Management Decision

Emerald Article: Entrepreneurship and open innovation in an emerging

economy
Ian Chaston, Gregory J. Scott

Article information:
To cite this document: Ian Chaston, Gregory J. Scott, (2012),"Entrepreneurship and open innovation in an emerging economy",
Management Decision, Vol. 50 Iss: 7 pp. 1161 - 1177
Permanent link to this document:
http://dx.doi.org/10.1108/00251741211246941
Downloaded on: 23-07-2012
References: This document contains references to 83 other documents
To copy this document: permissions@emeraldinsight.com

Access to this document was granted through an Emerald subscription provided by Emerald Author Access

For Authors:
If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service.
Information about how to choose which publication to write for and submission guidelines are available for all. Please visit
www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
With over forty years' experience, Emerald Group Publishing is a leading independent publisher of global research with impact in
business, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, as
well as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization is
a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive
preservation.
*Related content and download information correct at time of download.
 The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0025-1747.htm

Open innovation
Entrepreneurship and open in an emerging
innovation in an emerging economy
economy
1161
Ian Chaston and Gregory J. Scott
Centrum Catolica,
Centro de Negocios de la Pontificia Universidad Católica del Perú, Lima, Peru

Abstract
Purpose – The purpose of the paper is to examine the performance of firms in Peru in relation to
entrepreneurial orientation and involvement in open innovation.
Design/methodology/approach – Data were acquired through a survey of middle and senior
managers employed in Peruvian companies.
Findings – Firms achieving higher sales growth did not exhibit more of an entrepreneurial
orientation or utilize a double loop learning style. More entrepreneurial firms appear to have adopted a
double loop learning approach to knowledge acquisition. Peruvian firms involved in open innovation
reported higher sales growth and indicated greater reliance on the use of double loop learning.
Practical implications – The practical implications of the study are that firms in emerging
economies do not have to be reliant on entrepreneurial behaviour to sustain business growth.
Nevertheless involvement in open innovation can be beneficial.
Originality/value – The originality of this paper is that although the results are only for companies
in Peru, the findings may suggest that firms operating in emerging economies need not necessarily
rely on entrepreneurial behaviour to sustain business growth, although involvement in open
innovation may enhance business performance.
Keywords Entrepreneurship, Learning styles, Knowledge acquisition, Open innovation,
Entrepreneurialism, Innovation
Paper type Research paper

Introduction
Various initiatives in 2008 by Governments to avoid a meltdown in financial markets
in the UK and the USA resulted in a massive increase in the scale of these countries’
public sector deficits (DeLisle, 2007). Further weakening of balance sheets among
European banks was caused by the emergence of a sovereign debt crisis in
Mediterranean countries such as Greece, Portugal and Spain. The combined effect of
these events has been an economic downturn in many Western nations, the scale of
which has only previously been encountered during the Great Depression of the 1930s.
Countries such as China and India have emerged as formidable loci of economic
growth. This has led to growing interest in entrepreneurial activity of firms outside of
North America and Europe (Pisani and Patrick, 2002; Belausteguigoitia and Portilla,
2004; Jain and Pisani, 2008). In Latin America, interest has heightened as many of the
region’s governments adopted policies to reduce the size of the public sector, ceding
greater influence to private firms through programs of privatization, liberalization of Management Decision
Vol. 50 No. 7, 2012
domestic markets and free trade agreements (Robles et al., 2003; Reficco and Ogliastri, pp. 1161-1177
q Emerald Group Publishing Limited
2009). Many of these same countries have also seen their economic growth prospects 0025-1747
adversely affected by the financial crisis in the developed countries (Kliksberg, 2009). DOI 10.1108/00251741211246941
MD As a consequence many firms in Latin America have been confronted with the
challenge of adjusting to achieving greater competitiveness and surviving the global
50,7 financial crisis.
Joseph Schumpeter’s (1934) analysis of the Great Depression caused him to conclude
that the most effective strategy for surviving a major economic downturn is for
organizations to exhibit an entrepreneurial orientation. Drucker (1985a, b)
1162 subsequently posited that post-war business survival rates were likely to be highest
among firms which engaged in innovation. Other studies have also concluded that
innovation will assist firms to emerge from an economic downturn in a much stronger
position than their competitors who choose to cut costs or improve internal efficiencies
(Trott, 1998; Gilbert, 1990; Ghemawar, 1993).
Most organizations traditionally seek to retain ownership of proprietary knowledge
by using a “closed approach” to innovation (Cooper, 1994; Cooper and Kleinschmidt,
1995). Chesbrough (2003) who coined the phrase “open innovation,” posited that firms
in the twenty-first century are more likely to be successful by entering into
collaborative relationships with other organizations when seeking to exploit
innovation. This is because open innovation provides access to new knowledge,
permitting the evolution of new strategies more appropriate for responding to
turbulent conditions that exist in world markets (Chesbrough, 2007).
The vast majority of the literature on management theories is based on research
concerning firms located in developed economies. Hence the question arises of whether
theories concerning entrepreneurship and the use of open innovation are as equally
applicable in firms based in an emerging economy. The purpose of this study is to
examine this question in the context of the recent performance of organizations
operating in Peru.

