Open access peer-reviewed chapter

Open Innovation Strategies on New Product and Process Development Prospects: A Case of the Automotive Component Manufacturers in South Africa

Written By

Arthur Mzwandile Gonyora and Pfano Mashau

Submitted: 04 April 2022 Reviewed: 22 April 2022 Published: 10 June 2022

DOI: 10.5772/intechopen.105035

From the Edited Volume

Supply Chain - Recent Advances and New Perspectives in the Industry 4.0 Era

Edited by Tamás Bányai, Ágota Bányai and Ireneusz Kaczmar

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Abstract

Competition between South African Automotive Component Manufacturers ACMs has focused on activities associated with supply chain management such as transporting raw materials and finished products. However, these activities are non-value, adding, so they are an area of relative opportunities for cost reduction; hence new product development presents a significant boost to competitiveness. This chapter\'s primary goal is to determine which open innovation practices can benefit ACMs in developing new products and processes by using a sample survey of 10 ACMs in the automotive manufacturing industry in South Africa. The study adopted a quantitative methodology approach using a 5 Likert structured questionnaire. Data were collected from 33 respondents, including owners, senior and junior managers of ACMs. The results identified that idea generation positively influences the Open Innovation activity of seeking new outside applications for internally developed innovations, knowledge, tools and ideas on new product development. The significant implications are that ACMs should improve their dynamic capabilities to turn ideas generated into new innovative products to remain competitive. This chapter contributes to the existing knowledge by suggesting a contextualised impact of open innovation strategy on sustainable new product development of ACMs in South Africa.

Keywords

  • automotive component manufacturers
  • open innovation
  • new product development
  • fourth industrial revolution

1. Introduction

The disruptive changes of the 4th Industrial Revolution (4th IR) era have resulted in fierce competition between companies, big or small, focused on supply chain management activities, such as transporting primary and secondary products. However, these activities are non-valve adding to products; instead, there are significant opportunities for cost reduction. On the other hand, Global Original Equipment Manufacturers (OEMs) seek advanced operational strategies that capacitate the approach towards their target markets while reducing distances, decreasing production costs, on-time delivery, reducing cycle times, and thus improving the overall process and product quality [1]. To respond to the disruptive changes caused by the 4th IR, these big international players have established local subsidiaries to support them in producing automobiles in other countries and position themselves better to access their markets. The benefits derived include government subsidies from the host country, local skilled labour, appropriate infrastructure, and low production costs [2].

Since ACMs are pivotal in the manufacturing supply chain, they face unique challenges of lack of resources, dynamic capabilities, and vulnerabilities in the industry. These challenges result in technical stoppages or unplanned shutdowns, leading to loss of working time, hindering workers from keeping their jobs and companies from retaining skilled human resources. Thus, besides ACMs maintaining their employees, their revenue is significantly compromised and negatively impacts competitiveness. This problem has necessitated management to develop alternatives such as new products and services. This new product development process enables companies to increase their income, become more competitive, and avoid the frequent loss of highly skilled workers, curtailing unintended knowledge transfer.

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2. Problem statement

The main markets for ACMs have diminished due to financial crises and the numerous operational challenges they have to overcome. These firms face impermanent shutdowns or technical stoppages in avoiding job losses and retaining valued skilled human resources, notwithstanding the challenges of the 4th IR, which emanate from adopting a big-picture perspective of business and processes to integrate different needs across departments and workers into one common goal. Industry 4.0 brings entirely new capabilities to operations managers, allowing them to respond faster to critical situations and improve on multiple KPIs. The price of holding on to their human resources reduces financial income or risks total work stoppage. This problem has resulted in top managers adopting innovation and developing new products manufactured with the existing infrastructure, robust organisational structure, advanced production systems and competent workforce. Inevitably, the benefits of new product development are an increase in income, competitiveness and retention of highly skilled workers, and managing knowledge transfer. As such, this study sought to compile and categorise the application of OI in the context of the new product development in the 4 IR era by answering the following Research Questions RQs:

RO1: What impact of open innovation strategies on new product development prospects in the 4 IR era?

