namibia. These countries are rated 121st and 125th in the Global Innovation Index, respectively (Cornell University, INSEAD, WIPO 2014).

The expansion of innovation networks was not limited to those of the challenge owner alone. The project collaborator’s networks were also expanded. RIIS, in its capacity as the project managing party, benefited through the expansion of its solution provider database. This has a very direct impact on its future capacity for innovation intermediation.

4.2 Database Development Project (DDP)

The DDP is a collaboration between RIIS, THRIP and the NWU. The aim of the project aim is to produce various technologies and systems necessary to effectively run open innovation services. Postgraduate students from NWU are hosted on a long term basis at RIIS, providing them with industry experience. RIIS benefits from the development of new technologies and systems and from their collective knowledge. The project is currently in its second year and has produced several positive outputs, including the development of processes, a challenge campaign management system and a database of potential solution providers. The original project mission statement was provided as:

“The data project aims to create a structured data environment supported by cutting edge database management tools (including software and hardware) to collect, classify and store data, supported by automated processes to acquire and extract data and extensive reporting options, ensuring that RIIS remains the preferred supplier and a credible practitioner of open innovation in South Africa and the Africa.”

This aim remains intact, but was expanded to include development of supporting business structures, such as a time management system.

The development of web-based innovation exchange platforms consists of a variety of activities requiring a diverse skill set. An external contractor is responsible for a substantial amount of web development, but was assisted by students in all stages of development. The stages included scoping, design and prototyping, implementation, testing, content generation and maintenance. Several high quality innovation exchange platforms were produced in the process. At the onset of the project a business requirements analysis was done and the required areas of development identified where the project would have a maximum impact. It was determined that the processes in place were inadequate and these were subsequently updated.

The nature of RIIS’ business requires a comprehensive contact database. At the onset of the project this was run on a spreadsheet system with minimal centralisation and with no data standards. This has been remediated through the development of a contact management system specifically tailored to suit open innovation challenge campaigning.

Open Innovation challenges are mostly technically advanced. Through collaboration between RIIS and the NWU, expert knowledge became more readily available to aid in the execution of challenge campaigns. Research support was extended to contact discovery for Open Innovation challenges.

4.2.1 Data value project benefits

The project has benefited the industry partner (RIIS) in the following ways:

a. Utilisation and availability of specialised skill sets. Through the THRIP project students are assigned to perform tasks for RIIS. In some cases on a permanent basis and on others as vacation internships or task specific assignment. The students are chosen on the merit of their skill set and the need for their skill sets in the project implementation.
b. Business process updates trimmed an array of redundant activities, restructured others and highlighted the need for training in several areas.
c. Increased business intelligence through more comprehensive reporting capabilities.
d. Readily available expert knowledge and research assistance, applied to both internal development and industry specific open innovation challenges.
e. Increased resilience through process refinement.
f. Development of human capital.

The project has benefited the academic partner (NWU) as follows:

a. An increased capacity for relevant publication is generated by the T riple Helix ecosystem. The a vailability of industry relevant problems and real world data fosters the generation of practical research questions that have the potential to impact policy and generate valuable business intelligence, technologies and processes.
b. Several research proposals have thus far been identified and fed back to the NWU.

The project has aided government mandate as follows:

a. The bursary scheme associated with THRIP creates opportunities for students that would in alternate circumstances not be able to afford an education.
b. The project activities speak directly to South Africa’s ‘brain drain’ problem. All of the students involved are either studying engineering or IT

5 DISCUSSION

5.1 Regional Connect

The heart of the Regional Connect project was to leverage technology and innovation networks to accelerate innovation in Namibia and Zambia, with a specific focus on adding competitive advantage (for smaller organisations), and improving operational efficiency (for larger companies).

