Assumption: Environmental solutions require expensive and sophisticated technologies that are not always available to SMEs.

Our message to SMEs: We can introduce your company to the most updated technologies in the market.

Over the last fifteen years we have been working with top-notch scientists and extremely advanced technological teams from around the world. We are not only familiar with the most cutting-edge environmental remediation technologies, but we can bring your company up to speed for a successful venture using such technologies.

The term open innovation has become a major buzzword in innovation management. But behind the buzz is a sustainable message: Successful innovation is not solely performed internally within a firm, but in a cooperative mode with other external actors.

Sources of external input for innovation are plentiful, including market actors like customers, suppliers, competitors and the scientific system of university labs and research institutions.

The core idea of a new era of open innovation is the integration of these actors in a flexible and informal way beyond the traditional notion of innovation alliances or contract research. Such a range and complexity of activities can bring its own challenges in terms of the effort required to make Open Innovation happen, often drawing upon the valuable time of key staff and stretching the organization in a variety of new directions.

While this phenomenon has been recognized at large multinational companies the applicability at Small and Medium-Sized Enterprises (SMEs) is less clear. This formed the point of departure for this research. Open Innovation was defined as "how the company works with external actors outside the organization to foster innovation" and the focus has been on the adoption of open innovation at high- tech SMEs. Our experience has led to some revealing insights into motives to –challenges resulting from– and consequences of - open innovation: from the potential pitfalls, to the opportunities presented by working with external expertise.

An innovation scan consisting of relevant and proven scales has been used to collect quantitative data on the respective), its innovation performance and its relations to external actors. Subsequently, qualitative data has been gathered by the selection of four high- tech SMEs, on which an in-depth study about motives, challenges and consequences has been conducted. The results show that in the quantitative analyses no significant differences could be found in the adoption of open innovation at low- and high-tech SMEs. However, it did show that SMEs in general have relatively small networks and innovative relationships seem to evolve around natural supplier/customer collaborations. These relationships indicated to be very intensive, meaning they holster a lot of innovation. This was confirmed in the multiple case study, with the addition that some collaboration with universities took place on an exploratory basis. Furthermore, motives to engage in open innovation were identified, including: opening new markets, entering new technological domains, market research and cost reduction by early customer integration. Also de-motives were quoted such as preventing imitation and sticking to the company's own business. Challenges were found in the typical lack of resources to pursue an open innovation strategy, risk, proximity of partners and backseat/driver seat dynamics. Finally, consequences for high-tech SMEs were highlighted. Many authors describe open innovation as being a new phenomenon, bus as argued in our criteria, companies never have or had a fully closed innovation system. Open innovation is a paradigm switch fuelled by the increasing globalization and improving information technologies, high-tech SMEs can participate in this landscape, but will have to find their own place.

Today's manufacturing industry not only has to respond to the economic fluctuations, it also has to take in to account the recent technological, global and workforce trends.

Nowadays, the new manufacturing environment is characterized by intense global competition, rapid technology changes and product variety proliferation. As a result, manufacturing companies have to deal with more demanding customers, greater competitive intensity, and increased complexity in production technology and coordination.

Companies have started to look for new ways to increase the speed and effectiveness of their innovation approaches. Developing a steady stream of new products or services is essential for most companies and very few can do this by only using their own resources and must look for potential collaborators outside their own company to provide the technologies, skills or knowledge they lack. Cooperation with other organizations increases the innovation performance of organizations but managing this more collaborative approach – known as 'open innovation' – demands a range of skills and capabilities that many firms do not possess. Chesbrough (2003) first coined the term open innovation as an emerging new paradigm in innovation research in his book 'Open Innovation' (2003). He defined open innovation as:

"The use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology."

This is a paradigm shift from the traditional vertical integration model where internal R&D activities lead to internally developed products that are then distributed by the firm. The open innovation paradigm treats Research & Development (R&D) as an open system. Open innovation suggests that valuable ideas can come from inside or outside the company and can go to market from inside or outside the company as well. This approach places external ideas and external paths to the market on the same level of importance as that is reserved for internal ideas and paths to the market in the earlier era (Chesbrough et al., 2006). Open innovation embraces a wide range of initiatives including:

• Accessing new technologies, know how, intellectual property and ideas from external sources such as other companies, universities, inventors and innovation 'brokers' through partnering, licensing and joint ventures.
• Effective integration and exploitation of these external elements into innovative new product, process and service developments.
• Collaboration on innovation with suppliers, customers, industry networks and competitors.
• Spinouts, venturing and out-licensing to gain value from ideas and technologies that do not fit the core strategy of the company.

Chesbrough (2006) acknowledges that open innovation has achieved a certain degree of face validity within at least a small portion of large companies in high-tech industries. Large companies are in a relatively stable, structured business environment and resource availability facilitates research. However, the volatile environment and limited resources of a Small and Medium-sized Enterprise (SME) impede 'good' research and it therefore remains an open question whether the concept of open innovation applies to SMEs. SMEs remain socially and economical important, since they represent 99% of all enterprises in the EU, providing around 65 million jobs (EC, 2003).

Although SMEs enjoy unique advantages related to their business culture and flexibility, the lack of resources is a constraint for exploiting their innovative capabilities (Freel,2000; Hanna & Walsh, 2002; Kaufmann &Tödtling, 2002). It is hard for SMEs to outperform their – larger - competitors. As a result, SMEs face huge challenges; they have to design and make technology intensive products, and they have to capture the imagination of customers worldwide. Such products have to be attractive, innovative and competitive in the global marketplace. Is it possible for SMEs to use open innovation to achieve such important ambitions? Or is open innovation only reserved for large companies?