RO2: What proposed contextual open innovation strategies model will apply to automotive component manufacturers?

The study contributes to the current body of knowledge by addressing the gap that exists in the literature on open innovation strategies by exploring how ACMs in a developing country such as South Africa approach new product development initiatives to escape the intense competition of today’s global economy when responding to the competitiveness issues. Open innovation strategies identified in the study impact the competitiveness of the ACMs industry, which plays a vital role in the overall South African economy. The study also identifies how South African ACMs adopt open innovation strategies and the benefits. The field of competitive strategies is dynamic; thus, the study provides new insights into new product development and the concept of open innovation strategies, which can assist practitioners in developing appropriate open innovation strategies to mitigate new product development challenges and boost competitiveness.

The chapter first reviews available literature on ACMs, open innovation strategies and the benefits to new product development, followed by a description of the research design and methodology, a report of the findings, recommendations and subsequent conclusions.

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3. Literature review

ACMs have to develop innovations and new products compared to the traditional innovation process to be competitive. They must identify customers' needs and requirements achievable from their production process capacity and the organisational structure. Their inability to implement drastic changes to their production processes and only be ready and attentive to the requirements of their parent companies makes them vulnerable to competitiveness and innovation [3].

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4. Fourth industrial revolution (I4.0)

While the first, second and third industrial revolutions (IRs) changed the industries’ shop floors through the use of steam power, electrical power and automation, respectively, the I4.0 is about the communication among cyber-physical systems (CPSs) [4]. The advances in computing power, intelligent control, and connectivity lead to the development of intelligent products and allow for radical changes in several other areas. As in the previous IRs, sweeping changes in the shop floor are causing a cascading effect of changes through all the processes in the value chains, thus supporting the creation of new business models and allowing for the production of improved products, which are impacting customers’ uses and behaviours in new ways.

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5. ACM open innovation model

The ACM Open Innovation Strategies archetypal represents the various approaches that diverse ACMs are likely to apply to strengthen their organisation's performance by increasing innovation activities, including New Product Development NPD and economic performance. The strategies are responsible for the successful overwhelming core challenges component manufacturers face about their size, otherwise coined (size-related challenges). Referred to in this archetype as ‘resource scarcity, inadequate dynamic capabilities, and extreme exposure to risk’, This archetypal assumes that ACM’s ‘knowledge exploration’, referred to as ‘creation of value’, and ‘knowledge exploitation’, referred to as ‘value capture’, help to select the appropriate strategic options to follow. It assumes that ACM’s leverage changes over time and can hypothetically accept other alternatives in the future.

The open innovation strategies model (Figure 1) represents an assumption that ACMs must concentrate on essential elements in the management process, which encompass guidance, reinforcement of absorptive and adsorptive capacities, cultivation of risk-taking culture, employee motivation, exploiting functional business systems, effective decision-making and employee assurance and other numerous factors.

Figure 1.

ACM open innovation strategies. Source: [5].

The proposed archetype highlights those facets since they are vital in determining which strategy an ACM should pursue. This model incorporates management considerations to focus on lower forms of innovation strategies that can be followed by ACMs who possess unique strengths in competition depending on whether they are “exploration and exploitation capabilities” [5].

With the automotive industry being the focal point, the study authors adopted this archetype to assess a variety of ACM approaches for contending with others in this environment, given ACM’s relative innovation exploration and exploitation strengths. There are many combinations of strategies and sub-strategies. For example, inward open innovation is viewed in numerous ways, including procurement or hiring a patent, exchanging stock for a patent, acquiring mutually joint patents, acquisitions, or subcontracting R and D projects. Inward and outward innovation can coincide by combining other unique strategies such as cross-licencing. This model focuses on open innovation’s three main groupings (inward, outward, and collaboration strategies). The model pairs them to the categories of ACMs that will use and benefit from them. Each strategy was assessed theoretically about:

  • Its ability to increase ACM innovation outputs and financial performance.