The Peruvian economy

A decade of political stability, macro-economic caution and free trade has enabled Peru
to emerge as one of the strongest economies in Latin America (Tello and Tavara, 2010).
Abundant mineral resources have provided the foundation stone for a strong export
performance. The benefits from exporting minerals have been significantly enhanced
in recent years as a consequence of China’s ever increasing demand for primary
commodities (de Althaus, 2007; Country Report: Peru, 2008; UPS-MINAG, 2010; Scott,
2011). Economic growth rose to 9 per cent in 2008, driven in part by higher world prices
for minerals and metals, and assisted by the government’s consistent embrace of
privatization and market liberalization (ADEX, 2005; Murakami, 2007; Hausmann and
Klinger, 2008; The Economist, 2009; González Vigil, 2009).
In 2009 Peru was one of only a handful of countries worldwide that registered
positive economic growth despite the major downturn in most Western economies
(IMD, 2010). Nevertheless, to partly offset the adverse effects of the global slump in
commodity markets, the government increased public sector spending. By 2010 a
recovery in global demand for minerals led to increased exports. Despite the ongoing
depressed economic conditions in key export markets such as the USA and the EU, in
2011 Peru managed to return to economic growth, as demonstrated by the economy
growing by 7.1 per cent in May 2011 versus the prior year (Dube, 2011). Nevertheless
there remains some caution over the medium-term prospects for Peru’s economy. This
is because the country remains heavily reliant on minerals and agricultural exports
which are both sectors where volatility in demand and prices are expected to exist for Open innovation
the foreseeable future (The Sunday Times, 2011).
in an emerging
Entrepreneurship
economy
Joseph Schumpeter’s (1934) perception of entrepreneurship was that of a
“meta-economic event” which caused a major market change. Although Drucker
(1985a) shared Schumpeter’s view about the importance of entrepreneurship he did not 1163
accept the perspective that entrepreneurship is confined to responding to meta-events.
In his view, other forms of innovation should also be considered as entrepreneurial.
Drucker’s broader view of entrepreneurship has gained wide acceptance over the last
30 years. Carson et al. (1995) concluded that the scale of market success is likely to be
greatest among those firms which exhibit a strong entrepreneurial orientation. Miller
(1983) posited that the entrepreneurial orientation of a firm is demonstrated by the
extent to which top managers take risks, favour change and exploit innovation to
achieve a competitive advantage.
Hills and LaForge (1992) suggested that entrepreneurial firms exhibit the ability to
exploit innovation to develop a unique operation that supports business growth.
Georgelli et al. (2000) proposed entrepreneurial organizations are able to achieve
business growth as the result of a capacity for changing business processes or the
launching of new products or services.
These various observations provide the basis for the hypothesis that:
H1. Business performance will be higher among firms exhibiting an
entrepreneurial orientation.

Innovation and learning

Entrepreneurship is a creative process in which individuals engage in some form of
generative learning. This activity permits the acquisition of new knowledge (Miller and
Friesen, 1982; Popper and Lipshitz, 1998). New knowledge when linked with the
individual’s existing understanding and business experience results in the generation of
new ideas (Oguz, 2001). The importance of individuals and organizations being engaged
in learning as a process which can enhance organizational performance through the
generation of new ideas began to receive significant attention in the literature in the
1970s. Kirton (1976) suggested that individuals approach to solving problems is located
on a continuum ranging from adaption to innovation. Argyris and Schon (1978)
proposed the concept of “single loop” and “double loop” learning. They characterized
single loop learning as a process whereby past experience is relied on when attempting
to improve organizational performance. In contrast, double-loop learning is concerned
with acquiring new knowledge that can enhance the quality of a solution. Argyris and
Schon argued that for organizations to invent new strategies capable of sustaining
performance in a more volatile world, they need to adopt a double-loop learning
orientation. As researchers acquired understanding of the benefits of double loop
learning, their attention then focused on the learning behavior of entire organizations.
Support for the benefits of embedding a philosophy of employees engaged in learning
based on collaborative knowledge sharing and new knowledge acquisition were
presented by writers such as Senge (1990), Pedler et al. (1991) and Garvin (1993).
These various observations provide the basis for the hypothesis that:
H2. Double loop learning will enhance the business performance of firms.
MD Recognition of the critical importance of entrepreneurship in sustaining the performance
of Western firms has resulted in emphasis being given to the role of learning to enhance
50,7 creativity within organizations (Kuratko et al., 1993; Lundvall, 1998). Maccoby (1993)
concluded that some of the US’s leading companies such as AT&T, American Express
and United Airlines have recognized the importance of employees learning from each
other and from customers to develop innovative solutions to organizational problems. In
1164 his view, these types of firms are engaged in continuous innovation exploiting double
loop learning to acquire new knowledge that can sustain success.
Although the majority of case materials on the role of learning in the management of
innovation tend to feature American companies, researchers have shown that learning
can also be of benefit to organizations located elsewhere in the world. Salmador and
Bueno (2007) examined the management of strategy formulation and innovation in
Spanish banks. They concluded that management emphasis on adopting a learning
orientation was a major factor influencing the success of these organizations’ operations.
Ayas (2003) reached a similar conclusion in her study of the Fokker Aircraft company in
Germany. Wu et al. (2002) reached a similar conclusion in relation to the importance
influence of learning style in optimizing innovation processes and enhancing
performance in the highly competitive global consumer electronics industry.
These various observations provide the basis for the hypothesis that:
H3. Entrepreneurially orientated firms engage in double loop learning.

