Open innovation ecosystems during the COVID-19 pandemic
Vanessa Ratten and Clare D’Souza
The World Health Organization declared COVID-19 a pandemic on March 11, 2020. In December 2019, COVID-19 was first detected in Wuhan, China, and initially COVID-19 was reported as a new type of coronavirus that then spread to other parts of the world. COVID-19 has caused widespread havoc in the global economy due to the concurrent health, society, and economic problems it has caused. Some sectors of the economy such as hospitality and tourism have been affected more than others due to travel restrictions and social distancing requirements. The impact of COVID-19 is unprecedented as never before has an epidemic had such an effect on the global economy. While there have been previous epidemics, COVID-19 has caused more technological changes than others. This is due to the reduced physical contact in society requiring communication through technological devices.
COVID-19 is a highly contagious disease with no known specific cures or vaccines. This means nonmedical interventions such as social distancing have been implemented in order to decrease transmission rates. This has decreased person-to-person contact and increased reliance on technological devices for communication. As a result, there has been an upsurge in digital technology usage particularly through computer-to-human interaction. This has meant an increased interest in artificial intelligence and robotic technology. The benefit of robots is that they can provide contactless service and replace human-to-human contact services. Prior to COVID-19, the tourism industry has experienced a long period of growth characterized by the introduction of the term ‘overtourism’being used. This completely changed with COVID-19 as travel being significantly curtailed and physical movement restricted. Moreover, businesses can no longer operate alone during the COVID-19 pandemic as they require other businesses either as suppliers or as customers to survive. Thus, increasingly businesses are realizing that cooperation networks that incorporate others in their value chain are beneficial.
The purpose of this chapter is to review the current state of knowledge about open innovation by focusing on the role of social forms of cooperation. The current literature on open innovation is based on understanding the process
Open innovation ecosystems 15 through a community model that highlights the need for stakeholder interaction. This means innovation is viewed as a collective purpose that entities of different sizes and forms can engage in. Therefore, this chapter discusses the way the term ‘open innovation’ can be described on the basis of the environmental context, which is particularly useful in times of crisis.
Crises involve an unpredicted event so there is usually not much time to prepare for their occurrence in the marketplace. Bhaduri (2019) suggests that crises can occur from an internal or external basis. Internal crises involve some kind of unanticipated change within an organization. This can include changes in leadership, unexpected financial events, and ethical failures. Internal crisis means they are normally restricted to one organization so the impact is restricted to the stakeholders related to the organization (Comfort, 2007). External crises involve events that impact a number of organizations. COVID-19 is an external crisis that has impacted global society in an unprecedented way.
Pearson and Mitroff (1993) suggest that a crisis involves five main stages: signal detection, preparation/prevention, containment/damage limitation, recovery, and learning. In the case of COVID-19, the initial outbreak in China was contained through lockdown measures. This then made other countries try to prevent the spread of the disease through border closures. Unfortunately, this did not work as the virus spread to other countries. As a result, containment strategies were enacted, which tried to mitigate the spread of the virus. This not only limited the potential social damages but also inflicted other forms of hardship. As the COVID-19 pandemic is currently ongoing, there are some attempts to look beyond the pandemic, but there is still much uncertainty as to how that will progress. This means it is important for society to learn about COVID-19 and to derive new strategies to ensure future crises and catastrophes are handled in the right way.
Unexpected catastrophes such as epidemics, natural disasters, and economic collapses each cause different types of change. Epidemics are harder to predict and plan for due to their unknown origin. Natural disasters occur on a more common basis and there are risk management strategies in place to deal with them. Economic collapses typically occur on the basis of changes in politics.
Managing crises in the form of emergencies centers around communication, coordination, and control (Comfort, 2007). Communication can occur in written or verbal format. It is important to communicate constantly new and relevant information about COVID-19. This enables individuals to coordinate their activities and to better control outbreaks. To do this, some degree of cognition is required. Cognition is defined as ‘the capacity to recognise the degree of emerging risk to which a community is exposed and to act on that information’ (Comfort, 2007:189). Individuals who utilize their cognition can better manage COVID-19 and potential changes.