  • Its strategic mitigation or aggravation of the mentioned challenges are resource scarcity, limited dynamic capabilities and disproportionate risk exposure.

The study intends to establish the link between open innovation strategies in reducing NPD challenges affecting these ACMs to the actual performance outcomes. The study also allows us to evaluate the impact of the strategies in executing NPD activities.

The model indicates that each quadrant is identified by a name that describes the archetypal strategic positioning in that quadrant. As an illustration, ACMs in the lower right quadrant focus on investing in the production of new knowledge, whereas ACMs in the upper left quadrant will focus on commercialisation initiatives. Each quadrant describes all ACMs, and the classification is designed to give an easy reference. All ACMs could follow the collaborative route, but the ACMs in the lower left quadrant could employ only collaborative strategies. This choice is a result of the lack of proficiency in the creation of value, hence classified as “inventive,” and the capturing of value capabilities classified as “Commercialising” and combined capabilities classified as “versatile. ACMs in the other quadrants are classified as “collaborative.” The collaborative approach is available as a strategic option in every quadrant.

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6. Collaborative automotive component manufactures quadrant

The lower left quadrant in the model represents ACMs that collaborate and lack innovative exploration and exploitation capabilities. Besides the lack of explorative or exploitative capabilities, they possess the option to implement various collaboration approaches that permit control of the exploration and exploitation strengths over other organisations. Besides, there are three core classifications of collaborations with employees termed “closed innovation approach.” These collaborations are [6]. While collaboration is the primary open innovation strategy available, it is not exceptional for collaborative organisations only since ACMs in supplementary quadrants could, by choice, implement collaboration-interrelated strategies. These subsequent suggestions are about ACMs universally, notwithstanding the quadrant they occupy.

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7. Inventive automotive component manufacturers quadrant

The inventive quadrant is at the lower right side of the model. Since the ACMs in this quadrant have strong knowledge creation (exploration) abilities, referred to as “inventive,” they are likely to depend on their unique resources and capabilities. Many ACMs belong to this group because they experience challenges with value capture. Additionally, [7] noted that ACMs who possess fewer capabilities to commercialise resort to the option of licencing out their innovations to willing partners.

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8. Commercialising automotive component manufactures quadrant

The upper left quadrant of the model is the “Commercialising” ACMs quadrant. These organisations are characterised by intense commercialisation, “exploitation capabilities” matched with not as robust knowledge creation, “exploration capabilities.” The conversion of external ideas into new products achieved through Commercialisation and ACMs in this quadrant focus on this activity. There are fewer ACMs in this grouping than in Inventive or Collaborative quadrants because many organisations lack commercialisation capabilities [8]. This grouping includes manufacturers and niche organisations with specialised distribution channels. Other organisations are bound to gain an advantage by obtaining IP since their positioning makes them better positioned to consider IP as a feasible option. “Inward open innovation” gives ACMs a competitive advantage when bringing products to the market.

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9. Versatile automotive component manufactures quadrant

The Versatile ACMs quadrant is on the upper right side of the model and depicts the most robust organisations. More established mid-sized and small organisations in this cluster have reached maturity and are deeply rooted in niche markets. They possess robust knowledge creation and exploitation capabilities. They are self-reliant in exploration or exploitation assistance and can opt for a more closed innovation approach. They can benefit by implementing more than one innovation strategy: inward, outward, or collaboration. These ACMs can use different strategies, sub, or coupled strategies to enhance their organisational performance and competitive standing. When negligible benefits derived from the formation of these actions are equal to the marginal costs, these organisations start seeking an approach to change the excellent symmetry of depth (intensity) and breadth (scope) of these activities; hence we reach the final proposition.

