MANAGING OPEN INNOVATION: THE ROLES OF STRATEGIC ORIENTATION AND DYNAMIC CAPABILITIES, EVIDENCE FROM ETHIOPIAN SMEs

The focus of this study was to assess empirically the effects of strategic orientation open innovation through dynamic capabilities of small and medium-sized enterprises (SMEs). A cross-sectional field survey quantitative approach was applied to collect primary data from the study area. Based on the empirical data of 321 SMEs operating in study area, the study was employed structural equation modeling (SEM) to analyze the data and research hypotheses in the proposed structural regression model. The SEM analysis found that open innovation is associated with small and medium enterprises' higher-level strategic orientation. Finally, the results indicated that dynamic capabilities mediated the path between strategic orientation and open innovation. Moreover, the study indicated that strategic orientation creates value through dynamic capabilities of the SMEs. Hence, the ability to sense, seize and transform the external ideas, knowledge and information along with the internal resources is vital to small and medium-sized enterprises success.