The Triple Helix architecture is therefore focused on establishing system-wide networks and relationships, and improving the viability of technology transfer between organisations (both locally and globally); it is therefore a system-level architecture. The Regional Connect project showed that there was significant caution around the use of open innovation to solve challenges. This is considered to be the result of the ‘foreignness’ of the concept, particularly as Namibia does not have a strong Intellectual Property regime. Many firms and organisations are therefore unwilling to reveal their IP on what is perceived to be an ‘Open Platform’. This was further exaggerated by South Africa’s lack of affiliation to the African Regional Intellectual Property Organisation (ARIPO). Many firms directly expressed their reservation about South Africa (seen to be the largest technology contributor in Figure 2) and South African firms not being held accountable by ARIPO; in other words, South Africa could ‘steal’ their ideas.

This demonstrates a behavioural resistance against an open innovation approach, even one where Intellectual Property rights are strongly protected (as they were within Regional Connect). A second important insight from the project was that challenge owners could not implement the solutions found through open innovation because of a lack of both financial and human resources. Not only do the firms lack direct financial resources with which to purchase the technologies, but there are significant skills shortages in order to implement them. In both instances of SMME clients, an important prerequisite for their OI Challenge was “requires no or limited advanced skills to operate”. This is because of the lack of advanced skills within these firms. These two factors – limited financial resources, and limited skills – a poor absorptive capacity of these firms for advanced technologies.

Because of these two factors (risk aversion to open innovation, and limited absorptive capacity), a negative feedback loop is created, particularly for smaller organisations: they are unlikely to adopt and/or implement leading technologies, resulting in poorly competitive industries, which in turn results in fewer financial resources and skills absorption to enable new technology investment. It is notable that the challenge owners that actively pursued solutions are large organisations with relative monopolies in their local industry, affording them significant financial resources with which to adopt these technologies.

A further important consideration is the virtual non-existence of local technologies for local challenges. Despite significant effort put into sourcing local technologies, only four proposals (out of a total of 68) originated from Namibia and Zambia. This is indicative of the limited innovation capability of local firms (at least in the industries in which the challenges were run). The potential for benefitting from technology transfer is therefore very high, except that firms lack the necessary absorptive capacity.

The implication of this is that open innovation processes, such as that operated by the Regional Connect project, will only create economic benefits provided that the beneficiaries of the processes (the firms searching for technology) are suitably empowered or enabled to absorb these technologies. On a wider scale it can be argued that the network formation achieved by the Regional Connect project can only occur through the application of external incentives. Both Namibia and Zambia are technology followers, with very little to show in cutting edge technological or research development (Cornell University, INSEAD, WIPO 2014).

A point of concern is the observation that the open innovation platform utilised in the Regional Connect project had little effect on the absorptive capacity of smaller firms. The firms were presented with excellent technological solutions to their business problems, but were unable to implement these due to cost. This calls for a diversification in approach when dealing with different firm sizes. A local industry-university collaboration might have a more profound impact on the growth of these firms.

5.2 Database Development Project (DDP)

The core aim of the DDP is to maintain RIIS’s position as a credible practitioner of open innovation services, ie. to maintain and grow the economic and commercial competitiveness of a firm. This particular Triple Helix architecture is therefore focused on the micro, firm-level (as opposed to the much broader system- level of the Regional Connect project); ie. it is a firm-level architecture. Although the product bouquet of the firm constantly undergoes evaluation and is evolved through market dynamics, the firm’s internal processes and technological prowess would stagnate if it was not for the availability of funds from government development programs such as THRIP. It is, of course, not a revelation that the ability of firms to innovative is critical in gaining and sustaining competitive advantage and has become fundamental in the concept of the firm (Teece, Pisano and Shuen, 1997).

However, the capacity of smaller firms to undertake significant amounts of research and development is limited by their access to resources, and the negligible impact which a ‘normal’ R&D budget –

in percentage terms – could generate. For example, a firm of $1m turnover that dedicates 2% of turnover to R&D annually will spend only $20,000. This could potentially be of significant impact to the organisation, but in comparison to the very large (multi-million dollar) research budgets of larger organisations, it is inconsequential. The ability of a small firm, then, to access significant amounts of research funding through matched funding programmes (such as THRIP), and to access leading practitioners (through the university collaboration) allows a small firm to compete well beyond its direct competitors.

These additional resources directly impact on the absorptive capacity of the firm (RIIS, in this case) to develop, implement and benefit from organisational and process innovations that would otherwise be de-prioritised in favour of operational requirements.