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10. Innovation and new product development in the automotive industry

Frequently innovation definition is about the adoption of an idea or behaviour [9], the development of new products [10] and the initiation of changes to an established phenomenon [11] utilising the right technology [12]. Innovation is critical to different companies and countries, and Schumpeter was the first economist to pronounce the importance of innovation and development for any entity. Additionally, a recent overview of the economic importance of innovation has found an adjacent relationship between these two variables for any country [13]. Innovation is a strategy used by automotive component manufacturers that adhere to long-term plans based on OEM operational strategy [14], especially in a capitalist environment, where production and consumerism are vibrant [15].

Innovative practices assist automotive component manufacturers and the supply chain that have saturated traditional markets with outdated products. Automotive component manufacturers usually understand their customer requirements and lead times based on long-term forecasting. Minor product modifications can be implemented using the available organisational structures and production processes. Despite this, automotive component manufacturers can expedite proposed products with suitable characteristics thanks to their technical capabilities, which is a great advantage since the time required for the new product development (NPD) process is lengthy in a small company. However, currently, these ACMs have much expertise in product changes and production processes they can swiftly respond to their parent companies’ production requirements.

Fortunately, some South African automotive component manufacturers improve product characteristics through innovative practices designed by their product department or a product development department. In contrast, some OEMs have introduced technical development centres that provide technical support to other departments in NPD and component suppliers in their value chains. These companies possess a competitive advantage based on their geographical location, which is strategically a critical success factor in competing with other global players in the automotive industry. Nevertheless, one of the most critical issues concerning innovation in these automotive component manufacturers is the relationship between the different critical factors associated with the success of NPD and competitive advantage [16]. Therefore, this relationship makes it an area of exceptional and consistent attention if competitiveness is achieved.

11. Critical success factors in NPD and innovation

Innovation and NPD present an opportunity for strategic advantage in the automotive and other industries as related processes necessary to identify a firm’s activities or critical success factors (CSFs) [17]. Numerous authors have intensified efforts on the role of CSFs; the literature review indicates management commitment as crucial for NPD [18], survival and success. Team development skills are other extensively studied CSFs [18] and the internal processes companies use to retain a trained workforce. Similarly, authors have highlighted the processes for the identification of the following: market needs [19, 20], the translation of those needs into a workable design to be manufactured [21, 22] and the cultural adaptations made as companies introduce the structural changes required to keep people continuously informed in an even developmental process [13, 22].

The present study [15] recently authenticated three dimensions addressed in [21] as CSFs. These dimensions are product, market and process characteristics. Furthermore, [15] confirmed organisational and marketing characteristics, suggesting that these CSFs are relevant in NPD.

Several authors have presented their evidence and finally identified benefits gained from NPD for both customers and companies worldwide. Table 1 presents the most important benefits. However, the question is, “Are these findings applicable to South African automotive component manufacturers as processes and innovation practices? The answer is based on the relationship between innovation and NPD and the benefits derived from open innovation explored in the next section.

Benefits for CompaniesReferences
Competitive edge[16, 19]
Financial performance[16, 19, 22]
Innovation speed[16, 22, 23]
Financial profit[24]
Market share[25]
Product adaptation to the environment[22, 23, 25]
Adaptation to customer demands[19, 25]
Technological upper hand over competitors[25]
Long-term view[26]
Reduced product lifecycle[24]
Market growth[24]
Product acceptance in the market[27]
Benefits for Customers
Customer satisfaction[16, 22]
Innovation of a new product[16, 22]
Product quality[16, 19]
Technological innovations[16, 25]
Product functionality[24]
Reliability of the new product[24]
Technical support and performance[24]

Table 1.

Benefits of open innovation in ACMs. Source: Own.

