Effectiveness of open innovation strategies on technology innovation in micro and small furniture manufacturing enterprises in Tanzania

Abstract

Although open innovation is widely regarded as a less resource demanding approach to innovation for small enterprises, few 
studies have comprehensively assessed the effects of all three open innovation strategies within a single industry. This gap, 
together with the inconsistent and largely high-tech, developed country evidence base, calls for context-specific studies of the 
approach in developing countries. This study assessed the effectiveness of the three open innovation strategies (inbound, 
outbound, and coupled) in fostering technological innovation in the low-tech furniture-manufacturing industry in Tanzania. A 
quota sample of 213 micro and small furniture-manufacturing enterprises (MSFMEs) in Arusha, Dar es Salaam, and Mbeya was 
surveyed. Using regression analysis performed in SmartPLS through its PROCESS path-analysis module, the study finds that 
only outbound open innovation significantly promotes technological innovation among MSFMEs in Tanzania. This differential effect underscores the need for MSFMEs to develop internal capabilities, such as absorptive capacity, as preconditions for enacting open innovation strategies effectively and to prioritise outbound open innovation as the most effective strategy for fostering technological innovation.