Free in, free out?: Outbound transfer of user innovations in small UK firms

Abstract

Small firms develop user innovations, with some going on to become viable new industrial products - the challenge to industrial suppliers being to identify and absorb such innovations from their existing or potential customer base. In this paper we: i) analyse which small firms more likely develop user innovations; ii) investigate how the outbound knowledge transfer of user innovations is related to inbound knowledge sourcing and acquisition; and iii) explore why small firms may reveal user innovations. Drawing on a survey of 1004 small firms in the United Kingdom, of which 23 revealed their user innovations, the research confirms that the incidence of this phenomenon is related to firm size and general innovation activity. However, in direct contrast to innovating consumers or open-source contributors, the revealing of locally-created innovations was shown to be selective and motivated by optional future benefits. Further, it emerged that small firms barely freely reveal at all, suggesting that further research of this phenomena in the context of small firms is required. These in-depth insights into small firm revealing behaviour are of great value to industrial suppliers who wish to draw on innovations that emerge within their existing or potential customer base.