Open innovation is not a walk in the park [7], especially for start-up ventures which lack adequate capabilities regarding capital investments and research and development activities. Hence, open innovation presents an excellent opportunity for ACMs to venture into new product development [28]. Nevertheless, [29] criticises [30], the founder of open innovation, for exaggerating its applicability to research and development by claiming that it is often long-term, expensive and always risky and requires the protection of consequences. He argues that closed innovation remains an effective way for research and development investment. Internet-based tools such as Web 2.0 are increasingly gaining leverage in the internal and external capabilities of ACMs [31]. Some scholars argue that ACMs are more effective than OEMs in parallel using various open innovation practices because of their unwavering support and dedication to parent companies’ requirements [32]. However, [33] found that most ACMs still pursue closed over open innovation. [34] argue that firms that provide their ideas to external parties are more product innovative orientated than non-providers. They found that mutual rather than one-way exchanges are relationships that significantly raise the probability for automotive component manufacturers to experience a substantial benefit from contributing to other firms’ new product development projects. [35] explored Danish small and medium enterprises and identified the costs linked to numerous sources of innovation. However, the automotive manufacturers found that market and science sources are related to decreased costs and collaboration, so suppliers of a similar knowledge base are related to the performance of the market and collaboration with customers in lesser project fees.

Nevertheless, they found that novelty in new products is lower than in those embedded with suppliers. Technology scouting is a low cost but valuable alternative for SMEs involved in high-tech activities [36]. Overall, SMEs are increasingly adopting open innovation as a part of operational strategies [37, 38].

A critical study by [38] found that ACMs adopt open innovation primarily for commercial interests such as meeting customer demand and keeping up with competitors. [39] demonstrated that ACMs’ interaction with sources of innovation is not essential during the phase of recognising the innovation process but also at the end-stage to facilitate the successful commercialisation of a product or service. Kang et al. [40] asserted that the firm size and government support significantly impact the commercialisation of automotive component manufacturers. They established that appropriability, innovative capabilities and investment in external research and development have profoundly positive impacts on ACMs’ commercialisation initiatives. [28] further, argue that ACMs are good at inventions but lack essential commercialisation resources. Hence, ACMs suggest that collaboration with other partners, including intermediaries at the commercial stage, may help overcome their limitations for commercialisation. Collaboration for ACMs is more critical in the commercialisation stage than in other stages such as ideation, research, and development [38, 39, 40, 41]. For ACMs, open innovation is less practical than revenue generation [32, 42]. Nevertheless, cooperation with industry incumbents helps to overcome challenges ACMs encounter [38].

12. The theory underpinning the study

Based on the literature review, the study identifies four ACMs’ open innovation strategies: commercialisation, collaboration, invention, and versatility. In support of [5], they illustrate the relationship between these four main categories of open innovation strategies and the theoretical underpinnings to evaluate how they impact competitiveness. This study focuses on how these strategies impact NPD. The resource-related challenges (inputs) are expressed in terms of the resource-based view theory. The firm capability-related challenges (transforming these inputs into outputs) are conceptualised by examining the dynamic capabilities theory. The risk-related challenges (related to the uncertainty of innovation project outcomes) are more effectively comprehended by assessing the portfolio theory. Regardless of the nature of the performance benchmark (financial and philanthropic), these three types of challenges faced by ACMs directly impact competitiveness, which the study proposes to be achieved through new product development.

13. Research design

An exploratory and descriptive method technique was adopted. The empirical research aimed to determine:

  1. the impact of open innovation strategies on new product development prospects in the I4.0 era.

  2. to propose a contextual open innovation strategies model that will apply to the automotive component manufacturers in the industry.

The chapter’s objectives were achieved; by designing a structured questionnaire that consisted of two sections. Section 1 included the profile of the company concerning positions and qualifications. Section 2 required the respondents to indicate to what extent they collaborated with external partners in adopting open innovation strategies during NPD, identified using a five-point Likert scale for each of these constructs. The constructs measured organisational support for innovation projects, collaboration with external partners and the use of external knowledge. The impact of the strategies was measured using a five-point Likert scale varying from 1 (impact to a lesser extent) to 5 (impact to a greater extent). Section 2 of the questionnaire required respondents to rate their agreement, from 1 = strongly disagree to 5 = strongly agree, that there were benefits from each of the four strategies, namely versatility, inventiveness, commercialisation and collaboration under study. A statistician checked the questionnaire prior to conducting the empirical research to ensure that the formulation of the questions was clear and understandable to the respondents.

