trust-embedded open innovation: towards a human
Transcription
trust-embedded open innovation: towards a human
1 Dimitrios G. Salampasis TRUST-EMBEDDED OPEN INNOVATION: TOWARDS A HUMAN-CENTRIC APPROACH IN THE FINANCIAL INDUSTRY Thesis for the degree of Doctor of Philosophy (Industrial Engineering and Management) to be presented with due permission for public examination and criticism in the Auditorium 1382, Skinnarilankatu 34, at the Lappeenranta University of Technology, Lappeenranta, Finland, on the 16th of November 2015, at 12:00. Acta Universitatis Lappeenrantaensis 668 P a g e |2 2 Academic Supervisor Prof. Dr. Marko Torkkeli Lappeenranta University of Technology Finland Co-Supervisor Prof. Dr. Anne-Laure Mention Luxembourg Institute of Science and Technology Luxembourg University of Liege Belgium Reviewers Prof. Dr. Tõnis Mets Queensland University of Technology Australia Prof. Dr. Urs Daellenbach Victoria University of Wellington New Zealand Opponent Prof. Dr. Patrick Schueffel Hochschule für Wirtschaft Freiburg Switzerland ISBN 978-952-265-869-2 ISBN 978-952-265-870-8 (PDF) ISSN-L 1456-4491 ISSN 1456-4491 Lappeenrannan teknillinen yliopisto Yliopistopaino 2015 P a g e |3 3 ABSTRACT Dimitrios Salampasis Trust Embedded Open Innovation: Human-Centricity in the Financial Industry Lappeenranta: 2015 199 p. Acta Universitatis Lappeenrantaesis 668 Diss. Lappeenranta University of Technology ISBN 978-952-265-869-2, ISBN 978-952-265-870-8 (PDF), ISSN-L 1456-4491, ISSN 1456-4491 Globalization and interconnectedness in the worldwide sphere have changed the existing and prevailing modus operandi of organizations around the globe and have challenged existing practices along with the business as usual mindset. There are no rules in terms of creating a competitive advantage and positioning within an unstable, constantly changing and volatile globalized business environment. The financial industry, the locomotive or the flagship industry of global economy, especially, within the aftermath of the financial crisis, has reached a certain point trying to recover and redefine its strategic orientation and positioning within the global business arena. Innovation has always been a trend and a buzzword and by many has been considered as the ultimate answer to any kind of problem. The mantra Innovate or Die has been prevailing in any organizational entity in a, sometimes, ruthless endeavour to develop cutting-edge products and services and capture a landmark position in the market. The emerging shift from a closed to an open innovation paradigm has been considered as new operational mechanism within the management and leadership of the company of the future. To that respect, open innovation has been experiencing a tremendous growth research trajectory by putting forward a new way of exchanging and using surplus knowledge in order to sustain innovation within organizations and in the level of industry. P a g e |4 4 In the abovementioned reality, there seems to be something missing: the human element. This research, by going beyond the traditional narratives for open innovation, aims at making an innovative theoretical and managerial contribution developed and grounded on the on-going discussion regarding the individual and organizational barriers to open innovation within the financial industry. By functioning across disciplines and researching out to primary data, it debunks the myth that open innovation is solely a knowledge inflow and outflow mechanism and sheds light to the understanding on the why and the how organizational open innovation works by enlightening the broader dynamics and underlying principles of this fascinating paradigm. Little attention has been given to the role of the human element, the foundational pre-requisite of trust encapsulated within the precise and fundamental nature of organizing for open innovation, the organizational capabilities, the individual profiles of open innovation leaders, the definition of open innovation in the realms of the financial industry, the strategic intent of the financial industry and the need for nurturing a societal impact for human development. To that respect, this research introduces the trust-embedded approach to open innovation as a new insightful way of organizing for open innovation. It unveils the peculiarities of the corporate and individual spheres that act as a catalyst towards the creation of productive open innovation activities. The incentive of this research captures the fundamental question revolving around the need for financial institutions to recognise the importance for organizing for open innovation. The overarching question is why and how to create a corporate culture of openness in the financial industry, an organizational environment that can help open innovation excel. This research shares novel and cutting edge outcomes and propositions both under the prism of theory and practice. The trust-embedded open innovation paradigm captures the norms and narratives around the way of leading open innovation within the 21st century by cultivating a human-centricity mindset that leads to the creation of human organizations, leaving behind the dehumanization mindset currently prevailing within the financial industry. Keywords: open innovation, trust, financial industry, human side, readiness, qualitative, individual, organizational, conceptual, interviews P a g e |5 5 ACKNOWLEDGMENTS This PhD research would not have been accomplished without the valuable help of many people whom I wish to thank for their support, their contribution and their comments. Initially I would like to thank the Luxembourg Institute of Science and Technology for investing valuable resources and giving me the chance to conduct my PhD research and also be able to attend conferences, trainings and workshops. I am really grateful for their support. More specifically I am more that grateful and indebted to Prof. Dr. Anne-Laure Mention, who guided me through all the process, who was there with great enthusiasm anytime I wanted help, advice and who shared with me all her valuable experience, contacts and time, along with, her constructive feedback. The most important thing is the fact that she believed in this work and helped me understand that I could manage it despite all the difficulties, the time constraints and the perplexity of the topic. Last but not least I would like to thank her for having her office door always open for me and was always there for me both in good, bad and hard times. Furthermore, I would like to thank my academic supervisor Prof. Dr. Marko Torkkeli, for inviting me on this highly strenuous, challenging but at the same time full of surprises research journey, for giving me the opportunity to become his PhD student and who believed in the topic, my skills and competences. I am grateful to him for showing his enthusiasm and for his ethical and moral support in hard times, his patience and his trust on my face and my personality. Last but not least I will never forget his moto “keep pushing” and his never-ending belief on my potential. From the Luxembourg Institute of Science and Technology I would like to thank my colleagues Mr. Dieter De Smet, Ms Clémentine Fry, Dr. Andrey Martovoy and Dr. Anna-Leena Asikainen, who embraced this endeavour and were always keen on helping, listening and being there for me anytime I wanted help and support. I would also like to thank the two external reviewers Prof. Mets and Prof. Daellenbach for their constructive feedback and extremely useful comments. They indeed highlighted vital and critical elements helping me see beyond my own perspective and allowing me to address and refine important parameters of this study. Last but not least, I would like to thank Prof. Patrick Schueffel for agreeing to be my opponent. P a g e |6 6 This PhD research has been a long learning process, which changed completely the way I look, I perceive and I understand the world around me. This is what I tried to bring on the table, this cosmological view via the lenses of multidisciplinarity. To that respect I would like to thank the pre-examiners and the opponent for embracing this mindset and for acknowledging its value within the innovation management discourse. I would like to thank all the executive professionals who agreed to take part in my work by sharing information, experience, time and valuable insights, who had the patience to explain and who believed in the value that the suggestive outcomes this study would bring both in terms of academic research but also in terms of managerial perspective. I would also like to thank all the anonymous reviewers who provided priceless feedback to all my conference and journal submissions and publications, priceless feedback that helped me develop my research further. Moreover, I would like to thank LUT staff Sanna Tomperi, Jussi Oksala and Reeta Toivanen for helping me with all the practical issues and for being available all the time and willing to assist. Last but not least I would like to thank my friends for their psychological support and their interest in my work, and of course my family who despite the fact that they are far away, they have always been close and present. Luxembourg, Monday, October 26th, 2015 Dimitrios G. Salampasis P a g e |7 7 To my parents who have taught me that things in life must not be taken for granted Trying and learning is what keeps us alive P a g e |8 8 TABLE OF CONTENTS ABSTRACT ................................................................................................................3 ACKNOWLEDGMENTS ...........................................................................................5 TABLE OF CONTENTS ............................................................................................8 LIST OF FIGURES ...................................................................................................11 LIST OF TABLES ....................................................................................................13 PUBLICATIONS ......................................................................................................15 PART I: OVERVIEW OF THE THESIS ..............................................................19 OUTLINE AND STRUCTURE OF THE THESIS ..................................................20 CHAPTER 1: INTRODUCTION .............................................................................23 1.1. Prologue ....................................................................................................23 1.2. Research background and motivation .......................................................24 1.3. The human aspect ......................................................................................29 1.4. The contemporary relevance of the financial industry as an empirical setting ……………………………………………………………………………31 1.5. Personal perceptions and incentives ..........................................................33 1.6. Limitations of existing research scholarship .............................................36 1.7. Addressing the research gap and problem delineation ..............................38 1.8. Strategic intent, relevance and impact of the research ..............................40 CHAPTER 2: RESEARCH OBJECTIVES AND STUDY SETTING .....................42 2.1. Research objectives ...................................................................................42 2.2. Scope of the research .................................................................................45 2.3. Definition of key concepts ........................................................................46 2.3.1. Open Innovation ................................................................................47 2.3.2. Trust ..................................................................................................53 2.3.3. Readiness ...........................................................................................57 CHAPTER 3: THEORETICAL FOUNDATIONS ...................................................61 CHAPTER 4: RESEARCH METHODOLOGIES ....................................................74 P a g e |9 9 4.1. Introduction to research .............................................................................74 4.2. Paradigm....................................................................................................76 4.3. Reasoning ..................................................................................................83 4.3.1. Inductive reasoning ...........................................................................84 4.3.2. Deductive reasoning ..........................................................................84 4.3.3. Abductive reasoning ..........................................................................85 4.4. Research design .........................................................................................86 4.4.1. Multidisciplinary-based scholarship ..................................................87 4.4.2. Methods .............................................................................................89 4.4.3. Research methodology ......................................................................90 4.4.3.1. Semi-structured interviews ........................................................90 4.4.3.2. Literature review .......................................................................92 4.4.4. 4.5. Research procedure ...........................................................................93 4.4.4.1. Sampling ....................................................................................93 4.4.4.2. Analysis of the data ...................................................................95 Trustworthiness of research.......................................................................96 CHAPTER 5: SUMMARY OF PUBLICATIONS .................................................104 5.1. Purpose of the research............................................................................104 5.2. Overview of publications ........................................................................105 CHAPTER 6: CONTRIBUTION ............................................................................138 6.1. Introductory remarks ...............................................................................138 6.2. The trust-embedded dimension of open innovation ................................140 6.3. Trust-embedded open innovation: the driver of competitive advantage, not competitor takeover .............................................................................................142 6.4. The human side of open innovation ........................................................143 6.5. Open innovation in the financial industry: thinking beyond innovation (Quis custodiet ipsos custodes?)