From Rural Outsourcing to Rural Opportunities

IJICTHD Editorial Board Editors-in-Chief: Susheel Chhabra, Lal Bahadur Shastri Institute of Management, India Hakikur Rahman, U. of Minho, Portugal Associate Editors: Manuel Acevedo, International Consultant on ICTs for Development, Argentina Mila Gasco, Institute of Public Governance and Management, Spain Carlos Jimenez, Institute of Electrical and Electronics Engineers Technology Management Council (IEEE TMC), Spain Sangeeta Sharma, U. of Rajasthan, India Chia-Wen Tsai, Ming Chuan U., Taiwan IGI Editorial: Heather A. Probst, Director of Journal Publications Jamie M. Wilson, Assistant Director of Journal Publications Chris Hrobak, Journal Production Editor Gregory Snader, Production and Graphics Assistant Brittany Metzel, Production Assistant International Editorial Review Board: Vincenzo Ambriola, Università di Pisa, Italy Kaushik Anjali, Management Development Institute - Gurgaon, India L. Ariunaa, Intec Co. Ltd, Mongolia Charles Ayo, Covenant U., Nigeria Robert Cropf, Saint Louis U., USA D. N. Gupta, Institute for Studies in Industrial Development, India Gashaw Kebede, Addis Ababa U., Ethiopia John Lannon, U. of Limerick Centre for Information and Knowledge Management, Ireland and the Praxis Centre, UK Euripides Loukis, U. of the Aegean, Greece Luis Felipe Luna-Reyes, Universidad de las Américas, Mexico Robin Mansell, London School of Economics, UK Alemayehu Molla, RMIT U., Australia Bantu Morolong, U. of Botswana, Botswana Kumar Muneesh, U. of Delhi - South Campus, India Irena Ograjenšek, U. of Ljubljana, Slovenia IGIP Anne-Marie Oostveen, Oxford Internet Institute, UK Ismael Pena, Open U. of Catalonia, Spain Daniel Pimienta, FUNREDES, Dominican Republic Miguel Porrua, Organization of American States, USA Singh Ramanjeet, Institute of Management & Technology, India Saeed Saqib, U. of Siegen, Germany Katherine Sarikakis, U. of Leeds, UK M. P. Satija, Guru Nanak Dev U., India Tino Schuppan, The Postdam U. Institute for eGovernment, Germany Bharati Sen, SNDT Women’s U., India Christian Serarols, Universitat Autònoma de Barcelona, Spain Jamal Shahin, U. of Amsterdam, The Netherlands Carlos Nunes Silva, Universidade de Lisboa, Portugal Teresa Torres, Rovira i Virgili U., Spain Kumar Vilendar, Fortune Institute of International Business, India IGI PublIshInG www.igi-global.com Call fOr arTIClES International Journal of Information Communication Technologies and Human Development An official publication of the Information Resources Management Association The Editor-in-Chief of the International Journal of Information Communication Technologies and Human Development (IJICTHD) would like to invite you to consider submitting a manuscript for inclusion in this scholarly journal. 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For a convenient easy-to-use library recommendation form, please visit: http://www.igiglobal.com/ijicthd and click on the "Library Recommendation Form" link along the right margin. InternatIonal Journal of InformatIon CommunICatIon teChnologIes and human development July-September 2011, Vol. 3, No. 3 Table of Contents Special Theme issue on Open Innovation Strategies for SMEs Development: Utilization of ICT methods Editorial Preface i Hakikur Rahman, University of Minho, Portugal Isabel Ramos, University of Minho, Portugal Research Articles 1 Electronic Networks and Gaining Market Share: Opportunities and Challenges (Cases from the Jordanian Handicrafts Sector) Ghazi Al-Weshah, Al-Balqa Applied University, Jordan Khalil Al-Hyari, Al-Balqa Applied University, Jordan Amjad Abu-Elsamen, University of Jordan, Jordan Marwan Al-Nsour, Al-Balqa Applied University, Jordan 16 From Rural Outsourcing to Rural Opportunities: Developing an ICT Mediated Distributed Production Enterprise in Tamil Nadu, India Aarti Kawlra, Indian Institute of Technology Madras, India 31 Factors Afecting E-Commerce Adoption by Small Businesses in a Developing Country: A Case Study of a Small Hotel Ali Acilar, Bilecik University, Turkey Çağlar Karamaşa, Bilecik University, Turkey 42 Empowerment of SMEs Through Open Innovation Strategies: Life Cycle of Technology Management Hakikur Rahman, University of Minho, Portugal Isabel Ramos, University of Minho, Portugal 58 Web-Based Intellectual Property MarketPlace: A Survey of Current Practices Isabel Ramos, University of Minho, Portugal José Fernandes, University of Minho, Portugal i Editorial PrEfacE Special Issue on Open Innovation Strategies for SMEs Development: Utilization of ICT methods Hakikur Rahman, University of Minho, Portugal Isabel Ramos, University of Minho, Portugal PrEaMblE Entrepreneurship in recent years is passing through a dynamic transformation in operational and management aspects in terms of competitive advantage, knowledge gain and value addition within an enterprise. This may be termed as a paradigm shift and it has been shifted from simple introduction of new ideas, product or service development to collaborative nature incorporating innovation, in terms of products, processes, services and organizational transformations. Innovation has also incorporated open innovation concepts and practices in comparison to the more traditional closed innovation. Small and medium enterprises (SMEs) play a critical role in the economy of most countries in the world. Many of them are leaders in applying innovation strategies for business promotion, value gain and economic empowerment in a country. However, little is known on how open innova- tion is implemented in SMEs and what are the challenges and beneits associated with their implementation. This special issue would like to focus in-depth studies, cases and researches focusing open innovation strategies for SMEs development through utilization of ICT tools. OrganIzaTIOn Of ThE SPECIal ISSUE This special issue has ive papers, focusing various aspects of open innovation within the entrepreneurships. Ranging from conceptual issues to empirical or success cases, this special issue has tried to accumulate knowledge on how SMEs can apply the open innovation strategies for their development and empower them to act aZs catalyst of economic empowerment. Paper 1 aims at providing a deep understanding of the current status of electronic networks in the Jordanian handicrafts sector from ii managers’ perspectives. The study enhances utilizing the e-environment to gain market share in local, regional, and international markets. Four cases of handicraft projects have been selected to conduct face to face interview. The results show that handicraft projects have initial attempts to use E-electronic in their activities, while these attempts are still in embryonic stages and they do not use E-networks effectively to gain market share to date. However, project managers believe that there is direct link between the use of electronic networks and the increase the business market share. Inspired by the potential of ICTs, for socio-economic development, and supported by a university based technology and business incubator, paper 2 reveals how Rural Production Company, initially an exploratory project whose key innovation was its Internet kiosk-facilitated model of crafts production and local empowerment, transformed into a social enterprise catering to global demands. The paper is a relexive mapping of the organization’s evolution from the original research agenda of outsourcing production cum rural employment, to one that privileges local networks both as a conscious business strategy and as an arena for collaborative change for human development. Paper 3 explores the factors affecting the adoption of e-commerce by small businesses in a developing country context. To attain this purpose a case study was conducted in a small hotel, which is using its website to keep up with customer expectations and competition in a small Turkish city. Although having a website is critically important and it provides some beneits for the hotel, but in order to become successful in e-commerce, it is just not enough. Conclusions and suggestions derived from this study provide a meaningful contribution to the understanding of e-commerce adoption among small businesses in developing countries. Adoption of innovation strategies in entrepreneurship is an age old phenomenon, but inclusion of open innovation or collaborative innovation strategies in the entrepreneurship is a newly evolved concept. By far, most researches reveal, majority of successful global ventures are adopting open innovation strategies in their business proceedings. However, despite their contribution to entrepreneurship and national economy, the SMEs are well below in acquiring this newly emerged trend of doing business. Moreover, not many researches are being conducted to investigate SMEs potencies, expectations, delivery channels and intricacies around the adoption of open innovation strategies. Paper 4 tries to put forward a contextual framework leading to an operational framework to explore the lifecycle of open innovation strategy management activities focusing technology transfer. It also discusses about issues on future researches in empowering SMEs through utilization of open innovation strategies. Along the past years, the knowledge and innovation management have acquired increasing relevance in organizations and entrepreneurships. During the last decade, open innovation strategy, and especially, crowdsourcing innovation model has gained increasing importance. Paper 5 discusses about this issue by approaching in two ways for commercializing intellectual property: crowdsourcing innovation and intellectual property marketplaces. The paper aims to provide knowledge about concepts and practices underlying the ways for commercializing intellectual property. It also seeks to contribute with a proposal of architecture for an intellectual property marketplace, based on the analysis of practices about crowdsourcing innovation and intellectual property marketplaces. Hakikur Rahman, Editor-in-Chief Isabel Ramos, Guest Editor IJICTHD iii Hakikur Rahman is an academic over 25 years has served leading education institutes and established various ICT projects funded by ADB, UNDP and World Bank in Bangladesh. He is currently serving as a Post Doctorate Researcher at the University of Minho, Portugal. He has written and edited over 15 books on computer education in ICT, education and research. Graduating from the Bangladesh University of Engineering and Technology in 1981, he has done his Master's of Engineering from the American University of Beirut in 1986 and completed his PhD in Computer Engineering from the Ansted University, BVI, UK in 2001. Isabel Ramos has a doctorate degree in Information Technologies and Systems, specialization in Information Systems Engineering and Management (2001) and a master degree in Informatics for management. She is an Assistant Professor in the Information Systems Department of the Minho University, Portugal and Chair of the Information Systems Master Programs of the University. Dr. Ramos is Associate Editor of the International Journal of Technology and Human Interaction and member of the editorial board of Enterprise Information Systems. She is Secretary of the Technical Committee 8 (Information Systems) of IFIP – International Federation for Information Systems and awarded with the IFIP Outstanding Service Award in 2009. She is author and co-author of two books and more than 4 dozens of scientiic and technical papers. International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 1 Electronic networks and gaining Market Share: Opportunities and Challenges (Cases from the Jordanian handicrafts Sector) Ghazi Al-Weshah, Al-Balqa Applied University, Jordan Khalil Al-Hyari, Al-Balqa Applied University, Jordan Amjad Abu-Elsamen, University of Jordan, Jordan Marwan Al-Nsour, Al-Balqa Applied University, Jordan abSTraCT This study provides a deep understanding of the current status of electronic networks in the Jordanian handicrafts sector from managers’ perspectives. More speciically, this study enhances utilisation of the e-environment to gain market share in local, regional, and international markets. Four cases of handicraft projects are selected to conduct face to face interviews. The results show that handicraft projects have initial attempts to use E-electronic in their activities, but these attempts are still in embryonic stages, and they do not use E-networks effectively to gain market share. However, project managers believe that there is a direct link between the use of electronic networks and increases in the business’s market share. Furthermore, it is intended that these initiatives be treated as innovative and at the end utilised to enhance the business development of similar enterprises belonging to the small and medium enterprises sector. The study recommends that such projects consider adoption of e-networks in their future plans, enhance their staff skills in terms of improving their IT and English language skills, and develop their own internet website to create new marketing channels. Keywords: Case Study, E-environment, E-networks, Handicrafts, Interview, Jordan, Market Share, SMEs InTrODUCTIOn Electronic networks can assist an organisation discover and share knowledge and learning within the organisation and from entities outside DOI: 10.4018/jicthd.2011070101 the organisation (O’Toole, 2003), as an innovative instrument for adding business value. The concept of electronic network is rarely mentioned in the networks literature, but used as e-business (Taylor & Murphy, 2004; Fillis et al., 2004; O’Toole, 2003), e-relationships (O’Toole, 2003), or electronic market-place Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 2 International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 and e-business (Stockdale & Standing, 2004). Therefore, these terms are used interchangeably with e-networks. Some studies used the terms e-commerce, internet commerce, and e-business in a compatible way (Stockdale & Standing, 2006; Poon & Swatman, 1998). Ramsey et al. (2003) stated that the term electronic business is used broadly and interchangeably with e-commerce and internet commerce to describe the internet activities and process in a business. Moreover, Fillis et al. (2004) confirmed that the terms e-business and e-commerce can be used interchangeably to describe firms’ utilisation of E-technology in their activities and operations. Most of the previous studies defined the term E-business to represent all electronic activities and process in a business (Liu & Arnett, 2000; Tang et al., 2003; Fillis et al., 2004). For example, Liu and Arnett (2000) considered e-business as a way of conducting business by companies and their customers performing electronic transactions through computer networks. Moreover, e-business is also defined as the enhancement and optimisation of a business’s activities through the usage or creation of new, digital markets and value chains both for strategic and operational benefits (Tang et al., 2003). Furthermore, Fillis et al. (2004) defined e-business as “any business carried out over an electronic network (exchanging data files, having a websites, using other companies’ websites or buying and selling goods and services online” (p. 179). The above-mentioned definitions used Ebusiness as a broad term to describe all electronic activities that can be adopted in businesses operations in different ways to build relationships management with other parties. Specifically, small and medium size enterprises (SMEs) do not have the skills or time to implement all internet applications. Firm size affects the level of resources available for investment in information technologies and associated training which can support e-business adoption in SMEs (Serbanica & Militaru, 2008). Currently, the Internet is most commonly used by SME firms in developing countries for communication and research; the Internet is least used for e-commerce. E-mail is considered an important means of communication. However, the extent of use is limited by the SMEs’ recognition of the importance of face-to-face interaction with their buyers and suppliers (Andam, 2003). In developing countries, there are many barriers and challenges for small business to adopt electronic networks as driver for electronic activities. The previous studies in developing countries have not defined electronic networks in a clear way. For example, Adekunle and Tella (2008) investigated the barriers of electronic networks adoption in Nigerian small businesses. Consequently, they concluded that E-commerce, E-business and e-networks could be used interchangeably. Up to date, no any empirical study has investigated the use of E-networks in handicrafts sector in Jordan. This paper attempts to make contribution to the recognition of this knowledge gap. It also offers guidance for future research in a field of research. The paper, first, presents a review of the literature pertaining to the concept of electronic networks, small businesses, E-networks environment, and the Handicraft industry scope. Thereafter, explained the methodology employed for this research. The study results are then analysed and interpreted in the light of theoretical evidence reported in extant literature. Finally, a number of conclusions drawn from this investigation were discussed, along with limitations of the study and avenues of future research. The Concept of Electronic networks There is no single, uniformly acceptable definition of electronic networks term. The terms e-business, e-commerce, e-relationships, and e-network are used interchangeably in the literature. However, electronic network can be defined as all financial and informational electronically mediated exchanges between organisations and its external shareholders (Kulmala & Rauva, 2005). Therefore, the Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 3 electronic networks can be considered as a tool of the e-commerce (Kulmala & Rauva, 2005; Stockdale & Standing, 2004). The electronic networks in a study of emarketplace defined as an inter-organisational information system that allows multiple buyers and sellers, and other shareholders to communicate and transact through a dynamic central market place that is supported by additional services (Stockdale & Standing, 2004). Adekunle and Tella (2008) described the value and benefits of using e-networks. They mentioned that “using electronic information to boost performance and create value by forming new relationships between and among businesses and customers”. The level of confidence of using e-mail for communication with both suppliers and buyers increases only after an initial face-toface interaction. E-mail, therefore, becomes a means for maintaining a business relationship (Andam, 2003). For the purpose of this study, the electronic network can be considered as all internet activities and process (such as e-mail and websites) that are adopted in businesses operations in different ways to communicate and build relationships with competitors, customers, marketing agencies, and other stakeholders. While gaining knowledge and capacity from internal and external sources for the value gain (Chesbrough, 2003), forms a dynamic knowledge acquisition system, belonging to the newly evolved open innovation paradigm. Small businesses and E-networks Environment Sparkes and Thomas (2001) investigated the use of internet as one of critical success factor for marketing in Welsh agri-foods small businesses. They concluded that there is need for appropriate support of SMEs to make them aware of the importance of the adoption of e-business as a critical success factor for their marketing because it provides a strong interaction with customers and international audience. O’Toole (2003) suggested that there are various implementation levels of the E-relationship using industry associations, consultants, government agencies, universities or network providers. The study recommended that institutions should play the key role in making the technology infrastructure cheaper and available. Another benefit of adopting e-business in SMEs could be the higher efficiency obtained in business activities due to a fast and accurate processing of information. Web-enabled services increase the competitiveness of SMEs because they change the relationship with customers by creating a stronger link between firms and its clients (Lal, 2005). Collins et al. (2003) examined the causal relationship between enhancing the SMEs business performance and the utilization of e-networks in the tourism sector; Fink and Disterer (2006) examined to what extend is the information communication technologies (ICT) are infused into the operation of SMEs? They considered ICT a tool for SMEs to become international businesses; Fillis et al. (2004) argued that electronic network is an essential asset for small business development taking into consideration the macro trend of globalization which removes the geographic barriers and increase competitions among businesses. Therefore, they developed a conceptual model that increases the level of e-networks adoption. Fillis et al. (2004) proposed some areas which confirm that “E-networks can create competitive advantage in small businesses such as: first, E-networks provide small firms the ability to access an information infrastructure. Second, adoption of E-networks provides small firms with internal and external communication among each others. Third, adoption of E-networks allows small businesses to communicate effectively with customers, suppliers, business partners and competitors. Fourth, small firm’s competitive advantages can be provided by connecting to the internet. Fifth, the entrepreneurial owners’ orientation of small businesses can create sustainable advantages. SMEs use ICTs to develop new organizational models, compete in new markets or enhance their internal and external communication relationships (Sánchez et al., 2007). Ramsey et al. (2003) emphasised that even in the well- Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 4 International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 developed countries, the adoption and effective use of e-business remains law among small and medium enterprises. However, e-networks can create a competitive advantage for small firms and the e-enabled small businesses are well placed to gain benefits of the electronic networks. Nevertheless, the studies of Stockdale and Standing (2006), Ramsey et al. (2003) have concluded that the successful adoption of e-business depends on the business owner’s motivation, experience, focus on profitability, close relationship with customers, and the innovation and flexibility level of management. Ramsey et al. (2003) identified that there are major difficulties for SMEs going online, these difficulties are mainly; the lack of strategic appreciation of the dynamics of the Web, and the development of capabilities for managing the information infrastructure for e-business. Therefore, the support of IT agencies, private sector, or national institutions is highly recommended to consider the decision of e-business adoption on the strategic plans. Serbanica and Militaru (2008) confirmed that the smaller businesses are often less aware of full benefits for e-business. In addition, SMEs have shown a greater uncertainty of the benefits of IT adoption than larger firms. It is highly recommended by Chitura et al. (2008) that researchers seek to find new ways to help small businesses overcome e-business adoption barriers. Chitura et al. (2008) summarised some previous studies for barriers of e-commerce adoption by SMEs between 2001 and 2006. The study implications concluded that the future studies should stop searching for the barriers and instead focus on how SMEs can overcome these barriers to obtain the full benefits of the technology. Lawrence (2008) investigated how SMEs use the internet in UK. More specifically, the benefits of using internet, issues countered in using the internet, and the impact of using internet on business activities. 400 questionnaires were distributed to SMEs in UK. The study concluded that SMEs are experiencing limited success with the use of internet in exposing their products or services to global audience and reaching new customers. Allahawiah et al. (2010) investigated the level of Internet usage for business solutions by small and medium enterprises in Jordan. A random sample of 100 firms with less than 500 employees was selected from various sector in Jordan. They found that a majority of respondents use the Internet in business activities, the adoption of the Internet as a business tool is limited to a brochure, where Web site which primarily provides only one way and non-interactive information about the company and its products. Hunaiti et al. (2009) investigated the main challenges facing the growth of e-commerce in SMEs in Libya. Questionnaire surveys have been distributed to forty business managers to concerning e-commerce situation in Libya. The study found many challenges facing Libyans’ e-commerce like the expensiveness of internet pricing; the unsuitability of online shopping services and Libyan postal system; and the Libyans’ culture and their limited trust in the online trading systems. Other previous studies identified that there are many benefits for e-business adoption by small businesses such as cost of sales reduction, innovation, job creation, and low cost of transaction, in addition to many other indirect benefits (Adekunle & Tella, 2008; Sánchez et al., 2007; Stockdale & Standing, 2004;). These studies concluded that the benefits gained by E-networks adoption are strongly linked to the flexibility and entrepreneurial orientation of small businesses. Scope of handicraft industry There are very limited studies in handicraft enterprises area. However, some studies attempt to define the scope of handicraft industries and investigate the characteristics of the Craft micro-enterprises (Fillis, 2002; McAuley & Fillis, 2004). Fillis (2002) identified the craft business characteristics; the study defined crafts as “a class of objects in which these objects Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 5 must have a high-degree of hand made input, either by using the hand itself, hand-tools and hand-held power tools” (p. 915). Fillis (2002) also stated that a product can be called craftproduct when traditional methods are using as part of the production process. Therefore, craft products are not necessarily to be produced using traditional materials. Consequently, craft products are produced by traditional production methods regardless of the used materials. McAuley and Fillis (2004) defined crafts in the widest possible sense as involving of individuals to firms making or manufacturing a functional or decorative product which has a handmade element at some stage in its production. Moreover, Fillis (2002) distinguished between the production of hand crafts and the craft-based industries; craft production involves a single person who is completing the entire process from conceptualisation to fabrication. On the other hand, the crafts product itself must exhibit artistic appeal that been made of individual design and contain a large degree of manual skills in its production, either manufactured as one-off items or in small batches (Fillis, 2002). McAuley and Fillis (2006) evaluated craft sector and what the practical options might be for the craft sector to survive after the credit crunch. Their findings stated that craft business sits at the micro end of the continuum of SMEs and the main component of this SME spectrum is being sole operator or having a few staff, or operating part-time, this is strongly supporting the craft business characteristics discussed by Fillis (2002). McAuley and Fillis (2006) concluded that during economic downturn, the craft businesses sales are expected to be decreased in compare with previous years because regular buyers and people who occasionally buy crafts will buy less. Small craft businesses faces many barriers such as the high cost of hiring employees, the hardness of finding a craft expert, and the increase on the workload in case of businesses expanding. Thus, small businesses need to be supported by a technology provider in order to have sustained and cheap electronic services (McAuley & Fillis, 2006; Ramsey et al., 2003). In terms of market share, craft businesses are expected to maintain their loyal buyers. However, it is hard to get the attention of new customers to gain more market share. McAuley and Fillis (2006) proposed a survival strategy should consider many issues: first, develop training to improve craftsperson skills. They stated that “there is no better time than in a recession to get the training completed especially in improving the selling skills for the craftsperson” (McAuley & Fillis, 2006); Second, adopt cooperative with other business to share resources and especially promotional costs. Third, confirm the online business presence and shift to online sales. Based on the above mentioned discussion, the study focuses on the contribution of electronic networks as a key success factor to gain market share in some selected handicraft small businesses in Jordan. Market share strategies Market share literature can be divided into economics literature and marketing literature (Falkenberg, 1984). Economics studies focus on the relationship between market share and profitability (Prescott et al., 1986; Shanklin, 1992; Kuzma & Shanklin, 1992) and the relationship between market share and return on investment (Chussil, 1991). Marketing studies focus on how to develop market share using one or more of marketing mix tools (Falkenberg, 1984). Therefore, there is no single definition for market share term. Many studies use market share term for “sales volume”. In no growth markets, the two terms are synonymous. But in declining markets, growing share is the only way to maintain or grow sales (Chussil, 1991). However, most studies state that market share can be represented as the ratio between company’s total sales and the total sales of its industry. Moreover, the nature of competition in market plays an important role in identifying the market share characteristics (Strouse, 2001). In Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 6 International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 this aspect, Falkenberg (1984) stated that from marketing view market share is determined by the relative attractiveness of a firm total offering. Kuzma and Shanklin (1992) confirmed that market share reflects two types of forces that do cause high or low profits; first, relative scale and or experience based cost advantages and disadvantages. Second, relative success in designing, producing, and marketing products that meet the needs of customer in particular served market. Broadly speaking, it is costly to gain market share against market leaders in a mature industry with flat or declining sales (Kuzma & Shanklin, 1992). In building market share a business should consider competitors reactions. Moreover, building the market share should be integrated in planning process particularly strategic plans (Chussil, 1991). Strouse (2001) reported that market share can be increased by three different ways. The first is to take customers away from competitors. This increases one’s own share and reduces the share of each competitor. However, the business should assume that competitors aren’t taking as many customers from you as you are from them. More specifically, branding and service differentiation are the most effective method to attract customers from competitors. Second, strategic groups, regulatory initiatives, competitive entry into local markets, technology, and critical analysis of their customers’ service experiences are major tools in increasing market share. Third, mergers and acquisitions are successful strategies to buy more market share especially if competitive market is highly fragmented. Haider (2009) stated that there are essential guidelines for any business to win market share such as differentiation, focused advertising, customer relationship management, promotional schemes, and services after sale. Fillis et al. (2004) suggested that e-business offers the opportunity to increase market share and long term profitability. Study aim and objectives The main focal point of this study is to provide a deeper understanding of the current status of electronic networks (the use of internet: email and websites) in the Jordanian handicrafts sector More specifically, the research objectives of the study are to: • • • Explore and understand the concept of electronic networks from the managers’ perspectives in handicraft small businesses; Explore how small businesses utilise and employ the e-environment to develop their business activities and Identify the contribution of electronic networks in gaining market share in the Jordanian handicrafts sector, and identify the challenges of using e-networks in gaining market share. Methodological considerations To achieve the study aim and objectives, the study methodology has been employed based on the qualitative approach. More specifically, multi-cases study design has been adopted. The study adopts the qualitative case study approach (Bryman, 2008) to provide a deeper understanding of the current status of electronic networks in Jordanian small businesses which operate in the high quality handicraft sector. In-depth interviews are used as data generation tool in this study. The purposive choice basis is employed to select the target interviewees. The qualitative data of each case have been analysed independently using the textual analysis of interviews transcripts. In the light of a holistic view of the study, cross cases analysis has been carried out to achieve the study aim and objectives. This kind of study design provides in-depth analysis and highly takes into its consideration the reality of the research data and issues. Therefore, the data from the in-depth interviews were Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 7 analysed for emergent themes, used together and integrated with the findings of case study and the literature to design the overall findings. analysis of Case 1 (The Candles Project) Interviewee profile The interviewee gender is female; her position is manager of the selected project. In term of experience, she has about 19 years of experience in handicraft sector. Moreover, she has BSc in Business Management. The current status of electronic networks in the project The manager defined the use of E-networks in the project as “the use different websites and email to communicate with customers and marketing dealers, and the use of computerised systems to manage the internal work in the project” She emphasised that the business use the email to communicate with the project marketers and showrooms of different products of the project. The project uses the electronic networks (email) to receive orders, submit reports, and discuss new designs. The business got an internet access. However, they still depend on manual work. The business case does not have an official website on the internet. The project depends on marketing agencies and dealers in products marketing and new market outlets. The manager said: “I never tried to access any competitors’ websites but we do not face any problem in contacting with our customers or dealers. We totally depend on market agencies to marketing our products. So, the dealers try to find us new outlets and we do not worry about marketing “. The Project Market Share and Use of Electronic networks The manger is not satisfied about the business market share. Comparing with the past years the business does not make any sales figures that cover its cost. Moreover, products design needs local women experts on handicrafts because it represents the traditional line of crafts. The project does not have the financial ability to recruit more employees or to increase the wages. Additionally, the business cannot make large orders or accepts order that comes on urgent basis. Accordingly, the project cannot increase the market share due to the previous issues. Furthermore, the use of E-networks applications may not help on increase the market share as the project manager stated. The project manager said: “I am not happy with the current situation of our outlets, and our centers in Lebanon and Saudi Arabia have been closed because of the un-certainty in the political situation, today we manage our orders according to the number of women we have. We cannot accept more orders or big orders. Also, the seasons play a major role; on summer the women are much able to work on handicrafts orders”. analySIS Of CaSE 2 (DESIgn CEnTrE PrOJECT) Interviewee profile The interviewee gender is female; her position is owner and manger the Project. In term of experience, she has about 15 years of experience in handicraft sector. She used to work as quality manager in a different business. The Current Status of Electronic networks in the Project The project manager defined the use of electronic networks as communication tools that can be used to facilitate the daily work of the project such as marketing dealers and shows rooms communications. She emphasised that the business use the electronic networks to document the work, receive orders and to communicate with the project stakeholders. However, the project is Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 8 International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 not using the internet access efficiently because of the challenge of using the English language. The project manager said: “We use the computerised systems to document our orders, stock items, raw materials, and our financial records. Additionally, we use the email to communicate with our outlets, but we don’t use the internet for any other purposes because it is hard to understand the English language probably”. The Project Market Share and Use of Electronic networks The manager is satisfied about the market share that the business has achieved. However, she believes on the ability of the business to improve its market share through the evaluation of the products designs and quality. The project adopts customers’ feedback policy to improve its products. The project manager said: “Our products have been evaluated several times in terms of the quality and the design; many improvement touches have been added and tested in order to satisfy our customers. Today we have a good number of orders and a good sales figure. Our products are produced with high care and on a quality level. Moreover, we believe in continuous improvements of our products by taking the customers opinions”. Improving the project market share through contacting different marketing agencies is a key issue. According to the business manger’s experience in marketing, the project identified that the main obstacles of sales drop is the lack of marketing distribution channels and the use of E-networks may help the project on create more marketing channels. The project manager stated that: “There is a large market for our products in the Middle East and in international markets. Moreover, it has been very hard to market our products in Jordan; the Jordanian market can- not be the only targeted market. However, the main problem on the business outreach is the far distance from the Capital Amman. I know the website will help and we going to develop website for our project”. analySIS Of CaSE 3 (nOrTh JOrDan PrOJECT) Interviewee Profile The interviewee is male; he is the manager of the project. In term of experience, he has 14 years of experience in handicraft sector. He has BSc degree in marketing. The Current Status of Electronic networks in the Project The manger defined the electronic networks as all the internet activities and applications available to facilitate the daily work and communicate efficiently with other parties such as customers, suppliers and marketing outlets in a quicker and cheaper way. The project manager said: “Electronic networks allow us use of internet activities and computerised applications to convey and communicate efficiently with our customers, suppliers, markets in quick and cheap media”. Mainly, the project is using the electronic networks applications for the purpose of building relationships, and communication with customers, suppliers, marketers, and showrooms. Moreover, they use e-networks for managerial communications, sending and receiving reports, and raw material orders. However, the project manger is not completely satisfied about the level of using the E-networks and he believes that E-networks activities can make the work quicker and easier. The project manager said: “Actually, we use the internet to build relationships and communication with customers, sup- Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 9 plier, and for marketing purposes in very limited way. We send and receive some reports by the internet. I am not satisfied about our situation for using the internet I think we can get more benefits such as easy and quick work. “. The Project Market Share and Use of Electronic networks The project manager is not satisfied about market share situation. The project is planning to develop their internet website and developing its own marketing outlets and channels in order to increase the market share locally, regionally, and internationally. Therefore, they will save the marketing cost for different products. Moreover, they adopt customers’ feedbacks to develop their products. The project manager said: “We are planning to develop our electronic websites. We are also thinking to open our marketing channels to reach more customers in Jordan and outside Jordan; the next step is to develop new marketing ideas to reach project customer not from the marketing agencies and different showrooms. So we can save marketing cost. Also, e-mail helps us to contact customer satisfaction about our products” analySIS Of CaSE 4 (ThE WEavIng PrOJECT) with different marketing advisors searching new products design, learning and improving the products shape and quality. The project manager said: “Electronic network is the use of internet to communicate with different advisors, to search some new designs, to learn and improve our products shape and quality”. The Project Market Share and Use of Electronic networks The project manager is not satisfied about the size of current market share. However, the project has ability to achieve more market share and increase the market demand for its products. The project manager said: “I am not satisfied about the market share that our project gains from the Jordanian market. I believe we can do better. The project has a very good number of direct orders. It is important to increase our market share and our profit in order to be able to develop our own centre”. The project attempts to develop training programmes in order to develop the managerial skills of the workers to increase their market share. The project manager believes that the use of E-networks applications help them to maximise their sales and profits. Interviewee Profile CrOSS CaSES analySIS The interviewee is female; she is the project owner and manager. She has 10 years of experience in the handicraft sector. She has BSc in Quality Engineering. In the light of holistic view of the four selected cases, the researcher can extract some common similarities, varieties, and themes in the selected cases of the small Jordanian handicraft projects. The Current Status of Electronic networks in the Project The Current Status of Electronic networks The project manager defined the use of electronic networks as a communications tool that is being used for the purpose of communicating All the owners/ managers of the four projects cases were asked to identify the concept of the Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 10 International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 Table 1. Concepts of e-networks in the selected projects Case no. Electronic networks concept Case 1 The use different websites and email to communicate with customers and marketing dealers, and the use of computerised systems to manage the internal work. Case 2 Communication tools that can be used to facilitate the daily work of the project such as marketing dealers and shows rooms communications. Case 3 All the internet activities and applications available to facilitate the daily work and communicate efficiently with other parties such as customers, suppliers and marketing outlets in a quicker and cheaper way. Case 4 Communications tool that used for the purpose of communicating with different marketing advisors searching new products design, learning and improving the products shape and quality. electronic networks from their own perspectives. Their definitions are shown in Table 1. As shown in (Table 1), the use of electronic networks has been identified in different ways. However, all cases have defined the electronic networks as a communication tool that can be used to facilitate and manage the work. Among these cases, Case 4 considered the role of electronic networks in enhancing the business owner’s skills of searching new products designs and quality. On the other hand, Case 3 defined the electronic networks as all internet activities and applications that help the business to make the work process quicker and easier. Some previous studies mentioned that SMEs adoption for e-networks is growing for different purposes. For example, Andam (2003) stated that ICT usage patterns among SMEs in developing countries show a progression from the use of the Internet for communication (primarily e-mail) to use of the Internet for research and information search, to the development of Web sites with static information about a firm’s goods or services, and finally to use the Internet for e-commerce. Doncombe and Heeks (2005) also mentioned that the networked use of ICTs, frequent use of email and the Web, and use of computers in various applications are being applied and adapted in such systems on a largely ad hoc basis. However, in many cases, they lack the employee skills to effectively manage the sys- tems that have been developed. In other cases, the development process may be deficient. how Small handicraft businesses Utilise the E-environment? Almost, all the selected cases have an internet access and they mainly use the email to communicate with different parties, send and receive documents related to the project reporting, orders, and follow-ups. Table 2 presents how small handicrafts utilise the E-environment. As shown in Table 2, one project (Case 4) is using the E-networks applications on searching for the purpose of developing the handicraft design and products. One of the cases is not using the E-networks application for any purpose and it is not recognising the benefits of using the E-networks applications. In general, the business cases that are utilising the E-networks are not satisfied about the level of participation on the electronic networks activities. Earlier studies also confirmed that ICTs can create new, strong linkages between internal activities, and even coordinate these actions more closely with their consumers and suppliers to facilitate integration within the company (Leenders & Wierenga, 2002; Sánchez et al., 2007). Leeders and Wierenga (2002) suggested that ICTs not only help to transfer knowledge among team members, but also support the creation of new knowledge within a particular area. Sánchez et al. (2007) also stated that ICTs enhance the company’s ability to coordinate Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 11 Table 2. How small businesses utilise E -environment Expected benefits of E-environment Case 1 Case 2 Case 3 Case 4 Communicate with projects customers, suppliers and marketing dealers ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Improve products design and quality ✓ Send and receive internal and external reports Build customers relationships with continuous communications Make the work processes easier, quicker, and cheaper ✓ ✓ Develop their own marketing outlet and channels ✓ ✓ Take customers feedback and satisfaction ✓ ✓ Table 3. The use of E-networks to increase the business market share The use of E-networks to increase the business market share The use of E-networks applications has no impact on increasing the business market share. the use of E-networks may help the project on create more marketing channels Case 1 Case 2 Case 3 ✓ ✓ Case 4 ✓ The participation on the E-networks activities is the way to increase the direct sales. ✓ The use of E-networks lead to increase the market share ✓ The use of E-networks facilitates the development of the business that will lead directly to increase the market share The use of e-networks to take customers feedback as products development driver activities regionally, nationally and globally, creating many new interrelationships among them. The Use of E-networks and gain Market Share As shown in Table 3, the business cases recognised direct and indirect links between the use of E-networks and increase the market share. However, case 1 has not identified any link. Two projects (Cases 2 and 3) believe in e-networks as driver for products development through taking customers’ feedback. In short, (Figure 1) represents the relationship between the use of E-networks and increasing the market share. In this aspect, similar studies stated that E-networks enable SMEs to access to new ✓ ✓ ✓ ✓ environments as well as the generation of new markets and business models (Sánchez et al., 2007). Allahawiah et al. (2010) concluded that internet supports many SMEs to maintain contact with their customers. They can use the Internet for transnational marketing and transactions, thereby globalizing their sales and allow SMEs to improve relations with their suppliers and customers. Challenges of Use E-networks to gain Market Share As shown in Table 4, the four cases confirms that the major challenges for using e-networks to gain make share are external marketing agencies and lack of staff skills. However, three projects (Cases 1, 3, and 4) consider that difficulty in Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 12 International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 Figure 1. Links identified between uses of E-networks and gaining of market share. Table 4. Challenges of use E-networks to gain market share challenges of E-networks use to increase the business market share Case 1 Case 2 Case 3 Case 4 The project depends on external marketing agencies and dealers ✓ ✓ ✓ ✓ Lack of staff skills such as English language difficulties ✓ ✓ ✓ ✓ The project has difficulty accessing regional markets ✓ ✓ ✓ Long distance from the capital city (Amman) ✓ Lack of expert workers in handicraft products ✓ The project has seasonal demand ✓ accessing regional markets is an additional major challenge. Furthermore, Stansfield and Grant (2003) concluded that policy makers need to address the current attitudes and support mechanisms with regards to how to develop a positive approach to training staff with the skills needed to capitalise on Internet related technologies. Andam (2003) also concluded that there are many challenges faced by SMEs in their use of ICT in business or in engaging in e-commerce in developing countries such as lack of awareness for ICT value and lack of ICT knowledge and skills. In addition to these, some previous studies confirmed that continuous training can play an important role in increasing the awareness of the huge potentialities of ICTs. Entrepreneurs can acquire a learning culture, integrating the training in their work activities and understanding in depth the potentialities of communica- tion and information tools (Brady et al., 2002; Sánchez et al., 2007) rESUlTS anD COnClUSIOnS The purpose of this study was to provide a deep understanding of the current status of electronic networks in the Jordanian handicrafts sector from managers’ perspectives. More specifically, the study investigated the contribution of electronic networks as a key success factor to gain market share in some selected handicraft small businesses in Jordan. In the light of the textual analysis of business case transcripts and the holistic analysis of cross cases, several findings have emerged from this study. First, a definition for Electronic Networks has been developed. It can be defined as a communication tool that saves time and money of a business. Furthermore, electronic networks Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 13 can be used for the purpose of searching, interacting, learning, facilitating the internal work, as well as developing the production. Second, although the majority of projects do strongly believe in the importance of E-networks to gain market share to develop the handicraft sector in Jordan, the selected cases are not satisfied with the level E-networks activities deployment in their projects, as email were indicated to be the main electronic networks utilised. Finally, the major barriers of E-networks use are depending on external marketing agencies, lack of staff skills especially English language, and difficulty in having access to regional markets. In the light of the study findings and insights, the following recommendations are proposed for the Jordanian handicraft businesses. First, businesses should consider the decision of e-networks adoption in their future plans to take advantages of electronic networks applications in a manner that go beyond e-mails applications. Second, businesses should adopt the internal marketing concept through proper employees selection and proper training for their staff skills and capabilities to enhance their IT and English language skills. Third, businesses should take steps forward in utilising marketing through designing their own interactive internet website that is essential in creating new marketing channels with direct sales to avoid external marketing agencies. This is also important to aid businesses in developing their promotional campaigns for their products using E-network to build their projects image outside Jordan. The evidence reported in this study should be interpreted in the light of several limitations. Notably, this study scope was limited to Jordanian handicraft businesses sector within a specific small country context, thus caution has to be exercised when generalising the present findings. rECOMMEnDaTIOnS fOr fUrThEr rESEarCh In the light of study limitations, the future studies can test the different stages of elec- tronic networks adoption in handicraft sectors. Moreover, potential applications of electronic networks using various handicraft sectors can be investigated. Furthermore, learning processes from other sectors experience can be considered by handicrafts sector. Finally, e-networks can be disseminated as another evolutionary open innovation concept for business development among the small firms arena in the context of utilising knowledge from within the business and outside the business to promote value gain. rEfErEnCES Adekunle, P., & Tella, A. (2008). 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Barriers to the takeup of electronic commerce among small-medium sized enterprises. Informing Science, ▪▪▪, 737–745. Stockdale, R., & Standing, C. (2004). Benefits and barriers of electronic marketplace participation: An SME perspective. Journal of Enterprise Information Management, 17(4), 301–311. doi:10.1108/17410390410548715 Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 1-15, July-September 2011 15 Stockdale, R., & Standing, C. (2006). A classification model to support SME e-commerce adoption initiatives. Journal of Small Business and Enterprise Development, 13(3), 381–394. doi:10.1108/14626000610680262 Tang, N., Burridge, M., & Ang, A. (2003). Development of an electronic-business planning model for small and medium-sized enterprises. International Journal of Logistics Research and Applications, 6(4), 289–304. doi:10.1080/13675560310001627043 Taylor, M., & Murphy, A. (2004). SMEs and e-business. Journal of Small Business and Enterprise Development, 11(3), 280–289. doi:10.1108/14626000410551546 Thomas, B., & Sparkes, A. (2001). The use of Internet as a critical success factor for the marketing of Welsh agri-food SMEs in twenty first century. British Food Journal, 103(5), 331–347. doi:10.1108/00070700110395368 Ghazi A. Al-Weshah is an Assistant Professor of Marketing at the Faculty of Planning and Management, Al-Balqa Applied University- Jordan. He has a PhD in Marketing from University of Wales, UK. His research interests are marketing information, competitive intelligences, and E-marketing. He had worked as an instructor in business and marketing for 4 year in Jordan and Saudi Arabia. Prior to academe he was working as a financial controller in the Jordanian banking industry. Khalil Al-Hyari is an assistant professor at the faculty of planning and management, Al-Balqa Applied University, Al- Salt- Jordan. He has a PhD in SMEs Management from Glamorgan University, UK , 2009. His interests are in business research methods, SMEs management, manufacturing activities of SMEs in Jordan, internationalisation and export Amjad A. Abu-ELSamen is an Assistant Professor of Marketing at the University of Jordan. He received his PhD from OklahomaState University, USA. His research interests include the applications of behavioral decision making theories, research methodology, services marketing, and B2B e-commerce. He has published several research papers in the field of marketing in international refereed business journals. Dr. Abu ELSamen has experience in teaching, lecturing, and supervising students in USA and Jordan. Dr. Abu ELSamen is among the few in Middle East to earn SAS predictive modeling certificate. He also received the SAS data mining certificate and won an international tournament in modeling and data mining. Marwan Al-Nsour is an associate professor at the faculty of planning and management, Al-Balqa Applied University, Al- Salt- Jordan. Dr. Al-Nsour has supervised and examined many PhD and masters thesis in Management area. His research interests are in operation management, quality management, and SMEs management. Currently, he is the dean of faculty of Management and Planning at Al-Balqa Applied University in Jordan. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 16 International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 from rural Outsourcing to rural Opportunities: Developing an ICT Mediated Distributed Production Enterprise in Tamil nadu, India Aarti Kawlra, Indian Institute of Technology Madras, India abSTraCT Inspired by the potential of Information and Communication Technologies, henceforth ICTs, for socio-economic development, and supported by a university based technology and business incubator, Rural Production Company, henceforth RPC, was set up in 2007 employing an ICT-mediated distributed production model. This paper reveals how RPC, initially an exploratory project whose key innovation was its Internet kioskfacilitated model of crafts production and local empowerment, morphed into a social enterprise catering to global demands. The context of innovation provided by the Incubator led to a transformation of an ICT4D (ICT for Development) project into a business venture through the practice of formal and informal questioning at every stage of its implementation. This paper focuses on the iterative method adopted while highlighting the role of the incubator in the overall design and development process of the enterprise. This paper is a relexive mapping of the organization’s evolution from the original research agenda of outsourcing production cum rural employment, to one that privileges local networks both as a conscious business strategy and as an arena for collaborative change for human development. Keywords: Crafts, Distributed Production, Information and Communication Technology (ICT), Local Networks, Open Innovation, Outsourcing, Social Entrepreneurship, University-Based Business Incubation InTrODUCTIOn This paper follows the conception and growth of a social enterprise developed within the context of a university based incubator. It presents the unique incubation context of innovation and enterprise development of a production company involved in rural crafts by spotlighting the reflexive practices within its development DOI: 10.4018/jicthd.2011070102 process. The study is set against the backdrop of advancements in affordable technologies for rural connectivity (Jain & Raghuram, 2005; James, 2002; 2004; Jhunjhunwala, n. d.; Jhunjhunwala, Ramamurthi, & Gonsalves, 1998) on one hand, and research in distributed production models (Holmstrom, 1993; Johansson, Kisch, & Mirata, 2005; Mathew, 1997; Oram & Doane, 2005) and crafts production (Brouwer, 1999; De Neve, 2005; Liebl & Roy, 2004; Mies, 1982; Kawlra, 1998; Venkatesan, 2009; Wood, 2000) on the other. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 17 It’s still wider relevance lies in going beyond narrow technological determinist views of ICT and development towards one that views technology as both facilitating and enhancing capabilities (Castells, 2000; Fukada-Parr, 2003; Grunfeld, 2009; Gurumurthy, 2008; Heeks, 2002, 2009; James, 2004; Sen, 1999). Presenting a detailed reflection of the stages in the growth of the organisation along with a conscious recognition of the role played by the incubator during its developmental course, it is hoped, would provide a closer look into the significance of academia-led innovation for a more dynamic and sustainable engagement with local actors in rural contexts. It will be appropriate, therefore, to commence the discussion with an understanding of incubators in general and the distinguishing features of the specific incubator in particular. ThE InnOvaTIOn COnTExT Of UnIvErSITy baSED InCUbaTIOn Incubators, in general, are seen as innovation spaces where entrepreneurs and business ventures receive various kinds of support for a sustained period of time to develop and commercialize new products, new technologies, or services. Typically this is accomplished through “job-creation” and “wealth generation” which are viewed as a means to focus on the wider community through the agency of the entrepreneur often, mediated through technology (Almirall, 2008; Carayannis et al., 2006; Castells, 2000; Chesbrough, 2003; Scaramuzzi, 2002; Sein & Harindranath, 2004; Schaffers et al., 2007; Schaffers & Kulkki, 2007; Steyaert, 2000). The aims and approaches of incubators vary from country to country and cater to the unique entrepreneurial ecosystem of its country of location (Akcomak, 2009; Chandra, 2007; Lalkaka, 2001). In the developing world, incubators are viewed as important means of economic development through the promotion and growth of micro, small and medium enterprises and actively supported through programmatic funding and policies by governments through business incubation (Scaramuzzi, 2002). The various functions and services of incubators include – physical space and business centre facilities; technology and human resources; management and administrative (accounting and legal) support; information and data support; mentoring, diagnostic and crisis support; and access to finance and venture capitalists. University-based incubators, in particular, are usually set up in or near the institution’s campus, have the involvement of its students and faculty, and vary in model, size and goals. Typically they are committed to forge linkages between academia, the industry and the government towards the macro-goal of economic development. This approach has been termed the “triple helix model” of regional development where entrepreneurial universities transfer knowledge to the industry via the mechanism of incubators, for the benefit of society (Etzkowitz, 2002). While it is believed that knowledge-based growth would in turn foster more research funding and stimulate greater interaction (networks) between the three partners or stakeholders and in turn also sustain the incubators, the triple helix model has shown limited success (Cooke, 2005; Gunasekara, 2006). Other “innovation intermediaries” like the European Living Labs (‘living laboratories’) also support business innovation by providing a structured environment within which new technologies, products and services are designed and validated with the participation and feedback of actual users in real life settings (Almirall, 2008; Schaffers et al., 2007; Schaffers & Kulkki, 2007). However, while they are committed to the multiple stakeholders concerned, they do not necessarily involve academia. As a formal arrangement for the interaction between academia, governmental and nongovernmental organisations and the private industry, university-based incubators are innovation spaces where new ideas and structures of change are co-created and co-developed. As in recent advances in the development of IT, the incubation context presented in this paper points to iterative methodologies in design processes Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 18 International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 involving the wider society including users (Dittrich, Eriksen, & Wessels, 2009; Kling, 2000). Negotiations and constructive discourse between the various actors and agents are central to the flexibility of the innovation process while confronting limitations and challenges. Indeed, innovation requires the ability to bring about change not only through a break from convention, but also through a reconfiguration of priorities and agendas while continuing to honour the original mission. Indeed the stated goal of the incubator under study is to design, pilot and build businesses that harness the power of ICT’s in the areas of affordable connectivity, livelihood, health, education, agriculture and financial inclusion for empowering rural India. The innovative character of the universitybased incubator studied in this paper, it will be seen, is its openness to exploration in areas sans experience or demonstrated potential and its strategy to view challenges as lessons that enrich its wider eco-system of incubation. Most significantly, this paper will show how the incubator’s processes provide entrepreneurs with a learning space for a sustained dialogue and collaboration with rural entrepreneurs, producers, governmental and non-governmental intermediaries, during the course of the development and maturity of the enterprise. Indeed, a key component of the incubation practice is the building of networks of relationships between urban entrepreneurs and local actors and leveraging the increasingly robust mobile and Internet connectivity in rural India for the same. Rural Incubator (henceforth RI) was conceived by its academic founders as an incubator with a difference. In 2006, the year of its inception, it mission was defined to serve India’s rural underserved population, characterised by significantly lower levels of education and employment, through the creation of innovative business models and ICT applications. Its original research context was the technical innovations in providing affordable and low-cost connectivity to rural India at the university on the one hand and, on the other, to conduct field based experiments in building locally appropriate applications and services for further influ- encing telecom policies. It was in this context and spirit of social entrepreneurship that rural production company (henceforth RPC) was set up in late 2007 at the RI with an initial funding from a global project on Information for Development. It was registered as a company by an entrepreneur who had some experience with working in microfinance and self-help groups (SHG’s) in Madurai, Tamil Nadu and who had been at the RI exploring possibilities in an existing research project in rural IT outsourcing. The genealogy of the company, however, dates still further back a couple of years when it was a pilot project developing and testing an ICT enabled crafts production project. The crafts sector in India is characterised on one hand by a high degree of dynamism and, on the other, by a potential that remains largely untapped (Liebl & Roy, 2003). Apart from the few successful traditional artisan community based enterprises, private enterprises, a host of governmental and non governmental bodies engaged in crafts production and some studio or designer led niche ventures, the sector continues to struggle with problems pertaining to market responsiveness, global competition and availability of raw materials among others (Liebl & Roy, 2003). The promotion of micro and small enterprises with an ethically inspired developmental focus for the creation of rural livelihoods has been an important approach favouring crafts and their producers (Brouwer, 1999; De Neve, 2005; Holmstrom, 1993; Karnani, 2007; Mathew, 1997; Miller, Dawans, & Alter, 2009; Randall, 2005; Solanki, 2002; Strawn & Littrell, 2006). Creating innovative ICT’s based solutions for enabling greater sustainability and scalability of rural craft-based production enterprises, therefore, was among the objectives in the ICT4D vision of the Incubator. ThE ICT4D PrOJECT: ExPlOraTOry PhaSE The inception of RPC has its roots in the academic context of technology innovations for Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 19 providing low-cost connectivity to rural India as part of the twin global projects of bridging the “digital divide” through the spread and diffusion of ICT’s (James, 2004; Kenniston, 2000; Norris, 2001) on the one hand, and finding “fortune at the bottom of the pyramid” on the other (Prahalad, 2002, 2004). It was also preceded by the several experiments in delivering affordable and low-cost Internet and telecom facilities to rural India since the late 1990’s (Garai & Shadrach, 2006; James, 2004). Among these ICT for rural experiments was the rural Internet service provider company, henceforth ISP Company, which had been recently been incubated as the result of commercialisation of academic research with a business and delivery model believed to be appropriate for scaling throughout rural India (James, 2004; Jhunjhunwala, Ramachandran, & Bandhopadhyay, 2004; Paul, 2004). The Internet Kiosk Model of ICT access and Services Delivery Its model inspired by the earlier success of expanding STD (subscriber trunk-dialling) access across India by sharing revenues with the local level operator, was designed as a threetier franchise with entrepreneurs at every level. At the level of the city the ISP Company was responsible for the management and delivery of Internet services throughout its network. At the district level were the Local Service Providers (LSP) who invest in setting up the Access Centre and were responsible for managing and expanding the network to nearby villages. At the third tier were the many village-level entrepreneurs, or kiosk operators (KO) recruited by LSP’s and who invest in and set up Internet kiosks with the infrastructural and technical training support of the ISP Company. These KO’s in turn were positioned to provide a variety of Internet and computer based services for the rural market. The ISP Company’s rural networks across Tamil Nadu at the district and village levels formed the “rural access” nodes to RPC’s first pilot forays in outsourcing production as the Project. Its rural outreach was mediated by the persona of the kiosk operator (KO), who performed the role of a local coordinator for organizing women’s self-help groups (SHG’s) and other rural producers to come under the fold of the Project. The many KO’s were further coordinated under each district by Project field staff to provide technical and other support to the KO as well as seek out other producer groups in the vicinity of the kiosk. Given that a three tier model for “penetration” into rural Tamil Nadu was already available – along the lines of the fibre optic cable – and offering existing relations with the different KO’s and LSP’s, the Project was initiated by taking forward a significant lesson learned from some existing projects on craft production at the university. The failure of two such experiments had been largely attributed to the problem of transportation of raw material from cities to the kiosk villages and back again to the urban client or company. This important lesson from the academic knowledge pool was responsible for re-orienting the production towards products for which raw materials were abundantly available in rural areas. from Information Entrepreneurship to Craft Entrepreneurship RPC in its original Project mode commenced its development by identifying and selecting KO’s from banana plantation villages in the ISP Company’s rural network for producing banana bark rope for a client in Bangalore. Given the fact that banana bark rope making is not a specialized skill and is not unknown to agricultural workers in the three districts chosen, the main endeavour was to enlist KO’s who would be willing to expand their work description to include the organization of banana rope production. Raw material or bark collection and storage, training on banana bark splicing, rope twisting, rope grading, quality checking, packaging, delivery, invoicing and receipts were some of the main tasks involved, which were envisioned by the Project to be facilitated by a combination of technology mediated and face to face interactions. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 20 International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 Within a few months, five KO’s from the three districts had been enlisted as local entrepreneurs ready to take on production for the Project and which was carried out in the households and streets of the producers’ own villages. Exposure to the different products made from the rope at the client’s facility in Bangalore, and subsequent interactions between KO’s with trainers and quality managers immediately made it clear to all concerned that variations in rope quality was locality specific. Each KO/ Project Centre was thus given a specific product to develop based upon the quality of the rope they produced and the expertise available in and around the region. Thus, for instance, while some qualities were good for making table and floor mats, others were fine enough to crochet into fashion accessories, while a third could be used as weft in weaving table runners by coarse count handloom weavers in the vicinity. In this way, each KO was envisioned to expand his/ her production capacity and product portfolio by training new producer groups while at the same time handling production orders for the Project. In the meantime, the Project was to handle business development and find markets outside India among fair trade organizations and eco-friendly craft product retailers. Within six months the Project had started registering revenues and was in a position to think of itself less as a research pilot and more as an enterprise in the making with an innovative business model in the field of craft production. In a poster submission at an international conference held at the university in August 2007, RPC presented its ICT enabled distributed production model publicly for the first time as below: “The Company mediates between the production Centre(s) and the Client(s) at a macro level while at the micro level of analysis, RPC is engaged in the distribution and aggregation of production orders to and from its many franchises or village-based ICT enabled Production Centres for the benefit of its many clients, each with their individual product specifications. Its particular Distributive Production Man- agement System (C3) includes a Centre-wise product and skill database as well as a portfolio of craft workers differentiated on the basis of their skill levels and product specialties. The role of RPC, apart from business development, is essentially to provide quality filters and production standards on the one hand and, on the other, mentorship to village based ICT entrepreneurs engaged in production coordination. This not only provides a unique model for community-based production organization outside the traditional artisan community fold but also offers transparencies, efficiencies and risk distribution in craft production hitherto unimaginable”(Kawlra & Sreejith, 2007, p. 4). As a paradigm for ICT applications for livelihoods creation, this was an ideal typical model and the feedback for it was positive as well. However, the reality on the ground presented a very different picture. The incubator’s project reviews were based on two key milestones – successful completion of client orders and sustained revenue at the local Internet kiosk. This, according to its “incubation pathway”, would take the Project to its next level – to that of being a pilot – or a “venture in the making” where the various technical, business and production processes are fine-tuned for different geographies and eventual scaling. The difficulty, however, was that while the Project’s implementation plans appeared sound on paper, the said targets were far from achieved on account of irregularities in the supply and quality of products from the production units. The problems faced were related to the fact that the various local partners – the kiosk operators – were primarily “information entrepreneurs” providing ICT based services and only secondarily organizers of production. Moreover, the investments in the kiosk were fixed and required little working capital, something that they were unprepared for. Added to that, the exigencies of production required that the Project move to locations where raw material or skills were available which, unfortunately, did not necessarily coincide with kiosk presence. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 21 Rethinking the approach of the ICT based kiosk facilitated model for craft production was clearly required. Some of the questions that came up during brainstorming sessions at the incubator were: Was it a top down imposition? But had not the Project looked at raw material resources and skills availability among other things before selecting its local partners for ensuring continuity? Is there a need to redefine the initial goals of service applications at Internet kiosks? It was clear that the Project’s mission was not product-led but rather employment-led production. So why was the Project investing so much in product diversification and new skills development? Again, why was it focusing on the sustainability of individual kiosk operators who did not have production domain expertise? The arguments were clearly guiding RPC to move away from the BoP (Bottom of the Pyramid) model of viewing the rural as an emerging market for ICT products to a perspective that views rural citizens not merely as consumers but, significantly, as producers with capabilities and potential that could be developed (Karnani, 2007; Sen, 1999). The incubator suggested stepping out of the project mode of development intervention and moving on to that of a for-profit business without compromising on the original mission of wealth creation in rural India. An IT enabled venture catering to business process outsourcing to rural areas was part of the incubation eco-system and served to provide the Project with many a lesson from its own experience in business modelling. One of the aspects inadvertently adopted, was its model of outsourcing to rural areas for its comparative cost advantage vis-à-vis the urban. This change, however, was made possible only after it had been decided subsequent to much deliberation that RPC was not a handicrafts company producing skill intensive, low volume-high margin products for the niche market, but rather one focused on high volumelow skill handmade products to generate large scale rural employment. Its aim, therefore, was not the production of custom made designer products but rather, the custom production of handmade products. This newly articulated vision and mission, however, demanded a full time executive at its helm. So the initial research project, of enabling crafts production through ICT kiosks, gradually gave way to an enterprise in the making through a formal incorporation of the project as a company with its principal project staff as the first board members. ThE EMErgEnT rUral (CrafT) PrODUCTIOn COMPany (rPC) The move towards larger production scales was a confident one as it meant not only demonstrating the use of ICT’s in creating greater efficiencies in production across geographies but also in piloting the distributed production model as a way to mitigate its unsustainable practices and consequences. Under this model, production is organised in small micro-units that are flexible and interrelated with each other in accordance with individual product or client production cycles (Christopher, 2000; Holmstrom, 1993; Johansson, Kisch, & Mirata, 2005). RPC was now repositioned as a production organization employing ICT’s for enhancing standardized, efficient and transparent production in rural areas. The problem addressed and value addition proposed by the emergent enterprise was defined in a report to an international funder in October 2007 as one addressing the pitfalls of the existing informal sector - delivery, quality, communication and credibility on the demand side and, on the supply side, it would provide employment opportunities to a workforce hitherto untrained or exposed to global demand. RI’s academic environment ensured that the company’s operational model would shift from that of Internet kiosk facilitation, but also be wary of the pitfalls of the factory model with its attendant social and environmental implications. The local entrepreneurs this time were not to be ICT kiosk operators but those focused and experienced in craft production. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 22 International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 So what was eventually envisioned was a rural production-outsourcing model or contractual production in micro-production units in villages in dispersed locations. Each of these production centres was to specialize in a core set of skills and production capabilities and capacities for individual clients and together be coordinated through the company’s ICT platform for efficient production and delivery. The model was that of horizontally placed, autonomous modular units of production linked to a single buyer or organiser of production. Moreover, this was also the rhetoric and production mantra of the 80’s where “outsourcing” meant that firms decided to purchase fabricated or manufactured inputs into their own assembly line without actually setting up their own in-house facility to do the same (Friedman, 2005). So in the leather footwear industry, for instance, the raw material is sourced from one country, the tanning done in yet another, the uppers in still another, while the design and the final shoe is made in the company’s own country. “Could this be a model worth emulating?” RPC’s CEO and others at the RI were not sure but for a while, continued with the flow led by the buoyancy of the incubation environment. However, it soon became evident that in the context of the use of ICT’s, production process outsourcing was very different from business process outsourcing. RPC was transporting physical goods and not transmitting services over the Internet or other virtual communication channels (Bhagwati, 2004). The issues of quantity, quality and costs were highly vulnerable areas and could not be outsourced to still fledgling units and instead required greater vertical integration. The company’s next milestone, therefore, was to become more than just a coordinator of production entrepreneurs located in geographically dispersed centres. This would, it was believed, be addressed by the ICT interface that could be developed through the support of the incubator and presented a fairly surmountable challenge. What was more crucial was the fact that systems had to be developed and put in place in order to handle rural manufacturing at larger scales profitably. This meant a vertical integration of the production process and the creation of micro units based not on local entrepreneurs’ production capacity but on specific skills, raw materials and stage in the production process. The aim was to have closer monitoring and standardization of processes for achieving higher production quality and quantity at lower costs. It was decided, therefore, that mid-level organizers of production, would no longer provide the working capital or share revenues. This would mitigate a number of risks and challenges that had already been experienced with regard to quality, quantity and costs. At this stage RPC was more confident of its production and marketing capabilities and less so of handling local producers and the management took the decision to outsource labour mobilisation, recruitment and administration to local partners while keeping training and product development and production monitoring in house. By now RPC’s revenues had started to mount as had the number of big clients together with their production compliance requirements. The company soon moved from coordinating dispersed production entrepreneurs to that of investing in its own production units in rural Tamil Nadu. SEarChIng fOr (branD) IDEnTITy: frOM OUTSOUrCIng TO OPPOrTUnITIES Economic self-sufficiency was a very important criterion for moving onto the next phase of incubation – that of an early stage Start-up. A round of funding was initiated by the RI to take the company forward in this direction of graduation from its fold. This in turn led to an expansion of the Board as well as the induction of industry and academic advisors to support this move. The regular budgetary reviews at the RI discontinued and instead the role of monitoring progress was taken up by the Board which included an RI representative. In the first Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 23 year of its operation as a graduated company, the growth imperative guided much of RPC’s business strategy. This objective of expansion is clearly stated and evident in RPC’s second Annual Report of the assessment year 2008-09: “… to provide global customers with access to rural artisans who manufacture diverse products …. In the first year of its operation the company was engaged in the business of manufacture and sale of eco-friendly products made from natural fibres like banana and jute. The product segments …during this period were corporate gift items like bags and folders and furnishings like mats, carpets and window blinds” (Sreejith, 2009, p. 1). Consequently, its rural production partners as well as central organizational structure also underwent many expansive changes. In that year (2008-09) RPC’s production units grew from being located in two districts of Tamil Nadu – Madurai and Thanjavur – to seven other districts. The demand for corporate products led to further expansion so that the company was now locating its product finishing units outside Chennai city. In October 2008, the company had its own warehouse cum design studio in Chennai. By mid-2009 RPC was well underway in its large-scale production of handmade potpourri bags for a prestigious multinational company and was slowly dedicating staff and resources to build infrastructure and conduct training workshops to cater to the growing demand. It became imperative therefore that communication design inputs be provided for all the company’s client presentations, promotional literature and website. This, it was believed, would evoke positive imagery of a professional enterprise engaged in rural production and employment generation while at the same time build a natural fibre focused brand identity. After numerous brainstorming sessions, two important revelations were made, with obvious implications for RPC’s future development and strategy. The first was the question of its name and the second was to do with its product range – both had to be altered to suit the changed market positioning of the company. Originally the term “outsourcing” had been central to the name of the company. Now the “o” of outsourcing became the “o” of opportunities in the name, which itself is an acronym. The website records this change by highlighting the active involvement of small rural producers with artisanal skills as “opportunities”. According to the CEO, the term ‘outsourced’ confused some customers with regard to RPC’s business model, as it appeared to be a trading organization offering no value additions of its own. The chosen term ‘opportunity’ on the other hand, did not imply this imagery and better captured the true essence of an ethical production organization. And while there was a clear economic rational to the said amendments, the conceptual basis for the same was no less significant. The repositioning of RPC’s products as eco-friendly meant a fresh look at all parameters of production from the environmental perspective, in addition to that of equity, which had already been part of the original research design. The mission statement of the company now incorporated economy, equity and environment as the organization’s triple bottom line. The market repositioning also meant a clearer agenda and it was decided therefore to concentrate on key clients with larger and repeat orders. As it was unlikely to find such customers in the corporate products segment, RPC decided to withdraw from this segment and focus solely on handmade or handloom woven home accessories. In October 2009, the company’s website formally announced that they had “discontinued small orders to focus exclusively on larger key accounts. This was done so that … (RPC) could best fulfill our customers’ needs while obtaining maximum social impact…,”thus reinforcing the company’s new found production vision. RPC had to move out of the corporate products segment for other reasons as well. Work pressure had continued to rise and the company was facing difficulties in meeting production schedules and quantities from multiple small clients. Various demands – pertaining to funds, Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 24 International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 new client orders, coordinating diverse production centres, marketing, sampling and the like – continued, until it was finally concluded that RPC was facing the conundrum of a very top heavy organization. It was at this time that the management, the board and academic advisors at RI together re-stated the company’s commitment to the distributed production model and RPC was strategically transformed into a lean organizational structure at the head office in Chennai with its own production centres in dispersed locations in rural Tamil Nadu. The priority areas for the company were now reformulated using a perspective that consciously views local resources as opportunities for mutual growth: limiting the diversity of raw materials to maintain quality standards; improving their sourcing and procurement procedures; using the volume and continuity of key account orders to negotiate better rates with local suppliers by building long term relations with them; directly working with the rural producers instead of mediating entrepreneurs; creating a productivity based incentive system to remunerate workers; using existing rural infrastructure like marriage halls and vacant buildings for production instead of building or purchasing specially for the purpose. RPC had transformed from a company focusing on corporate and conference bespoke products for national and international customers to one focusing on large whole sale buyers of mass-produced natural fibre handmade products alone. Accordingly, its product portfolio and marketing message to customers changed in the company’s website. The products featured on the website were intended to showcase the portfolio of skills and raw materials that the company could work with. RPC was now offering to its international customers, not certain products but capabilities in the form of flexible production units with the ability to quickly respond to market signals, to enable collaborative prototyping and product innovations. These capabilities could then be mutually utilized by the clients and the company designers to realistically assess future production capacities and client orders respectively. Both the decision to focus on the large scale manufacture of natural fibres and products and the name change came from the realization that a sustainable and competitive business model must leverage existing rural opportunities and strengths, which is aptly reflected in the company’s by-line “Rural skills meeting global demand”. Most recently its CEO conceptualized RPC by contrasting it with other craft product companies along the following lines: • • • • • • RPC focuses on eco-friendly home accessories and packaging products with plans for product diversification into other products and innovative applications of natural fibres like natural fibre wall panels, seed beds, leaf plates and so on. Its business proposition is that of bringing mass production methods and systems like assembly line production into a rural distributed production context, enabling standardization, large volumes and consistent quality. It employs agricultural workers, who are trained in the skills required and work in a convivial atmosphere close to their homes. Production takes place in a number of geographically dispersed units. Each micro-production unit caters to client order specifications and capacities and functions under work compliance and certified conditions. It makes use of ICTs to coordinate production and supply chain management. Technology is used for daily updated MIS, design communication, streamlining procurement and material flow, production processes and quality control. Currently, the company is in the process of developing mobile phone-based reporting systems from all the centres and in customizing its resource management (ERP) system for enhancing production efficiencies and scale. Finally, it organizes production in a web or network of multiple hubs associated with still more numerous spokes. Each hub, usually located at the district or town level, is a nodal point of aggregation of materials Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 25 and finished products, quality check point, packaging and delivery end, sampling site and coordinating and monitoring station for its respective spokes or production units. Each spoke at the village level is engaged in production, recruitment, training, and production reporting. The continuous evaluation and reformulation of the model in conceptual and operational terms within a larger incubation eco-system had by now provided the company with a market positioning for itself. Not only was it self-consciously characterised as an innovative model, but was also overtly perceived as one sensitive to the wider human developmental goals of its incubator, now reconstituted as its own. RPC had grown from being a small ICT4D exploratory project to an enterprise in the making and finally into a start-up company with a sizeable turnover and prestigious international clients for natural fibre based handmade products. However, the road ahead for RPC, though much better defined, was still not free from challenges. nEW ChallEngES In OPEraTIOnS The difficulties in meeting international compliance norms from geographically distributed units in irregular settings, however, soon became so magnified that at one point the RPC management even considered the possibility of a dedicated production campus with a capacity of at least 250 workers managed entirely along the lines of an offshore factory. While this would have provided greater control over production, it was soon realised that the idea was in opposition to the original commitment of sustainable wealth creation using ICTs and could lead to fresh problems associated with centralised large scale manufacture. RPC’s current distributed production model had also evolved over a period of two years from a model of total outsourcing of production - where the company coordinated with multiple local entrepreneurs in different locations for its client order; to partial outsourcing using local partners primarily for its HR function of accessing rural producers, while handling production and marketing themselves. This model however, was also soon to change in the face of developments that took place vis a vis a local partner compelling the company to completely discontinue the modality of outsourcing from its operations portfolio. A conflict situation arose between the company and its local HR partner in one of its biggest production centres handling nearly 300 craft producers. The issue involved a small local NGO who had been engaged by RPC for contract production on a revenue sharing basis. The problem had arisen when the NGO’s role had recently been changed to that of an agent for the recruitment and HR compliance at a fixed monthly remuneration. Loss of a significant role and partnership, as an organiser of production and goods supplier, had prompted the aforesaid to harbour resentment against this decision taken by RPC. The differences between RPC and the local agent reached a pinnacle point when false allegations were made by them and an official complaint registered against RPC as to who in fact had greater commitment from and rights over, the different producers under each of the production units. A confrontation before the local police inspector decided the case in favour of neither and producers were asked to choose between the two organisers of production – the local agent or RPC. In due course of settlement of the dispute, the complaint was withdrawn, a legal agreement drawn and RPC opened the doors of the production units once again to find a return of all but 25 of the full strength of its employees. The lessons learnt from these developments were clearly articulated by RPC management – the strengthening of other centres in the distant vicinity and adding another centre in a different geographical location to handle production overflow in order to significantly reduce dependency on this particular site. It was also further decided to take cognisance of the Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 26 International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 fact that RPC had left the most crucial aspect of production – human resource relations – to an outside agency and thereby lost the opportunity of learning in-house the issues pertaining to rural producers in disbursed units. Most importantly, the lesson reiterated for RPC the efficacy and significance of the distributed production model involving smaller but numerous units over the factory based one involving large number of producers under a single roof. RPC had come a long way in building its networks of interaction and collaboration with local actors. From working directly with ICT kiosk entrepreneurs, RPC had moved to working with the producer-suppliers and artisans in their neighbourhood and in the business relations developed initially by them. RPC had also developed links with small and big NGO’s and semi-governmental bodies in different districts and variously partnered with them. Its hub and spoke production model too required licenses and approvals from local governmental authorities for smooth functioning and certification in each of the districts. The foundation of all these local networks of association has been built upon a matrix of good will created by RPC in the areas of its operation in rural Tamil Nadu. The company is now well poised in its unique model of ICT enabled distributed production, as a significant player in the field of handmade natural fibre based products, practising open innovation, by taking advantage of its wider ecology of networks for continued value addition and growth. fUTUrE ISSUES The initial umbilical cord of the company with its incubator, though formally severed is far from detached. The road ahead to achieving sustainability and scalability are dependent on continuous rounds of funding and investments that would propel the company to its next phase of operation and scale. Whether it is for a state of the art design studio or a business development office and team located abroad to cater to its global clients, RPC must continue to lever- age and sustain the linkages it had originally developed in the eco-system of RI. Equally, apart from the official financial agreements between the two, RI continues to see to the growth of RPC towards its next phase of development as a member of its board, fund raiser and technology mentor. Moreover, RI’s unique position as a university-based incubator allows it to be at the cutting edge of academic research and collaboration enabling access to both R&D funding, expertise and industry linkages world-wide. Indeed, RI continues to be engaged in national and international level research projects where RPC’s own network of associations located in and around its dispersed production units, become “living labs” for RI’s innovations in ICT applications for distributed production and work practices. COnClUSIOn This paper has described the evolution of a university led rural-inclusive business venture that aims to strategically employ ICTs in the maintenance of an ever-expanding production network cutting across the traditional rural-urban divide in the context of enterprise building. It has shown the inception and transformation of the venture from an ICT for development project into a distributed production enterprise, ethically inspired and facilitated by global level processes and research in technology and production. In addition, this case study has revealed the changing consciousness of the team that altered from the implementation of an ICT4D project for creating a profitable business to one that is also environmentally sensitive and socially conscious. At every stage of its growth, focusing on local actors, resources and linkages was a business strategy, be it the cooperative participation or lack thereof of partners in the different rural production sites or the availability or non-availability of natural or human resources. The emergent rural eco-system associated with RPC was in turn directly responsible for the company’s future Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 27 trajectory. The study presented here is relevant not only for those interested in the promotion of social entrepreneurship through crafts but also for those keen on rural empowerment through technology based enterprise development. It is a study that views socio-economic development as the continuous and dynamic engagement with local actors through collaborative action and extending networks. Finally, this case study is significant to innovation design on two accounts. In the first place it is an ethnographic reflection, the value of which lies in its “thick descriptions” (Geertz, 1975) offering a more nuanced narrative for deep insights. It is a record of the “conditions” of the creation of both the research project and enterprise building endeavour in a discursive manner. It points to the dynamic interplay between the incubators goals and the emergent company’s goals and, in that sense, a self conscious exercise in constructive discourse and negotiation (Roth, 1989; Tedlock, 1991). Indeed, the paper presents an example of the incubator as a space of high reflexivity with the demonstrated potential for tremendous autonomy of action. Secondly, it presents the specific RI’s design process as more individualised and practice-based, enabling multiple iterations in support of the specific situation at hand (Suchman, 2001). It also points towards the possibility of an open space of incubation and innovation created for the fulfillment of mutual goals more sustainably. The case of RPC encourages the development of innovative solutions at every horizontal or vertical step of enterprise building, thereby creating a wider, more dynamic social ecology of collaboration for technology design and human development. aCKnOWlEDgMEnTS Material for this paper was collected by the author as a member of the staff and participant observer at the RI as well as a member of the board of RPC. Details of the organisation’s later development process were generously provided by RPC’s founder and CEO for which the author is very grateful. Thanks are due to C. Shambu Prasad of Xavier Institute of Management, Bhubaneswar, Vijay Baskar of Madras Institute of Development Studies and John B. Lourdusamy of IIT Madras for their comments on earlier drafts of this paper and to the Dept. of Humanities & Social Sciences, IIT Madras for providing the space to work. rEfErEnCES Akcomak, S. (2009). Incubators as tools for entrepreneurship promotion in developing countries. Tokyo, Japan: United Nations University. Almirall, E. (2008). Living labs and open innovation: Roles and applicability. Electronic Journal for Virtual Organizations and Networks, 10, 21–26. Brouwer, J. (1999). Modern and indigenous perceptions in small enterprises. Economic and Political Weekly, 34(48), 152–156. Carayannis, E. G., Popescu, D., Sipp, C., & Stewart, M. (2006). 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Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 29 Kenniston, K., & Kumar, D. (Eds.). (2003). The four digital divides. New Delhi, India: Sage. Roth, P. A. (1989). Ethnography without tears. Current Anthropology, 30(5), 555–569. doi:10.1086/203784 Kling, R. (2000). Learning about information technologies and social change: The contribution of social informatics. The Information Society, 16(3), 217–223. doi:10.1080/01972240050133661 Scaramuzzi, E. (2002). Incubators in developing countries: Status and development perspectives. Washington, DC: World Bank. Lalkala, R. (2001, November). Best practices in business incubation: Lessons yet to be learned. In Proceedings of the International Conference on Business Centres: Actors for Economic and Social Development, Brussels, Belgium (pp. 14-15). 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Building bridges: Practice-based ethnographies . In Schiffer, M. B. (Ed.), Anthropological perspectives in technology. Albuquerque, NM: University of New Mexico Press. Tedlock, B. (1991). From participant observation to the observation of participation: The emergence of narrative ethnography. Journal of Anthropological Research, 47(1), 69–94. Venkatesan, S. (2009). Craft matters: Artisans, development and the Indian nation. New Delhi, India: Orient Blackswan. Wood, W. W. (2000). Flexible production, households, and fieldwork: Multisited Zapotec weavers in the era of late capitalism. Ethnology, 39(2), 133–148. doi:10.2307/3773840 Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 30 International Journal of Information Communication Technologies and Human Development, 3(3), 16-30, July-September 2011 Aarti Kawlra is an associate faculty member of the Department of Humanities and Social Sciences, at the Indian Institute of Technology Madras. She has a PhD in Sociology/Social Anthropology from IIT Delhi on the community basis of production of silk handloom saris in Tamil Nadu. She is interested in decentralisation and networks with reference to both artisanal and information and communication technologies. Her wider academic focus is in material culture and, in particular, on notions of “work” and “community” in the context of technology design and use. Having been trained in ethnographic research methods her research emphasises reflexivity and the descriptive narrative. She has worked as a Consultant at the University based business Incubator under study and was engaged in a number of research projects entailing ICT4D applications for rural India, of which the present study is one. Currently, she is involved in a project on gender and citizenship through ICT’s in Kerala. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 31-41, July-September 2011 31 factors affecting E-Commerce adoption by Small businesses in a Developing Country: a Case Study of a Small hotel Ali Acilar, Bilecik University, Turkey Çağlar Karamaşa, Bilecik University, Turkey abSTraCT Internet use has grown and spread rapidly around the world during the last decade. Today, computers and the Internet have become an integral part of modern societies. The Internet has created a new medium for communication and commerce for businesses. It is hard to imagine a business working without using a computer. These technological advances have also largely affected small and medium-sized enterprises (SMEs). While large companies have been quick to adopt the information and communication technologies (ICTs), SMEs have been slow to adopt these technologies in general for various reasons, especially in developing countries. This study explores the factors affecting the adoption of e-commerce by small businesses in a developing country. To attain this purpose a case study was conducted in a small hotel, which is using its website to keep up with customer expectations and competition in a small Turkish city. Conclusions and suggestions derived from this study provide a meaningful contribution to the understanding of e-commerce adoption among small businesses in developing countries. Keywords: E-Commerce, Hospitality Industry, ICTs, Small Businesses, SMEs InTrODUCTIOn The ICTs are developing at a fast pace, affecting almost all aspects of our daily lives. Today, computers and the Internet have become an indispensable part of modern societies. According to Internet World Stats (2010) it is estimated that there are approximately 2 billion (28.7% of the world’s population) Internet users in the world. DOI: 10.4018/jicthd.2011070103 From 2000 to 2010, the number of Internet users around the world increased by 444.8% (Internet World Stats, 2010) and Internet use in all areas of life has become more common over the time. The use of Internet for commercial purposes has also greatly increased. According to the United States Census Bureau, the total volume of e-commerce transactions in the United States was about 3,704 billion dollars in 2008, and among them 92.2% were B2B (United States Census Bureau, 2010). Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 32 International Journal of Information Communication Technologies and Human Development, 3(3), 31-41, July-September 2011 Computers and the Internet have changed the way we live, the way we communicate, the way we get education, and the way we make business (Lee & Chan, 2008). Today, many businesses depend on computers and the Internet for their daily operations. In terms of entrepreneurships, apart from assisting large corporate enterprises, the Internet has also providing many benefits and advantages to small businesses. It serves the small businesses in many ways. As a means of transaction, the Internet serves as a marketplace to bring sellers and buyers together for conducting sales; as a communication medium, the World Wide Web provides an inexpensive, easy and fast way for interacting with customers, suppliers and other businesses, and a company’s Web presence helps enhance credibility, gather feedback, improve customer service, and facilitate business process (Chen et al., 2003). However, SMEs face various difficulties when adopting the Internet and e-commerce. These difficulties are mainly related with SME’s structure and their surrounding environment (Al-Qirim, 2007). Small businesses usually lack the technical knowledge, the financial power, the know-how, and the experience (AlHawari, Al-Yamani, & Izwawa, 2008). Overall, the literature suggests that Internet use is not prevalent among small enterprises (Karanasios, 2007), especially in developing countries. Since the tourism and hospitality industry is very important for developing countries to prevent unemployment and to achieve economic development, tourism is the top national priority for economic development in many developing countries, and because of its relatively low startup costs and its high potential to attract foreign capital, e-tourism is being promoted (Bui, Le, & Jones, 2006). The vast majority of hospitality businesses around the world are small and medium sized, belong to local entrepreneurs, are run by family, generally employ members of the local society (Main, 2002). Because small and medium sized hospitality organizations provide stable employment opportunities and support the integration of local economies in peripheral areas, even during recession periods, despite their size, these organizations are very important (Buhalis & Main, 1998). The tourism and hospitality industry has relied mainly on information, while tourism services are produced and consumed in a physical world in a regional or local context, purchase decision of a tourism product is generally based on information received through direct or intermediary market channels; prior knowledge; word of mouth; and perceptions of trust and service quality (Braun, 2006). In this case, the ICTs, especially the World Wide Web, can provide the information to customers looking for data as part of their purchase process. The tourism and hospitality enterprises can obtain a wide range of benefits from using the ICTs. These technologies help the tourism and hospitality enterprises to reduce costs, enhance operational efficiency, and improve service quality and customer experience (Law, Leung, & Buhalis, 2009). The Internet can create a direct link between the members of the hospitality industry and consumers, and also websites can provide information about the services and create an instant confirmation response to an inquiry such as room availability (Braun, 2006). Despite these apparent benefits and advantages, the small hospitality business owners do not use the Internet to its full advantage (Lituchy & Rail, 2000; Hudson & Gilbert, 2006). Given these issues, the main objective of this paper is to examine the factors affecting e-commerce adoption by small businesses in a developing country by using a case study approach. For this reason, this paper investigates the case of a family owned small hotel, which is using its website to keep up with customer expectations and competition in a small Turkish city. lITEraTUrE rEvIEW There is a digital divide between developed and developing countries in terms of accessing and using the ICTs. There is even a digital divide within developed countries. ICT adoption rates Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 31-41, July-September 2011 33 among enterprises differ between and within industries. Since today tourism and hospitality industry is highly dependent on information and the ICTs, the digital divide phenomenon also exists in this industry. There are a variety of technological divides (motivational, physical, informational, etc.) between tourists and destinations within developed countries and between developed and developing countries (Minghetti & Buhalis, 2009). While high-tech tourists and regions or enterprises meet in an electronic marketplace and communicate directly through electronic channels, mediumand low-digital-access tourists and destinations still depend on analog transactions and physical intermediaries for their vacation planning process and transactions (Minghetti & Buhalis, 2009). Factors affecting e-commerce adoption in small businesses are discussed in the following paragraphs. factors affecting E-Commerce adoption in Small businesses Several factors were identified from the literature reviewed as having considerable influence on the adoption of e-commerce among small businesses. These factors can be listed as: organizational factors, technological factors, individual factors, and environmental factors (Al-Qirim, 2007; Upadhyaya & Mohanan, 2009; Rogers, 2003; Cloete, Courtney, & Fintz, 2002). These affecting factors could be briefly summarized as follows: Organizational factors: user involvement, external/internal communications, quality of internal IT systems and capability, top management support, size, information intensity of products, specialization; Technological factors: observability, trialability, relative advantage, cost, complexity, compatibility, image; Individual factors: CEO’s innovativeness, CEO’s prior information systems/e-commerce knowledge, characteristics of owner/entrepreneur, educational qualification, etc., and Environmental factors: vertical linkages, government, competition, external pressure from suppliers/buyers, external support from technology vendors (Al-Qirim, 2007; Upadhyaya & Mohanan, 2009; Rogers, 2003; Cloete, Courtney, & Fintz, 2002). Auger and Gallaugher (1997) studied factors affecting the adoption of an Internetbased sales presence for small businesses. They identified six factors that impacted the decision to go on-line: low development and maintenance costs, an interest in experimenting with a new marketing tool, the desire to promote products and build the company’s image, financial considerations, benefits in obtaining and disseminating information, and competitive considerations. According to their study results, among these factors, low development and maintenance cost was revealed as the most significant. Auger and Gallaugher (1997) also found that small businesses that have made the decision to go on-line perceive that deploying a Web-based sales presence is a relatively lowrisk, and high reward strategy. Poon and Swatman (1999) found that the perception of long-term benefits and potential business opportunities drive small business to adopt Internet commerce. Premkumar and Roberts (1999) studied factors that influence the adoption of various communications technologies in small businesses located in rural communities in the United States and they found that relative advantage, top management support, organizational size, external pressure and competitive pressure are important determinants of adoption. Riemenschneider and McKinney (2002) analyzed the differences in the belief of small business executives regarding the adoption of Web-based e-commerce. They found that security and cost were barriers to adoption of Web-based e-commerce. Daniel and Grimshaw (2002) found that the use of e-commerce for responding to competitors, providing enhanced customer services and improving relations with suppliers was driving the uptake by smaller businesses to a greater extent than by their larger counterparts. Cloete, Courtney, and Fintz (2002) identified factors affecting e-commerce adoption in small businesses as: the owner’s perception and acceptance of e-commerce, characteristics of the Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 34 International Journal of Information Communication Technologies and Human Development, 3(3), 31-41, July-September 2011 organization, and the context in which the business find itself. According to Cloete, Courtney, and Fintz (2002), adoption of e-commerce is mainly based on perceived benefit. Chen et al. (2003) studied the e-commerce case of a small traditional retailer and identified six critical success factors for the firm, as follows: incremental e-commerce involvement, allocating resources widely, outsourcing the development, changing business process, studying the customer, and revising and evaluating results. Jennex, Amoroso, and Adelakun (2004) investigated the key infrastructure factors affecting the success of small companies in developing economies that are establishing B2B e-commerce ventures. They found that workers’ skills, client interface, and technical infrastructure are the most important factors to the success of a B2B e-commerce relationship. Jeon, Han, and Lee (2006) investigated determining factors for the successful adoption of e-business by SMEs in Korea and they determined several factors for e-business adoption, i.e., CEO’s knowledge of IT/e-business, the relative advantages and benefits from adopting e-business, governmental support for e-business, and using e-business as a globalization strategy for market expansion. They also found that business size, the cost of e-business adoption and competitive pressures from the industry do not seem to be an important factor in adopting e-business by SMEs in Korea. Pearson and Grandon (2005) surveyed managers/owners of SMEs in the Midwest region of the United States to identify variables that differentiate between adopters and non-adopters of e-commerce. They found that organizational readiness, perceived usefulness, compatibility, and external pressure differentiated between adopters and non-adopters of e-commerce. Al-Qirim (2007) investigated the impact of technological, organizational, individual and environmental factors on e-commerce adoption in New Zealand SMEs. He found that technological factors such as complexity, the compatibility, and the cost are affecting significantly, but observability and trialability are not. Image was found to play a supplementary role in his study. At organizational level, factors such as user involvement, external/internal communications, quality of IT systems and capabilities, and specialization were found as insignificant. At the individual level, the study found CEO’s innovativeness played an important role in e-commerce adoption in SMEs. At the environmental level, pressure from supplier/buyer on their adoption decision of e-commerce was identified as important in his study. Bharadwaj and Soni (2007) found that a major reason for businesses not engaging in e-commerce is their perception that it is not strategically important for their businesses. Upadhyaya and Mohanan (2009) researched the factors affecting electronic marketplace adoption among manufacturing SMEs in India. They found that the owner’s knowledge of computers and the Internet, organization’s familiarity with Internet-based applications and size of the firm are the factors that contribute to the e-marketplace adoption. According to their study, the government support and the extent to which the firm is globalized does not have any influence on manufacturing SMEs to adopt e-marketplace. factors affecting E-Commerce adoption in Small businesses in the Tourism and hospitality Industry Buhalis and Main (1998) studied the process of information technology adoption in small and medium-sized hospitality organizations (SMHOs) and identified several reasons for the lack of use of information technology in these organizations as follows: a) the lack of training, b) the age, educational level, and family arrangements of the SMHOs’ proprietors, c) the deficiency of rational management and marketing functions, and d) the short-term, operational focus of managers. Raymond (2001) administered a survey to travel agencies to study determinants of website implementation in small businesses. He identified various factors determining the assimilation Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 31-41, July-September 2011 35 of e-commerce by small enterprises in the form of informational, transactional, and strategic implementation of a website. Raymond (2001) found that the informational implementation and transactional implementation are determined by environmental context (business partners’ influence and environmental uncertainty), whereas strategic implementation is determined by travel agencies’ marketing strategy (in terms of distribution and communication), the organizational context (type of ownership, nature of business), and the characteristics of e-commerce (perceived advantages and technology attributes). Morrison and King (2002) explored the perceptions and attitudes of small tourism business owner-operators in regional areas towards investigating e-commerce as an element of destination marketing. They identified two major challenges for small tourism enterprises: First, the impact of online technologies supporting ecommerce in tourism is likely to increase rather than diminish, because they enable and support new organizational configurations and have the capacity to re-engineer market places and supply chains. Secondly, the success of many destination marketing businesses is dependent upon the effective engagement of a significant proportion of small tourism businesses. Morrison and King (2002) suggested that public sector destination marketing organizations need to: accept and work with the innate characteristics of the population; ensure the utility and functionality of the proposed technology; enhance owner-operator understanding of the benefits and costs of Internet-based trade; and utilize a combination of coercive push and voluntary pull factors to engage them in both individual and destination-based e-commerce strategies. Warden and Tunzelana (2004) found that organizational barriers exist in e-commerce adoption initiatives of SMMEs (Small Medium Micro Enterprises) in the South African Tourism industry. Hudson and Gilbert (2006) studied small hospitality businesses to identify the underlying success factors in utilizing the Internet as a marketing tool in the tourism and hospitality sector. Their study results suggest that bed & breakfast hotel owners are using the Internet as a low-cost method of increasing their customer base, especially from overseas markets. Hudson and Gilbert (2006) found that success in adoption of the Internet is closely related to online experience, the measurement of website efficiency, prompt responses to inquiries, making it easy for customers to make a reservation, the development of relationships with customers, customer adoption of technology, and the existence of online partners. Karanasios (2007) identified four major Internet adoption obstacles in small tourism enterprises in Ecuador, as: the cost of adoption, inadequate and poor ICT infrastructure, a lack of government support, and a lack of the ICT skills. Innovation Strategies in Tourism Industry Innovation in the service industry has been a topic of growing interest among researchers and policy makers (Nybakk & Hansen, 2008). Innovations in tourism industry can be categorized as follows: product or service innovations, process innovations, managerial innovations, management innovations, and institutional innovations (Hjalager, 2010). Aldebert, Dang, and Longhi (in press) studied the evolution of innovative activities in the tourism industry through the empirical analysis of annual Tourism@ events which is an important trade fair in Europe that brings together major actors related to the tourism industry. They found that 70.7% of innovation in tourism is product or service innovation. In order to be able to survive in today’s competitive business world, SMEs must keep pace with the changes in their environment using limited resources. One of the ways to accomplish this goal for SMEs is applying open innovation in their business strategies. According to (Chesbrough, 2006, p. 43) “Open innovation means that valuable ideas can come from inside or outside the company and can go to market from inside or outside the company Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 36 International Journal of Information Communication Technologies and Human Development, 3(3), 31-41, July-September 2011 as well”. Open innovation process includes purposive outflows of knowledge as well as purposive inflows of knowledge (Van de Vrande et al., 2009). Purposive outflows of knowledge mean innovation activities to leverage existing technological capabilities outside the boundaries of the organization and purposive inflows of knowledge imply innovation activities to capture and benefit from external sources of knowledge to enhance current technological developments in organization (Van de Vrande et al., 2009). UNIZO, the Belgian federation of independent entrepreneurs, classified sources of open innovation for SMEs, such as: customers, suppliers, personnel, research organizations and universities, consultants and advisors, internal research and results from market research (Evens, 2009). Internet is an important medium of open innovation sources for small tourism and hospitality businesses. For example, INNOTOUR (www.innotour.com) is a center for innovation in tourism (Liburd & Hjalager, 2009). INNOTOUR defines itself as: “INNOTOUR is an open platform for tourism educators, researchers, students and businesses and dissemination of knowledge in the field of tourism innovation. The purpose is to build with colleagues a living website to maximize student relevance and learning, collaborative research and innovation in tourism businesses” (INNOTOUR). Open innovation initiatives in the tourism sector are usually a response to an external threat or crisis (Sandulli, 2009). Affecting factors of the success of these initiatives are the transfer of explicit knowledge and the presence of a strong player that takes the risk of innovating (Sandulli, 2009). METhODOlOgy The main aim of the present study is to explore the factors affecting e-commerce adoption by small businesses in a developing country. The study uses a single-case research methodology. According to Dul and Hak, (2008, p. 4) “A case study is in which (a) one case (single case study) or a small number of cases (comparative case study) in their real life context are selected, and (b) scores obtained from these cases are analysed in a qualitative manner.” A family owned small hotel using its website since 2009 was selected for the study. The authors conducted interviews with the owner of the hotel to explore the factors affecting e-commerce adoption in a small business. The owner of the hotel was visited and interviewed three times by the authors. In interviews, the authors gathered information on the background of the hotel and its owner, Internet and Web use in the hotel, benefits of these technologies to the hotel and then the authors examined the factors affecting e-commerce adoption. In addition to the interview, the website of the hotel was also explored. CaSE STUDy Otel Gören is a three-generation family owned and operated small hotel. It was established in 1952 and since then has served its customers. Otel Gören is located in one of the main streets of Bilecik, a small but a historical city in the northwest of Turkey. Bilecik’s population is about 45,000. Besides the owner, the hotel currently employs four people; one of them is his wife. The owner works on a full time basis in the hotel. The hotel is a bed and breakfast hotel. It serves approximately 3000 customers annually with 20 rooms and 40 beds. Taner Gören is the owner of the hotel. He is forty years old, graduated from commercial high school, married and has one child. His computer skill is neither expert nor novice. The owner indicates his computer skill as moderate. Information technology resources of the hotel are limited. There are two computers in the hotel; one is in the owner’s office and the other one is on the reception desk. The hotel has an ADSL Internet connection. Customer records are kept on the computer at the reception desk. The Hotel has been using the Internet since 2000, but not mainly for business purposes Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 31-41, July-September 2011 37 until 2005. In Turkey, Hotels have to report the identification information of their guests to the appropriate Turkish authorities every day. Since 2005, keeping customer records on a computer and sending to the police department via the Internet have become mandatory for the hotels above a certain size. For this reason, Mr. Taner has started using ADSL broadband Internet connection since 2005. The hotel also provides wireless Internet connection to its customers. Communication (E-mail), sending the identification information of the guests to the police, information search and gathering were the main uses of the Internet in the hotel. At present, room reservations are usually made via telephone enquiries direct to the hotel. Some customers use e-mail to book a room. Approximately 10% of the bookings were made via e-mail in 2010. Since the customers cannot get instant response via e-mail they may prefer to book a room via phone. Last year, Mr. Taner decided to renovate the hotel and then the hotel building was completely refurbished inside and out. With this renovation he wanted to have a website. The hotel’s website was launched in 2009. The owner is aware of the importance of the Internet for businesses and he believes that today, it is necessary to have a website. The website of the hotel was designed by a local Web solutions firm and was registered with one of the main search engines. The content of the website is in Turkish. The hotel’s website is relatively basic, simple and easy to use and navigate. It contains some sample pictures of the rooms, a list of the services provided by the hotel, contact information and daily weather of Bilecik. Audio, video and 360-degree photography were not used in the website. The hotel’s website does not include Web-based booking system and does not offer online payment. Because of owner’s concerns regarding the technology, he does not want to use Web-based booking system. He believes that it may cause some problems. For now, Webbased booking system is not seen as necessary by the owner. It seems that the main reasons for that the hotel is not using Web-based booking system are the lack of technical knowledge of the owner about the system and for now, it is not seen as necessary by the owner. The owner of the hotel has not registered the hotel’s website to a booking portal yet. He stated that he did not know that there is such a service exists in the Internet. But when asked, he states that he might register to an online booking portal in the future. The introduction of the website has provided the following benefits to the hotel: Availability: The information on the hotel’s website is available to potential customers 24 hours a day, 7 days a week. This provides convenience to the customers and to the hotel. Today, the most popular and convenient way of looking for a hotel is the Web. Credibility: The website gives the hotel a mark of credibility and creates an image. Keeping up with the competition: Having a website helps the hotel to keep up with the competition. Cost saving: The website provides cost saving comparing to other media in terms of advertising. In terms of e-commerce, it cannot be said that the hotel is successful. However, the hotel has not been benefitting fully from the Web’s potential. The hotel has not completed the ecommerce adoption process yet. Besides Hotel Gören, there are five more hotels in Bilecik. Two of them do not have a website yet. Among the hotels having a website, just one of them has been using an online reservation system on its website and this hotel was also registered to a well known international booking portal (www.booking.com). Most of the hotels in Bilecik are registered to national portals (e.g. www.otelrezervasyonu.gen.tr). rECOMMEnDaTIOnS anD COnClUSIOnS Today, computers and the Internet have become an important part of the business life. The Internet has affected many industries, but the Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 38 International Journal of Information Communication Technologies and Human Development, 3(3), 31-41, July-September 2011 hospitality industry has been one of the most impacted. Nevertheless, the small hospitality business owners do not use the Internet to its full advantage and only a small number use a secure server for online bookings (Hudson & Gilbert, 2006). To be able to survive in the fastchanging environment, the small businesses in the hospitality industry have to adapt technological advances such as e-commerce to stay competitive. However, practicing e-commerce in developing countries is a major challenge (Bui, Le, & Jones, 2006) for especially small businesses with scarce resources. The main aim of this study was to explore the factors affecting e-commerce adoption by small businesses in a developing country. For this reason, a family owned and operated small hotel in a small Turkish city was examined as a case study. The owner of the hotel appreciates the value of the Internet. However, it cannot be said that the hotel makes full use of the Internet. E-mail, sending the identification information of the guests to the police, information search and gathering were the main uses of the Internet in the hotel. The hotel has a basic website that is not having Web-based booking system. Having a website has provided the opportunity for the hotel to reach more customers, to improve its service, to save costs, and to promote its image and credibility. Having a website can be accepted as the first step to e-commerce for most businesses in the Internet. But, it is not enough for a successful e-commerce application. In order to be successful in the Internet, the small hospitality businesses should also add value to their websites with, such as Webbased booking system, tourist information, and maps. Also, developing a website in only one language for a hotel may not be sufficient in the hospitality industry. The hotel website should provide information in common languages of the world, such as English and German in order to attract tourists. The authors of the study suggest that the most important factor affecting the adoption of e-commerce in the case hotel is the perceived benefits by the owner. Other factors are identi- fied as follows: customer expectations, competition and the increased use of the Internet by people. The main reasons for not using the Web-based booking in the website of the case hotel are found as following: the owner lacks the technical knowledge and, for now, Web-based booking is not seen as necessary by the owner. In order to keep up with competition in the era of Internet, e-commerce awareness among small businesses should be increased especially in the developing countries. In addition to increasing awareness, it is required to support small businesses with knowledge and experience about e-commerce. Because most small businesses cannot afford the necessary training, consulting or outsourcing for e-commerce implementations, it is possible for chambers of commerce, or small-business associations to organize training sessions for small businesses to attend at an affordable price (Lituchy & Rail, 2000). There are a number of limitations of this study. The first limitation is that the authors used a single case study methodology, and investigated only one small business. The second limitation is that investigated business is a hotel in the hospitality industry. The factors affecting adoption of e-commerce in small businesses may differ in different industries. Another limitation is that the study focused on a business that has not completed the ecommerce adoption process, yet. Finally, the study was conducted in Turkey. Therefore the generalization of the conclusions may not be applicable. Future studies in this topic area in other developing countries will help to learn more about the factors affecting the adoption of e-commerce by small businesses in developing countries. aCKnOWlEDgMEnT An earlier version of this paper was presented at the International Conference on Entrepreneurship, Family Business and Innovation, 21-23 October 2010, Çankaya University, Ankara, Turkey. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 31-41, July-September 2011 39 rEfErEnCES Al-Hawari, M., Al-Yamani, H., & Izwawa, B. (2008). Small businesses’ decision to have a website Saudi Arabia case study. World Academy of Science . Engineering and Technology, 37, 308–312. Al-Qirim, N. A. (2007). 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Retrieved from http://www.internetworldstats. com/stats.htm Jennex, M. E., Amoroso, D., & Adelakun, O. (2004). E-commerce infrastructure success factors for small companies in developing economies. Electronic Commerce Research, 4, 263–286. doi:10.1023/B:ELEC.0000027983.36409.d4 Jeon, B. N., Han, K. S., & Lee, M. J. (2006). Determining factors for the adoption of e-business: The case of SMEs in Korea. Applied Economics, 38(16), 1905–1916. doi:10.1080/00036840500427262 Karanasios, S. (2007). Ecuador, the digital divide and small tourism enterprises. Journal of Business Systems . Governance and Ethics, 2(3), 21–34. Law, R., Leung, R., & Buhalis, D. (2009). Information technology applications in hospitality and tourism: A review of publications from 2005 to 2007. Journal of Travel & Tourism Marketing, 26, 599–623. doi:10.1080/10548400903163160 Lee, W. W., & Chan, A. K. K. (2008, December). Computer ethics: An argument for rethinking business ethics. Paper presented at the 2nd World Business Ethics Forum: Rethinking the Value of Business Ethics, Hong Kong, China. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 40 International Journal of Information Communication Technologies and Human Development, 3(3), 31-41, July-September 2011 Liburd, J., & Hjalager, A. M. (2009). Valuing open innovation environments in tourism education and research-the case of INNOTOUR. Paper presented at the Think Tank 9 on The Importance of Values in Sustainable Tourism, Singapore. Lituchy, T. R., & Rail, A. (2000). Bed and breakfasts, small inns, and the Internet: The impact of technology on the globalization of small businesses. Journal of International Marketing, 8(2), 86–97. doi:10.1509/ jimk.8.2.86.19625 Main, H. C. (2002). The expansion of technology in small and medium hospitality enterprises with a focus on net technology. 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Adoption of new information technologies in rural small businesses. Omega . International Journal of Management Science, 27, 467–484. Raymond, L. (2001). Determinants of web site implementation in small businesses. Internet Research, 11(5), 411–422. doi:10.1108/10662240110410363 Riemenschneider, C. K., & McKinney, V. R. (2001-2002). Assessing belief differences in small business adopters and non-adopters of web-based e-commerce. Journal of Computer Information Systems, 42(2), 101–107. Rogers, E. (2003). Diffusion of innovations. New York, NY: Free Press. Sandulli, F. D. (2009). Challenges and opportunities of open innovation and open business models in tourism. Paper presented at the First International Conference on the Measurement and Economic Analysis of Regional Tourism Donostia, San Sebastian, Spain. United States Census Bureau. (2010). E-Stats. Retrieved from http://www.census.gov/econ/ estats/2008/2008reportfinal.pdf Upadhyaya, P., & Mohanan, P. (2009). Electronic marketplace adoption: A case study of manufacturing SMEs. ICFAIAN Journal of Management Research, 8(6), 30–40. Van de Vrande, V., de Jong, J. P. J., Vanhaverbeke, W., & de Rochemont, M. (2009). Open innovation in SMEs: Trends, motives and management challenges. Technovation, 29, 423–437. doi:10.1016/j. technovation.2008.10.001 Warden, S. C., & Tunzelana, S. (2004). E-commerce: A critical review of SME organisational barriers in tourism. Paper presented at the 6th WWW Applications Conference, Johannesburg, South Africa. Ali Acilar is an assistant professor in the Department of Business Administration, Bilecik University, Bilecik, Turkey. He graduated from the Department of Business Administration at Hacettepe University, Ankara, Turkey, received his MS in Operation Research and Statistics from Rensselaer Polytechnic Institute (RPI), Troy, NY, USA and obtained his Ph.D in Business Administration from Dumlupınar University, Kütahya, Turkey in 2007. His research interest includes information technology usage in SMEs, ethical use of information technology, gender issues in computer ethics, e-commerce and e-government. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 31-41, July-September 2011 41 Çağlar Karamaşa was graduated from the Department of Business Administration at Anadolu University, Eskişehir, Turkey in 2008. He is continuing his master degree in Quantitative Methods at Anadolu University. He has been working as a research assistant in the Department of Business Administration at Bilecik University since 2010. His research interests include integer programming and applications, semi definite programming, dynamic programming, decision support systems, information technologies and e-commerce applications. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 42 International Journal of Information Communication Technologies and Human Development, 3(3), 42-57, July-September 2011 Empowerment of SMEs Through Open Innovation Strategies: life Cycle of Technology Management Hakikur Rahman, University of Minho, Portugal Isabel Ramos, University of Minho, Portugal abSTraCT Adoption of innovation strategies in entrepreneurship is an age old phenomenon, but inclusion of open innovation or collaborative innovation strategies in the business processes is a newly evolved concept. By far, most research reveals that the majority of successful global ventures are adopting open innovation strategies in their business proceedings. However, despite their contribution to entrepreneurship and national economy, the small and medium scale enterprises (SMEs) are well below the expectation level in terms of acquiring this newly emerged trend of doing business. Moreover, not much research is being conducted to investigate SMEs potencies, expectations, delivery channels and intricacies around the adoption, nourishment and dissemination of open innovation strategies. This research proposes a contextual framework leading to an operational framework to explore the lifecycle of open innovation strategy management activities focusing technology transfer (inbounds or outwards). It discusses a few issues on future research in empowering SMEs through utilization of open innovation strategies. Keywords: Empowering SMEs, Open Innovation, Open Innovation Management, Open Innovation Strategies, SMEs InTrODUCTIOn While talking about successful entrepreneurship and value addition within an enterprise through open innovation (OI), one could realize that the innovation paradigm has been shifted from simple introduction of new ideas and products to accumulation of diversified actions, actors and agents along the process (Chesbrough, 2003a, 2006a). Furthermore, when the innovation process is not being restricted within the DOI: 10.4018/jicthd.2011070104 closed nature of it, the process takes many forms during its evolution (Rahman & Ramos, 2010). Definition of open innovation has also adopted many transformations along the path, incorporating innovations within the products, process or service of an enterprise to organizational, marketing, or external entities and relations. Nature and scope of agents and actors even varies widely within the innovation dynamics, when the open innovation techniques are being applied to enterprises, designated as the small and medium enterprises (SMEs) (Schumpeter, 1934, 1982; Davenport, 1993; OECD, 1992, 1996, 2005; De Jong et al., 2007). Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 42-57, July-September 2011 43 Due to the open and collaborative nature of this newly evolved perception, the primary focus of this paper has been kept within open nature of innovation (a more recently evolved terminology, which is better known as crowdsourcing1 innovation), but not limited to other collaborative innovation, though it is not easy to put a restrictive boundary between them. Being new in the research arena, on one hand the concept of open innovation has been flourished very progressively within a short span of time (Chesbrough, 2003b; Chesbrough, Vanhaverbeke, & West, 2006; Gassmann, 2006), but at the same time, it has evolved through various growth patterns in diversified directions involving different factors and parameters (Christensen, Olesen, & Kjaer, 2005; Chesbrough & Crowther, 2006; Dodgson, Gann, & Salter, 2006; Gassmann, 2006; Vanhaverbeke, 2006; West & Gallagher, 2006). Furthermore, as this research is related to SMEs2, which are the steering factor of economic growth in the European countries, and especially in Europe where they comprise of over 98% (EC, 2008) of the entrepreneurships, the problem statements were constructed following multiple research studies along this aspect, though sufficient works towards the improvement of knowledge factors on SMEs development have not been found. This research argues that to empower the SMEs through OI strategies, firstly the contextual framework need to be devised and then the operational framework has to be developed. The research also argues that the operational framework revolves around the life cycle of technology management activities that are either inbound to the enterprises or outbound from them. Depending on nature, scope, transparency and efficiency of the life cycle, the open innovation will grow among and within the entrepreneurships. The more efficient and focused the life cycle will be the growth factor of OI strategies will reach towards fulfilling the operational framework. In this discourse, this paper has tried to discuss the contextual framework in relevance to the OI strategies as the background concept, and to support the main thrust of the paper, which is the life-cycle of technology management, it has tried to develop an operational framework as the entry point. COnTExTUal fraMEWOrK Innovation is a way of performing something new. It may refer to incremental and emergent or radical and revolutionary changes in thinking, products, process development, or organizational development. Innovation, as seen by Schumpeter (1934) incorporates way of producing new products, new methods of production, new sources of supply, opening of new markets, and new ways of organizing businesses. Oslo manual (1992, 1996, 2005), after several adjustments has come into this argument, that innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations. However, other scholars and researchers in the field of innovation, has put forward definition of innovation in various formats and perspectives. Some definitions or arguments are being included below: “The creation of new ideas/processes which will lead to change in an enterprise´s economic and social potential” (Drucker, 1998, p. 149) This research will look into the economic and social aspect of open innovation process, but at the same time look into any technology parameters that are involved within the processes. Tidd, Bessant, and Pavitt (2005) and Bessant and Tidd (2007) argued that there are four types of innovation, i.e., the innovator has four routes of innovation paths, such as product innovation (changes in the products or services [things] which an organization offers), process innovation (changes in the ways in which products or services are created and delivered), positioning innovation (changes in the context in which the products or services are Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 44 International Journal of Information Communication Technologies and Human Development, 3(3), 42-57, July-September 2011 introduced) and paradigm innovation (changes in the underlying mental models which outline what the organization does)3. This research would argue that these are the areas through which open innovation takes place in an enterprise. However, in terms of the types of open innovation, Darsø (2001) argued that innovation can be incremental (improvements of processes, products and methods, often found by technicians or employees during their daily work), radical (novel, surprising and different approach or composition), social (spring from social needs, rather than from technology, and are related to new ways of interaction) and quantum (refers to the emergence of qualitatively new system states brought by small incremental changes). Furthermore, talking about types of innovation, Henderson and Clark (1990) identified four; incremental innovation- improves component knowledge and leaves architectural knowledge unchanged; modular innovation- architectural knowledge unchanged, component knowledge of one or more components reduced in value; architectural innovation- component knowledge unchanged, architectural knowledge reduced in value; and radical innovation4- both component knowledge and architectural knowledge reduced in value. Thus, innovation can be termed as introduction of new idea into the marketplace in the form of a new product or service, or an improvement in organization or process (http:// www.mjward.co.uk/Businesses-phrases-termsjargon/Business-Phrases-Terms-l.html). This definition enables one to concentrate on demand driven innovation, or innovation may be re-termed as a: “Process by which an idea or invention is translated into good or service for which people will pay” (Businessdictionary.com). The final definition that this research has selected leads to the very basic parameters of innovation, where there are goods or services between buyer and the seller. Hence, a functional equation (Figure 1) (by taking innovation as the most probable or prominent function in above definitions and arguments) can be deducted, as (see Figure 1): A context diagram (Figure 2) from the equation sets the primary problem statements of this research. If one argues that innovation generates new or improved products, process or services, then the following diagram can be derived: However, one could observe that this context diagram does not necessarily lead to the open nature of innovation that can be built upon. Therefore, this research would like to modify the context diagram by connecting to an open platform utilizing various open innovation strategies (Figure 3). Initially, this research would like to carry out investigation into the three aspects of open innovation (product, process and service). However, it will set its boundary within the various business processes through organizational transformations and capacity development initiatives incorporating open innovation strategies to empower SMEs. Furthermore, it will emphasize on technology diffusion and issues of technical nature to enable the SMEs community to innovate further in reaching out to their grass roots stakeholders. As the research progresses, depending on the survey responses, which this research would like to carry out, other parameters of open innovation strategies such as organizational and management aspects will be taken into account. OPEraTIOnal fraMEWOrK In search of finding different patterns of open innovation and their relationships with SMEs, initial part of the research spent sufficient period of time (over a year or so) in literature review. Review was restricted to definite search strings, but was not confined to specific journals or search engines. However, to keep the credibility of the searched content most of the searches were limited to highly ranked journals and databases. Similarly, case studies were conducted and survey reports were be- Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 42-57, July-September 2011 45 Figure 1. A functional equation mapping various definitions and arguments Figure 2. A context diagram derived from the functional equation ing studied that were being operationalized or established or implemented by well reputed national and international agencies or institutes, such as European Commission, OECD, World Bank, UNDP, Vinnova, Innocentive and others. Moreover, literature review emphasized on empirical studies and cases illustrating activities on SMEs in reaching out to their broad based grass roots clientele. Open Innovation, being latent within the product, process and service in an entrepreneurship grows naturally if these three could be intermingled further, such as incorporating new idea and changes through product development, process development and service development. In its simplest sense, open innovation will grow in an enterprise, if the bonding among them increases. As ƒ(P1,P2,S) moves inwards, bond- Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 46 International Journal of Information Communication Technologies and Human Development, 3(3), 42-57, July-September 2011 Figure 3. Open platform of interactions Figure 4. Bonding of the three parameters of open innovation management ing increases, and innovation grows (Figure 4), and eventually an enterprise emerges as a cent percent innovative entity. Given the potentiality of open innovation in an enterprise through improvement of the three parameters as shown in Figure 4, especially small and medium scale enterprises (SMEs), literature review gave primary focus to gather knowledge on opportunities and challenges that are being faced by SMEs when they are opening their windows of business processes through open innovation methods. Furthermore, to design an appropriate action plan for empowering them, a thorough literature review has been conducted on existing success cases utilizing open innovation strategies. These eventually assisted in developing the research design and survey methods. Readers may refer to Rahman and Ramos (2010) for an elaborate discussion on open innovation opportunities Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 42-57, July-September 2011 47 and challenges that are being faced by SMEs, and Rahman and Ramos (2010) illustrate an extended literature review on research and practices on open innovation strategies. However, before progressing further, this study would like to give an insight into the product, process and service innovation, but not reinventing the wheel. Researchers mention that product innovation is linked to the analysis of changes and innovations within the product category. Product innovation allows one to map out changes in one´s enterprise´s product. It compels to determine how a product should evolve to meet needs of the client and be competitive in the future (Crawford, 1983; Hiebing & Cooper, 2003). Process innovation combines the adoption of a new view of the business process with the application of innovation into key processes. The novel and distinctive feature of this combination is its enormous potential to assist an organization in achieving major reductions in process cost or process time, or major improvements in quality, flexibility, and service levels. In this perspective, the business must be viewed not in terms of functions, divisions, or products, but of key processes, they may include redesigning key processes from the beginning to the end, and employing whatever innovative technologies and organizational resources are available. However, a major challenge in process innovation is to make a successful transition to a continuous improvement in environment. Referring to Davenport (1993), this research purview that, if a company that does not institute continuous improvement after implementing process innovation is likely to revert to old ways of doing business. Framework for process innovation may comprise of; identifying processes for innovation, identifying transformation enablers, developing a business vision and process objectives, understanding and measuring existing processes, and designing and creating a prototype of the new process (Zuboff, 1988; Walton, 1989). Service innovation5 systems are dynamic configurations of people, technologies, orga- nizations and shared information that create and deliver value to customers, providers and partners through services. They are forming a growing proportion of the world economy and are becoming central activity for the businesses, governments, families and individuals. Nowadays, firms do not consider themselves to be ´services´ or ´manufacturing´ but providing solutions for customers that involve a combination of products and services. Preferably, service innovation can happen across all service sectors and one should look at all possible service activities rather than looking at specific service sectors (Van Ark, Broersma, & Den Hertog, 2003; Miles, 2005; IfM & IBM, 2008). Service innovation is more closely related to the depth than breadth (vertical than horizontal), and a deep relationship with external sources, such as customer needs of target markets are essential for service innovation (Lee et al., 2010). To enhance the bonding state and increase the open innovation, one can think of an operational framework as shown in Table 1. lIfE CyClE Of TEChnOlOgy ManagEMEnT As evolved from the very basic, but comprehensive definition of open innovation (Chesbrough, Vanhaverbeke, & West, 2006, p. 1), it is “the use of purposive inflows to accelerate internal innovation” and “the use of purposive outflows to expand the markets for external use of innovation”, and thus, it comprises of outside-in and inside-out flow of ideas, knowledge and technologies. The outside-in movements may be termed as technology acquisition or technology exploration, while the inside-out movements may be termed as technology dissemination or technology exploration (Lichtenthaler, 2008; Van de Vrande, De Jong, Vanhaverbeke, & De Rochemont, 2009). Through technology exploration, SMEs can get acquainted with outside information, gain knowledge and utilize them for their empowerment by enhancing existing technology platform. On the other hand, through technology exploitation, SMEs can empower Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 48 International Journal of Information Communication Technologies and Human Development, 3(3), 42-57, July-September 2011 Table 1. The operational framework Parameters of Innovation Management Operational activities Product innovation Process innovation Service innovation Relative interdependency A product may come out with an entirely new idea A process may respond to the need for better coordination and management of functional interdependencies A service may establish a common language and shared platform or adopt interdisciplinary approach for research and education on service systems Notable breakthrough A product may offer improved performance against an existing function or desire or need or may provide a new approach for an existing product A process intended to achieve radical business improvement A service may provide solutions for challenges on service systems research Integrated actions The product may provide additional functions or features or may be an existing product, but targeting to a new segment of the market The process may seem to be a discrete initiative but must be combined with other initiatives for ongoing transformations The service may develop appropriate organizational arrangements to enhance industry-academic collaboration and promote learning programmes on service science, management and engineering Intricately designed A product may have a new price or value mix (promotion or other value addition) or may have improved packaging A process can seldom be achieved in the absence of a carefully considered combination of both technological and human catalysts A service may develop modular template-based platform of common interests Localized ones The product may have changes in appearance or forms as per the local demand The process must suit the local business culture The service need to work with partners within a sustainable framework themselves by raising their knowledge platform (Chesbrough & Crowther, 2006; Lichtenthaler, 2008). Inter-firm collaborations (strategic alliances and joint ventures) are becoming essential instruments to improve competitiveness of enterprises in complex and critical environments (Hoffman & Schlosser, 2001). Along these two routes of open innovation, SMEs have the opportunities of increased customer involvement, external participation, networking among other partners, outsourcing of R&D and inward licensing of intellectual property (IP) through technology exploration, and they may have the opportunities of augmented venturing, inclusion of all-out staff involvement within the R&D processes and outward licensing of IP through technology exploitation (Van de Vrande, De Jong, Vanhaverbeke, & De Rochemont, 2009). In the context of technology exploration and technology exploitation, parameters as mentioned above need further investigation. A few important activities under the category of technology exploration are being discussed next. • Increased customer involvement- Researchers on open innovation recognize increased client involvement as an essential element to expedite internal innovation process (Gassmann, 2006). Apart from Von Hippel´s (2005) initiating work, this has Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 42-57, July-September 2011 49 • been supported by many other researchers (Olson & Bakke, 2001; Lilien et al., 2002; Bonner & Walker, 2004). Emphasis has been given to increased involvement of the customers at the beginning of the innovation process (Brockhoff, 2003; Von Hippel, 1998, 2005; Enkel et al., 2005). Firms may benefit from their customers´ ideas, thoughts and innovations by developing better products that are currently offered or by producing products based on the designs of customers (Van de Vrande et al., 2009). External networking- Another essential activity to innovate through open and collaborative innovation (Chesbrough et al., 2006), which includes acquiring and maintaining connections with external sources of social capital, organizations and individuals (Van de Vrande et al., 2009). External networking allows enterprises to acquire specific knowledge without spending time, effort or money but to connect to external partners. Such collaborative network among non-competing entities can be utilized to create R&D alliances and acquire technological capabilities (GomesCasseres, 1997; Lee et al., 2010). Within the limited resources of SMEs, they must find ways to achieve production of economies of scale to market their products effectively, and at the same time provide satisfactory support services to their customers. On one hand, Lee et al. (2010) observed that SMEs are flexible and more innovative in new areas, but lack in resources and capabilities. On the other hand, larger firms may be less flexible, but have stronger trend to develop inventions into products or processes. These resources often attract SMEs to collaborate with large firms (Barney & Clark, 2007). But stronger ties with larger firms may limit opportunities and alternatives for SMEs, and they prefer to make external networks with other SMEs or institutions, such as universities, private research establishments or other forms of non-competitive intermediaries (Rothwell, • • 1991; Torkkeli et al., 2007; Herstad et al., 2008; Lee et al., 2010). External participation- In fact this may refer to crowdsourcing in terms of open innovation strategies and it enables one to look into the minute details of innovation sequences in an enterprise which may seemingly unimportant or not promising before (Van de Vrande et al., 2009). A company’s competitiveness is increasingly depending on its capabilities beyond the internal boundaries (Prügl & Schreier, 2006). During the start up stages, an enterprise can invest by keeping eyes on potential opportunities (Keil, 2002; Chesbrough, 2006b), and then explore further to increase the knowledge platform through external collaboration (Van de Vrande et al., 2009). Within the innovation process, companies are intensifying relationships and cooperation with resources located outside the firm, ranging from customers, research institutes, intermediaries and business partners to universities and intermediaries (Howells et al., 2003; Linder et al., 2003). Outsourcing R&D- Nowadays, enterprises are outsourcing R&D activities to acquire external knowledge and technical service providers, such as engineering firms or high-tech organizations are taking lead in the open innovation arena (Van de Vrande et al., 2009). The basic assumption is that enterprises may not be able to conduct all R&D activities by themselves, but capitalize on external knowledge through outsourcing, either by collaboration, or taking or purchasing license (Gassmann, 2006). In this context, collaborative R&D is a useful means by which strategic flexibility can be increased and access to new knowledge can be realized (Pisano, 1990; Quinn, 2000; Fritsch & Lukas, 2001). While R&D outsourcing has been targeted to cost savings in most companies, more and more managers are discovering the value of cooperative R&D to achieve higher innovation rates. Collaborative R&D are being utilized to make system- Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 50 International Journal of Information Communication Technologies and Human Development, 3(3), 42-57, July-September 2011 • atic use of the competences of suppliers, customers, universities and competitors in order to share risks and costs, enlarge the knowledge base, access the complementary tangible and intangible assets, keep up with market developments and meet customer demands (Nalebuff & Brandeburger, 1996; Boiugrain & Haudeville, 2002; Van Gils & Zwart, 2004; Christensen et al., 2005; De Jong et al., 2007). Furthermore, the not-invented-here syndrome, a severe barrier to innovation, can also be mitigated if external partners are increasingly involved in the R&D processes (Katz & Allen, 1982) and the most important factor is that, in the open innovation paradigm, it is considered totally acceptable to acquire key development outside the organizational boundary (Prencipe, 2000). Inward licensing of Intellectual PropertyIntellectual Property (IP) can be termed as creative ideas and expressions of the human mind that have commercial value (http://www.c7.ca/glossary) or it can be seen as an idea, invention, formula, literary work, presentation, or other knowledge asset owned by an organization or individual (Utah Education Network, n. d.). The major legal mechanisms for protecting intellectual property rights are copyrights, patents, and trademarks. IP rights enable owners to select who may access and use their property and to protect it from unauthorized use. As Chesbrough (2006a) has mentioned IP as a catalyst of open business model, an enterprise can acquire intellectual property including the licensing of patents, copyrights or trademarks. This has been supported by Van de Vrande et al. (2009), as this process may strengthen one’s business model and gear up the internal research engines. Inward licensing tend to be less costly than conducting in-house R&D, and the licensing payment can be used to control risks by prudent payment scheme, which reduces time to bring new products into market and lowers risk when an invention of similar nature has already • been commercialized (Box, 2009; Darcy et al., 2009). Other issues like user innovation, non-supplier integration or external commercialization of technology fall under this category, but hardly have they formed any definitive trend channeling separate research aspects other than the activities mentioned above. However, as this research progress, efforts will be given to extract contents of similar interest and highlight them. Before proceeding next, a few activities on technology exploitation are being discussed below: • • Venturing- A venture can be seen as an agreement among people to do things in service of a purpose and according to a set of values, and in this context, an entrepreneur is a venturer that carries primary responsibility for operating a venture (http://igniter.com/post56). Hence, venturing is the process of establishing and developing a venture, and can be defined as starting up new entrepreneurships drawing on internal knowledge, which implies spin-off and spin-out processes. In most cases, support from the parent organization includes finance, human capital, legal advice, or administrative services (Van de Vrande et al., 2009). Keil (2002) suggests that external corporate venturing unites both physical and intellectual assets of an enterprise by extending and exploiting the internal capabilities for continual regeneration and growth. Though earlier studies on open innovation have primarily focused on venturing activities in large enterprises (Chesbrough, 2003a; Lord et al., 2002), but the potential of venturing activities is regarded to be as enormous. Chesbrough (2003a) illustrated that the total market value of 11 projects which turned into new ventures exceeding that of their parent company, Xerox, by a factor of two. Outward licensing of Intellectual Property- As mentioned earlier, IP plays a Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 42-57, July-September 2011 51 • crucial role in open innovation as a result of the in-and-out flows of knowledge (Arora, 2002; Chesbrough, 2003a, 2006a; Lichtenthaler, 2007). Enterprises have opportunities to out-license their IP through commercialization to obtain more value from it (Gassmann, 2006; Darcy et al., 2009). Darcy et al. (2009) mention that out-licensing of IPs bring opportunity of high profitability, allow multiple licensees to work together at the same time, seem less riskier than Foreign Direct Investment (FDI), simple to operate when less technology components exist, and especially suited for SMEs as this process lowers risk by eliminating need for downstream production facilities. Out-licensing of IPs allow them to profit from their IPs when other firms with different business models find them as profitable, and in this way IPs route to the market through external paths (Van de Vrande et al., 2009). By means of out-licensing, many firms have begun to actively commercialize technology. This increase in inward and outward technology transactions reflects the new paradigm of open innovation (Vujovic & Ulhøi, 2008; Lichtenthaler & Ernst, 2009). However, the decision of firms to license out depends on anticipated revenues and profit-dissipation effects (Arora et al., 2001), as whether the outward licensing generates revenues in the form of licensing payments, but current profits might decrease when licensees use their technology to compete in the same market (Van de Vrande et al., 2009). Moreover, these new forms of knowledge exploitation and creation of technology markets require the design of appropriate financial instruments to support the circulation and commercialization of knowledge (Darcy et al., 2009). Involvement of non-R&D employeesBy capitalizing on the initiatives and knowledge of internal employees, active or non-active with the R&D exercises, an enterprise can be benefited (Van de Vrande et al., 2009). Chesbrough et al. (2006) has • conducted case studies which illustrate the significance of informal ties of employees of one enterprise with employees of other enterprises, which are crucial in understanding of arrival of new products in the market and also the commercialization processes. Earlier researches (Van de Ven, 1986), also support this view that innovation by individual employees within an enterprise who are not involved in R&D, but involved in new idea generation could be effective in fostering the success of an enterprise. Moreover, along the context of currently evolved knowledge society, employees need to be involved in innovation processes in diversified ways, such as by encouraging them to generate new ideas and suggestions, exempting them to take initiatives beyond organizational boundaries, or introducing suggestion schemes such as idea boxes and internal competitions (Van Dijk & Van den Ende, 2002); There are other activities like spin-off (Ndonzuau et al., 2002), selling of results (OECD, 2008), transfer of technology (OECD, 2008), and transfer of know-how (OECD, 2008) that may fall under the activities of technology exploitation, which deserve further research and investigation. In the perpetual scenario, one can portrait a picture as shown in Figure 5, as SMEs are acting as catalysts in the process of technology exploration and technology exploitation performing the necessary actions. But, in reality, they need to be under a strategically guided and managed environment to achieve their innovativeness and competitiveness to attain a sustainable economic platform (Sautter & Clar, 2008). This research would argue that a third party in between them is essential to take necessary initiatives, strategies and action plans for providing appropriate guidance, support and directives at the field level in tackling issue, difficulties and challenges on behalf of them. Furthermore, this form of support should be carried out from a platform that would be institutional, so that in time of need, SMEs may rely on and feel dependable. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 52 International Journal of Information Communication Technologies and Human Development, 3(3), 42-57, July-September 2011 Figure 5. Life-cycle of technology exploration and technology exploitation in SMEs In addition to these, if this institutional support comes from a locally generated perspective, they would feel confident and comfortable to be working with. This research argues that to expedite and make efficient use of the life cycle management, engagement of partners is essential. The partners could be a consortium of SMEs and external entities, like research houses, universities, association of entrepreneurs, intermediaries specialized in carrying out open innovation strategies in SMEs, not acting in isolation, but acting in close interactions. Moreover, the life-cycle of technology exploration and technology exploitation (Figure 5) is not a perpetual one and demands a catalytic agent to make it roll or put in action. This research would like to put forward action plans in accomplishing the life-cycle management of the mentioned open innovation phenomena. It also affirms that a third party or agent of innovation can play the most important role in ascertaining pre-requisites at each entrepreneurship level, their networked level, or even at the level of their human skills. Among various action plans, establishment of a networked environment is pertinent. Utilizing ICT, an extended platform of communication and knowledge sharing can be established (D´Adderio, 2001; Antonelli, 2006), which can be physical or virtual. However, apart from the mentioned benefits or opportunities mentioned above, as Professor Henry Chesbrough (2003a, 2003b, 2006a, 2006b, 2007) claims a fundamental shift in innovation paradigm from closed to open innovation and advocates collaborative and open innovation strategies and open business models to take the full benefit from collaborating with external partners, this research would continue building on the paradigm shift. It would explore to develop a sustainable business model adopting open innovation strategies to be applicable for SMEs operating at the grass roots (Rahman & Ramos, 2010). Furthermore, as mentioned by Sautter and Clar (2008), this research would support that, it is beneficial to avail the competences of external partners meeting the challenges of increased complexity of research, technologi- Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 42-57, July-September 2011 53 cal development and innovation (RTDI), and growing global competition. fUTUrE rESEarCh SCOPES In strategically guided and well managed groups, the enhanced innovativeness and competitiveness at the firm level would result in sustainable economic development (Sautter & Clar, 2008). However, in order to survive, for SMEs- especially those operating in an increasing dynamic and digitalized environment and at the grass roots level, but with potentiality and knowledge being the most indispensable and important resource for innovation- need to establish trusted relations to aligned communities, networks and stakeholders (Hafkesbrink & Scholl, 2010). Future of this research would like to examine the conditions for proactivity the effect that proactive agents have through the life cycle management and on the reminder of the population, as a joint platform of interactive partners. This would constitute a significant research effort, and while future research would aim to uncover unattended clues in this area, the focus will be on disseminating and improving innovation tool for SMEs at the grass roots (MacGregor et al., 2007) and dedicated to tools to empower them. With the research agenda and the survey result this study would like to support its hypotheses articulated so far. COnClUSIOn It is clear that there are a variety of potential contribution that SMEs can make to economic development at the local, national and regional levels, that include employment and revenue generation, acting as supplier to larger companies and contributing to a more diversified economic strength through the development of new activities, particularly through new firm formation in service activities (Smallbone et al., 2003). An improved and efficient life cycle management would ensure engagement of ap- plicable open innovation strategies to be adopted in SMEs to empower them for elevated socioeconomic development. 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(Eds.), Information and organization design series (Vol. 7). New York, NY: Springer. Walton, R. E. (1989). Up and running: Integrating information technology and the organization. Boston, MA: Harvard Business School Press. West, J., & Gallagher, S. (2006). Challenges of open innovation: The paradox of firm investment in open-source software. R & D Management, 36(3), 319–331. doi:10.1111/j.1467-9310.2006.00436.x Zuboff, S. (1988). In the age of the smart machine: The future of work and power. New York, NY: Basic Books. EnDnOTES 1 2 3 Crowdsourcing is a form of open innovation (and in some cases, user innovation) that attempts to involve a large pool of outsiders to solve a problem. Product recommendations at Amazon etc. are probably the most often seen example (Chesbrough, Vanhaverbeke, & West, 2006) Small and medium enterprises (also SMEs, small and medium businesses, SMBs, and variations thereof) are companies whose headcount or turnover falls below certain limits (http://en.wikipedia.org/wiki/SMEs) About Types of Innovation: Tidd et al. (2005) argue that there are four types of innovation; consequently the innovator has four pathways to investigate when searching for good ideas, such as: a) Product Innovation - new products or improvements on products (example- the new Mini or the updated VX Beetle, new mod- Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 42-57, July-September 2011 57 els of mobile phones and so on.); b) Process Innovation - where some part of the process is improved to bring benefit (example- Just in Time); c) Positioning Innovation – for example- Lucozade used to be a medicinal drink but the was repositioned as a sports drink; and d) Paradigm Innovation - where major shifts in thinking cause change (example- during the time of the expensive mainframe, Bill Gates and others aimed to provide a home computer for everyone) (http://ezinearticles. com/?Types-of-Innovation&id=38384). 4 5 Radical innovation concerns technology breakthrough, user embracement as well as new business models (Artemis, 2009). Examples of service innovation may include: On-line tax returns, e-commerce, helpdesk outsourcing, music download, loyalty programs, home medical test kits, mobile phones, money market funds, ATMs and ticket kiosks, bar code, credit cards, binding arbitration, franchise chains, installment payment plans, leasing, patent system, public education and compound interest saving accounts (IfM & IBM, 2008, p. 17). Hakikur Rahman is an academic over 25 years has served leading education institutes and established various ICTD projects funded by ADB, UNDP and World Bank in Bangladesh. He is currently serving as a Post Doctoral Researcher at the University of Minho, Portugal. He has written and edited over 15 books on computer education, ICTs, knowledge management and research, and contributed over 50 book chapters, and journals and conference proceedings. Graduating from the Bangladesh University of Engineering and Technology in 1981, he has done his Master's of Engineering from the American University of Beirut in 1986 and completed his PhD in Computer Engineering from the Ansted University, BVI, UK in 2001. Isabel Ramos has a doctorate degree in Information Technologies and Systems, specialization in Information Systems Engineering and Management (2001) and a master degree in Informatics for management. She is an Assistant Professor in the Information Systems Department of the Minho University, Portugal and Chair of the Information Systems Master Programs of the University. Dr. Ramos is Associate Editor of the International Journal of Technology and Human Interaction and member of the editorial board of Enterprise Information Systems. She is Secretary of the Technical Committee 8 (Information Systems) of IFIP – International Federation for Information Systems and awarded with the IFIP Outstanding Service Award in 2009. She is author and co-author of two books and more than 4 dozens of scientific and technical papers. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 58 International Journal of Information Communication Technologies and Human Development, 3(3), 58-68, July-September 2011 Web-based Intellectual Property MarketPlace: a Survey of Current Practices Isabel Ramos, University of Minho, Portugal José Fernandes, University of Minho, Portugal abSTraCT In the past year, knowledge and innovation management have acquired increasing relevance in organizations. In the last decade, open innovation strategy, and in particular, crowdsourcing innovation model has also gained increasing importance. This model is seen as a new innovation model, capable of accelerating the innovation process. Therefore, it is important to understand how organizations can best take advantage of this innovation model. This paper approaches in two ways for commercializing intellectual property: crowdsourcing innovation, and intellectual property marketplaces. Thus, with the intention of understanding the concepts and practices, the study started by collecting scientiic articles through bibliographic data bases. The paper provides knowledge about concepts and practices underlying the ways for commercializing intellectual property. It also contributes with a proposal of architecture for an intellectual property marketplace, based on the analysis of practices about crowdsourcing innovation and intellectual property marketplaces. This architecture is still in a draft stage, but already includes helpful insights for organizations interested in applying the open innovation strategy. Keywords: Crowdsourcing Innovation, Intellectual Property Commercialization, Intellectual Property Marketplaces, Open Innovation, SME InTrODUCTIOn The Knowledge Management (KM) presents as goal the increase of efficiency and efficacy to the level of individual and collaborative work (Ramos & Carvalho, 2008). Thus, to better manage the organizational knowledge, it pretends to increase the innovation capacity as well as improve the decision processes. In the last years the KM has acquired increasingly preponderance in the international sphere. DOI: 10.4018/jicthd.2011070105 This paper approaches two ways for commercializing Intellectual Property (IP): Crowdsourcing Innovation (CI) and IP marketplaces. The CI is presented as a new way to innovate, capable of accelerating the innovation process (Adams & Ramos, 2009). This innovation model is supported by web platforms, for example, the platform of InnoCentive, and NineSigma, used to launch challenges for a community registered in the platform. The IP marketplaces are also supported by web platforms where registered members can promote their IP, namely patents. In this way, and considering the analysis made Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 58-68, July-September 2011 59 of some these marketplaces, the purpose of them is promoting the IP commercialization, providing the following services: selling, buying, and licensing of IP. It is important to refer that the two ways mentioned above are also important in the Small and Medium Enterprises (SMEs) scope, because these ways help them to promote their inventions with potential of commercialization as well as to enable them accessing to the innovation networks. The study is mainly motivated by the growing interest that CI and IP marketplaces have raised. The main objective of this paper is to present the concepts and practices in CI and IP marketplaces, ending with a draft of a proposal of architecture for an IP Marketplace that systemize the practices of two ways for IP commercialization. As there is no available systemization that promotes a view about the IP commercialization market, the proposal of architecture presented here intends helping SMEs. Thereafter the paper talks about IP commercialization, presents a review of current practices on CI and IP marketplaces, develops the architecture for an IP marketplace and put forward a few issues on future research before the conclusion. InTEllECTUal PrOPErTy COMMErCIalIzaTIOn In recent years two ways for commercializing IP, CI and IP marketplaces, supported by web platforms have acquired increasing relevancy. The CI practice aims to promote the creativity with intention for creating new ideas and concepts; and the IP marketplaces aim to provide support for commercializing IP already patented, i.e., they are focused in the transferring of IP among IP owners and buyers. To understand better the contents of the survey that are being discussed in the next section, some concepts related to crowdsourcing and IP marketplaces are being discussed next. Created by How (2006), the crowdsourcing term is presented as a web-based business model, composed of a distributed network of individuals. The idea is to launch challenges, with the intention of creating innovative solutions. In other words, a company puts in a crowdsourcing platform a challenge, for what the associative creative network (designated by crowd) develop solutions (Brabham, 2008). This study finds that there are two main definitions about crowdsourcing. The first one is given by Howe (2006): “Technological advances in everything from product design software to digital video cameras are breaking down the cost barriers that once separated amateurs from professionals. Hobbyists, parttimers, and dabblers suddenly have a market for their efforts, as smart companies in industries as disparate as pharmaceuticals and television discover ways to tap the latent talent of the crowd. The labor is not always free, but it costs a lot less than paying traditional employees. It’s not outsourcing; it’s crowdsourcing”(p. 3). And the second definition was given by Brabham (2008): “Crowdsourcing is not just another buzzword, not another meme. It is not just a repackaging of open philosophy for capitalist ends either. It is a model capable of aggregating talent, leveraging ingenuity while reducing the costs and time formerly needed to solve problems. Finally, Crowdsourcing is enabled only through the technology of the web, which is a creative mode of user interactivity, not merely a medium between messages and people” (p. 87). However, to understand the activity in IP marketplaces and CI, it is necessary to consider important concepts related with IP which are IP rights, and patents. Therefore, these two concepts are being presented in the form of definitions. The first, IP rights, “incorporate a variety of regulatory policies designed to improve the functioning of markets for technologies and information goods and services. These