14. Sampling

The unit of analysis for the study was senior R and D practitioners within the South African automotive component manufacturers who are member companies of the AIDC, an association that represents the South African automotive industry. As the association represents the entire automotive industry in South Africa, it was decided to incorporate members of this association. Four ACMs from the three central automotive manufacturing provinces were included giving a fair geographical spread a total of 33 questionnaires were sent out to the research and development managers representing the ACMs—a census sample.

15. Data collection

By using a survey questionnaire, quantitative data was collected from a sample of 33 managers with research and development responsibilities. Four major automotive component manufacturers participated in the research and provided all 33 respondents. These firms were distributed as Kwazulu natal (2), Gauteng (6) and Eastern cape (2). Some automotive component manufacturers refused to participate in the research, citing confidentiality issues with their clients, Original Equipment Manufacturers with head offices based globally. A total of 33 (75.3%) responses were received.

16. Data analysis

The completed questionnaires were coded, following which the responses were captured in Excel and analysed employing SPSS25, using descriptive statistics and binomial tests.

17. Ethical considerations

The UKZN research office granted the ethical clearance to enable the execution of the study. The researchers ensured that participants signed the consent forms, indicating that they were participating in the research voluntarily. The researchers assured participants of the confidential handling of information divulged in the questionnaires. The researchers were mindful of the effects of leaking business secrets to rival firms and kept all records about the research under lock and key.

18. Reliability analysis of the questionnaire

Reliability is an evaluating measure that tests a measuring instrument’s accuracy and consistency. It is how techniques, approaches and methodologies for collecting data provide reliable findings [43]. A reliability test was conducted on each of the four strategies, using Cronbach’s coefficient alpha, as illustrated in Table 2.

Cronbach’s AlphaNo of Items
0.89954

Table 2.

Cronbach’s coefficient alpha.

The analysis indicated a high level of reliability with a Cronbach’s Alpha of .899, items scoring 89.9%. Table 2 above reflects the resultant Cronbach’s Alpha for the questionnaire used in this study. Bryman and Bell [44] stated that it is essential to appreciate the basic features of what a reliability test means. Whereas Cronbach’s alpha determines internal reliability, it essentially calculates the average of all possible split-half reliability coefficients. A computed alpha coefficient will vary between 1 and 0 (denoting perfect internal reliability). As a rule of thumb, Figure 0.80 is typically employed in denoting an acceptable level of internal reliability, though many writers accept a slightly lower figure. For example, in the case of the “Burnout Scale” replicated by several researchers, alpha was 0.7, which they suggested was efficient.

19. Presentation of quantitative results

The focus of the chapter was on determining the relationship between innovation challenges and the competitiveness of automotive component manufacturers’ operations. The competitiveness was achieved by identifying the industry’s open innovation challenges and their impact on its competitiveness.

20. Position

Table 3 below indicates that most respondents occupied positions other than top managerial such as Artisans. Artisans provide technical advice to the management, which is a strategic role and function, and above all, they are the implementers of the organisation’s open, innovative strategies. However, strategic planning is primarily the responsibility of top management. Cumulatively management constituted 54.5% of the total respondents, with 15.2% being Chief Executive Officers, 27.3% senior managers, and 12.1% research and Development Managers. The researchers believe the respondents were strategically configured and positioned to competently answer the questionnaire and help the researchers gather relevant information and data to solve the research problem.

PositionFrequencyPer centValid PercentCumulative Percent
CEO515.215.215.2
Senior Manager927.327.342.4
R&D Manager412.112.154.5
Others1545.545.5100.0
Total33100.0100.0

Table 3.

Respondents’ position.

21. Qualification

Table 4 below shows that out of 33 respondents, the majority constituting 30.3% had a master’s degree, 27.3% with a Diploma, 8% with first degrees, 12.1% with other qualifications such as relevant Certificates and 6.1% had PhDs. A Master’s degree is an international standard managerial qualification. Managers that possess such a high level of qualifications are highly competent in their managerial duties. 81.8% of the respondents fell in suitably and relevantly qualified respondents. As a result, the researcher had no reason to doubt the managerial capabilities of the respondents and their competence to handle the questionnaire.