..........................................................................146 CHAPTER 7: CONCLUSION AND DISCUSSION ..............................................150 P a g e | 10 10 7.1. Concluding remarks ................................................................................150 7.2. Implications .............................................................................................153 7.2.1. Academic implications ....................................................................153 7.2.2. Managerial implications ..................................................................155 7.2.3. Policy implications ..........................................................................157 7.2.4. Societal implications .......................................................................158 7.3. Limitations and avenues for further research ..........................................159 LIST OF REFERENCES ........................................................................................164 PART II: PUBLICATIONS ................................................................................199 P a g e | 11 11 LIST OF FIGURES Figure 1: Overall composition of the dissertation (Developed by the author) .........20 Figure 2: Overview on limitations and challenges of existing research (Developed by the author) ............................................................................................................37 Figure 3: Focus of the research (Developed by the author) .....................................39 Figure 4: Composition of the publications and their positioning within the research and the research questions (Developed by the author) ..............................................44 Figure 5: A streamlined model of the study setting (Developed by the author) .......46 Figure 6: An evolutionary approach in the definition of open innovation (Developed by the author) ............................................................................................................49 Figure 7: Decoupling the locus of innovation process-Three archetypes of open innovation processes (Gassmann and Enkel, 2004, p.6) ...........................................50 Figure 8: Positioning of the Theory X and Theory Y (Developed by the author) ....67 Figure 9: Research corpus (Developed and visualized by the author based on Verma and Mallick, 1999) ....................................................................................................76 Figure 10: Composition of the publications and their relationships to the research questions (Developed by the author) .......................................................................104 Figure 11: Conceptual framework (Salampasis et al., 2014a, p.470) .....................106 Figure 12: Theoretical framework in relation to open format question (Salampasis et al., 2014a, p.471) .....................................................................................................107 Figure 13: Calculative and non-calculative factors (Salampasis et al., 2014a, p.475) .................................................................................................................................108 Figure 14: Antecedents of open innovation-conceptual framework (Salampasis et al., 2015a, p.41) .......................................................................................................109 Figure 15: A conceptualized definition of trust-embedded open innovation (Salampasis et al., 2015a, p.50) ...............................................................................111 P a g e | 12 12 Figure 16: Trust embedded organizational readiness for open innovation adoption in the financial services sector (Salampasis, 2014, p.318) ..........................................112 Figure 17: The organizational aspect of trust-embedded open innovation (conceptual model) (Salampasis et al., p.40) ..........................................................116 Figure 18: Conceptual model: the organizational aspect of open innovation adoption in the banking sector (Salampasis et al., 2015b, p.14) .............................................120 Figure 19: Organizational readiness mechanisms for open innovation in the financial industry (Salampasis et al., 2015c, p.9) ....................................................127 Figure 20: Rational and relational pathway of the research (Developed by the author) .....................................................................................................................137 Figure 21: The human side of open innovation in the financial industry (Developed by the author) ..........................................................................................................144 P a g e | 13 13 LIST OF TABLES Table 1: Author’s role in each publication (Adapted from Perry et al., 2003, p.656) ...................................................................................................................................18 Table 2: Positioning of the research questions within the publications (Developed by the author) ............................................................................................................45 Table 3: Closed vs Open Innovation (Adapted from Chesbrough, 2003b) ...............50 Table 4: Open innovation types and mechanisms (Adapted from Chesbrough and Bogers, 2014) ............................................................................................................51 Table 5: Micro and macro levels of trust (Developed by the author based on Fulmer and Gelfand, 2012) ....................................................................................................54 Table 6: Trust levels and referents (Developed by the author based on Fulmer and Gelfand, 2012) ...........................................................................................................56 Table 7: Seminal organizational theories..................................................................62 Table 8: Theory X and Theory Y .............................................................................71 Table 9: Three research paradigms (Freely translated from Giordano, 2003, p.25) 79 Table 10: Ontological, epistemological and methodological stances of interpretivism (Developed by the author)..................................................................81 Table 11: Contrasting elements between the three forms of reasoning (Developed by the author) .................................................................................................................85 Table 12: Forms of reasoning and methods applied in the research (Developed by the author) .................................................................................................................86 Table 13: Characteristics of qualitative and quantitative studies (Developed by the author) .......................................................................................................................87 Table 14: Sources and analysis of data in the dissertation (Developed by the author) ...................................................................................................................................90 Table 15: Trustworthiness of qualitative nature and methods of research (Developed by the author) ............................................................................................................98 P a g e | 14 14 Table 16: Variables related to the antecedents of open innovation (Salampasis et al., 2015a, p.49) .............................................................................................................110 Table 17: Variables of the organizational antecedents of open innovation (Salampasis, 2014, p.320) .......................................................................................114 Table 18: Organizational antecedents of trust-embedded open innovation (Salampasis et al., 2014b, p.39) ...............................................................................117 Table 19: Overview of interviewees (Salampasis et al., 2015c, p.4) ......................123 Table 20: Leadership traits of an open innovation leader in the financial industry (Salampasis et al., 2015c, p.6) .................................................................................124 Table 21: Summary of appended papers (Developed by the author)......................129 Table 22: Suggestions for future research on open innovation (Developed by the author based on Fredberg et al., 2008) ....................................................................134 P a g e | 15 15 PUBLICATIONS The dissertation consists of the introductory part (Part I) and the publications part (Part II). The publications listed below, summarize the contribution of the author and the acceptance procedure of each paper. Publication I Salampasis, D., Mention, A-L., Torkkeli, M. (2014). Open Innovation and Collaboration in the Financial Services Sector: Exploring the role of trust. International Journal of Business Innovation and Research, Vol.8, No.5, pp.466484. Information regarding the publication: The author was the main writer. The author was responsible for the literature review, study design, conducting the interviews, interviews transcription, data collection, analysis and interpretation. The implications and conclusions were written by the author, in collaboration with the 2nd and the 3rd author. Moreover, the 2nd and the 3rd author provided valuable contribution, in terms of aligning the interpretation of the data to the framework of the financial industry. The working paper was presented at a dedicated conference session during the 2012 Innovation for Financial Services Luxembourg Summit, where it received the Best Paper Award, was submitted to and accepted for publication to the international journal following a double blind review process. Publication II Salampasis, D., Mention, A-L., Torkkeli, M. (2015). Trust embeddedness within an open innovation mindset. International Journal of Business and Globalization, Vol.14, No.1, pp.32-57. Information regarding the publication: The author was the main writer. The author was responsible for the literature review, the formulation of the concepts and the development of the conceptual model. The research propositions and the conclusions presented within the paper were the responsibility of the author in collaboration with the 2nd and the 3rd author. The paper was accepted for publication following a double blind review process. Publication III Salampasis, D. (2014). Organizational Readiness for Open Innovation in the Financial Services Sector: The missing element of trust. Book Chapter in the Book P a g e | 16 16 “Innovation in financial services: a dual ambiguity” ed. Mention, A-L., Torkkeli, M. Newcastle: Cambridge Scholars Publishing, pp.295-336. Information regarding the publication: The author was solely responsible for the book chapter. The paper was accepted by the editors to be published as a book chapter following a double blind review process. Publication VI Salampasis, D., Mention, A-L., Torkkeli, M. (2014). “Trust embedded open innovation: Literature review, synthesis and research propositions”. Academy of Management Proceedings, 2014(1), doi:10.5465/AMBPP.2014.13668abstract, Philadelphia, USA Information regarding the publication: The author was the main writer. The author was responsible for the literature review, the formulation of the concepts and the development of the conceptual model. The research propositions and the conclusions presented within the paper were the responsibility of the author in collaboration with the 2nd and the 3rd author. The paper was accepted and presented at a dedicated session during the 2014 Academy of Management Meeting, Philadelphia, USA, following a double blind review process. Publication V Salampasis, D., Mention, A-L., Torkkeli, M. (2015). Human resources management and open innovation adoption in the banking sector: a conceptual model. International Journal of Business Excellence, Vol.8, No. 4, pp.433-457. Information regarding the publication: The author was the main writer. The author was responsible for the literature review, the formulation of the concepts and the development of the conceptual model. The research propositions and the conclusions presented within the paper were the responsibility of the author in collaboration with the 2nd and the 3rd author. Moreover, the 2nd and the 3rd author provided valuable contribution in terms of aligning the development of the conceptual model to the framework of the financial industry. The working paper was presented at a dedicated conference session during the 2013 International Conference Innovation for Financial Services in Singapore, was submitted to and accepted for publication to the international journal following a double blind review process. P a g e | 17 17 Publication VI1 Salampasis, D., Mention, A-L., Torkkeli, M. (2015). “Open innovation for “humanly-embedded” financial institutions: individuals and organizations at a crossroads”, in Proceedings of the 2015 R&D Management Conference, Pisa, Italy2 Information regarding the publication: The author was the main writer and solely responsible for the literature review, the study design, conducting the interviews, interview transcription, data collection, analysis and interpretation. The implications and conclusions were written by the author, in collaboration with the 2nd and the 3rd author. Moreover, the 2nd and the 3rd author provided valuable contribution in terms of linking the interpretation of the data to the framework of the financial industry. The working paper was presented at a dedicated conference session during the 2014 International Conference Innovation for Financial Services in Montréal, Canada after following a double blind review process. The final version of the paper, following upon the feedback received during the presentation of the working paper, was accepted and presented at a dedicated session during the 2015 R&D Management Conference Pisa, Italy, following a double blind review process. Overall contribution and position of the author It is important to underline at this point that even though this academic writing has been the sole responsibility of the author, the contributions of the academic and scientific supervisors, who acted as mentors and co-authors in this research journey must be fully acknowledged and valued. Based on the Elsevier handbook for Ethics, an author is generally considered to be an individual who has made a significant intellectual contribution to the study. The author has been the first author in all six publications (3 Journal Articles, 1 Book Chapter and 2 International Conference Proceedings) since he was “the driving force behind the paper, who makes the decisions of the chairperson of the board [and] also safely keeps the data from which the findings were made” (Perry et al., 2003, Currently under review, Special Issue Implementing the Technological, Organizational and Managerial tools supporting Open Innovation, Business Process Management Journal, Emerald Group Publishing. 2 A partially revised and updated manuscript of this paper has been presented in the 2015 International Open and User Innovation Meeting (OUI) in Lisbon, the leading academic conference on Open and User Innovation under the title Financial Institutions in the era of open innovation: individuals and organizations at a crossroads. 1 P a g e | 18 18 p.656). The co-authors (2nd and 3rd author) have equally contributed to the papers by providing priceless guidance in terms of the research design, conceptualization, data analysis and interpretation. The co-authors have been listed in alphabetical order in all the corresponding publications; the order has been a joint decision of the coauthors. Moreover, it is essential to call attention to the fact that the co-authors embraced this research by bringing their enthusiasm, interest, insights and foresights and experience to the table (Polonsky et al., 1998). All authors have been named on the scientific publications so as so to be granted the appropriate credit for the work and contribution and for being accountable for the respective research. The author declares no form of misconduct, which would undermine the confidence and the trustworthiness of this research. The following table depicts the contribution the author has made in each publication in the three aspects of authoring. Table 1: Author’s role in each publication (Adapted from Perry et al., 2003, p.656) Publications Conception and design, or analysis and interpretation of data Drafting the article or revising it critically for important intellectual content Publication I Publication II Conception, design, data collection, analysis and interpretation Conception and design, literature review Publication III3 Conception and design, literature review Publication IV Conception and design, literature review Publication V Conception and design, literature review Publication VI Conception, design, data collection, analysis and interpretation Drafting the paper and revising it critically for important intellectual content Drafting the paper and revising it critically for important intellectual content Drafting the paper and revising it critically for important intellectual content Drafting the paper and revising it critically for important intellectual content Drafting the paper and revising it critically for important intellectual content Drafting the paper and revising it critically for important intellectual content 3 This publication does not have any co-authors. Final approval of the version to be published P a g e | 19 19 PART I: OVERVIEW OF THE THESIS P a g e | 20 20 OUTLINE AND STRUCTURE OF THE THESIS This dissertation consists of two parts. Part I, the main body of this dissertation, provides an overview of the dissertation, the research questions and objectives, a detailed exploration of the main issues, perspectives, methodological stances, summaries of the publications and contribution, along with implications, limitations and avenues for further research. Part II consists of the official six publications. This study is characterized by a dynamic multidisciplinarity perceived within