The COVID-19 pandemic has resulted in unprecedented change that has affected all sectors of the economy. The spread of COVID-19 in China affected economic activities which then had spillover consequences for other countries. As China is among the world’s largest producers and exporters, the economic flow on effects to other countries has been significant. The economic impact can be seen in reduced manufacturing capabilities and restrictions on international mobility. Social effects in terms of closure of schools, universities, and workplaces led to an increase in online working and learning. The Spanish flu of 1911—1912 was the most similar pandemic in terms of impact. While there have been other pandemics, the impact of the COVID-19 pandemic has been more severe. During the pandemic, many individuals have shifted to working from home and this societal change may continue in the future. After the pandemic passes, it is expected that individuals will continue working from home and more businesses will have working from home models to facilitate knowledge sharing.
Knowledge is defined as ‘a fluid mix of framed experience, values, contextual information, and expert insights that provides a framework for evaluating and incorporating new experiences and information’ (Davenport and Prusak, 1998:5). In order to acquire information about emerging technologies, firms are increasingly relying on obtaining external knowledge that can be added to their existing knowledge base. This process of knowledge acquisition involves utilizing the inflow and outflow of knowledge for competitiveness reasons. Increasingly knowledge is being considered as a strategic asset that differentiates well-performing firms from nonperforming firms (Duran-Sanchez, Ratten, Del Rio Rama and Alvarez-Garcia, 2019). For this reason, innovation often results from the use of knowledge for strategic purposes. While not all knowledge is useful for innovation, certain forms of knowledge are more relevant than others. This includes knowledge about new business practices that can result in game-changing ideas in the global marketplace. Research and development (R&D) capabilities in firms rely on the continual flow of knowledge for scientific discoveries. Knowledge that is exchanged across different settings can result in collaborative production taking place (Ferreira, Fernandes and Ratten, 2019).
Knowledge is a source of intelligence for those who obtain and utilize it in the right way. While knowledge exists in many different forms and sources, obtaining the right kind of knowledge can be difficult. In addition, many firms and individuals are competing for knowledge so the process of acquiring good types of knowledge is important (Galvao, Mascarenhas, Marques, Ferreira and Ratten, 2019). Knowledge can be freely available or difficult to obtain due to confidentiality and intellectual property concerns. This means R&D collaborations might stress the kind of knowledge being shared and have associated intellectual property protocols to protect it. As a result of the trade-off being
Open innovation ecosystems 17 made between sharing knowledge while protecting its sources of origin, many tensions result. This means there is a paradox of wanting to share knowledge but also protecting it for competitive reasons.
Under conditions of change and market turmoil, it is useful to strategically reposition knowledge. This can be done by specifying which entities can access the knowledge, then facilitating interfirm networks to obtain timely information updates about the knowledge. Interfirm networks provide a way for firms to adjust quickly to new strategic opportunities by accessing, which requires knowledge sources (Geerguri-Rashiti, Ramadani, Abazi-Alili, Dana and Ratten, 2017). The search for novel knowledge is considered a process involving exploring new possibilities. This means considering alternative sources of action as a way to induce the flow of knowledge. Knowledge from existing sources can be applied in new ways that involve a process of exploitation. Knowledge sharing is a good way of making available existing sources of information (Jones, Klapper, Ratten and Fayolle, 2018). However, it does not create an obligation of reciprocal knowledge exchange that results in innovation.
Innovation involves creating something new (Potts and Ratten, 2016). This broad definition of innovation can be further refined by examining specific types of innovation such as product, process, marketing, supply, and organizational. Product innovation involves change involving a tangible resource. This means new or improved methods of production are integrated into a product. Process innovation involves changes in the way things are done. This intangible change includes introducing new ways of behaving. Marketing innovation involves developing new communication methods that often take into account technological innovation. Supply innovation refers to developing new supply markets that integrate emerging production methods. Organizational innovation refers to a change in the way an entity conducts itself (Ratten, 2018). This can include reorganization or restructuring of existing processes.