Open innovation
Huang et al. (2010) posited that open innovation leads to business growth by
permitting organizations to leverage more ideas from a variety of external sources.
Freel (2006) concluded that the primary benefit of open innovation is that it enhances
the likelihood that firms will achieve business growth as a result of incremental sales
from new products or production technologies. Mohannak (2007) and Moensted (2010)
reached similar conclusions in relation to high-tech firms where collaboration with
other organizations in the development of new products was positively correlated with
higher sales.
Chesbrough (2003) suggested that an important factor spurring the adoption of open
innovation is the rising cost of technology in many industries. Christensen et al. (2005)
concluded open innovation is utilized in a range of different ways. The approach
adopted by an organization will be influenced by:
. position in the market system;
.
the position of products or services on the Product Life Cycle Curve; and
.
the scale of added value that can be achieved through introducing new products
or production technologies.
Chesbrough (2007) suggested the process can best be described as existing on a
continuum ranging from a low to a high degree of “openness”. Lichtenthaler (2008)
concluded that the degree of openness seems to rise with the degree of emphasis on
radical innovation.
Elmquist et al. (2009) proposed that the key dimension influencing the
implementation of open innovation is whether a firm exhibits an internal versus an
external focus. An internally focused company that relies on closed innovation may
miss potentially more successful opportunities (Dyer and Singh, 1998). Open
innovation reduces this risk because the firm has access to both internal and external Open innovation
ideas. Although open innovation may provide access to more ideas, Birkinshaw et al. in an emerging
(2011) noted the costs of open innovation can be considerable.
Both Kenworthy (1995) and Lundvall (1998) concluded that national culture and economy
corporate culture may influence the willingness of organizations to collaborate over the
development of new products or operational processes. Tellis et al. (2009) examined
open innovation across 17 different nations. They found that the two most critical 1165
factors influencing successful open innovation were corporate culture and the scale of
investment associated with developing appropriate employee expertise inside the firm.
Trott’s (1998) conclusion that firms which focus on innovation are more likely to
survive in an increasingly turbulent world was endorsed in a recent survey of over
1,000 CEOs of major businesses conducted by IBM (2008). These individuals expressed
the view that long term growth is critically dependent on embedding a strong
commitment to innovation into their respective organizations. Chesbrough (2003)
posited that to sustain performance in an increasingly complex world necessitates that
firms need to engage in open innovation.
These observations provide the basis for the hypothesis that:
H4. Business performance will be higher among firms involved in open
innovation.
Wiklund and Shepherd’s (2002) and Chaston (2009) proposed that participation in
business networks is especially important when an organization is reliant on innovation
as the basis for evolving and implementing new strategies to overcome major
environmental threats. Niehaves’ (2010, p. 379) commented that open innovation “results
in blurring enterprise boundaries [. . .] external knowledge can be integrated as well as
knowledge can be extracted. The outside-in process extends the knowledge base,
external knowledge can be integrated as well as knowledge can be extracted and brought
to market”. Mohannak (2007), Moensted (2010) and Ojala and Tyrvained (2009) posited
that the creation of knowledge by involvement in collaborative activities is critical in
ensuring an adequate response to changing external environments. Lindsay (2005) and
Palacios et al. (2009) concluded that knowledge management was an especially important
factor influencing the level of innovative behavior in knowledge-intensive organizations.
Leidner (2000) proposed the highest priority in open innovation programs within
manufacturing firms should be given to the acquisition and exploitation of new
knowledge. Chen et al. (2006) expressed a similar opinion in relation to the behavior of
service sector organizations. Saussois’s (2003) assessment of the growing importance
of exploiting new knowledge led him to suggest that the rapid increase in the use of
information technology to store, analyze and access data has the potential to greatly
assist inter-organizational knowledge sharing. Wang and Rafiq (2009) noted that
where two or more organizations are engaged in entrepreneurial collaboration to
enhance the diversity of ideas, there is a critical need to integrate learning styles such
that all participants are able to effectively incorporate new knowledge from external
sources into their organization’s future vision and strategies.
These various observations provide the basis for the following hypothesis; namely:
H5. Firms engaged in open innovation will utilise double loop learning.
MD Methodology
In order to test the hypotheses delineated previously and given the limited access to
50,7 extensive commercial databases in Peru, a structured questionnaire was administered
to middle and senior managers currently enrolled in the Catholic University of Lima’s
post graduate programs in business administration. These individuals were requested
to characterize management practices within either their current firm or the
1166 organization where they have most recently been employed.
Rosa et al. (1996), Du Rietz and Henderson (2000) and Kariv (2008) proposed that
sales over time is an effective technique for assessing organizational performance
when researching a diverse range of industries. Hence this study used Chaston and
Mangle’s (1997) approach of asking respondents to comment on average sales growth
over the last three years on a five point scale ranging from “sales declined by more than
10 percent”, through to “sales increased by more than 10 percent”.
To determine involvement in innovation the study followed Brettel et al.’s (2008)
guidance that in international research the entrepreneurial orientation scale developed
by Covin and Slevin (1998) is an appropriate tool. This scale assesses the level of
entrepreneurial orientation using a five point scale ranging from “very strongly
disagree” through to “very strongly agree”. This scale assumes entrepreneurial
orientation exists as a continuum. At one end of the scale there are very conservative
firms and at other extreme, firms are heavily involved in exploiting innovation.
To determine the degree to which organizations are engaged in double loop
learning, the study used the scale developed by Sadler-Smith and Badger (1998). This
scale assumes learning style also exists as a continuum. At one extreme are
organizations biased towards single loop learning and at the other end of the
continuum, double loop learning is the dominant learning style.
This current study uses Niehaves’ (2010) perspective of open innovation being an
activity which utilizes external collaboration with other organizations to access new
knowledge. Most open innovation studies tend to be of a qualitative nature (Van der
Meer, 2007). One exception to this generalization is the empirical study undertaken by
Lazzarotti et al.’s (2010) of Italian firms. Their assessment of participation in open
innovation involves examining the purpose, aims and rationale for involvement in the
activity. The Lazzarotti et al. scale uses the following factors to calculate an overall
mean to provide an indication of the level of open innovation within an organization:
(1) Purpose
.
Expand skills, competences or creativity
.
Expand the organization’s competence base
.
Increase idea generation capability
.
Increase internal flexibility of the organization
(2) Aims
. Reduce or share the risks of innovation
.
Reduce or share the costs of innovation
(3) Rationale for open innovation involvement
.
Achieving technological leadership
.
Improving performance by means of innovation
.
Refining or revising services through innovation
 .
Gaining access to new expertise Open innovation
.
Focusing greater emphasis on more radical forms of innovation. in an emerging
The Lazzarotti et al.’s scale assumes degree of involvement in open innovation exists economy
on a continuum. At one extreme are organizations biased closed innovation and at the
other end of the continuum, open innovation is the dominant management philosophy.
A questionnaire was first prepared in English, and then translated into Spanish. 1167
The translated questionnaire which in total contained 55 questions was then revised by
both native Spanish and English speakers to ensure consistency and accuracy.

