An exploration of the relationship between organizational inertia with business model innovation and performance of Small and Medium-Sized Enterprises, from the perspective of open innovation

This study aims to examine how open innovation can be effective in changing organizational inertia to create business model innovation and improve firm performance. It also seeks to explore whether the existence of open innovation has a mediating effect and influence. This study constructs a theoretical model to explore the relationship between latent variables and uses a questionnaire to collect research data. In the conceptual framework, organizational inertia is a second-order latent variable and comprises three first-order latent variables: insight, action, and psychological inertia. Open innovation is also a second-order latent variable, and consists of two first-order latent variables: outbound and inbound open innovation. To clarify the relationship between these variables, SEM is used to test the goodness of fit of the theoretical model and research hypotheses. This study uses 119 SMEs and technology units in science and technology parks in Tehran. The results revealed that open innovation has a significant mediating effect on the relationships between organizational inertia and business model innovation, also organizational inertia and firm performance; business model innovation also has a positive influence on firm performance. This study contributes the empirical analysis of SMEs to illustrate the role of open innovation on business model innovation processes.