the unceasing interplay between the academic and practice/managerial sphere. A foundational element of this research is the fact that the author wanted to approach the role of trust in relation to open innovation and the establishment of human financial enterprises from a reality perspective, contributing to the theoretical foundations of the open innovation paradigm, developing a managerial tool, a conceptual framework and presenting a number of novel research outcomes and insights, which can be interpreted both in the planet of academia and the planet of practice and management. This is not easy, especially, when dealing with such elusive notions and in such a difficult, complex and highly unstable and volatile empirical setting; i.e. the financial industry. The following figure depicts the outline and structure of this dissertation. Figure 1: Overall composition of the dissertation (Developed by the author) P a g e | 21 21 In the Introduction section, the author projects the background and the motivation being the nucleus and the driving force for this research. The author describes the empirical setting of the financial industry, accentuating the importance, the relevance and the topical interest. Furthermore, the author depicts the incentives that led him into investigating this stream of research and the founded perceptions he uses to establish and base his reasoning. In a similar manner, the author underlines the research gap and the problem delineation by briefly describing the thematic areas that extant literature has not paid adequate attention. Last but not least, the author draws attention to his research mindset in the realms of explaining the strategic intent, the relevance and the impact that this research aspires to have in the research community, industry, practice, policy-making and society. In the Research Objectives and Study Setting section, the author presents the objectives of the research, addresses the research questions to be explored and introduces the relevant concepts to be explored. Furthermore, by means of a brief review of the literature the concepts of open innovation, trust and readiness (organizational and individual) as integrative elements of the intertwined phases of trust-embedded open innovation and the human dimension of open innovation in the financial industry are hereby being introduced and analysed. In the Theoretical Foundations section the author describes the relevant seminal organization and management theories that have already been associated, directly or indirectly, with open innovation (in existing literature) or have influenced the development of the existing publications of the author, and explains in detail the theoretical understanding and the reasoning behind the choice of the human side of enterprise theory (McGregor’s Theory X and Theory Y) in the quest towards the conceptualization of the human side of open innovation within the financial industry. The Research Methodology section, is an inherent element of the DNA of this research since it presents and justifies the how and the why this study has been conducted. It offers a detailed analysis of what is research and what a good research entails how a paradigm is being defined, what is the meaning and the role of reasoning and why it is important for the development of this respective research. Furthermore, the author opens to view the study approach, the epistemological aspects and the research design. This section is also connected to the quality assurance of the study. The quality standards dully justify the appropriateness of the methods that have been employed towards the tackling of the research problem and P a g e | 22 22 the answering of the research questions, safeguarding and securing the trustworthiness of the research. In the Summary of Publications section all the summaries of the author’s published work, in relation to this respective research, are presented, depicting an overall frame and picture of the research. Furthermore, the contribution of the author and all the collaborators is being analysed. This section also serves the purpose of reflecting the red thread and connecting all the dots among all publications. It caters for making a pitch of the holistic overview of all the interrelated elements consisting the body, mindset and rationale of the research, highlighting the contribution, the relevance and the rational and relational pathway of all the publications in a coherent but at the same time rigorous manner. The Contribution section analyses both the theoretical and practical/managerial contribution of this research towards the emerging theme of linking open innovation to seminal theories of innovation, management and economics. It offers a multidisciplinary perspective on the trust-embedded approach to open innovation, conceptualizing the human dimension of this paradigm. Furthermore, it provides cutting-edge insights in terms of putting in perspective the role of open innovation within the financial industry, along with the integrative role of the open innovation leader, and how this conceptualization could have an influence in the role of financial innovation and the strategic intent of the industry itself. It is important for the author to clarify that this research does not aim to develop a new theory on open innovation but to contribute to the discussion on the theoretical foundations of open innovation from the eyes of the human dimension in the emerging theme of the “increasing integration of open innovation with established theories of innovation, management and economics” (West et al., 2014, p.810). The Conclusions and Discussion section summarizes in its locus the overall contribution of this research, its unique value proposition, the learning outcomes and recognises the sharing of important academic, managerial, societal and policy implications at the level of open innovation and the financial industry per se. It stages a comprehensive and holistic picture of the overall research and offers extensive reasoning to be used, while reflecting on the major outcomes. Finally, it also pays a tribute to the limitations of this research but not with an attitude of failure, but by seeing them as potential ways of paving future research and encouragement for dedicated and focused investigation and argumentation of the outcomes of this endeavour. P a g e | 23 23 CHAPTER 1: INTRODUCTION “As much as we claim we want cooperation, most of our structures don’t reward it, our corporate culture doesn’t support it and our leaders are reluctant to embrace itthough it is often in the best interest of the organization to do so” (Heil et al., 2000, p.74). 1.1. Prologue The aim of this introductory chapter is to set the stage and acquaint the reader with the rationale behind the underlying elements discussed within this respective dissertation. It is important to highlight the fact that since the PhD is publicationbased, this dissertation shall cover all these specific factors that are required in order to perceive the understanding around the issues discussed hereby. This study aims at contributing to the extant scholarly research on innovation and open innovation management, along with, the research on open innovation within the financial industry, by looking into the organizational and individual aspects of open innovation, under the human dimension and the existence of trust. Hereby, the author argues that the consideration of this particular aspect of open innovation shall assist financial institutions to depict organizational and individual readiness in terms of adopting open innovation practices and, in a similar manner, are able to attract the right talent and mindset for open innovation. As it will be discussed later on, the financial industry, which is faced with unprecedented challenges, is bound to change its existing corporate operational business model and traditional modus operandi, in order to keep pace especially when it comes to the wave of digital disruption, technological breakthroughs and regulatory constraints. Financial institutions usually reflect a big lack of innovation needless to say open innovation. However, there are indeed existing examples of financial institutions, which have adopted open innovation practices, such as, DBS (experimentation as a service), Bank of America (Fintech Start-ups-Silicon Valley), Thomson Reuters (Catalyst Fund), Wells Fargo (Mentoring Program for Start-ups), BNP Paribas (Leveraging Open Innovation to build the Bank of Tomorrow)4, CIBC “Both physical and digital, combining the best of both worlds, meaning…new forms of interactivity facilitated by social networks, new services around mobility, digital transformation, and simplification of processes. For BNP Paribas, being innovative means anticipating changes that are affecting our clients and transforming these changes into opportunities.” (Bridges, 2015, n.g.) 4 P a g e | 24 24 and MaRs (Open Innovation Space for Financial Technology Start-ups)5 and BBVA, along with, the establishment and development of innovation centres and labs by many banking and financial services institutions (Standard Bank, Capital One, Commonwealth Bank, Citi, Visa, Chase Bank, etc). Chad Ballard, BBVA Director of Mobility and New Business Technologies says that “The Innovation Depot is taking all that collaboration and digital transformation we’re doing out of the development center and opening it up into the community … We want to look at things that simplify the customer experience, new concepts in payments. We also look at things in and out of the financial industry … It’s rare for a bank to give outsiders access to its internal software … We’re also sitting down with the start-ups, understanding their business models and figuring out how fast the bank can collaborate on their technology … We are building technology from within the community rather than from the outside …” (Crosman, 2015, n.g.). This quote is the starting point of this research endeavour, reflecting upon the shift of the financial industry in terms of embracing new ways of value creation, developing new learning mechanisms and sharing best practices with other industries. It is of note though that only few financial institutions are making open innovation a permanent practice. But, how easy is it for financial institutions to make this shift from the traditional hierarchical, silo-driven, dehumanized and monolithic corporate environments and state of mind to becoming open, borderless and collaborative organizations? In the realms of this reasoning, the research aspires to shed light on the integrative role of trust as the connective mechanism between the organizational and individual spheres in the process of creating human financial organizations by putting in action formal and informal dedicated processes and talent, so as to overcome internal resistance and barriers. 1.2. Research background and motivation The open innovation paradigm, within the last thirteen years, has attracted profound interest and has been explored under an academic, practitioner and policy-level prism and within diverse empirical settings. Abundant existing scholarship already Aayaz Pira, Vice President, Digital Channels, CIBC: “Partnerships and innovation are the key to building the bank of the future, which is why we are excited about the opportunity to further our commitment to innovation with MaRS. The opportunity to have our team work alongside top design talent and entrepreneurs in a collaborative environment will further our leadership in developing the innovations that will change the way Canadians bank.” (MaRs, 2015, n.g.) 5 P a g e | 25 25 discusses implications of open innovation mainly under the organizational, interorganizational and network level. Despite this meteoric rise in the literature, covering many finer-grained topics of open innovation, the research in a number of aspects coated via this paradigm is still in its infancy. To that respect, it is quite surprising though to see that there is a dearth of research in relation to the human side of this paradigm, which still remains an area that has received scarce and not systematic attention (Salampasis et al., 2015c). Very little has been written in the existing literature, mainly related to human resource management practices and the skills, professionals active within an open innovation framework, need to possess. In this frame of reference, this dissertation contributes to this on-going debate by delving into the exploration of the so-called human side projected in the dynamic interplay between the individual and the organizational sphere, within the financial industry, by looking into the element of trust, a conditional factor for open innovation, which has not yet received the attention it deserves (Salampasis et al., 2014a). In summary, this respective research is looking into the ways, the mechanisms, the factors and the talent (including mindset) needed for adopting open innovation practices within the financial industry. The rationale, of this dissertation, on exploring the element of trust into the quest of conceptualizing the human dimension of open innovation, in the financial industry, originates on the fact that “open innovation requires a different mindset and the need for more expanded set of capabilities within companies” (van de Vrande et al., 2010, p.223). Henry Chesbrough argues that “in every organization that I’ve worked with, open innovation does not come easily. There are tremendous internal barriers to doing it well. Some of those barriers are cultural in nature; some, I think reflect the logic of the reward systems that companies have in place. And if the company wants to embrace open innovation and some people actually start the process there are a lot of things that they don’t realize until they get into it” (Norton 2011, p.63). In a similar vein, Chesbrough believes that “Open innovation works best when you have people collaborating side by side, with people that are moving from one organization to another” (Wilson, 2012, p.45). Both these quotations hit all the right notes for this research currently emplaced in the intersection of the organizational and individual level of analysis and the need for understanding what open innovation means, the pre-requisite of organizational and individual readiness, the kind of profile (talent) required to be part of an open innovation team and the attention to the primary, but usually, neglected driver of open innovation: the human component. In this context, this dissertation argues that all these abovementioned elements are intertwined under the spectrum and the existence of trust (primarily P a g e | 26 26 positioned within the multilevel organizational system), acting as a default mechanism for open innovation adoption (Salampasis et al., 2014b), calling for looking back to the roots of the open innovation paradigm in terms of revisiting the organization from the inside, while paying attention to the underlying people-based principles and mindset in combination to the tactics and structures for open innovation6. For this reason, this dissertation prevails upon the fact that open innovation in the financial industry can only be realized within a corporate world of human action and human centricity. Salampasis et al. (2015b) discuss that people, the primary drivers of implementing open innovation practices [(“innovation is all about people” (Rosenfeld, 2008, p.14)], while being the human face of an organization to the outside world (the living embodiment of corporate values and strategic insight), do not receive the attention they deserve (individual level) and on the other hand organizations aspiring to adopt open innovation practices are simply not ready (organizational readiness) to begin the open innovation journey and put in place all the right mechanisms to foster individual readiness to that respect. In both cases, organizations tend to neglect the foundational and conditional element of trust within their process of building up open and collaborative corporate environments. To that respect, this dissertation suggests that the existing open innovation paradigm will not be able to work properly anymore in future organization, unless the latter possess a substantial reservoir of trust (primarily on the organizational level) and turn all the credit (pecuniary and non-pecuniary, respect, recognition etc) back to the people. Moreover, this argumentation provides an answer to the misconceptions raised by a number of scholars that the linkage between open innovation and trust is not a new phenomenon, heralding for its obviousness. This dissertation strongly argues that there is a need to develop a solid, theoretically-founded rationale and multidisciplinary conceptual, but at the same time applicable model, debating that obvious correlations and simple philosophies are the ones, which are the most difficult and complicated to address, investigate and understand their functionality7, especially within such a special empirical setting, as the financial industry, itself. Indeed, there are voices, arguing that the primary factor acting as a hindrance in the The author considers trust as an intangible asset for an organization in terms of providing a high differentiation potential and at the same time carrying the inherent ability of not being able to be imitated (Hunt and Morgan, 1995). 