QualificationFrequencyPer centValid PercentCumulative Percent
Diploma927.327.327.3
Degree824.224.251.5
Masters1030.330.381.8
PhD26.16.187.9
Others412.112.1100.0
Total33100.0100.0

Table 4.

Respondents qualifications.

Table 5 below shows the inferential correlation statistics measuring the impact of open innovation strategies on new product development prospects.

Correlation
Driven by University and research centersFrom idea generationSeeking new outside applications for internally developed innovations, knowledge, tools, and ideasSynergy created from combining knowledge among participating firmsProcess of new product/processes developmentIntroduction of new products/processes developmentIntroduction of new processes/servicesOpening of new markets
Driven by University and research centresPearson Correlation1−0.060−0.1830.090−0.0140.0730.1260.081
Sig. (2-tailed)0.7400.3090.6200.9380.6850.4850.660
N3333333333333332
From idea generationPearson Correlation−0.06010.539**0.1080.556**0.497**0.3240.183
Sig. (2-tailed)0.7400.0010.5490.0010.0030.0660.317
N3333333333333332
Seeking new outside applications for internally developed innovations, knowledge, tools, and ideasPearson Correlation−0.1830.539**10.1150.518**0.2220.2540.345
Sig. (2-tailed)0.3090.0010.5230.0020.2150.1540.053
N3333333333333332
Synergy created from combining knowledge among participating firmsPearson Correlation0.0900.1080.11510.2030.1100.3040.631**
Sig. (2-tailed)0.6200.5490.5230.2560.5410.0860.000
N3333333333333332
Process of new product/processes developmentPearson Correlation−0.0140.556**0.518**0.20310.697**0.455**0.269
Sig. (2-tailed)0.9380.0010.0020.2560.0000.0080.136
N3333333333333332
Introduction of new products/processes developmentPearson Correlation0.0730.497**0.2220.1100.697**10.455**0.210
Sig. (2-tailed)0.6850.0030.2150.5410.0000.0080.248
N3333333333333332
Introduction of new processes/ servicesPearson Correlation0.1260.3240.2540.3040.455**0.455**10.459**
Sig. (2-tailed)0.4850.0660.1540.0860.0080.0080.008
N3333333333333332
Opening of new marketsPearson Correlation0.0810.1830.3450.631**0.2690.2100.459**1
Sig. (2-tailed)0.6600.3170.0530.0000.1360.2480.008
N3232323232323232

Table 5.

Impact of open innovation on new product development.

The results in Table 5 above show that idea generation was found to have a strong positive impact on seeking new outside applications for internally developed innovations, knowledge, tools and ideas, r (0.539**) = 0.539, p = 0.001. From idea generation was also found to be having a strong positive impact on process of new product/ processes development, r (0.556**) = 0.556, p = 0.001, strong positive impact on introduction of new products /processes development r (0.497**) = 0.497, p = 0.003. “Seeking new outside applications for internally developed innovations, knowledge, tools, and ideas” were found to have a strong positive impact on the new product/processes development process, r (0.518**) = 0.518, p = 0.002.

The results also show that synergy created from combining knowledge among participating firms is having a strong positive impact on the opening of new markets, r (0.631**) = 0.631, p = 0.000. Process of new product/ processes development was found to be having a strong positive impact on introduction of new products/processes development, r (0.697**) = 0.697, p = 0.000 and a strong positive impact on introduction of new processes/ services, r (0.455**) = 0.455, p = 0.008. On the other hand, the introduction of new products/processes development had a strong positive impact on the introduction of new processes/services, r (0.455**) = 0.455, p = 0.008, while the introduction of new processes/services has a strong positive impact on the opening of new markets, r (0.459**) = 0.459, p = 0.008.