Results
Usable responses were received from 238 individuals. This level of response is
considered adequate for the proposed regression analysis to be undertaken to examine
entrepreneurial orientation (Covin and Slevin, 1998), double loop learning
(Sadler-Smith and Badger, 1998) and open innovation (Lazzarotti et al., 2010). The
breakdown of companies by sector and by size is provided in Table I. A visual
inspection of the data indicated some degree of variation between respondents working
in different sectors of industry. However, an ANOVA to assess variation by sector of
industry was not statistically significant at p , 0:05. Hence all of the survey forms
were used in the subsequent analysis.
All statistical analysis was undertaken using SPSS. Cronbach alpha scores for the
variables which constitute the entrepreneurial orientation scale were all greater than
0.7 (see Table II). Hence all variables could be used to calculate the overall mean
utilized in a regression analysis (Hair et al., 1998). A regression analysis to test the
relationship between sales performance and entrepreneurial orientation was not
statistically significant at p , 0:05.
Cronbach alpha scores for the variables which constitute the learning style scale
were all greater than 0.7 (see Table II). Hence all variables could be used to calculate the

(%)

A: Size of business by number of employees

1-9 employees 4.1
10-49 employees 5.3
50-249 employees 9.8
250 þ employees 80.8
Total 100.0
B: Sectors of industry
Agriculture, mining and fishing 15.9
Manufacturing 22.7
Retail/wholesale 16.5
Transportation 1.7
IT 5.2
Financial services 18.2
Media 4.6
Tourism 3.9
Table I.
Other 11.7
Background data on
Total 100.0
respondent firms
MD
Variable number Entrepreneurship scale Double loop learning scale Open innovation scale
50,7
1 0.81 0.80 0.71
2 0.81 0.89 0.81
3 0.73 0.88 0.79
4 0.79 0.81 0.70
1168 5
6
0.77 0.86
0.90
0.79
0.83
7 0.75 0.81
8 0.76 0.78
9 0.81 0.76
Table II. 10 0.79 0.77
Cronbach alpha scores 11 0.74

overall mean utilized in a regression analysis. A regression analysis of business

performance in relation to learning style was not statistically significant at p , 0:05.
However a regression analysis of entrepreneurial orientation in relation to learning
style was statistically significant at p , 0:05 (see Table III).
Cronbach alphas were calculated to test the reliability of the multiple measurement
variables associated with assessing open innovation. All values were greater that 0.70
(see Table II) which permitted their use in a regression analysis. A regression analysis
of business performance in relation to involvement in open innovation was statistically
significant at p , 0:05 (see Table IV). A regression analysis of involvement in open
innovation in relation to learning style was also statistically significant at p , 0:05 (see
Table V).

Conclusions and discussion

The regression of business performance in relation to entrepreneurial orientation was
not statistically significant at p , 0:05. Thus it seems the results from this study are
not able to support hypothesis H1 that business performance will be higher among
firms exhibiting an entrepreneurial orientation. The regression analysis of business
performance and learning style was also not statistically significant at p , 0:05. This
indicates that the results are unable to validate hypothesis H2 that double loop
learning will enhance the business performance of firms. In contrast the regression
analysis of entrepreneurial orientation in relation to learning style was statistically
significant at p , 0:05. Hence it appears that the results of this study do support
hypothesis H3 that entrepreneurially orientated firms engage in double loop learning.
Regression analysis of business performance in relation to involvement in open
innovation was statistically significant at p , 0:05. Hence it seems reasonable to
propose this research supports hypothesis H4; namely that business performance will
be higher among firms involved in open innovation. Additionally the regression
analysis of involvement in open innovation in relation to learning style was
statistically significant at p , 0:05. Hence it would appear this result supports
hypothesis H5 that firms engaged in open innovation will utilise double loop learning.
Hills and LaForge (1992) and Georgelli et al. (2000) presented the view that
entrepreneurship leads to higher business growth. Results of this current study were
unable to validate this viewpoint in relation to Peruvian firms. The implications of this
outcome are that reliance on a conservative managerial orientation in Peru can be just
 Unstandardized Standardized
coefficients coefficients
Std. error
Adjusted of the Sum of Mean Std.
R R-square R-square estimate squares Df square F Sig. B error Beta t Sig.

