Open Innovation Benefiting Micro, Small and Medium Enterprises - A Case of the Leather Cluster in Kolkata

Abstract

It is often argued that, in the beginning of the 20th century, firms relied heavily on closed innovation (Chesbrough, 2003) in order to improve their quality and productivity and discern business niche. The profit generated out of business operations was primarily used to support research and development in a virtuous circle of innovation. However, by the end of the 20th century, increased mobility of knowledge workers, rapid diffusion of information and growing availability of venture capital have caused the process of closed innovation in firms to start breaking up. Today, open innovation is increasingly becoming a paradigm that connects research from various areas of management science. Practitioners and experts have started believing that open innovation has a much broader domain of application than originally thought of. The objective of this paper is to look into the scope and use of open innovation, which has remained unexplored till date, in the leather cluster in Kolkata. Kolkata and Santiniketan are considered synonymous with the leather industry in West Bengal and this paper is based on primary data collected through structured interviews of the entrepreneurscum- exporters engaged in manufacturing leather goods and other utility items in Kolkata. The findings suggest that open innovation is happening in a limited way and the MSMEs, which are facilitating open innovation, knowingly or unknowingly, are able to derive benefits there from. However, there is a need to document these processes and disseminate the learning in order to ensure that the benefits reach a larger group of MSMEs and they put concerted efforts to accelerate the process of open innovation.