Abstract:
In Sri Lanka Small and Medium Enterprise (SMEs) is
the back bone of the economy and contribute more than 50% of
GDP. However, Sri Lankan SMEs are lack of innovations and lack
of awareness about new trends and global markets. To compete
with global markets, SMEs need to access to outside knowledge as
well as Innovations. Open Innovation (OI) driven Absorptive
Capacity is one of a key concept that SMEs can adopt in order to
grow their business to global level. This paper explores how Open
Innovation driven absorptive capacity can contribute to customer
value creation in terms of functional value aspect. The paper also
examines how Technological Turbulence, Market Turbulence and
Competitive Intensity influence the relationship between Open
Innovation Driven Absorptive Capacity and Functional value to
the customer. The study is focus on ICT based SME firms which
operates within the Western Province and the study is draw upon
60 ICT SMEs as the sample. Data collection has been carried out
using 5 Likert Scale questionnaires. 2 different questionnaires
send through Google Forms to Top Manager and 3 Customers
who uses their products/services. For the Data analysis this study
used SmartPLS and IBM SPSS software. The results indicated
that there is no relationship between Open Innovation driven
absorptive capacity and functional value to customer. In addition
to that the results highlighted that technological turbulence,
market turbulence has no influence between Open Innovation
Driven Absorptive Capacity and functional value to customer. But
competitive intensity has an influence between Open Innovation
Driven Absorptive Capacity and functional value to customer.
This study provides implications for industry experts and policy
makers to think about invest on innovations and recommended the
importance of acquire right combination of external knowledge to
create a value to the customer.