7 The author agrees with Drucker (1985, p.29) that “like most super-stars, knowledge-based innovation is temperamental, capricious and hard to manage”. 6 P a g e | 27 27 adoption and implementation of innovation practices is the lack of trust (MolinaMorales et al., 2011; Wang et al., 2011) encouraging the author to promote and empower his proposition regarding the trust-embeddedness approach towards open innovation (Salampasis et al., 2014b). Westergren and Holmström (2012, p.210) argue that trust is an “underappreciated but potentially high valuable source of value in open innovation networks”. To the best of the author’s knowledge, even though trust, appears as a crucial open innovation factor, among others, in a respective number of scholarly works, there is a very limited number of scholars, in the existing open innovation literature, considering trust “as a nucleus key for open innovation” being more than a conditional factor for adopting and applying such kind of practices (Shamah and Elsawaby, 2014, p.110; Shamah and Elsawaby, 2015) or arguing that “mutual trust in a cooperative relationship is essential to its ultimate success” (Lee et al., 2010, pp.298). The undergoing meaning of this observation is the fact that both open innovation and trust are embedded within a broader social and economic context and are constantly and continuously shaped by the contribution of extracellular factors consisting of dynamic relationships and interactions. This means that organizations and individuals need to be put in a continuous transformational trajectory, in order to be able to face the numerous challenges the adoption of open innovation practices entails (Salampasis et al., 2015c; 2014a). In a similar vein, the author receives encouragement and motivation from the fact that “in business research, however, the things routinely ignored by academics on the grounds that they cannot be measured-most human factors and all matters relating to judgement, ethics and morality-are exactly what make the difference between good business decisions and bad ones” (Bennis and O’Toole, 2005, p.100). Additionally, this dissertation reasons that the limited and elusive attention towards the human aspect of open innovation shares its reasoning to the fact that this paradigm has been primarily seen, conceptualised and investigated from the knowledge inflows and outflows panorama (Salampasis et al., 2014c), neglecting the realization and existence of complementary elements that are embedded in this dynamic interplay, such as, human capital, routines, behaviours, practices and norms (Alvesson and Kärreman, 2001). Against this landscape, this dissertation goes beyond the traditional narrative around open innovation, perceiving this paradigm as the ultimate mechanism for mixing and transferring of cultures, ideas, people, skills and behaviours, complementary to the widening and reordering of existing and new knowledge, both within and beyond the traditional organizational zone (Salampasis et al., 2015c). The raison d'etre behind this argumentation falls in the rationale that P a g e | 28 28 the open innovation paradigm should refrain, in the future, from being exclusively discerned only as a driver for knowledge exchange and sharing on an interorganizational and network level but needs to be perceived as an ecosystem of values, organizational cultures, organizational behaviours and human elements that co-exist in reach of this reciprocation, having their starting point to the locus of the individual and the organizational spectrum (Salampasis et al., 2015c)8. This observation adopts a number of views regarding the transitioning beyond the knowledge era and the necessity to redefine the sources of competitive advantage. To that respect, it is important to pay attention to the human element as a mechanism of decisive action and emotional conviction, reformulating labour, capital and information as scarce resources (Birkinshaw, 2012). Enkel (2010) acknowledges the integrative role of the individual attributes (the socalled talent for open innovation), which together with the organizational characteristics facilitate the reasoning behind the question of when and why there is a profit from open innovation. “One has to tap into human capabilities and connect diverse minds to work across organizational and national boundaries to be faster and better than the competition” (Allee and Taug, 2006, p.571). This dissertation also presents the argumentation that the adoption of open innovation practices acts as a true benchmark for the human side of the enterprise and facilitates an iterative unfolding process of identifying, unlocking, realizing and addressing the human problems of organizations (Salampasis et al., 2015c). This outlook is endorsed by the recently re-conceptualized definition of open innovation, which acknowledges the non-pecuniary elements ingrained within this paradigm. In this frame of reference, open innovation is defined as “a distributed innovation process based on purposively managed knowledge flows across organizational boundaries, using pecuniary and non-pecuniary mechanisms in line with the organization’s business model” (Chesbrough and Bogers, 2014, p.12). This definition supports the fact that, open innovation is emplaced within the core of the organization and is incentivised also by non-pecuniary terms. In this context, it becomes an imperative realization to listen and defend the voices that call for attention to the human element. “There is considerable potential for further research into the people side of open innovation, including organisational development, human resource practices and performance management” (Golightly et al., 2012, p.11). West and Bogers (2014, In order to develop an open innovation culture there is an inherent pre-requisite to understand and acknowledge the shift towards an open framework and the adoption of a different and alternative way of thinking and operating (van der Meer, 2007). 8 P a g e | 29 29 p.822) observe an important opportunity towards the development of “a theory and evidence about the development and application of competencies for integrating innovation from external sources and how these are similar to or different from their inwardly focused counterparts”. The viewpoint of this dissertation is that open innovation, as a connection-driven innovation paradigm, is a people-driven process and therefore it becomes highly important to learn how this human element can drive the successful adoption and implementation of open innovation within a truly trustworthy, collaborative, with shared purposes, open environment (Salampasis et al., 2015b). This means that organizations need to nurture openness, collaboration, sharing and co-operation from the inside before opening up to the outside world looking for setting up lasting and valuable business relationships (Salampasis et al., 2015a). For open innovation to excel and thrive, collaboration among the employees is the key. “Extended collaboration is the critical capability for long-term success in complex knowledge-businesses” (Heckscher, 2007, p.247). Working in isolation, in silos, with no ability or willingness to share knowledge, insights and foresights, open innovation cannot happen. In order for all these to be meaningful, this dissertation argues that trust needs to be put back in place along with better ways of working and decision-making processes (Salampasis et al., 2014c). Employees are the most valuable element for open innovation; the true advocates, the evangelists, the zealots of the organization. “The future will likely be won by those who don’t wait for light-bulb moments from a single genius, but rather develop highly collaborative win-win relationships that leverage the collective power of many” (Vitasek, 2015, n.g.). 1.3. The human aspect At this stage the author reckons that it is of great importance to reflect upon the usage of the word human, especially in relation to the individual aspect. This is quite challenging since this kind of delineation and understanding requires going beyond the traditional management perspective and looking into the anthropological manner, so as, to provide a number of insights in relation to the human agenda within the innovation and open innovation management literature. Furthermore, since these terms have been a subject of long philosophical debates, the author, hereby, aims at providing his own interpretation and reflection (also founded within existing literature), which also influences the underlying rationale behind the spirit and culture of this research. However, the author believes that this brief analysis is quite important, not only in terms of understanding the meaning and usage of these terms, but most importantly to reflect the reasoning and argumentation behind the P a g e | 30 30 author’s choice to focus on the human aspect and the element of trust within the open innovation paradigm. The notion of human shares a universal, egalitarian and catholic/collective characterization that purely originates from the human nature and human existence and the inalienable and indefensible right to life and survival, governing the character of national and international law. Since it is by nature a notion of existential character, it goes beyond historical situations and social structures. The awareness regarding the concept of human emerges after the 2nd World War and the raising of public opinion towards Nazi crimes and atrocities. In the nucleus of the concept of human are placed the values of classical humanism elevating man into the core and main subject that possesses an inalienable right to life, to education, to evolution and creativity within structures clearly coordinated and free. The concept of human is very broad and includes in its core civil-political, social, economic and cultural rights. The most fundamental rights which are governed by the values of humanism and create common moral language in the global community is that of life, freedom from slavery, freedom from torture, the right to a fair trial, privacy, freedom of speech, thought, conscience and religion. This humanism is related to evolutionary traits and the humane qualities of sympathy and compassion being reflected and realized through intellectual and emotional capacities. Furthermore, it connotes benevolence, which is a core element of trust. On the other hand, the notion of individual is a political term that is by nature energetic and participatory. It refers to the freedom of the individual (agency) to act in accordance with his/her own judgment and his/her own interests, always in the context of a healthy socio-political system and in relation to the other citizens. Individual rights protect and guarantee the freedoms of every citizen regarding the participation in public life, representation, equality before the Constitution and the Law, while safeguarding privacy. It is important also to underline the fact that human precedes the individual and that individual is a measurable concept contrary to human, which cannot be measured. This particular aspect reflects the overall underlying purpose of this research, which is to bring humanity back into the open innovation paradigm by encouraging the adoption of human-centric management principles within the financial industry. P a g e | 31 31 1.4. The contemporary relevance of the financial industry as an empirical setting The point of departure in this analysis is to elucidate the importance and relevance of the financial industry, as the empirical setting for this research, understanding the reasons behind the choice of the industry per se. The financial industry (consisting of banks and non-bank financial institutions) comprises all the provided economic services, which encapsulate a wide range of financial institutions that are responsible for managing capital. These institutions can be credit unions, banks, credit card companies, insurance companies, accountancy companies, consumer finance companies, stock brokerages, investment funds, real estate funds and some government-sponsored enterprises. This vast and diverse number of institutions is considered by the World Bank as the brain of the economy, since they provide many functions catering for the needs of the economy per se. To that respect, the financial industry serves the following main purposes: a) provision of credit, b) facilitation of transactions, c) provision of liquidity, d) mobility of savings, e) allocation of capital funds, f) monitoring of managers for responsible and as envisaged spending of allocated funds and g) risk management services/risk transformation-diversification9 (Baily and Elliott, 2013; World Bank, 201510). This broad scope and availability of services, generate positive externalities (or catalytic effects) over the rest of the economic activity (Eichler et al., 2013), depicting the importance of the industry in animating the worldwide economy and the society, at large, since its smooth, stable and sustainable functionality shares foundational implications for individuals, families, businesses, governments and civic institutions (World Economic Forum, 2013). Since the 1980s, the financial industry has been following a steady growth trajectory compared to other industries, such as, trade, production and manufacturing, accelerating structural changes towards the development and establishment of a service-based economy. “A well-functioning financial sector can be compared to that of the heart in the human body: just like the heart takes care of the constant circulation of blood, the financial system eases the flow of capital in modern economies” (Eichler et al., 2013, p.9). Haldane and Madouros (2011) accentuate the importance of the financial industry within the worldwide economy; the value-added Merton and Bodie (1995 cited by Greenwood and Scharfstein, 2012, p.2) present the “functional view” of the financial industry, which is “to dampen risk by reallocating it efficiently within the economy”. 10 Information provided on the dedicated website. Not for referencing or citation purposes. 9 P a g e | 32 32 of financial intermediaries in the US was about $1.2 trillion in 2010 catering for an 8% equivalence of total GDP. In 2009, the value-added of finance was around 10% of GDP in the United Kingdom. Greenwood and Scharfstein (2012) communicate the fact that the US financial services industry grew from 4.9% of GDP in 1980 to 7.9% of GDP in 2007. Furthermore, Baily and Elliott (2013) suggest, based on data by the US Bureau of Labour Statistics that employment in the industry has raised to 5.83 million people, even though the share of employment of the industry experienced a minor reduction to 5.2% in 2012. Den Haan (2011) suggests that the fraction of US GDP during the post-war period has increased from 2% to 8%. The World Bank states that the financial industry provides information, which is reliable and accessible, lowering the transaction costs supporting resource allocation and economic growth. According to the World Bank, for 2012, the market capitalization of listed companies 74.2% of GDP and the domestic credit provided by financial industry was 166.6% of GDP in 2013. Despite the current financial global turmoil, the importance of the financial industry to the overall global economy cannot be challenged, remaining a large part of the economy and a major employer. In the same token, the financial industry can be considered as a “network sector”, due to its catalytic effects on other industries (Eichler et al., 2013, p.82). Nowadays the landscape of the financial industry is being faced by a combination of emerging structural challenges, trends and customer needs (mobile applications, big data analytics, sharing economy, social media, payments, lending, savings, thirdparty solutions/platforms/utilities etc), especially with regards to the role of technological innovation, the pressure to adopt cutting-edge technologies, intensified regulatory changes and scrutiny due to involvement in risker businesses, insufficient liquidity and lack of transparency (OFR, 2014), compliance requirements, the loss of relevance and disconnect of traditional financial services from a customers’ standpoint that proves to be disastrous11 (Accenture 2020 Banking Report, 2013; Bradley et al., 2014; Groenfeldt, 2014; Millennial Disruption Index12), the unparalleled speed of building, obtaining access or acquiring new capabilities in relation to digital technology and beyond (Zook, 2015) and the fact that financial “We spent eight years getting out of the crisis and skipped a full generation of users. We need to figure out how we service the client. Having someone at the top who believes this is key. If you have resistance from the bank, you’re not going to be able to change much” (Belinky in Crosman, 2015). 