0.491 0.241 0.238 0.714

Regression 38.29 1 38.29 75.165 0.000
Residual 120.73 237 0.509
Total 159.02 238
(Constant) 1.359 0.164 8.29 0.000
Innovation 0.481 0.055 0.491 8.67 0.037

orientation
entrepreneurial
learning in relation to
Regression of double loop
Table III.
Open innovation
in an emerging
economy

1169
 MD
50,7

1170

Table IV.
Regression of

open innovation
performance in relation to
Unstandardized Standardized
coefficients coefficients
Adjusted Std. error of the Sum of Mean Std.
R R-square R-square estimate squares Df square F Sig. B error Beta t Sig.

0.130 0.017 0.013 1.111

Regression 4.96 1 4.96 4.019 0.046
Residual 289.85 237 1.233
Total 294.81 238
(Constant) 3.519 0.373 9.421 0.000
Networking 0.2337 0.118 0.130 2.005 0.046
 Unstandardized Standardized
coefficients coefficients
Adjusted Std. error of the Sum of Mean Std.
R R-square R-square estimate squares Df square F Sig. B error Beta t Sig.

0.491 0.241 0.238 0.714

Regression 38.29 1 38.29 76.165 0.000
Residual 120.733 237 0.509
Total 159.02 238
(Constant) 1.359 0.164 8.289 0.000
Open 0.481 0.055 0.491 8.670 0.000
innovation
Open innovation

open innovation
in an emerging
economy

learning in relation to
Regression of double loop
Table V.
1171
MD as effective for achieving business growth as the alternative strategy of focusing on
50,7 innovation. This outcome would appear to contradict espoused theory and raises the
question of why this difference exists. One possibility is that in some emerging
economies firms can achieve adequate business growth through focusing on
optimising the effectiveness and efficiency of their current operations. As a
consequence there is less appeal for engaging in entrepreneurial activities, which in
1172 most cases are inherently more risky than upgrading the productivity of existing
operations (Chaston, 2010).
Salmador and Bueno (2007) and Ayas (2003) concluded that double loop learning
can assist organizations enhance business performance. The lack of a statistically
significant relationship between business performance and learning means style in this
current study invalidate this viewpoint in relation to Peruvian firms. The implications
of this outcome are that Peruvian firms which focus on exploiting existing knowledge
can expect this approach may lead to improved business performance. This possibly
reflects the fact that where Peruvian firms are able to achieve growth by relying on
embedded experience, there is no perceived benefit is seeking to acquire new
information that might enhance problem solving. The assumption in this case is that
the managers have found that existing knowledge is completely adequate for resolving
any operational problems which might arise.
Popper and Lipshitz (1998) and Oguz (2001) posited that entrepreneurship involves
some form of generative learning to acquire new knowledge. Results of this study did
indicate that a bias towards double loop learning occurs in the case of entrepreneurially
orientated firms in Peru. Hence, the managerial implication that can be drawn in
relation to Peruvian companies seeking to exploit innovation is that double loop
learning can probably assist knowledge sharing between employees who are engaged
in entrepreneurial endeavours.
Chesbrough (2003) proposed that sustaining business performance in the
twenty-first century can be made more certain by firms engaging in collaboration
with other organizations in the development of new products and operational
processes. This perspective is supported by the findings of this study. They indicate
that Peruvian firms engaged in open innovation can be expected to achieve higher
business performance. Huang et al. (2010) posited that open innovation permits
leveraging of more ideas from a variety of external sources leading to improved
utilization of an organization’s existing key assets. Hence the management implication
which can be drawn from this current study is that those Peruvian companies seeking
to exploit innovation to optimize performance can expect to benefit from participation
in open innovation.
Niehaves’ (2010) perspective is that the most important aspect of involvement in
open innovation is the acquisition of new knowledge from sources external to the firm.
This current study indicates that there is greater emphasis on double loop learning
among Peruvian firms involved in open innovation. Therefore, it would seem probable
that these organizations recognize that successful exploitation of new external
knowledge does require effective knowledge transfer between participants. The
managerial implication of this conclusion is that the adoption of a strategy based on
open innovation will possibly be more successful when accompanied by the creation of
a strong organizational learning culture inside the participant firms.
Entreprenuership theory and practice Open innovation
The results of this current study raise doubts over whether emphasis on
entrepreneurship leading to higher business growth in relation to firms in emerging
in an emerging
economies is an entirely valid concept. This is because the results of this study suggest economy
that less risk adverse management practices which may exist in Peru are equally
appropriate when defining actions for firms located in this and possibly some other
emerging economies. 1173
Industrialization and rising consumer incomes in the BRIC nations will ensure
strong ongoing future demand for minerals and agricultural products. Hence possibly
when presenting management practices relevant to firms based in emerging economies
perhaps more emphasis should be given to the benefits of exploiting conventional
technologies and existing managerial capabilities to optimize organizational
performance over the medium term.
Another issue is the paucity of research on business optimization strategies in the
emerging nations. As demonstrated by Breznitz and Murphee’s (2011) study of
organizational strategies of Chinese companies, differences in culture, economic
strength and the political aims in that country have led to the evolution of business
strategies and management practices somewhat variance with those posited on MBA
programs focusing on managerial practices in Western economies. It would appear,
therefore that there exists a need for an expansion of management research concerned
with organizational processes and practices in the world’s emerging economies.