Innovation is a key ingredient of economic change and influences the productivity rate of entities within society. In an increasingly competitive environment, innovation provides a way for existing firms to maintain their market position and for new entrants to obtain market entry. Innovation can result in small changes that do not end in market disruption but rather act as improvement mechanisms. These minor changes are referred to as incremental innovation due to the change building on existing capabilities. This enables existing innovations to be improved on the basis of feedback. Incremental innovation is necessary in society as a form of continual improvement. In addition, as innovations become more widely used in society it can help to make improvements that enable better functionality. Radical innovations result in bigger changes and produce more disruption in society. Typically revolutionary products and services that involve technological innovation are referred to as being radical forms of innovation.
Innovation as a word has a variety of meanings, depending on its context. Innovation can be conceptualized as a change that incorporates some sense of novelty. The degree of this novelty' can be small or large, depending on the type of change. Most forms of innovation involve some degree of interactivity between the producer of the innovation and the user of the innovation. This means the end user of a product or service is an important part of the innovation process. Innovations that have a high level of uncertainty required the help and feedback given by users for improvement reasons. Innovation can be defined in a more narrow sense as ‘the implementation of a new or improved product or process and a new marketing or organizational methods in intercompany operations, workplace, organization and business relations’ (Simao and Franco, 2018:3). This definition implies that there is an abundance of research focusing on different aspects of innovation due to the increased usages of innovation in everyday' life. This has meant other types of change that have a non-innovation ty'pe have been neglected. Innovation is a dynamic capability as it is based on patterns of thinking that result in change. This means innovation is a way of improving the effectiveness of a product, service, or process. Innovation is associated with creative thinking due to the way' some form of action leads to improvements in performance.
Innovation consists of two main stages: initiation and implementation (Harding, Lock and Toohey, 2016). The initiation stage involves introducing a new way of thinking or product into the marketplace. This can be a difficult step due to the need to get consumers interested in the innovation. For this reason, it is helpful to stress the positive advantages of the innovation in terms of its usefulness. This might also involve highlighting how the innovation can be integrated into existing processes. The implementation stage refers to how the innovation is adopted by' users. This involves assessing how the innovation can be introduced into existing practices. The implementation of an innovation will be influenced by' its perceived novelty in relation to the status quo. This means more consumers will be less receptive to radical innovations unless they can see the advantages. Moreover, radical innovations will result in major changes to current processes; this means a greater proportion of entities in a community will be affected by the innovation.
The design process model of business model innovation consists of five stages: observe, synthesize, generate, refine, and implement (Zott and Amit, 2010). Observe means examining how consumers currently' use products and services. This means personally' viewing the process rather than relying on second-hand sources. Observation is useful in gaining a better understanding about how businesses work in the marketplace. Noticing how things are occurring brings a better sense of understanding about the topic. This enables more details to be ascertained about how things are occurring in practice. To do this, observation techniques that help to understand the process are needed. This includes following customers and then asking them questions about their behavior. Thereby' helping to bring a better understanding of what is occurring in a real-time format. Visual techniques such as photographs or videos can also be useful in
Open innovation ecosystems 19 understanding how things occur. In addition, customers can be asked to map out the process to understand the steps taken. The focus should be on all types of interaction that a customer has with a business from the initial discussion about a product to the after-sales service. This will enable information to be obtained on the role different stakeholders play in a business. The observation stage is complex as there are numerous ways to conduct this stage based on the priorities of the observer. To fully understand a business, care needs to be taken during this stage.
The synthesize stage involves taking into account everything that has been learnt during the observation stage. This means carefully considering the information and then sharing the information that has been acquired. To do this, the data need to be analyzed in terms of assessing potential patterns. This will enable a better understanding of why things occur like they do in the marketplace. By identifying key themes and issues in the data, a holistic understanding about the business is obtained. This will enable patterns of behavior to emerge based on the events occurring in the marketplace. Extracting information from the data can take time especially if the information is hard to understand. This means using techniques such as mind mapping to analyze linkages between themes.