12 Information provided on the dedicated website. Not for referencing or citation purposes. 11 P a g e | 33 33 institutions are no longer deemed trustworthy compared to other industries, such as, a technology and automotive (Edelman Trust Barometer, 201413). To that respect, the driving forces that shape the industry revolving around technological developments, collaboration models, consolidation activity, global interoperability across players, along with, a new generation of market participants and tech company disruptors venturing into the financial industry, change the nature of the industry itself. Within this fierce competition, the financial industry must be prepared for change, within an environment that is no longer business as usual in terms of institutional adaptation, modernization and change of mindset in order to sustain its relevance and competitive advantage, leaving also room for becoming a globally effective social industry, economically and socially sustainable (Davis and White, 2015). For this to happen, this dissertation argues that financial institutions need to adopt open innovation practices that will help them “embrace the technology-driven changes and look for new opportunities rather than protecting and preserving antiquated business models” (Hernaes, 2015, n.g.) in terms of remaining relevant to their customers. “It is encouraging that many banks are receptive to the idea of open innovation, collaboration and Fintech investment and also are prepared to sacrifice current revenue in order to move to new business models. But banks need to innovate faster, become more nimble and develop a more entrepreneurial culture if they are going to compete effectively and meet customers’ needs” (Holley, 2015, n.g.). And this does not seem to be easy at all … 1.5. Personal perceptions and incentives This research also originates from the personal perceptions of the author himself, perceptions reflecting “disciplinary and social needs, pragmatic parameters coated within the personal passion” of the researcher (Saldaňa, 2011). The author through this dissertation aspires to underline various definitional, conceptual and strategic intent gaps in the existing scholarship on open innovation by presenting an alternative and broader picture, positioning the concept and the value of open innovation in the financial industry and by highlightening the importance of adopting an incorporative attitude towards this paradigm. This means that there is an emerging need to view the research on open innovation from a broadened spectrum of disciplines and fields, with a solid grounding in the humanities disciplines, through the lenses of multidisciplinarity. 13 Information provided on the dedicated website. Not for referencing or citation purposes. P a g e | 34 34 The author argues that in order to understand the human side of open innovation there is a need to revisit the organizational and individual sphere. Furthermore, open innovation, human side and trust are complex phenomena, requiring dedicated attention, a multi-thematic approach and research mindset. Thus this research is “infused with multidisciplinary, practical and ethical questions and analyses reflecting the complex challenges business leaders face today” (Bennis and O’Toole, 2005, p.104). Moreover, an additional important perception is the fact that existing research on the human side of open innovation tends to be somewhat confusing, contradictory, limited, monolithic and does not seem to move forward (Salampasis et al., 2015b); thus the author argues that the scope of the human side of open innovation captures interrelated, dynamic peculiarities, giving prominence to the need for the development of organizational and individual capacity of open innovation within the financial industry. From the very beginning of this research, the author realized and argued that the open innovation paradigm should not only be captured and defined only through the prism of knowledge inflows and outflows (Salampasis et al., 2015a). To that respect, the author believes that this adopted approach shares numerous repercussions for the companies and the way they organize and govern their open innovation practices and activities; needless to refer to the impact on the value chain, the levels of performance, the empowerment of creativity and the business and customer value proposition. The business world is changing in fundamental ways; hence the existing approach to the open innovation paradigm does not seem to entirely serve the purposes of managing the future generation of financial institutions, requiring significant adaptation and embracing a multidisciplinary mindset (Salampasis et al., 2014a). There is something more in this dynamic exchange including mobility of knowledge, people, values, behavioural norms, cultural elements etc. In this term of reference, the human side is not only about skills and competences, as existing research tends to present, but it needs to be perceived and seen within a broader landscape (Salampasis et al., 2015c). “Now companies are seeking growth outside their core competences in an environment that’s being reshaped by disruptive technologies, evolving regulation and changing customer expectations” (Nahass, 2014, p.1). In terms of open innovation adoption and implementation, the author believes that a company cannot be open to the outside if it is not open on the inside and in order to achieve this openness, trust, within the organizational sphere, becomes the key facilitator and driver in this process (Salampasis et al., 2014b). As a result, a company cannot ask to be trusted if it is not trustworthy on the inside; if it is unable to build trust-based P a g e | 35 35 relationships, both within the organizational boundaries and beyond (Salampasis et al., 2015a). This perception has been endorsed by two additional parameters that have been acting as a catalyst (no direct causality has been perceived or even implied) for developing the character and culture of this research. Primarily lays the failure case of the financial industry and the untrustworthiness of the business model. Taking an example of major UK banks, Burke et al. (2011) argue that highrisk decisions and failures in their corporate governance have a negative influence on the reputation of the UK financial industry as a whole (incl. legal and accounting services enterprises). This means that the dark side around the status and legitimacy of the banking sector has a direct effect on the reputation and trustworthiness of the industry as a whole. In relation to the way innovation in perceived in terms of investment and growth, Christensen and van Bever (2014) articulate and introduce The Capitalist’s Dilemma. They argue that assessment metrics, that are currently used to pinpoint the role of capital towards investments on innovations, cater for a short-sighted approach and do not relinquish a long-term prism. “Doing the right thing for longterm prosperity is the wrong thing for most investors, according to the tools used to guide investments” (Christensen and van Bever, 2014, p.66). By employing a more focused approach in the financial industry Mukunda (2014, p.72) argues that the Wall Street has been extensively been criticized “not only for promoting short-term thinking but for sacrificing the interests of employees and customers to benefit shareholders and for encouraging dishonesty from executives who feel they’re being asked to meet impossible demands”. This dissertation receives inspiration (but again no direct causality is perceived or even implied) from these approaches, since open innovation needs to be positioned within an everlasting momentum and societal value, fostering a responsible and sustainable growth mindset in the realms of the financial industry. The author is fully in line with the fact that with the current way innovation is being perceived, primarily, from a numerical and assessment metrics approach (a.k.a. Wall Street’s preferred metrics), leaves unappreciated (or even behind) the human and societal aspect and the intent to create long-lasting sustainable and globalized impact on humanity. The human-centric approach to open innovation can open the discussion towards changing perceptions and mindset regarding responsible investments of the abundance of global capital or “capital superabundance” (Bain and Company, 2012, p.3), creating a “more balanced and sustained prosperity for all their stakeholders” (Malone and Fiske, 2013, p.13). This research elucidates that it is important to realize that open innovation is for and about the people and a humanistic approach P a g e | 36 36 shall encounter shifting attention from silo-driven mindsets to a broader magnitude of social realities. 1.6. Limitations of existing research scholarship Based upon the overall abovementioned analysis, the author argues that extant research scholarship depicts five areas of limitations that draw attention to the incentive and motivation for this research accentuating its relevance for academia, practice/management and policy. These limitations cater for providing a hermetic understanding and analysis of the topics discussed permitting the exact framing of the problem area. The author pays attention to the fact that existing research, even though indirectly acknowledges trust as an important element of open innovation, fails indeed to conceptualize this relationship and contribute to the theoretical development of the open innovation paradigm. The inadequacy of theoretical foundations and lenses in the way of understanding and interpreting the open innovation paradigm becomes an emerging theme in the open innovation research agenda, a theme that has been neglected for long (Vanhaverbeke and Cloodt, 2014; West et al., 2014). In a similar manner, the human dimension of open innovation has received scarce attention. There is a need for conceptualization, qualitative empirical exploration of the multifaceted nature of the human side, paying particular attention to the intersection and the dynamic interplay between the individual and organizational level of analysis, which shares multiple implications towards the development of organizational and individual readiness models that can ease the smooth adoption and implementation of open innovation practices. Additionally, the author observes that extant research and discussion provide limited insights on the role of open innovation within the financial industry, despite the inherent importance of the industry itself in the global business and economic arena. These limited insights are related to the capturing of the essence of open innovation, in terms of understanding the different peculiarities, functions, interpretations and meanings this paradigm can have in the realms of this highly important industry. The following figure summarizes the abovementioned key themes that require further exploration, analysis and understanding, themes that this dissertation aspires to illuminate by providing innovative, invigorating and cutting-edge insights. P a g e | 37 37 Figure 2: Overview on limitations and challenges of existing research (Developed by the author) The abovementioned figure summarizes the rationale behind this respective research by interlineating the areas in which it aims at contributing. It is important for the author to underline that the limitations of existing research incentivize the adoption of a multidisciplinary approach and the need to embrace a holistic view in terms of conceptualizing and understanding the human side of trust-embedded open innovation within the financial industry. P a g e | 38 38 1.7. Addressing the research gap and problem delineation Overall, this dissertation, by employing a multidisciplinary research approach in terms of talking across discipline lines and different backgrounds, aims at illuminating the ambiguities, peculiarities and mysteries of open innovation in the financial industry by exploring the multifaceted human side, crystallized within the locus of a trust-embedded approach of open innovation in the financial industry; an industry, which is surprisingly very much neglected by innovation studies, despite its importance for the worldwide economy. The research outcomes address cuttingedge topical issues in relation to trust, encapsulated within a dynamic interplay between the organizational and individual sphere (exploration of the diverse, different and antithetical facets of human nature and corporate environment), in relation to open innovation adoption and how to amplify dedicated skills, competences, values, motives and incentives, cultivating a collective open innovation organizational environment that influences business practices within the financial industry. Furthermore, this dissertation presents a number of argumentations regarding the strategic intent of the financial industry and caters for a mind-shift towards the understanding and appreciation of the highly neglected and forgotten element of trust in the journey towards the destination; the creation of open, collaborative, trustworthy, human financial enterprises. All in all, this dissertation argues that the adoption of open innovation practices within the financial industry is meaningful only via the existence of trust-based relationships within the organization per se being “the only way to advance the relationship and build precious relational capital in an increasingly transactional business environment” (Malone and Fiske, 2013, p.65), such as, the one within financial institutions. P a g e | 39 39 Figure 3: Focus of the research (Developed by the author) The abovementioned figure depicts the focus of this research. The research encapsulates and synthesizes multiple literature streams and disciplines in order to capture the trust embeddedness within the open innovation paradigm and the human-centricity within financial institutions. This exploratory14 and multidisciplinary research emplaces, at the front page, the importance of trust as an element engrained within the open innovation paradigm and interlineates the underscoring and importance of the human element towards the establishment of human financial institutions. From an academic standpoint this research represents a pathway opening to integrating a multidisciplinary approach in innovation studies. Furthermore, it sheds new light on the way open innovation is perceived both as a theory and as a practice for organizations by encouraging the discussion on the underlying, individual, organizational and to a greater extent human elements in terms of creating financial institutions that are ready to bring on board such practices and at the same time changing the mindset and the existing modus operandi of the financial industry itself. From a managerial viewpoint this research contributes towards providing valuable, up-to-speed but down-to-earth information, tools and resources to financial institutions on building, managing and establishing open, collaborative, trustworthy and human financial enterprises. Marshall and Rossman (1999, p.33) argue that the exploratory purpose covers the following elements: a) Investigation of little-understood phenomena, b) Identification or discovery of important categories of meaning and c) Generation of hypotheses for further research. 