References
ADEX (2005), “TLC con Tailandia se suscribirá en mayo del 2006”, Perú Exporta, Vol. 324,
pp. 28-9.
Argyris, C. and Schon, D.A. (1978), Organisational Learning: A Theory of Action Perspectives,
Addison-Wesley, Reading, MA.
Ayas, K. (2003), “Managing action and research for rigor and relevance: the case of Fokker
aircraft”, Human Resource Planning, Vol. 26 No. 2, pp. 19-29.
Belausteguigoitia, I. and Portilla, S. (2004), “The family business in Chile and Mexico:
organizational climate as an antecedent of entrepreneurial orientation”, in Tiffin, S. (Ed.),
Entrepreneurship in Latin America, Praeger, London.
Birkinshaw, J., Bouquet, C. and Barsoux, J.L. (2011), “The 5 myths of innovation”, Sloan
Management Review, Vol. 52 No. 2, pp. 40-53.
Brettel, N., Engelson, A. and Heinemann, F. (2008), “The new entrepreneurial ventures in a
globalised world”, Journal of International Entrepreneurship, Vol. 7, pp. 88-110.
Breznitz, D. and Murphee, M. (2011), Run of the Red Queen, Yale University Press, New Haven,
CT.
Carson, D., Cromie, S., McGowan, P. and Hill, J. (1995), Marketing and Entrepreneurship in SMEs:
An Innovative Approach, Prentice Hall, Hemel Hempstead.
Chaston, I. (2009), Entrepreneurship in Small Firms, Sage, London.
Chaston, I. (2010), Entrepreneurial Management in Small Firms, Sage, London.
Chaston, I. and Mangles, T. (1997), “Competencies for growth in SME sector manufacturing
firms”, Journal of Small Business Management, Vol. 35 No. 1, pp. 32-41.
Chen, S., Duan, Y.J., Edwards, S. and Lehaney, D. (2006), “Toward understanding
inter-organizational knowledge transfer needs in SMEs: insight from a UK
investigation”, Journal of Knowledge Management, Vol. 10 No. 3, pp. 6-13.
MD Chesbrough, H.W. (2003), “The era of open innovation”, Sloan Management Review, Vol. 44 No. 3,
pp. 35-41.
50,7
Chesbrough, H.W. (2007), “Why companies should have open business models”, Sloan
Management Review, Vol. 48 No. 2, pp. 22-8.
Christensen, J.F., Olesen, M.H. and Kjaer, J.S. (2005), “The industrial dynamics of open innovation
– evidence from the transformation of consumer electronics”, Research Policy, Vol. 34
1174 No. 10, pp. 1533-49.
Cooper, R.G. (1994), “Third generation new product processes”, Journal of Product Innovation
Management, Vol. 11, pp. 3-14.
Cooper, R.G. and Kleinschmidt, E.J. (1995), “Benchmarking the firm’s critical success factors in
new product development”, Journal of Product Innovation Management, Vol. 12 No. 5,
pp. 374-91.
Country Report: Peru (2008), Country Report: Peru, The Economist Intelligence Unit, London.
Covin, J.G. and Slevin, D.P. (1998), “The influence of organizational structure on the utility of an
entrepreneurial top management style”, Journal of Management Studies, Vol. 25 No. 1,
pp. 217-37.
de Althaus, J. (2007), La revolución capitalista en el Perú, Fondo de Cultura Económica, Lima.
DeLisle, J.D. (2007), “At the crossroads of expansion and recession”, Financial Views, Fall,
pp. 314-22.
Drucker, P.F. (1985a), “Entrepreneurial strategies”, California Management Review, Vol. 27 No. 2,
pp. 9-21.
Drucker, P.F. (1985b), Innovation & Entrepreneurship: Practice and Principles, Harper & Row,
New York, NY.
Dube, R. (2011), “Peru’s May GDP expands 7.1 per cent versus year ago”, Wall Street Journal, July
15, p. 2.
Du Rietz, A. and Henderson, M. (2000), “Testing female underperformance hypotheses”, Small
Business Economics, Vol. 14 No. 1, pp. 1-10.
Dyer, J.H. and Singh, H. (1998), “The relational view: cooperative strategy and sources of
interorganizational competitive advantage”, Academy of Management Review, Vol. 23
No. 4, pp. 660-79.
Elmquist, M., Fredberg, T. and Ollila, S. (2009), “Exploring the field of open innovation”,
European Journal of Innovation, Vol. 12 No. 3, pp. 326-45.
Freel, M. (2006), “Patterns of technological innovation in knowledge intensive business services”,
Industry and Innovation, Vol. 13 No. 3, pp. 335-59.
Garvin, D.A. (1993), “Building a learning organization”, Harvard Business Review, Vol. 71 No. 4,
pp. 78-92.
Georgelli, P., Joyce, B. and Woods, A. (2000), “Entrepreneurial action, innovation, and business
performance: the small independent business”, Journal of Small Business and Enterprise
Development, Vol. 7 No. 1, pp. 7-17.
Ghemawar, P. (1993), “The risk of not investing in a recession”, Sloan Management Review,
Vol. 34 No. 2, pp. 51-9.
Gilbert, N. (1990), “The time trap: short-term solutions needed for long-term problems”,
Management Review, Vol. 79 No. 27, pp. 28-33.