Generate means creating potential solutions to problems. This can occur through a creative path that enables different ideas to be brainstormed. The generation of ideas is best done in practice to see how potential solutions can be implemented. In order to generate ideas, it helps to have the feedback from others to reassess possibilities. This enables individuals to build on the ideas of others to obtain better outcomes. By encouraging the flow of information to disseminate between individuals, more comprehensive ideas can emerge. In order to obtain the best ideas, it is useful to encourage daydreaming. This enables individuals freedom to think in a different manner than they normally would. Innovation often occurs through deliberate action but can also occur via serendipity. This means how we think about innovation is influenced by input from others. Daydreaming can enable an individual to pursue new possibilities that previously were not considered. To do this properly, individuals need to think about ideas in a novel way. This can lead to the creation of entirely new systems unleashed by a flow of creativity so it is important to keep in mind that ideas are generated in different ways.
The refine process involves narrowing down potential possibilities in a more detailed way. This involves choosing the best ideas and then evaluating them based on set criteria. To do this, solutions should be discussed with stakeholders through both formal and informal communication. The refinement of ideas does not have to be in a deliberate manner but can also occur in an ad hoc fashion. Although the use of a dedicated team to concept test ideas can help. It can help to prototype or test ideas to see which one works. To do this, suggested ideas need to be circulated to develop rapid prototyping. This would give an idea a more tangible nature and allow others to try it. By identifying the strengths and weaknesses of the idea, it can lead to further improvements. The prototyping can involve a set of interactive activities that are conducted to see how realistic the idea is in the marketplace. This will give life to ideas and enable a better understanding of potential solutions. By exploring multiple direction an idea can take, it will hopefully lead to more successful outcomes. Part of this process involves presenting prototypes to stakeholders in order to gauge their reaction. Based on feedback, the idea is then further refined. To do this, different viewpoints are consolidated to make the changes. The implement stage means advancing the idea into the marketplace to others who can use it. This means making necessary adaptations to existing processes to smooth the process. Some modifications may need to be made to better fit the requirements of the market. Not all ideas can be implemented quickly as some changes will need to occur. This means the implementation of an idea may occur over an extended period of time.
Innovation processes have accelerated due to the ongoing increase in the knowledge economy. The global availability of knowledge has meant an increase in the way knowledge is utilized for economic success. Moreover, shorter innovation cycles have meant a reliance on continued knowledge acquisition. In order to seek new opportunities for commercialization, there needs to be further focus on knowledge management. This enables traditional business models to change to a more open environment in which knowledge is more freely circulated.
Rogers (1983) suggests that the likely success of an innovation is based on five attributes: (1) relative advantage, (2) compatibility, (3) trialability, (4) observability, and (5) complexity. The relative advantage refers to the degree of newness or difference between prior innovations and the current innovation. Innovations that are perceived as useful are likely to be more successful. However, an innovation also needs to be easy to use in order for it to gain market acceptance. Compatibility refers to how the innovation fits into current market practices. Innovations that supersede previous practices need to still align with current market conditions. This means analyzing the needs of potential adopters to see how the innovation fits into their lifestyle. The degree of fit between past and current experiences also needs to align with existing market practices. Trialability refers to how individuals utilize and innovation and whether further iterations are required to increase its appeal in the market. This can involve testing and prototyping different ideas to improve performance. Observability of results means understanding how the innovation is being adopted in society. Sometimes the original innovation might not be used in the same way that it was conceived. Complexity involves how difficult it is to understand an innovation. Opportunities can be discovered by being alert to unmet needs. This involves entrepreneurs focusing on what current problems are not being addressed in society. This process involves acquiring knowledge about current market practices and then forecasting potential need. In order to recognize certain opportunities, it can help to have a systematic search process. This involves discovering opportunities based on a search of current needs. Doing this helps to have entrepreneurs interact with others in the market to create social forms of innovation.