14 P a g e | 40 40 1.8. Strategic intent, relevance and impact of the research “Don’t worry if the assumptions of our theories do not reflect reality; what matters is that these theories can accurately predict the outcomes. The theories are valid because of their explanatory and predictive power, irrespective of how absurd the assumptions may look from the perspective of common sense” (Friedman, 1953 cited by Ghoshal, 2005, p.80). At this stage it is important for the author to highlight the fact that this research has an underlying purpose and aims at seeking and creating a greater impact both within the management scholarly research and business offering a real lens in the current function of the management of open innovation within the financial industry and in general, eschewing similar views such as the abovementioned one by Friedman. To that respect, this research aspires to create a positive impact on people, firms and society and contribute to the process so as to “galvanize knowledge-sharing, learning and change among academics and practitioners” (Alajoutsijärvi et al., 2011, p.34). Management is considered as “one of the greatest human innovations of the twentieth century” (Canals, 2009, p.1); business is not considered as scientific discipline. Instead it is considered as a profession, requiring a multidisciplinary and broad-based approach and mindset (Bennis and O’Toole, 2005) or even to the extreme, that management is a practicing art (Eccles and Nohria, 1992). Its main purpose is to streamline and master the numerous human, social and organizational complexities and compelling challenges within a globalized, cataclysmic and unpredictable business environment. Similarly Mintzberg (2004) prevails upon the fact that management as a practice encompasses the elements of experience, insight and science-based analysis. In this frame of reference, the word that has acted as a landmark for the author throughout this research endeavour is relevance. In this context, the author defines relevance as the development of rigorous research, in such a way, that creates new and diverse content of knowledge and methods that address business challenges, while offering insights and perceptivity to issues that are of primary importance to the business community. Hence, providing discernment, ideas and multi-thematic approaches can actually improve further and develop the practice of management. Therefore, this qualitative research bridges the gap between theory and practice by framing a contribution based both on theory and real data, grounded on actual business practices, so as, to offer research outcomes that can be of use for the industry and business per se (Bartunek et al., 2006), while contributing to “strike a new balance between scientific rigor and practical relevance” (Bennis and O’Toole, 2005, p.98). P a g e | 41 41 This abovementioned view endorses the intention of the author to embrace a broader view and perspective while tackling and addressing the respective research questions by being factual and at the same time interesting and useful for real life business. This means that the author aims at respecting and advancing scholarship15 in the field of innovation management by producing research outcomes and propositions that emanate “logic, future impact and credibility along with emotional and spiritual pursuits” in the quest for finding and unveiling the truth (Northcote, 2012, p.105) . The adoption of a qualitative approach, in the scope of this research, caters for the creation of an abundant scope by embracing multidisciplinarity for investigative depth, interpretative adequacy, illuminative fertility and participatory accountability (Shank and Villella, 2004). Especially in the realms of the financial industry, the author believes that the research outcomes can indeed contribute to the on-going discussion on the necessity of social relevance in the modern management research. The author is also in favour of the views presented by Ghoshal (2005) on the solely forceful domination of pragmatism and result production without taking into consideration the human aspect within the organizational sphere. “Organizations have become more impersonal and individuals are often treated as just another resource, causing employee loyalty to evaporate” (Canals, 2009, p.8). “Moving forward is not about reformulating novel dependent or independent variables; it is about addressing a phenomenon that can only be unpacked by combining theories, concepts, data and methods from multiple disciplines to explore the scope of boundary conditions of multiple disciplinary perspectives and the benefits of this integration” (Cheng et al., 2009, p.1072). This dissertation embraces this mindset arguing that the adoption of trust-embedded open innovation can bring back humanity within financial organizations, encasing the adoption of alternative models around the appreciation of human beings and the impact this mindset has on people, organizations and society. Boyer (1980 cited by Ghoshal, 2005) suggests four kinds of scholarship: a) discovery (research), integration (synthesis), practice (application) and teaching (pedagogy). 15 P a g e | 42 42 CHAPTER 2: RESEARCH OBJECTIVES AND STUDY SETTING 2.1. Research objectives The overall purpose of this qualitative research is to develop a concise, concrete, dynamic and comprehensive conceptual model, which (a) examines the trustembedded aspect of open innovation, (b) conceptualizes the framework of the human dimension of open innovation (c) empowers the integrative role of human resource management and (d) creates the prerequisites, the mindset and the talent to observe the emerging shift towards the building of human enterprises in the financial industry through the adoption of open innovation practices. To that respect this research contributes to the on-going and much needed debate on the necessity to recognize the importance of organizing for open innovation in the financial industry. Hence, the overarching research question, which is dispersed across this research, is Why and How to Create a Corporate Culture and Environment for Trust-Embedded Open Innovation in the Financial Industry. In this context, this research endeavours to address the following research questions encapsulated within the abovementioned purpose: RQ1. How is trust related to open innovation within the financial industry? RQ2. How is open innovation conceptualized under the prism of intraorganizational trust? RQ3. What is the interplay between organizational readiness and trust-embedded open innovation adoption in the financial industry? RQ4. How do trust, readiness and human resource management practices conceptualize the human dimension of trust-embedded open innovation in the banking sector? RQ5. What is the profile of an open innovation leader and how to create the right organizational environment for employees to excel within an open innovation corporate environment in the financial industry, within and outside the organizational boundaries? These five abovementioned research questions depict the natural pathway of the author’s cognitive resonance in terms of developing the framework of exploring the overarching research question. The research question covers many multifaceted aspects and elements, which require individual but at the same time integrative P a g e | 43 43 exploration. The research journey begins with the introduction of trust as a conditional pre-requisite of open innovation adoption within the financial industry. Driving this logical flow, the following research question, offers a detailed analysis in terms of introducing and conceptualizing the trust-embedded open innovation mindset. This is important because this theoretical contribution acts as a default mechanism in the process of understanding the role of open innovation within the financial industry, in terms of exploring the neglected human dimension of this paradigm. Revisiting the organizational level it is natural to explore the organizational readiness (and to a greater extend the individual readiness) dimension, in terms of framing a conceptual model that could be used as an auditing tool to assess the organizational readiness mechanisms for open innovation in the financial industry. This research question depicts the inherent interplay between the organizational and individual level of analysis since it embraces the multifaceted role of the organizational sphere and how it can affect the adoption of open innovation practices. In the same token, the interplay between trust, readiness and human resource management practices take the research forward by providing a conceptual model of capturing the human dimension. This human dimension is finally illustrated in the last research question, which aims at putting into pieces the puzzle of individual characteristics and organizational elements required in order to thrive and succeed within the corporate environment of financial institutions. As the following figure projects, the attitude towards the research questions is exploratory by nature, encircling aspects from a number of disciplines, enriching the research scope and objective, while at the same time taking into consideration elements from multiple knowledge sources, practices and theoretical lenses. Based on the abovementioned analysis, the following figure depicts an overall view of the research by positioning each of the six publications and their relationships to the dimensional literature space and the aim of the research itself. P a g e | 44 44 Figure 4: Composition of the publications and their positioning within the research and the research questions (Developed by the author) Saldaňa (2011) argues that the formulation of the research questions should provide descriptive, explanatory and outlining answers within the story of a social process. Research questions “may also address the social meanings humans construct and attribute, the contexts of particular phenomena and the variances that occur within them” (Luttrell, 2011, p.161 cited by Saldaňa, 2011, p.71). The research questions also reflect the corresponding research paradigm and approach the author wishes to adopt, the choice of the research methodology, the way data will be collected, treated and analysed and also the topical issues to be explored in relation to the reality as perceived by the author. The following table depicts the overall positioning of the research questions in relation to each dedicated publication. It is important to underline that, publications I, II and IV address the trust-embeddedness aspect, showing both the difficulty in connecting the elusive concept of trust with open innovation and the challenge to address this part of research with a high volume of literature streams. P a g e | 45 45 Table 2: Positioning of the research questions within the publications (Developed by the author) Publications/Research Questions RQ1 RQ2 I X X II V VI RQ4 RQ5 X III IV RQ3 X X X X X X 2.2. Scope of the research In this context, the following figure presents a streamlined model of the study setting, in accordance with the abovementioned analysis and the publications. The model depicts the starting point of the open innovation paradigm and the twofold exploration of the organizational (antecedents of open innovation and readiness) and the individual dimension (individual readiness and open innovation leader) with trust acting as the connective factor between the two and how learning and development along with training and talent acquisition and retention, realized by human resource management practices and top management actions, facilitate the shift towards human centricity within the financial industry. A crucial point to be clarified here is the fact that in order to be able to conceptualize the humancentricity dimension, it is important to capture the essence of open innovation primarily within the organizational level. Human resource management practices and top management play a continual circular role in the mobilization of the individual dimension leveraging it on the organizational level; in other words leading to the institutionalization of human enterprises that entail within their entities elements from the individual and the organizational sphere. P a g e | 46 46 Figure 5: A streamlined model of the study setting (Developed by the author) 2.3. Definition of key concepts The discussion around the open innovation paradigm encasing a number of finergrained topics, has resulted in the need to shed light to some additional issues still being in their infancy, lacking adequate and systematic attention. In this frame of reference, the element of trust falls in the endeavour of identifying and exploring the organizational and individual barriers towards the implementation of open innovation practices. Open innovation is primarily embedded in the establishment of successful business relationships; therefore this kind of relationship empowerment must be related to trust (Kanter, 1994). Within the open innovation paradigm, which is considered as a connection-driven innovation paradigm (Salampasis et al., 2015b), trust is seen as a congenital condition of the human collage, requiring years to be built, moments to be destroyed and maybe never be rebuilt (Salampasis et al., 2014b). Salampasis et al. (2015a) perceive the true and pure meaning of open innovation being realized only through the establishment of deep connections and long-lasting relationships, P a g e | 47 47 arguing that trust is the linkage between the two aspects; the individual and the organizational sphere. This realization, even though it seems to be a simple philosophy, it encapsulates numerous challenges and implications from the management perspective of open innovation. These challenges are primarily mainly related to the elements of a) vulnerability that exists between the trustor and the trustee, b) the expectation of performing a particular action and c) the lack of control (Mayer et al., 1995), which are the core DNA of trust. The discussion around the necessity and importance of trust as a prerequisite for open innovation to be meaningful, successful and thrive within the organizational sphere, primarily, and the outside world, opens up new pathways both for research and practice. At the same time it drives the emergence of a new mindset around the attention to the humanly-embedded elements in organizations and the need to establish all the necessary auditing mechanisms for organizational and individual readiness towards open innovation. Last but not least the attention to trust nurtures the soft side within business relationships by reflecting a shift towards a more human to human philosophy (Salampasis et al., 2014b). The author would like to underline the fact that since all the related concepts have been extensively analysed and described in the respective publications attached in the dissertation, there is no intention to repeat here what has already been written and included in the corresponding publications, but to offer a brief overview of the vicinity of the conceptual elements encased within the three interrelated and under study concepts. Naturally, some potential overlapping is unavoidable, but this should not be considered as plagiarism or misconduct. 