What was critical for this to happen is a minimum level of technical and financial resources to support the programme. Financial resources in the programme were generated both through private equity injections to the firm, along with cash generated through organic growth. At the same time, the relatively high level of technical competency in South Africa provided the required skill set for the firm to both develop, as well as utilise, the innovations. In both examples, the absorptive capacity of the firm enabled it to benefit and maintain competitive benefits from the THRIP / NWU collaboration.

6 CONCLUSION AND FUTURE DIRECTION

This study contributes to the literature by analysing two Triple Helix projects and their economic impact on different scales. It is shown that projects of this nature can contribute to economic growth through the forging of innovation networks and so increase social capital, bolster firm resilience through technology dissemination and intelligence, and influence absorptive capacity.

Open Innovation is a viable option to hasten economic growth. It supports the framework and aims of national systems of innovation and creates an environment in which economic growth activities can flourish. It would be a fair assessment to conclude that all the partners present in a Triple Helix network are required before open innovation, in the modes utilised in these projects, can be implemented at a level sufficient to have a significant economic impact. Without government funding and mandates almost no channels for innovation would be formed. local knowledge would stagnate.

Without universities It was clear from the Regional Connect project that there is much ignorance on the subject of innovation and that a cultural change is necessary before firms will start to actively search out innovation intermediaries and other similar organisations and programmes.

Firm size and capabilities should be taken into consideration before endeavouring on an innovation initiative. International technology awareness and adoption is a good strategy for larger companies while university-industry collaborations can be more suitable for the needs of smaller companies. The negating factors for small firms to capture value from direct technology transfer is a lack of technology awareness, lack of skills to utilise a more advanced technology, and most notably a lack of financial resources. These factors, among others, result in small firms having a very low absorptive capacity. An interesting avenue of future research would be to determine the levels of absorptive capacity required before a firm starts to benefit from direct technology adoption.

These initiatives should enable small firms to innovate internally through direct funding and incentives for university-industry collaborations. At the same time open innovation challenges, or similar open methods, should be used to bolster innovation in larger firms.

The reasoning behind this approach is that most small firms do not have the financial capacity to innovate internally and require specialised skill sets and knowledge to do so. These can be supplied through university-industry collaborations. Government mandate and oversight can have a large impact on the scale at which these collaborations are formed.

It was shown that the cost of technology adoption from developed countries can have a detrimental effect on organisation’s absorptive capacity. Selective technology adoption subsidies can help to negate this, but would be complex to administrate. It is thus recommend that the administration be decentralised across Triple Helix collaborations where the decisions for fund allocations must be approved by both government development agencies and subject experts from universities. This will not only minimise unfruitful expenditure, but the open nature of the Triple Helix collaboration can also act as a buffer against corruption.

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AUTHORS

Daniël Nel is an Information Engineer at the Research Institute for Innovation and Sustainability. His academic background includes a Bachelors degree in Computer/Electronic Engineering (North West University), and he is currently enrolled for his postgraduate studies focusing on Technology Intelligence (MEng, North West University ). Daniël develops software tools for use in Open Innovation intermediation and management and technology intelligence gathering. This includes the development of big data analytics, collaboration platforms and natural language analysis software. He is involved in several Triple Helix projects across Southern Africa, being the lead engineer for SOLEX, OpenIX, Regional Connect and Connect+Solve.

Davis Cook is the Chief Executive Officer of the Research Institute for Innovation and Sustainability, an open Innovation Consultancy based in Pretoria, South Africa. Davis has a broad economic background that includes undergraduate degrees in Physics and Applied Mathematics (Pretoria) and Politics, philosophy and Economics (UNISA) along with postgraduate studies in Development Studies (SOAS, University of London). Davies has worked internationally in financial, strategy and sustainability consulting, serving some of the largest private and public companies globally. He has worked in economic development- focused roles in the South African government, with a focus on the role of innovation in promoting economic and social development. In his current role as CEO of RIIS, Davis aims to use open innovation approaches to stimulate and consolidate the national system of innovation in South and Southern Africa.