Open innovation ecosystems 21
Social innovation differs from traditional types of innovation by focusing on more community type of activities. This means the focus is on the habitat and health of individuals within a community setting. Governments are spending more money on the nonprofit and social sector due to demands from the community. While some social services can be outsourced, in times of a crisis like COVID-19, governments need to prioritize social services. Social innovation is a difficult phenomenon to describe due to its definition changing based on the environmental conditions. For some, social innovation can be quick as it results in a positive change in society. For others, social innovation is a long and complex event that is difficult to predict. This means it can be complex to understand the nature and origins of social innovation unless it is considered in conjunction with the environmental context. Social innovation is generally referred to as the implementation of new ideas within an existing social system. This highlights the need to generate new ideas based on human needs.
Additional attention is clearly needed to understand how to identify ways to support and encourage entrepreneurship during the COVID-19 pandemic. Social innovation provides a way to respond to unsolved social needs that have been unsuccessfully addressed in the marketplace. Due to the COVID-19 pandemic, there has been an increase in social problems that cannot be solved by the government. Therefore, more social innovation is required to identify and implement new services that improve the quality of life for society. Social innovation fills gaps in society that neither the private sector nor the government can fill.
Social innovation can be defined as ‘a novel solution to a social problem that is more effective, efficient, or just than existing solutions and for which the value created accrues primarily to society as a whole rather than private individuals’ (Phills, Deiglmeier and Miller, 2008:39). The concept of social innovation is particularly needed during the COVID-19 crisis due to the profound social shifts that have occurred. Social innovation helps to address unmet social needs through societal action. This is due to social innovation embedding a stakeholder orientation to finding solutions to problems that rely on a number of stakeholders for input.
Closed innovation normally refers to in-house exploitation and/or distribution (Inauen and Schenker-Wicki, 2012). This means the innovation is only known to those inside an organization and the knowledge is not shared with others. In the past, this way was considered the best approach to managing innovation. It helped organizations gain a superior market advantage while ensuring future innovations also stayed in-house. More recently a process called inside-out open innovation has become popular due to market advantages. This means there is a potential for others to supplement or add to the existing innovation.
Examples of inside-out open innovation include licensing, open-source innovation, participating in other companies, and sale and/or divestment (Inauen and Schenker-Wicki, 2012).
External participation in open innovation strategies can lead to better industry engagement. The inside-out open innovation process is defined as ‘the commercialization of ideas, technologies and innovations via external distribution channels’ (Inauen and Schenker-Wicki, 2012:216). This means external sources of innovation are required to foster new ideas. Thereby outside influencers such as customers, competitors, and suppliers can produce change that then is implemented in another context. Other entities, including research institutions and universities, play a key role in sourcing new ideas and technologies. Thereby providing ideas from outside sources to be brought to the market more quickly, Enkel, Gassman and Chebrough (2009:312) refer to the inside-out process as ‘earning profits by bringing ideas to market, selling intellectual property and multiplying technology by transferring ideas to the outside environment.’ The notion of this inside-out process is that open innovation refers to the need to open up innovation processes to external entities to facilitate a process of co-creation. This means combining internal and external sources of innovation to create new value.
Open innovation is a popular way to foster innovation due to the increasing time-based concerns faced by many companies. This means time is a strategic weapon when utilized in the right way. The rapidly growing body of literature associated with open innovation is due to its practical significance in the global economy. In organizations there is a tendency to keep ideas in-house and not to share ideas externally. This is a natural tendency due to the need to protect current market positions. However, changing organizational cultures are valuing new ideas and are changing the current status quo. This means leadership of an organization can help facilitate more open processes in innovation.
Elmquist, Fredberg and Ollila (2009:340) describe open innovation as ‘an internal process that is becoming more dependent on external knowledge and external actors, but it still considers innovation as an internal process.’ Open innovation normally means that the boundaries of a firm are opened to others in order to facilitate the flow of information. There can be negative sides of open innovation as many different viewpoints are considered. This can result in an overreliance on crowd thinking rather than the advice of experts. This means ideas can be misunderstood and result in time being wasted. In addition, customer’s feedback might be hard to implement due to practical limitations. Open innovation means purposively managing knowledge flows in the broader environmental context. This means the knowledge flow is not restricted to a specific organization, but rather has a free-flowing nature that combines ideas found in external entities made possible through coopetition.