2.3.1. Open Innovation Innovation to some extent had always been open (West and Gallagher, 2006). Open innovation is recognized as one of the most important paradigms in innovation management catering for the opening and democratization of the innovation lifecycle and the reaching out beyond the organizational boundaries to capitalize on internal and external knowledge, ideas and pathways to market. By definition open innovation is “the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively” (Chesbrough et al., 2006, p.1) and is “systematically relying on a firm’s … capabilities of internally and externally carrying out the major technology management tasks …along the innovation process” (Lichtenthaler, 2011, p.77). P a g e | 48 48 The underlying philosophy of open innovation is grounded in the complementarity between the inflows and outflows of knowledge while bringing economic value to creativity and knowledge (van der Meer, 2007). Within an open knowledge era, experiencing a profound abundance and a non-stop flow of information, where the transferring of knowledge inflows and outflows and access to information is indeed beyond understanding, collaboration becomes the new business as usual mindset that can facilitate success within this constantly changing business world characterized by high competition and volatility. Open innovation is betting on the power of “crowd wisdom” in order to find the right solution (Simanis and Hart, 2009, p.80). It is worth mentioning here the word that Chesbrough himself is using to describe open innovation; a porous business model joining sides to the notion of transparency, openness and sharing (Chesbrough, 2003b, p.37), or the fact that the boundaries of the firm become permeable (Lichtenthaler, 2011). As a concept, open innovation, has experienced an unprecedented growth trajectory in terms of academic research being perceived as one of the most discussed and debated innovation management approach in modern academia and business. As a model has been of complementary nature to previous concepts of employees’ cumulative innovation (Chandler, 1963; Reuter, 1977; Scotchmer, 2004), the supplier and user innovation paradigm (von Hippel, 1986, 1988, 2005a, 2005b, 2009), open source (West and Gallagher, 2006), user co-creation (Franke and Piller, 2004), user-centred innovation and customer integration (Baldwin et al., 2006; Baldwin and von Hippel, 2011; Oliveira and von Hippel, 2011), peer to peer innovation (Satzger and Neus, 2010), distributed innovation (Bogers and West, 2012; Sawhney and Prandelli, 2000) and the early supplier involvement process (Bidault et al., 1998) by bringing on board the competitors as a potential external source of innovation, opening up the innovation process. Moreover, its definition has experiences evolutionary approach depicted in the following figure. P a g e | 49 49 Figure 6: An evolutionary approach in the definition of open innovation (Developed by the author) The core of open innovation model is the infusion of external ideas and knowledge into the new product development (Chesbrough and Appleyard, 2007; Laursen and Salter, 2006), denoting an emerging shift from a closed to an open innovation paradigm (Chesbrough et al., 2006; Dahlander and Gann, 2010). This propensity to the open paradigm is illustrated into the fact that “closed innovation springs entirely from internal company innovation activity, largely in the form of organized R&D” (Helfat, 2006, p.86). On the other hand the open innovation model advances its emergence from “sources external to the company in combination with supplementary internal company innovation activity” (Helfat, 2006, p.86). The following table depicts the core differences between the closed and the open innovation paradigms. P a g e | 50 50 Table 3: Closed vs Open Innovation (Adapted from Chesbrough, 2003 b) In the process of understanding the functionality of these knowledge inflows and outflows, Gassmann and Enkel (2004) identified three processes within the structure of the open innovation paradigm: inside-out (outbound), outside-in (inbound) and coupled (bidirectional) process. Figure 7: Decoupling the locus of innovation process-Three archetypes of open innovation processes (Gassmann and Enkel, 2004, p.6) P a g e | 51 51 In the same manner, the following table provides an overall understanding of these three types and their respective mechanisms. Table 4: Open innovation types and mechanisms (Adapted from Chesbrough and Bogers, 2014) Rigby and Zook (2002) consider a number of core benefits of open innovation: the inflow of ideas that can potentially lead to innovation, the outflow of ideas in terms of revenue generation and talent acquisition, the early exposition and entrance to the market in terms of evaluating and assessing the viability of a possible investment and the inflow and outflow of ideas that puts emphasis on the identification, understanding and focusing on core innovative assets. Almirall and CasadesusMasanell (2010) present a simulation model that depicts the trade-off between benefits of discovery and costs of divergence. In their study it is discussed that discovery “might arise not from the exercise of full strategic freedom but from restricting the available choices and learning from those made by others” (Almirall and Casadesus-Masanell, 2010, p.44). Going back to the shift from closed to open innovation a brief but important parallel analysis of two innovation models is important. The way innovation has been perceived so far is under the pillar of value creation and customer need fulfilment. P a g e | 52 52 The main goal of the firms under the structural innovation paradigm or vertically integrated innovation model (Bogers and West, 2012) is to deliver a product or a service to the customer in a better, faster and cheaper way that another competitor would have done. The customer is based on the centre of the process but only as a consumer; meaning that there is no interest on building up relationships, customer involvement in the product or service creation process. It is simply a process working for the customer but without the customer. Simanis and Hart (2009) argue that the implementation of the structural innovation paradigm has substantial consequences in the societal, customer and environmental leads of life. Societies are simply a group of consumers waiting for their needs to fulfilled, relationships become transactions, the natural environment is used only as a source of raw material and a general attitude of a mass consumer market, which will potentially lead to a better quality of life, is born. On the other hand the embedded innovation paradigm brings upfront the concept of business intimacy. Business model intimacy is based upon the relational model of identity and a community creation. It builds up a sense of belonging, on shared vision practices and creates a sense of responsibility to the community. Embedded innovation and business intimacy symbolize a new conceptualization of value creation which is not based only on the competitive advantage but elevates the creation of long lasting and trustworthy relationships. Through these relationships a unique platform for sustainable growth is formulated and new horizons for companies and the society are being opened. The embedded innovation paradigm promulgates collaborative attitudes and mutual learning since it is enacted within a community based environment, giving absolute emphasis on relationship, team building and equal partnerships. It encourages the endorsement of engagement which is a new way of thinking by instilling responsibility and commitment and creates an ecosystem of people and institutions that respect the values of the enterprise. Through these community-based practices diverse people are working together towards the creation of sustainable and common value. “Innovation isn’t enabled by new relationships, it is the relationship” (Simanis and Hart, 2009, p.83). Following the analysis of the two models of innovation paradigm it is clear that open innovation is perceived under the pillar of collaborative innovation. Collaborative innovation can be perceived dyadically via the involvement of lead users (Oliveira and von Hippel, 2011), and the customers such “as through participatory design, empathy, trust and modularization” (Greer and Lei, 2012, p.64). It derives from the structural differences within the organization regarding the flow of information and ownership besides the structural mechanism of coordinating this infusion of P a g e | 53 53 information (Satzger and Neus, 2010). It is important to understand that collaborative innovation is set within a framework of a peer to peer or network perspective and is managed through synergies. “Firms that manage to create a synergy between their own processes and externally available ideas may be able to benefit from the external creative ideas of outsiders to generate profitable new products and services” (Dahlander and Gann, 2010, p.704). Open innovation is considered a multidimensional concept. These dimensions are multifaceted capturing a wide spectrum of the open innovation research agenda: inbound and outbound (Bigliardi et al., 2012), breadth and depth (Laursen and Salter, 2006), external sourcing, search, collaboration and protection (Ebersberger et al., 2010). In a similar manner, West et al. (2006) identified five levels of analysis: individuals and groups, implications for firms, interoganizational value networks, industry-sector, national institutions-innovation systems. Ili et al. (2010) by bringing insights from the automotive industry identified the following four dimensions: external sources for innovation, operations and processes, external exploitation and personal opinion on future trends in industry and their own company. Last but not least from a research stream point of view the following perspectives are proposed: spatial, structural, supplier, user, process, leveraging, tool, cultural, institutional (Gassmann et al., 2010). The author would like to highlight that in the realms of this research, open innovation is considered holistically and does not differentiate between the three processes. This is discussed in detail in the limitations section. 2.3.2. Trust Trust is an invisible but extremely powerful prerequisite of any kind of relationship. As a concept it has been extensively explored in the literature embracing numerous definitions, research approaches and conceptualizations. Trust is an elusive and multidimensional notion (Brattström et al., 2012, Corazzini, 1977)) capturing many interconnected, interrelated and difficult to understand elements that exist individually, but neither necessarily interdependently nor constantly (Tyler and Stanley, 2007). This multidimensionality has been extensively explored within extant literature leading to the proposition of various and different dimension of trust (Coleman, 1990; Deutsch, 1960; Gambetta, 1988; Hart et al., 1986; Jackson, 1985; Luhmann, 1979; Strickland, 1958; Zand, 1972). Swan and Trawick (1987) developed a conceptual framework projecting five trust dimensions: P a g e | 54 54 dependability/reliability, friendliness. honesty, competence, customer orientation and This fact has resulted into a multilingualism of trust in terms of definition, perception and positioning. “Several terms have been used synonymously with trust and this has obfuscated the nature of trust. Amongst these are cooperation, confidence and predictability” (Mayer et al., 1995, p.712). As a concept it has undergone sociological, psychological and cognitive conceptualizations contributing to the significance of the notion while attracting considerable research efforts (Bachmann, 2001; Kramer and Tyler, 1996; Kramer, 1999; Lane and Bachmann, 1998; Misztal, 2013; Rousseau et al., 1998; Seligman, 2000; Sztompka, 1999; Tyler, 2003). However, trust still remains a very elusive notion being extremely difficult to conceptualize due to the highly extended and broad literature and the lack of a widely accepted definition. This is mainly grounded on the inherent dilemma of the primary perception of trust either as a psychological attitude (referring to the expectation and the willingness) or as a behavioural choice (decision to trust). Möllering (2001, p.404) elaborates upon the nature of trust towards a theory of expectations, interpretation and suspension arguing that “trust can be defined, first of all, as a state of favourable expectation regarding other people’s actions and intentions”. Kramer (1999, p.571) acknowledges the fact that “most trust theorists agree that whatever else its essential features, trust is fundamentally a psychological state”. Extant research has highlighted and acknowledged the central role trust plays in organizations delineating the aspects of the micro and macro level. This delineation depicts the need for seeing trust as a multilevel, multidimensional construct requiring multidisciplinary research approach. Table 5: Micro and macro levels of trust (Developed by the author based on Fulmer and Gelfand, 2012) Trust Micro level Employee satisfaction Effort and performance Citizenship behavior Collaboration and teamwork Leadership effectiveness Human resource management Macro level Organizational change and survival Entrepreneurship Strategic alliances Mergers and acquisitions National-level economic health P a g e | 55 55 Perceptions Negotiation success Trust has important embedded psychological, sociological and economic properties. The main idea behind the importance and existence of trust is the assumption that the social world is characterized by benevolence i.e. “having confidence or faith that some order, upon whom we must depend, will not act in ways that occasion us painful consequences” (Boon, 1995, p.656). In terms of conceptualization this dissertation adopts the definition proposed by Mayer et al., (1995, p.712) that trust is “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party”, referring to the “extent that people can trust others, they can work together to create benefits that each individually cannot generate alone” (Dunning et al., 2012, p.687). Yamagishi (1998) considers trust as an efficient and effective form of social intelligence, while Orbell and Dawes (1993) argue that in economic life, trust is a foundational catalyst and enabler of cooperation for mutual benefit. Fukuyama (1995), while examining the principles that do good and bring prosperity to the society, recognizes the importance of trust as a foundational prerequisite for the development of interorganizational relationships, which facilitate and ease interfirm exchange of knowledge, while Niu (2010) puts emphasis on the existence of high degrees of trust among parties in order to nurture and foster effective and efficient collaboration among organizations. This non-singularity nature of the concept of trust has led existing scholarship into distinguishing different types of trust: generalized, system, process-based and personality-based (Johnson and Grayson, 1999; Lindgreen, 2003). Krueger et al. (2007, p.3) distinguish two forms of trust: conditional and unconditional. Conditional trust is connected in the mind of evaluating the “expected and realized reward”, while unconditional trust is tied in with “social attachment behaviour”. In the interorganizational level, trust can be perceived either as dispositional or relational (Gulati and Sytch, 2008). Dispositional trust mainly reflects expectations about the trustworthiness of others in general (Gurtman, 1992). Relational trust pertains to a specific dyadic partner (McAllister, 1995). Scholars, such as, Brownlie and Howson (2005), argue that trust depicts solely as a relational entity and cannot be perceived under an isolation perspective. “Trust occurs as individuals extract the known factors while bracketing off or suspending the unknown factors to avoid confusing decisions with uncertainty” (Powell, 2011, p.29). Reina and Reina (2006) propose three elements in order to describe the capacity of trust: competence trust, P a g e | 56 56 contractual trust and communication trust. De Cremer (2015) denotes that no perceived difference exists towards the acknowledgement of the importance of trust, underlining the inherent desire of human beings to develop and build business relationships based on trust, irrespective of their cultural background perspective. This means though that even if there are no differences in the aspect of why, multiple differences and approaches, originating mainly from the ad hoc cultural credentials, are perceived in the aspects of how, when and with whom. An organization is by nature an inherently multilevel system and therefore the role of trust is perceived at the individual, team and organizational level and in a referent refers to interpersonal, team and organization. Table 6: Trust levels and referents (Developed by the author based on Fulmer and Gelfand, 2012) Trust Levels and Referents Levels Referents Individual Interpersonal Team Team Organizational Organization This research primarily positions trust within the organizational level of analysis, which involves the “aggregated degree of trust shared with sufficient consensus among members in an organization” (Fulmer and Gelfand, 2012, p.1170). However, it is important to highlight that in terms of conceptualizing the trust-embeddedness aspect of open innovation, trust is perceived as a social reality. This means that the author tries to see trust not only as a psychological event within the individual cosmological perception but as a systematic and intersubjective social reality (Lewis and Weigert, 1985). To that respect, the author tries to bring a sociological conceptualization and understanding. Trust allows social interactions to proceed on a simple and confident basis making it a functional necessary pre-condition for continuance of harmonious social relationships. In this frame of reference, the human dimension is captured within the cognitive, the emotional and the behavioural base of trust. In this frame of reference, we have these three distinctive analytical dimensions of trust corresponding to the three basic modes of human social experience. In this research context, these dimensions of the phenomenon are interpenetrating and mutually supporting aspects of the one, unitary experience and social imperative that is called trust. It is important also to underline the fact that this research does not aim at operationalizing trust in terms of understanding the various P a g e | 57 57 functionalities it entails within the different levels of analysis and the potential effects it can possible on open innovation performance. This is discussed in detail in the limitations section. 