22. Discussion of results

This study indicates that idea generation positively influences the open innovation activity of seeking new outside applications for internally developed innovations, knowledge, tools, and ideas for new product development. Idea generation also positively impacts new process development and the introduction of new product development. The results also indicate that the synergies created from combining knowledge among participating firms have a positive, substantial impact on opening new markets for new products. The introduction of new processes or services has a strong positive impact on opening new markets for new products. New processes and services such as distribution channels and value chains are essential and critical for new product development.

Literature suggests that several attempts have proffered open innovation strategies at the centre of openness and its ability to stimulate innovation within firms. This stimulation is achieved by combining large and different pools of external sources resulting in increased diversified products and better processes of matching products to consumer preferences [45, 46, 47]. Open innovation management creates and brings monetary values to innovative technological knowledge and individual creativity. Literature has, in recent years, popularised this model of bringing monetary value to innovation as open innovation [3]. However, open innovation is not a one-dimensional concept; it culminates in many tastes and forms, and although it adds to the richness of the open innovation concept, it hinders theory development [45]. Above all, open innovation enables the identification of new product development performances, even in situations where internal R and D activities provide new product development needs solely and goes beyond by engaging external sources such as the knowledge of individuals as well as ideas from customers and technology [46, 48].

The automotive components manufacturers need innovators who create products, develop discovery skills, and believe that they can change the world [49] as they lead these innovative organisations. Organisational leadership and management play an essential role in staffing all organisational departments with innovative individuals [49] and encouraging employee creativity as the basis for innovation [50].

In summary, new product development encompasses physical product development, processes development and services development, of which innovation plays a vital role in their achievement. New product development requires innovative employees, leaders and creative managers who believe in themselves and are driven by the quest for knowledge acquisition.

23. Recommendations

The nature of the automotive components manufacturers demands that their performance be measured in terms of product development productivity. The demand for components parts is exceptionally high and ever-increasing in the automotive industry. Quality determines the life span of the component products; as a result, the need for continuous innovation in new product development overwhelms the automotive components manufacturers. Dynamic capabilities lie at the centre of achieving all these. Therefore, the chapter recommends that the automotive components manufacturers invest in improving their dynamic capabilities to turn ideas generated into new innovative products to remain competitive in the country’s automotive industry and globally competitive.

24. Limitations

A study of a strategic nature such as this would naturally face limitations in terms of the target population of corporate executives that might not be willing to divulge information. Predominantly the local or domestic automotive component manufacturers are more reluctant to share information as they perceive threats to their production capabilities and processes, especially regarding the use of external knowledge and contents of materials and local suppliers in fear of the likelihood of being sidelined by the multinational corporations who are dominating the market share of the South African automotive industry.

The study was quantitative, and bulk data were collected using a structured questionnaire. A structured questionnaire limited the respondents. They could not express their personal views and opinions beyond the structured constructs in the questionnaire, unlike the interview protocol would allow.

The study was limited to a small sample drawn from KwaZulu-Natal, Gauteng and the Eastern Cape with the diversity of the automotive component manufacturers compared to the limited number of companies covered externally in this research; this limitation is essential for future research. Not all subsectors of the automotive industry have been covered in the research due to the technical nature of the study, where research and development are not prerequisites among small and micro firms. A more comprehensive sample would have enhanced the potential for the generalisability of the results.

Acknowledgments

The authors would like to express their gratitude to The Graduate School of Business Leadership at the University of KwaZulu Natal for issuing an ethical clearance certificate making it possible to conduct the study.

Authors’ contributions

AMG conception and design of the research. AMG collected, analysed and interpreted the data and drafted the manuscript. P.M critically revised the manuscript and approved the final version to be published.

Funding

This research received no specific grant from any funding agency in public, commercial or not-for-profit sectors.

Competing interests

The authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article.

Data availability statement

Data sharing applies to this article as new data were created and analysed. Data can be obtained from the authors upon request.

Disclaimer

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors.

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Written By

Arthur Mzwandile Gonyora and Pfano Mashau

Submitted: 04 April 2022 Reviewed: 22 April 2022 Published: 10 June 2022