Coopetition is a way organizations can gain access to innovation. Brandenburger and Nalebuff (1996) introduced the concept of coopetition to a business
Open innovation ecosystems 23 audience. In the quick-changing business environment, coopetition provides a way for businesses to compete with each other but also cooperate on projects. Bouncken, Gast, Kraus and Bogers (2015:591) define coopetition as ‘a strategic and dynamic process in which economic actors jointly create value through cooperative interaction, while they simultaneously compete to capture part of that value.’ This definition implies that collaborating while competing provides a way for organizations to obtain useful information that can be beneficial for performance results.
Coopetition is useful when each organization has something to offer that can collectively lead to better outcomes. This means that coopetition can provide a way to obtain resources that would otherwise be hard to obtain. The main benefits of coopetition include ‘the exchange of resources, capabilities and knowledge’ (Hora, Gast, Kailer, Key-Marti and Mas-Tur et al, 2018:414). Coopetition enables organizations to simultaneously cooperate and compete, thereby facilitating mutual needs. The main reasons for coopetition arise from the way organizations can pool their resources and knowledge to promote innovation. This strategy facilitates new product development that is required in the ever-changing business world. The initial idea of coopetition was criticized due to a belief that competing organizations could not also collaborate. This belief changed when organizations realized that there were benefits associated with the coopetition process. Despite the positive result from coopetition, there are still risks that can result in failure. This means the general belief about coopetition needs to be mitigated by potential risks.
One way of dealing with the pressure of change is to collaborate with other businesses to develop new products. More businesses are incorporating collaborative agreements into their product portfolios as a way to generate new ideas. This collaborative process enables businesses to construct a network of businesses that can help them develop a wide variety of products over a longer period of time. Innovation networks are particularly important in the COVID-19 environment where changes occur rapidly and there is a need to respond to consumer demands in a short time period. New ideas often arise from collaboration with others since these businesses give access to a different knowledge base. Businesses establish relationships with other businesses that they infrequently interact with, which are called weak tie partnerships (Dittrich and Duysters, 2007). These kinds of partnerships enable businesses to benefit from resources outside of their normal industry. Weak tie partnerships are characterized by a lower level of commitment to sharing ideas about new projects.
Co-creation is a new way of thinking about the benefits of participation from multiple stakeholders that are evident in the process of coopetition. Co-creation enables stakeholders to offer suggestions and input on entrepreneurial activity. Individuals are linked through social interaction, so co-creation is a natural progression. Co-creation merges both social and communication processes in order to derive mutual gain. It is useful to have input from others rather than relying on one individual. Co-creation does not necessarily mean creating a new business venture as it can also involve shared interpretation. This means individuals through interactions can share a common understanding about meanings. The nature of co-creation depends on the environmental context. This means in times of crisis such as the COVID-19 pandemic, the type of co-creation will involve ideas related more to technological innovation. Other types of co-creation may also occur depending on the goal of the collaboration process. The main reward for participating in co-creation is the intrinsic benefit received by the individual.
Inherent in the concept of co-creation is an assumption that innovation will occur. This means co-creation normally involves creating more relevant things or processes. This contrasts to a traditional stage-gate research and development process that limits the involvement of outsiders. Co-creation implies that individuals within an organization share knowledge with those outside the organization. The idea behind co-creation is that through the participation of users, a better idea will result. Involving users from the initial idea stage through to the commercialization stage can save time and money. This enables the co-creation process to overcome potential problems before they occur in the marketplace. In addition, the actual needs of the users instead of the perceived needs are considered. Active user involvement enables user scenarios to be considered. This enables the idea to be better tailored for consumers and facilitates an ecosystem approach to the sharing of knowledge.