González Vigil, F. (2009), “El TLC China-Perú: una negociación ejemplar”, Punto de Equilibrio,
Vol. 18 No. 101, pp. 30-1.
Hair, J.F., Anderson, R.E., Tatham, R.L. and Black, W.C. (1998), Multivariate Data Analysis, Open innovation
Prentice Hall, Englewood Cliffs, NJ.
in an emerging
Hausmann, R. and Klinger, B. (2008), “Growth diagnostics in Peru”, Harvard Kennedy School,
Cambridge, MA, Faculty Research Working Paper Series #08-062. economy
Hills, G.E. and LaForge, R.W. (1992), “Research at the marketing interface to advance
entrepreneurship theory”, Entrepreneurship Theory and Practice, Vol. 23, pp. 33-59.
Huang, T., Wang, W.C., Ken, Y., Tseng, C.-Y. and Lee, C.-L. (2010), “Managing technology 1175
transfer in open innovation: the case study in Taiwan”, Modern Applied Science, Vol. 4
No. 1, pp. 2-11.
IBM (2008), The Enterprise of the Future, available at: www.ibm.com/gbs/uk/ceostudy (accessed
January 2010).
IMD (2010), World Competitiveness Yearbook 2010, International Institute for Management
Development, Lausanne.
Jain, A. and Pisani, M.J. (2008), “Small- and microenterprise business development in Costa Rica:
an examination of domestic and foreign born entrepreneurs”, Latin American Business
Review, Vol. 9 No. 2, pp. 149-67.
Kariv, D. (2008), “The relationship between stress and business performance among men and
women entrepreneurs”, Journal Small Business and Entrepreneurship, Vol. 21 No. 4,
pp. 449-76.
Kenworthy, L. (1995), In Search of National Economic Success: Balancing Competition and
Cooperation, Sage, London.
Kirton, R.N. (1976), “Perception of problem constraint”, Management Science, Vol. 22 No. 1,
pp. 12-31.
Kliksberg, B. (2009), “Una agenda renovada de responsabilidad empresarial para América Latina
en la era de la crisis”, Ministerio de Trabajo, Empleo y Seguridad Social. RSE y trabajo
decente en la Argentina. Contexto, desafı́os y oportunidades, Ministerio de Trabajo, Buenos
Aires Empleo y Seguridad Social, pp. 23-41.
Kuratko, D.F., Hornsby, J.S., Naffziger, D.W. and Montagno, R.V. (1993), “Implementing
entrepreneurial thinking in established organizations”, S.A.M. Advanced Management
Journal, Vol. 58 No. 1, pp. 28-37.
Lazzarotti, V., Manzini, R. and Pellegrini, L. (2010), “Open innovation models adopted in practice:
an extensive study in Italy”, Business Excellence, Vol. 14 No. 4, pp. 11-23.
Leidner, G. (2000), “Open boundaries, creating business innovation through complexity”, Sloan
Management Review, Vol. 41 No. 1, pp. 4-11.
Lichtenthaler, U. (2008), “Open innovation in practice: an analysis of strategic approaches to
technology transactions”, IEEE Transactions on Engineering Management, Vol. 55 No. 1,
pp. 148-57.
Lindsay, V.J. (2005), “The development of international industry clusters: a complexity theory
approach”, Journal of International Entrepreneurship, Vol. 3, pp. 71-97.
Lundvall, B. (1998), “Why study national systems and national styles of innovation?”,
Technology Analysis and Strategic Management, Vol. 10 No. 4, pp. 407-21.
Maccoby, M. (1993), “What should learning organizations learn?”, Research Technology
Management, Vol. 36 No. 3, pp. 49-56.
Miller, D. (1983), “The correlates of entrepreneurship in three types of firm”, Management
Science, Vol. 29, pp. 671-82.
MD Miller, D. and Friesen, P.H. (1982), “Archetypes of strategy formulation”, Management Science,
Vol. 28, pp. 770-91.
50,7
Moensted, M. (2010), “Networking and entrepreneurship in small high-tech European firms:
an empirical study”, International Journal of Management, Vol. 27 No. 1, pp. 16-32.
Mohannak, K. (2007), “Innovation networks and capability building in the Australian
high-technology SMEs”, European Journal of Innovation Management, Vol. 10 No. 2,
1176 pp. 236-45.
Murakami, Y. (2007), Perú en la era del chino, Instituto de Estudios Peruanos and the Center for
Integrated Area Studies, Kyoto University, Kyoto.
Niehaves, B. (2010), “Open process innovation: the impact of personnel resource scarcity on the
involvement of customers and consultants in public sector BPM”, Business Process
Management Journal, Vol. 16 No. 3, pp. 377-93.
Oguz, F. (2001), “How entrepreneurs learn? A practical interpretation”, METU Studies in
Development, Vol. 28 Nos 1/2, pp. 183-202.
Ojala, A. and Tyrvained, P. (2009), “Impact of psychic distance to the internationalization
behavior of knowledge-intensive SMEs”, European Business Review, Vol. 21 No. 3,
pp. 263-71.
Palacios, A.D., Gil, I. and Garrigos, F. (2009), “The impact of knowledge management on
innovation and entrepreneurship in the biotechnology and telecommunications