policies include patents, copyrights, trademarks, trade secrets (rules against unfair competition in acquiring private business information), and numerous related devices” (Maskus, 2008, p. 249); the second concept, about patents, is described by the same author as “temporary exclusive Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 60 International Journal of Information Communication Technologies and Human Development, 3(3), 58-68, July-September 2011 rights to use or license process technologies and to make and distribute the embodiments of ideas into new products” (p. 261). The definition of an electronic marketplace is also relevant in this context. So, according to Bakos (1991) “an electronic marketplace (or electronic market system) is an interorganizational information system that allows the participating buyers and sellers to exchange information about prices and product offerings” (p. 299); and in the context of this paper, the “product offerings” are seen as IP assets. In summary one can say that an IP Marketplace aims at promoting the IP commercialization, providing support for the interaction of IP owners and potential buyers. The next section approaches the practices, complemented with some examples on the two ways of IP commercialization that are being discussed earlier. a SUrvEy Of CUrrEnT PraCTICES Crowdsourcing Innovation Practices Over the years the organizations have demonstrated a great enthusiasm with the CI: “Enterprises are increasingly employing crowdsourcing to access scalable workforce on-line” (Vukovic, 2009, p. 686). Considering that crowdsourcing converges for an opening in the investigation and development process, it is important to highlight the importance of web 2.0 (Trompette et al., 2008). This infrastructure facilitates the on-line resolution of innovation problems, in a distributed and more efficient way, ensuring scalability benefits and skilled manpower in a global scale (Vukovic, 2009). According to the same author, the CI process integrates three main actors: requestor; crowdsourcing platform; and provider. The requestor is responsible for submitting a task request on the crowdsourcing platforms, for initiating the process; the requestor pays or assigns awards for the successful execution of the task by one or more providers; and the crowdsourcing platform aims to ensure the successful execution of the task by providers, as well as, ensure that requestors pay the promised rewards (Vukovic, 2009). Relatively to the rewards offered by participating in the CI platforms, according to Antikainen and Vaataja (2010), can be divided in two forms: monetary rewards and non-monetary rewards. The monetary rewards include money and products; while the non-monetary rewards consist in publishing different kinds of rankings about winners of challenges. Regarding the motivation to participate in CI platforms, according to Leimeister et al. (2009), is principally intrinsic or activated by external incentives. Rosenstiel (2007) described the activation of human behavior in a model designated by MotiveIncentive-Activation-Behavior (MIAB). In this, the activation is stimulated by incentives that later influence the behavior of people. Another thing that should be highlighted is the benefits for organizations. Reichwald and Piller (2006) suggested three: reduction of the time in development of new products; reduction of the costs with innovation; and better consumer acceptance of the new products. So, it is important to refer four guidelines for successful crowdsourcing suggested by Hempel (2006). These guidelines are: • • • • The defined challenge should be clear in relation to its objective and expected results; It is essential to define adequate filters to select the best idea for a challenge, because generally several solutions are received through crowdsourcing; It is important to have a rigorous process for attracting new elements, being essential to have in consideration the diversity and quality of skills; and It is important to create a sense of belonging to a friendly community. The offered rewards are important to recruit people from the crowd, but it is also important to create conditions that allow the building Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 58-68, July-September 2011 61 of friendship relations within the crowd. These are two ways to maintain people in the community for a long time. The intermediation platforms, designated by some authors as innovation intermediaries, aim to provide support for CI practice. According to Trompette et al. (2008) the intermediary can play the following main roles: • • • Broker: these intermediaries connect companies seeking innovative ideas with those individuals and small teams that have the knowledge and skills to provide those ideas. Agent: these intermediaries know individuals and small teams that have innovative ideas and technologies and pro-actively find the companies that can benefit from them. Scout: these intermediaries work for companies that have innovation needs and search for the technologies being developed in Universities and other R&D entities that can fulfill those needs. Furthermore, according to Trompette et al. (2008), the intermediation platforms are trying to conjugate a private investment model (profits aiming) and a collective action model. In the private investment model the innovation is financed by private investment, i.e., use private resources for creating and developing the new ideas/concepts; while the collective action model aims at getting the results of the collaborative work of innovators (e.g. an innovation, a service, etc) and make them available for public use. The idea in the Trompette et al.’s (2008) paper is to create a private-collective model, identical to suggested by Hippel and Krogh (2003) for applying in open source software projects. Model of this study conjugates the best things of the two models mentioned above, aiming the maximum benefits. Examples Regarding to the examples of CI platforms, the Open Innovators is a website that provides many examples of platforms that give support to CI practice. Through this website it has been possible to identify four examples of CI platforms. The examples are: InnoCentive, IdeaConnection, NineSigma, categorized as research and development platforms; and Cambrian House – Chaordix categorized as intermediary of Open Innovation (OI) service. Relatively to the platform characteristics, after analyse them, it can be noticed that they all focus on the creation and sustaining a crowd, trying to continuously add new members with diversified knowledge and skills (Diener & Piller, 2010). The crowd provides solutions for challenges that companies make available to the platform, or for challenges that an owner company of a CI platform decide to launch by its own initiative. Among the four platforms that are being analyzed here, only one – InnoCentive – presents a public challenge center where the crowd members can submit their solutions for posted challenges. This can be understood as a way to maintain confidentially about the challenges submitted by companies. There are other elements that characterize this type of platforms, as it is the example of a blog. This aims to promote the debate of ideas as well as sharing of diverse elements about CI. Some platforms make available consulting services in OI. Table 1 intends to give a perspective about a set of characteristics that were found in the analysis of four selected CI platforms. To obtain these characteristics this research has used as main reference the study realized by Diener and Piller (2010), which considered several characteristics about intermediation platforms that give support to the OI practice. Intellectual Property Marketplaces Practices Regarding the practical issues about IP marketplaces, it is important to mention the evolution of IP legislation that, according to Webber and Cave (2007), has had a significant progress along the past thirty years. This is based in Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 62 International Journal of Information Communication Technologies and Human Development, 3(3), 58-68, July-September 2011 Table 1. A set of standard characteristics related to CI platforms (adapted from Diener & Piller, 2010) Characteristics Covered topics CI platforms industry focus Automotive, Engineering, Telecom, Computer / IT, Design, Consumer electronics, Medicine / Health, and Pharmaceutical / Chemical Focus of CI platforms on stages of the innovation process Ideation, New product development, and commercialization Types of open innovation approaches Managing community, Providing software, and Open innovation consultant Methodological approaches of CI platforms to accomplish open innovation Workshops, Challenges, and Toolkit Type of community support by CI platforms Collaborative space, Discussion forum, and Panel of specialists Type of community access Restricted and Non-restricted the fact that nowadays a growing number of specialists are focused on solving and debating issues related with the IP legislation. According to Blackman (2007), the IP management has acquired increasingly importance for companies having in consideration that this is a strategic element for them. To reinforce this idea, and according to Kamiyama et al. (2006), companies have obtained competitive advantages through their own IP, such as the improvement of their competitive position; generation of a higher volume of incomes; and improvement of the access to financing. However, one of the most important challenges for IP marketplaces is the IP valuation (Kamiyama et al., 2006). The same authors showed that several specialists have proposed methods for facilitating the IP valuation that can be categorized in two groups: qualitative methods and quantitative methods. According to the same authors, the qualitative methods aim at evaluating patents based in some factors, namely: strength and breadth of the patents rights; and evaluating the legal security of these same rights. Regarding the quantitative methods, these aim at determining the monetary value of a patent. According to Smith and Parr (2000), this value can be obtained by one of three approaches: cost approach, income approach, and market approach. Another aspect that assumes relevancy for organizations is the patent licensing (Kamiyama et al., 2006). It is suggested, three types of licensing: cross-licensing, patent pools, and unilateral licensing. However, it is relevant to say that in some situations, to develop an innovation, the patent license may not be enough and it may be necessary to get additional know-how or technologies. According to Blackman (2007), IP marketplaces can also instigate the technology diffusion, the appearing of new companies, as well as an increase in competition. As Chesbrough (2006) says, “A small number of intermediary firms have arisen in recent years to assist in the process of identification, negotiation, and transfer of patents from one firm to another” (p. 3). Examples IP marketplaces also appear in result of the necessity for finding or monitor the external knowledge, taking for marketplaces the effort of developing required skills and resources (Lee & Lee, 2010). There are many IP marketplaces on the web promoting the IP commercialization. For this paper four examples have been selected. These examples are: Yet2.com, IPMarket, IdeaBuyer, and Tynax. In general, this type of Marketplaces provides services that Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 58-68, July-September 2011 63 Table 2. A set of standard services related to IP marketplaces Services Description Selling IP It aims at helping the IP owners to realize gains with their IP, providing a way to promote IP for potential buyers. Buying IP It provides a web place in which the IP owners (vendors) can expose their IP for potential buyers, being created the ideal conditions for realizing IP transactions among vendors and buyers. Licensing IP It intends to provide support in licensing agreements of IP assets, namely patents. Patents wanted It provides a place in which the Marketplace members, namely companies, make available requests for patents needed for solving innovation problems. Strategic alliance It aims at encouraging the creation of agreements among companies for achieving a strategic goal. These agreements include international licensing, contract management and joint entrepreneurship. Training It provides a set of educational materials to help the IP owners better understanding the dynamic of the IP market which is in continuous change. Strategic advising It provides services to help Marketplace members to define the best strategies for maximizing the value of their IP assets, mainly their patents portfolio. aim to promote the transactions between the IP owners (vendors) and the potential buyers. Usually, IP marketplaces arrange patents into categories to make searches of IP easier. The IP available is mainly patents; in some cases are inventions. Therefore, IP marketplaces also provide a patents license service. In respect to the commercialization, the IP prices are not usually listed on-line. In the analyzed IP marketplaces there were only small description of IP, and the details are only provided by contacting the Marketplace staff. Table 2 aims to provide a synthesis about a set of standard services related with IP marketplaces. The presented services in this table were identified in the analyzed IP marketplaces. DrafT PrOPOSal Of a STanDarD arChITECTUrE fOr an InTEllECTUal PrOPErTy MarKETPlaCE architecture Outlook The proposal of architecture presented in the next subsection has resulted from the analyses of concepts and practices in CI and IP market- places. It intends to be a design of the main components that an IP Marketplace can integrate. Those components were the ones that these researchers found in the several studied marketplaces. Authors are not suggesting that all components should be implemented in all situations. They are only proposing a systemized understanding of the components that can be part of marketplaces, so that managers can find the knowledge they need to implement a specific Marketplace initiative. Proposal of architecture The draft proposal is presented in Figure 1, which is composed by three layers: Infrastructure, Applications, and Services. The layer-1 – Infrastructure – is integrated in two sub-layers: on the sub-layer 1.1 is represented the knowledge repository where all information is stored. This repository is kept autonomous in relation to the documentary and operational databases (sub-layer 1.2). It is necessary to define a crowdsourcing innovation ontology and also indexing techniques to enable analysis to the stored data in the Knowledge Repository as well as other pertinent queries; the sub-layer 1.2 presents a set of operational Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 64 International Journal of Information Communication Technologies and Human Development, 3(3), 58-68, July-September 2011 Figure 1. Draft proposal of a standard architecture for an IP marketplace databases holding the actual information. These databases holding all generated information by the several operations performed in each service available in the Marketplace. Beyond this, they intend to take the interlocutor function among the applications that support the several services and the Knowledge Repository. The layer-2 – Applications – presents the set of applications that are responsible for giving support to the several services available in Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 58-68, July-September 2011 65 Table 3. Memory and learning services Services Description Support application(s) Social networking It aims at providing a sense of belonging to a community in which the members have the possibility for sharing contents. Social networking software Creative thinking It intends providing a set of tools to integrate the creativity. Creativity tools Training It aims providing training about several topics in the open innovation area. Learning management Collaboration It intends giving support for helping evaluate available technologies, for solving problems of technologic innovation, and for discussing technology and market trends. Co-creation tools and Information intelligence Table 4. IP commercialization services Services Description Support application(s) Evaluation of IP It intends to provide support to evaluate IP assets. IP management and risk management IP e-Marketplace It aims at providing the services of buying and selling IP (e.g. patents, technology, software, code for software, literature review, thesis, market studies), and licensing patents. This research proposes that buying IP and licensing patents should be supported by a mechanism allowing on-line transactions. IP management, e-Marketplace, and Transactions security Patents wanted It intends to provide companies with the possibility of making available a description of their innovation needs, expecting the submission of patents as solutions to those needs. IP management Protecting inventions It intends to provide support for protecting inventions through patents. IP management Challenge center It aims at providing an opportunity to make challenges available, distributed by several categories. The members can submit their solutions to these challenges. Challenge management IP and Market observatory It intends to provide access to several worldwide IP databases. This service also should provide a surveillance component focused in the technologic and market trends. Content management and Informational intelligence the Marketplace. In this scope searches were conducted to identify applications that could be adopted here. This study has found that it may be needed to develop new applications related with Information Intelligence and eMarketplace, because this study did not find any available in the market. The Tables 3, 4, 5, and 6 presents the support applications for each service. The layer-3 – Services – depicts the services available in the Marketplace, focused on three value creation processes: Memory and Learning, IP Commercialization, and Technology Incubation. The layer-3 also presents a set of shared services. Description about the three value creation processes are given below, which are being incorporated in the layer-3 of architecture (as Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 66 International Journal of Information Communication Technologies and Human Development, 3(3), 58-68, July-September 2011 Table 5. Technology incubation services Services Description Support application(s) Identifying opportunities It aims at identifying investment/financing opportunities. It also intends to help companies in developing the acquired technology into an innovation with high commercial potential. Partnership management and Informational intelligence Consulting in innovation It intends to help companies to develop mature innovation processes. Services portfolio management Table 6. Shared services Services Description Support application(s) Profile creation It enables individual and companies to describe themselves and to create a unique identification within the community. Membership management Profiles query It aims at providing access to the members’ profile. Membership management Building reputation This service aims at creating a reputation index about each community member. Membership management Risk center It intends to help in risk management associated with innovation strategy adoption, project execution, innovation process management, protecting inventions, and IP commercialization. Risk management Project center It aims at helping to develop new projects as well as giving support on project contracts management. Project management and Contract management Help Desk It intends to provide support to the several services available in the Marketplace, namely to clarify issues, and solve specific problems. Help Desk software New and Events It aims at providing resources about topics related with the three value creation processes. Content management Sharing ideas It intends to provide opportunities to share ideas, for example opinion articles. The aim is to promote the discussion among members. Blogging and Wiki the main focus area of this research), as well as a corresponding table that synthesizes the features of services. • • Memory and Learning: includes a set of services that aims to encourage the members’ creativity with the intention of creating new inventions/concepts. Table 3 aims at providing a perspective about the features of the services available in this process. IP commercialization: includes a set of services focused in the transferring of IP • assets, promoting the interaction among IP owners and potential buyers. Table 4 intends to give a perspective about the features of the services defined for this process. Technology Incubation: the services supporting this process aim at enabling the development of the acquired IP in commercially successful innovations. Table 5 describes the features of defined services. Beyond of three value creation processes described above, the layer-3 of architecture Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development, 3(3), 58-68, July-September 2011 67 includes a set of services that are shared by these three processes. Table 6 synthesizes the features of the shared services. This section presents and discusses a draft proposal of a standard architecture for an IP marketplace that provides useful services for helping companies to adopt an open innovation strategy. This was done by describing the layers and components of architecture. In the next section future developments are explored. fUTUrE ISSUES Given the results of the work developed so far, this study suggests four scenarios for future investigation: • • • • Ideating a mechanism for online intellectual property transactions based in an electronic contract; Improving the proposal of architecture presented in the subsection by integrating the architecture principles of SOA (ServiceOriented Architecture) and SaaS (Software as a Service); Detailing specification of all services as well as the applications that support those services; and Exploring issues that Small and Medium Enterprises can face to access some services available in the proposal of architecture presented above and identify ways that help them to attenuate these difficulties. COnClUSIOn This paper addresses concepts and practices related to Crowdsourcing Innovation (CI) and Intellectual Property (IP) marketplaces. It presents some examples to complement the theoretical explanation. Based on this information, it was possible to design a draft proposal of architecture for an IP marketplace. In sum, this paper aimed at presenting a proposal of architecture for an IP marketplace that includes a set of services that can be useful for organizations interested in implementing an open innovation strategy. rEfErEnCES Adams, C., & Ramos, I. (2009). Crowdsourcing: A social networking approach to outsourcing. Cutter IT Journal, 22(10). Antikainen, M. J., & Vaataja, H. K. (2010). Rewarding in open innovation communities – how to motivate members. International Journal of Entrepreneurship and Innovation Management, 11(4), 440–456. doi:10.1504/IJEIM.2010.032267 Bakos, J. Y. (1991). A strategic analysis of electronic marketplaces. Management Information Systems Quarterly, 15(3), 295–310. doi:10.2307/249641 Blackman, M. (2007). Patents: Realising and securing value. World Patent Information, 29(2), 186–187. doi:10.1016/j.wpi.2006.11.002 Brabham, D. C. (2008). 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Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. 68 International Journal of Information Communication Technologies and Human Development, 3(3), 58-68, July-September 2011 Kamiyama, S., Sheehan, J., & Martinez, C. (2006). Valuation and exploitation of intellectual property. Paris, France: OECD Publishing. Lee, Y. G., & Lee, J. H. (2010). Different characteristics between auctioned and non-auctioned patents. Scientometrics, 82(1), 135–148. doi:10.1007/ s11192-009-0029-7 Leimeister, J. M., Huber, M., Bretschneider, U., & Krcmar, H. (2009). Leveraging crowdsourcing: Activation-supporting components for IT-based idea competitions. Journal of Management Information Systems, 26(1), 197–224. doi:10.2753/MIS07421222260108 Maskus, K. E. (2008). The globalization of intellectual property rights and innovation in services. Journal of Industry, Competition and Trade, 8(3), 247–267. doi:10.1007/s10842-008-0040-3 Ramos, I., & Carvalho, J. A. (2008). Organizational mind: A new perspective on knowledge management . In Koohang, A., & Harman, K. (Eds.), Knowledge management: Theoretical foundations. Hershey, PA: IGI Global. Reichwald, R., & Piller, F. (2006). Interaktive wertschöpfung: Open innovation, individualisierung und neue formen der arbeitsteilung. Berlin, Germany: Gabler Verlag. Rosenstiel, L. V. (2007). Grundlagen der organisations-psychologie: Basiswissen und Anwendungshinweise. Stuttgart, Germany: Schäffer-Poeschel. Smith, G. V., & Parr, R. L. (2000). Valuation of intellectual property and intangible assets (3rd ed.). New York, NY: John Wiley & Sons. Trompette, P., Chanal, V., & Pelissier, C. (2008, July 10-12). Crowdsourcing as a way to access external knowledge for innovation: Control, incentive and coordination in hybrid forms of innovation. In Proceedings of the 24th EGOS Colloquium, Amsterdam, Netherlands. Vukovic, M. (2009). Crowdsourcing for enterprises. In Proceedings of the World Congress on Services-I (pp. 686-692). Webber, D., & Cave, D. C. (2007). Intellectual property – challenges for the future. In Proceedings of the IEEE Region 10 TENCON Conference (pp. 1-5). Isabel Ramos has a doctorate degree in Information Technologies and Systems, specialization in Information Systems Engineering and Management (2001) and a master degree in Informatics for management. She is an Assistant Professor in the Information Systems Department of the Minho University, Portugal and Chair of the Information Systems Master Programs of the University. Dr. Ramos is Associate Editor of the International Journal of Technology and Human Interaction and member of the editorial board of Enterprise Information Systems. She is Secretary of the Technical Committee 8 (Information Systems) of IFIP – International Federation for Information Systems and awarded with the IFIP Outstanding Service Award in 2009. She is author and co-author of two books and more than 4 dozens of scientific and technical papers. José Joaquim Dias Fernandes has a master degree in Information Systems Engineering and Management (2010). He was a researcher at Algoritmi Centre in the Information Systems Department of the Minho University. He also contributed in the PERCEPTUM Project – an open innovation brokering service. Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Information Communication Technologies and Human Development An oficial publication of the Information Resources Management Association Mission The mission of the International Journal of Information Communication Technologies and Human Development (IJICTHD) is to create awareness of how ICTs can contribute to human development in several areas. 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