The main type of ecosystems is business, innovation, and entrepreneurial (Hakala, O’Shea, Farny and Luoto, 2019). Business ecosystems focus more on the evolution of businesses into entities that require some form of coopetition. Coopetition occurs when businesses collaborate and compete in order to realize market synergies. Due to the changing circumstances of many businesses, a global approach to market selection is required (Abazi-Alili, Ramadani, Ratten, Abazi-Caushi and Rexhepi, 2016). This enables businesses to realize they are part of a system based on connections. In order to improve value in a business, there needs to be some form of leadership through coopetition. This enables the ecosystem to be governed by those interested in facilitating its growth. In a business ecosystem, not all entities are equal as there will be winners and losers in each market transaction. This makes strategy a necessity for competition in order to realize positive results. Within the business ecosystem, there will be some entities that are stronger and have more power because of their market position. This makes the leading businesses need to support new businesses in order to progress the ecosystem.
Innovation ecosystems differ from business ecosystems due to the emphasis on co-creation. This means unlike business ecosystems that emphasize competition as well as cooperation, innovation ecosystems rely on value derived from collaborating on projects (Coelho, Marques, Loureiro and Ratten, 2018). In this sense, the innovation provides a source of cohesion among the ecosystem members. This means that entities in an innovation ecosystem realize the need
Open innovation ecosystems 25 for complementary entities. By focusing on key innovative projects, entities can integrate their research and development efforts. This enables entities to be connected to others outside of their organization.
Entrepreneurial ecosystems differ again to innovation and business forms of ecosystems by stressing the role of policy in business decisions (Ratten, 2017). This means the emphasis is on regions in terms of how multiple stakeholders interact in order to contribute to a systemic flow of knowledge emphasizing entrepreneurial endeavors (Ratten, 2019). There are different components required in an entrepreneurial ecosystem in order for it to function properly. This includes entrepreneurs, investors, government bodies, policy makers, and the community. Regional actors realize that entrepreneurship often needs to be considered as a collective effort based on an innovative mindset. This means regions can encourage others to act in an entrepreneurial manner (Ratten, Ferreira and Fernandes, 2016).
Audretsch, Cunningham, Kuratko, Lehmann and Menter (2019) refer to entrepreneurial ecosystems having an economic, societal, and technological impact. The economic aspect relates to the financial or productive outcomes from the collaboration while the social aspect implies information dissemination. The technological aspect focuses more on innovation that is derived from an integration of network members. Within an ecosystem, there needs to be some degree of coherence in the goals, activities, and values. This helps to produce a more vibrant entrepreneurial ecosystem due to the existence of collective norms. An entrepreneurial ecosystem aims to foster entrepreneurial activity within a given area (Ratten and Tajeddini, 2017). This means it tends to refer to a generic context that is based on network interactions. Networks can be horizontal in terms of competitors or vertical in terms of the supply chain. The entities in an entrepreneurial ecosystem are based on the idea that frequent and collaborative interaction is required to produce entrepreneurial ideas (Ratten et al., 2016). This means entrepreneurs are supported by funding agencies, government entities, and customers in their ability to produce certain products or services. Not all entities in an ecosystem are the same as they depend upon the active participation of businesses and trade associations. Siam (2015) suggested that an entrepreneurial ecosystem comprises framework and systemic conditions. Framework conditions include culture, demand, infrastructure, and institutions (Qian, 2018). Systemic conditions involve finance, knowledge, leadership, networks, support services, and talent (Qian, 2018).
This chapter has focused on how the COVID-19 pandemic in the form of a crisis requires an open innovation approach to knowledge sharing. This means harnessing the collective potential of a group of entities to enable market solutions to be derived. To do this, it is useful to highlight the way social innovation is needed that enables different entities to collaborate but also compete. This process is referred to as coopetition and was discussed in this chapter as a positive way to facilitate change. This is useful in the COVID-19 pandemic that needs open innovation in the form of ecosystems in order to encourage knowledge exchange.
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