industries”, Small Business Economics, Vol. 32 No. 3, pp. 291-312.
Pedler, M., Burgoyne, J. and Boydell, T. (1991), The Learning Company, McGraw-Hill, London.
Pisani, M.J. and Patrick, J.M. (2002), “A conceptual model and propositions for bolstering
entrepreneurship in the informal sector: the case of Central America”, Journal of
Developmental Entrepreneurship, Vol. 7 No. 1, pp. 95-111.
Popper, M. and Lipshitz, R. (1998), “Organizational learning mechanisms: a structural and
cultural approach to organizational learning”, Journal of Applied Behavioral Science,
Vol. 34, pp. 161-79.
Reficco, E. and Ogliastri, E. (2009), “Empresa y sociedad en America Latina: una introducción”,
Academia, Revista Latinoamericana de Administración, Vol. 43, pp. 1-25.
Robles, F., Simon, F. and Haar, J. (2003), “Winning strategies for the new Latin markets”,
Financial Times/Prentice Hall, Upper Saddle River, NJ, pp. 2-3.
Rosa, P., Carter, S. and Hamilton, D. (1996), “Gender as a determinant of small business
performance: insights from a British study”, Small Business Economics, Vol. 8 No. 6,
pp. 463-78.
Sadler-Smith, A. and Badger, B. (1998), “Cognitive style, learning and innovation”, Technology
Analysis & Strategic Management, Vol. 10 No. 2, pp. 247-65.
Salmador, M.P. and Bueno, E. (2007), “Knowledge creation in strategy-making: implications for
theory and practice”, European Journal of Innovation Management, Vol. 10 No. 3,
pp. 367-76.
Saussois, J. (2003), “Knowledge management in government: an idea whose time has come”,
OECD Journal on Budgeting, Vol. 3 No. 3, pp. 105-20.
Schumpeter, J. (1934), The Theory of Economic Development, Harvard University Press, Boston,
MA.
Scott, G. (2011), “Growth rates for potatoes in Latin America in comparative perspective:
1961-07”, American Journal of Potato Research, Vol. 88, pp. 143-52.
Senge, P. (1990), The Fifth Discipline: The Art and Practice of the Learning Organization, Open innovation
Doubleday, New York, NY.
Tellis, G.J., Prabhu, J.C. and Chandy, R.K. (2009), “Radical innovation across nations:
in an emerging
the pre-eminence of corporate culture”, Journal of Marketing, Vol. 73, pp. 3-23. economy
Tello, MD.D. and Tavara, J. (2010), “Productive development policies in Latin American
countries: the case of Perú, 1990-2007”, Inter-American Development Bank, Washington,
DC, IDB Working Paper Series No. IDB-WP 129. 1177
The Economist (2009), “Peru’s economy has shrunk but it should escape recession”,
The Economist, September 2, p. 23.
The Sunday Times (2011), “The changing investment opportunities in South America”,
The Sunday Times, London, July 3, p. B3.
Trott, P. (1998), “Growing businesses by generating genuine business opportunities: a review of
recent thinking”, Journal of Applied Management, Vol. 7 No. 2, pp. 211-23.
UPS-MINAG (2010), Plan Estratégico Sectorial Multianual Actualizado del Ministerio de
Agricultura 2007-2011, Mimeo Oficina de Planeamiento y Presupuesto-MINAG, Lima.
Van der Meer, H. (2007), “Open innovation – the Dutch treat: challenges in thinking in business
models”, Creativity and Innovation Management, Vol. 16 No. 2, pp. 193-204.
Wang, C.L. and Rafiq, M. (2009), “Organizational diversity and shared vision: resolving the
paradox of exploratory and exploitative learning”, European Journal of Innovation
Management, Vol. 12 No. 1, pp. 86-101.
Wiklund, J. and Shepherd, D. (2002), “Knowledge-based resources, entrepreneurial orientation,
and the performance of small and medium-sized businesses”, Strategic Management
Journal, Vol. 24 No. 3, pp. 1307-18.
Wu, W., Chiang, C. and Jiang, J. (2002), “Interrelationships between TMT management styles and
organizational innovation”, Industrial Management þ Data Systems, Vol. 102 Nos 3/4,
pp. 171-83.

Further reading
Merona, A.L., Lopez-Nicolas, C. and Sabater-Sanchez, R. (2007), “Knowledge management
strategy diagnosis from KM instruments use”, Journal of Knowledge Management, Vol. 1
No. 2, pp. 60-72.

About the authors

Ian Chaston is currently a Visiting Professor in Marketing and Entrepreneurship at Centrum
Catolica in Peru. His primary research interests are entrepreneurship, marketing and small
business management.
Gregory J. Scott is a Professor at Centrum Catolica. Prior to entering academia he spent many
years engaged in advising on the development of the agricultural sector in various nations across
the world. Gregory J. Scott is the corresponding author and can be contacted at:
gscott@pucp.edu.pe

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints