SMEs are the engine of economies but slightly overlooked in the open innovation literature, which provides a scarcity of studies on the risks residing in open innovation projects involving SMEs and even fewer attempts to assess the mitigation potential of these dangers Moreover, there is a limited amount of research on the innovation practices of SMEs located in Eastern European countries. In Romania, we were not able to identify one single study reflecting the extent of open innovation projects in SMEs and the risks they face, which led us to attempt to cover this gap. What allures SMEs to embrace open innovation is their resource deficiency, insufficient abilities to explore and exploit technology, major knowledge gaps and the objective of minimizing the risks of innovation. The limited literature written on SMEs and open innovation highlights the motives, the benefits and the barriers these engines of economy confront when embarking in open innovation projects. However, no particular attempt to further the research into managing and mitigating the effective risks triggered by open innovation in SMEs was found. Based on a survey conducted on 211 Romanian SMEs in the Romanian financial services and consultancy sector, this paper both explores the risks affecting the innovation performance of SMEs in collaborative relationships, and seeks to provide a conceptual model for overcoming these threats. Within the survey, our work highlights that open innovation in Romanian SMEs is impeded by risks related to insufficient financial resources, inexperienced, unmotivated and unwilling to cooperate people, poor adaptation to technological advances in the industry, knowledge sharing risks, weak social capital and noteworthy regulation risks. All the risks identified through our research were mapped down in seven categories of risk drivers, with internal and external origin: workforce, collaboration itself, organizational culture / social capital, regulations and market barriers, clients, access to finance, technology advances. The risk mitigation model is centred on the SMEs key strategic advantages: high flexibility, ability for adaptation, people empowerment. The research results support the potential of mitigating risks SMEs face in open innovation projects, and indicate six factors as main risk mitigators: transparent communication among innovators, trust building, people empowerment, organizational learning and investment in knowledge, leadership, vision and convictions, proactiveness towards unethical behaviour. The results of our study can guide an SME to competitive advantage, parting both from the essence of collaboration in the scope of innovation, as well as from the challenge of efficiently managing the risks the process involves. Our model is appropriate to benchmark a financial sector SME. By undertaking this study we aim to contribute to the scarce literature on open innovation practices in Romanian SMEs and to shed light on the factors that a firm needs to approach in order to foster a culture for innovation and, in the same time, reduce the open innovation risks.