2.3.3. Readiness As it has already been discussed, the adoption and implementation of open innovation practices within a corporate environment, requires the creation of such an organizational setting that shows readiness towards incorporating such kind practices. Furthermore, for the realms of this research, open innovation has been considered as a mindset (Salampasis et al., 2015a) engulfed within the culture of the organizational sphere. However, this kind of leverage does not come easily. It stands in need for change in many aspects of the organizational entity, so as to prove the readiness open innovation depends upon. Managing change consists one of the most critical and core challenges organizations are faced with and it has been argued that successful organizations are the ones, which are put in a continuous and consistent change trajectory, in terms of striving to meet and face current and future challenges (Madsen et al., 2006). Change is defined as the process of “altering people’s actions, reactions and interactions to move the organization’s existing state to some future desired state” (McNabb and Sepic, 1995, p.370). This definition depicts the change stands in need for alterations both within the individual and the organizational sphere. “Change in inherent in human action and necessarily occurs in the context of human social interactions” (Ford and Ford, 1995, cited by Choi and Ruona, 2011, p.47). This means that employees (individual sphere) need to show signs of flexibility, adjustment and willingness to accept change, a process that should occur continuously. Change means introducing new things, processes and elements that can have a multilevel effect within the organization and also share significant influence within the organizational culture, behavior, along with, involving and modifying traditional norms and institutionalized state of minds. This means that change challenges to not occur on a stand-alone mode but reflect perplexed human dynamics involving individuals, departments, organizations and the environment beyond corporate boundaries (Backer, 1995). Choi and Ruona (2011) argue that in the organizational change literature two prevailing perspectives exist: a) the strategic management perspective (changes required in terms of implementing corporate strategy) and b) the organizational development perspective (efforts and changes required within the organizational work setting in order to improve individual development and corporate performance). Moreover, change can be discussed P a g e | 58 58 within various levels of analysis, such as, individual, group, organization etc. Needless to say that, “organizational change interventions cannot be successful unless individual change takes place. Individual change cannot effectively occur unless employees are prepared and ready for it” (Madsen et al., 2006, p.94). Readiness for change is perceived in two dimensions: the individual and the organizational. By definition, readiness is “a mindset that exists among employees during the implementation of organizational changes. It comprises the beliefs, attitudes, and intentions of change target members regarding the need for and capability of implementing organizational change. Readiness for organizational change is important to any change effort because the state of readiness for change may influence the strategy followed throughout the change effort” (Armenakis and Fredenberger, 1997, p.144) or “an individual’s beliefs, attitudes and intentions regarding the extent to which changes are needed and the organization’s capacity to successfully undertake those changes” (Armenakis et al., 1993, p.681). This means that readiness for change is a combination of organizational (Armenakis et al., 1993) and individual models (Prochaska et al., 2001), thus it is not a fixed element of individuals or a system. Therefore the factors that determine individual and organizational readiness for change involve the culture, the climate, the policies and the performance outcomes of an organization (McNabb and Sepic, 1995). Backer (1995) states that the individual aspect of readiness for change revolves around the beliefs, attitudes and intentions people have in relation to a) the extent to which changes are needed and required and 2) the perception that individual and organizational capacity exists in order to drive and successfully implement these changes. To that respect, change includes interpersonal and social dynamics in terms of understanding, perceiving and implementing the needed enhancement interventions that shall lead to the desired changes. Weiner (2009) discusses organizational readiness for change both in psychological and structural terms giving emphasis on the organization’s resources in relation to finance, infrastructure, people and information. However, Weiner leads a sceptical pathway regarding the concrete conceptualization of organizational readiness for change by wondering whether readiness is a structural construct or a psychological one and brings forward a theory trying to “reconcile the structural view and the psychological view by specifying a relationship between them” (Weiner, 2009, p.716). This leads towards a clear distinction between the institutional perspective in 16 Page number not for citation purposes. P a g e | 59 59 relation to the organization as a construction (in terms of infrastructure and processes) and the organization a cumulative formation in relation organizational culture, people’s psychological readiness, organizational behaviour, values and principles requiring “collective, coordinated behaviour change [...] in order to effectively implement the change” (Weiner, 2009, p.617). Armenakis and Fredenberger (1997) discuss the components forming the notion of readiness related to the faith the employees have towards the change agent and his competences regarding the management of change, the realization and understanding of the necessity proposed by the change, the balanced reflection upon the urgency regarding the change i.e. that the need for change is understood by all parties and is not simply imposed by top level management and finally the willingness of the employees to be actively involved in the change and contribute to the creation of an effective and efficient organization. In relation to the abovementioned multi-level managerial challenges and prior changes, Rafferty et al. (2013, p.112) while identifying a gap in the literature regarding the reflection of the multi-level processes in relation to organizational readiness, develop a multilevel review of change readiness “outlining the antecedents and consequences of individual, work group and organizational change readiness” [...] suggesting that “ the processes that contribute to the emergence of change readiness at the individual and collective levels differ at the individual, group and organizational levels”. Penland (1997) presents an interesting relationship between organizational readiness and the implementation of Quality Management Systems by developing a model of organizational readiness strategies focusing on three environmental factors; strategic leadership, vision perspective and positive culture. Strategic leadership is “the process of identifying, crystallizing and communicating changes that will assure integration and harmony within current and future environments” (Penland, 1997, p.70). The vision perspective includes the crystallization on the specific focus of the organization, the identification of barriers hindering improvement, development and change and the goals and expectations on performance measurement and evaluation. In addition the nurturing of a positive culture embraces “a strong value for team participation and shared leadership as basic management practices to enhance probabilities for success” since it is “comprised of beliefs, values, attitudes, norms and philosophies that significantly influence its ultimate success or failure” (Penland, 1997, p.71). 17 Page number not for citation purposes. P a g e | 60 60 Weiner (2009, p.218) argues that “organizational readiness for change is not only a multi-level construct, but a multi-faceted one”. This leads to the understanding that readiness requires preparation both on a psychological and behavioural level so as to be efficiently and effectively implemented. It endorses the readiness for individual change regarding the staff perceptions, which is realised through a variety of stages; the precontemplative, the contemplative, the preparatory, the action and the maintenance stage. Cunningham et al. (2002, p.378) suggest that “the movement through these stages is governed by decisional balance, the anticipated risks of change vs the potential benefits of change”. In this section, the author has highlightened the definitional elements of the three main concepts this research revolves around: open innovation, trust and readiness, in terms of understanding the underlying rationale behind this research. Each of these concepts has been extensively discussed within the publications and the aim of this section is to unveil aspects behind these concepts that have been used as linkages in the way of understanding the trust-embeddedness approach to open innovation and the conceptualization of the human side of open innovation in the financial industry. To that respect, the following will analyse the theoretical foundations, which this research is being based on in order to develop the theoretical contribution. 18 Page number not for citation purposes. P a g e | 61 61 CHAPTER 3: THEORETICAL FOUNDATIONS The endeavour to capture and conceptualize the human dimension of open innovation under the prism of trust is quite challenging. Therefore the author, following the Chinese qiang da chu tou niao19 mindset, has been quite thoughtful and cautious and has employed a systematic thinking in terms of avoiding, as much as possible, fallacies, misconceptions and misinterpretations. In order to overcome, or at least, address these foundational challenge, in the best possible way, so as, to achieve not only academic excellence but also ensure building upon a stable and solid theoretical foundation, the author needs to adopt a multidisciplinary research philosophy, think in a creative, multidisciplinary and rigorous way and synthesize many and various streams of literature in order to combine concepts, theories and ideas. Moreover, the author did not wish to fall in the trap of “casual theorizing” (Birkinshaw et al., 2011, p.579) by offering vague and intuitive descriptive insights; rather the trust-embedded approach to open innovation aspect has been framed both within existing debates and within existing literature and the author is explicit in terms of presenting and arguing about the respective body of theories the research is based on. This case highlights the complexity of the phenomena the author has to investigate in a qualitative manner hence the need for theoretical allies became more than imperative. In this context, a fundamental issue within this approach is the fact that open innovation lacks a theoretical foundation in relation to the theories of the firm since “open innovation has only been loosely connected to the existing innovation management literature and the underlying management theories” (van de Vrande et al., 2010, p.230). This constitutes an important and crucial shortcoming which depicts that “a better theoretical foundation of open innovation research is needed […]. In particular, open innovation studies need to be sufficiently grounded in prior research into both open innovation and related fields. […] A cumulative development of open innovation research that integrates earlier findings is essential to arrive at a coherent body of knowledge about open innovation” (Lichtenthaler, 2011, p.87). West et al. (2014) acknowledge the integration of open innovation with existing established underpinning theories of innovation, management and economics as one very important emerging theme in the open innovation research agenda. Open innovation has been linked to the dynamic capabilities perspective (Teece, 2007), 19 Early bird gets shot. P a g e | 62 62 the resource dependence theory (Alexy et al., 2013), absorptive capacity (Spithoven et al., 2011; West and Bogers, 2014), firm diversification (Colombo et al., 2014) and theories of governance (Felin and Zenger, 2014; Gambardella and Panico, 2014). Vanhaverbeke and Cloodt (2014) conducted a very interesting review of the seminal theories of the firm and strategy literature, making an attempt to connect these existing theories to the open innovation paradigm. The authors recognize the fact that scarce and non-systematic attention has been given to the link between firms’ business and corporate strategy, there is a partial alignment of some theories with the open innovation paradigm and these theories require further adaptation to capture an explicit dimension of open innovation and the fact that “open innovation is a complex, multi-dimensional phenomenon which compels us to combine different perspectives into a broader, dynamic (or stepwise) framework” (Vanhaverbeke and Cloodt, 2014, p.273). In the context in which this dissertation is written, the author suggests that the open innovation paradigm lies within the interplay among the seminal theories of management and organization, such as, the resource dependence theory, the resource-based view, the dynamic capabilities approach, the relational view, the organizational ecology and the new institutionalism. Needless to say that other theories covering aspects of strategy, economics etc can be considered but for this particular context the author limits the analysis in theories that have influenced this respective research and theories that have already been discussed within the existing literature. The following table depicts the main elements of each theory. Table 7: Seminal organizational theories20 Theories Resource dependence theory Main elements Depicts the role that external resources play in the shaping of organizational behaviour Explains the interplay between the power of resources and organizational dependency Recognizes the need for a multidimensional spectrum of resources required by the organization Resources can be founded and attracted from the external The table was developed by the author based on the seminal works of Amburgey and Rao, 1996; Barney, 1986a, 1986b, 1991; 2001, Barney et al., 2001; Carrol and Hannan, 1989; DiMaggio and Powell, 1983; Dyer and Singh, 1998; Dyer, 1997; Eisenhardt and Martin, 2000; Grant and Baden-Fuller, 2004; Hannan and Freeman, 1977; Kleiner, 2013; Lavie, 2006; Penrose, 1959; Pfeffer and Salancik 1978; Teece et al., 1997; Teece and Pisano, 1994; Teece, 2007, 2009; Wernerfelt, 1984, 1995. 20 P a g e | 63 63 Resource-based view Dynamic capabilities Organizational ecology Relational view environment of the organization Acts the driver of organizational competitive advantage Resources are priceless Resources are tangible and intangible Sustainable competitive advantage is only possible by means of resources that cannot be easily imitated and substituted Exploring the firm as a black box-addressing the fact that different companies have different levels of capabilities. Dynamic capabilities are of idiosyncratic nature depicted in their uniqueness to each company and embedded in each company’s historical legacy (Kleiner, 2013) “The firm's ability to integrate, build and reconfigure internal and external competences to address rapidly changing environments. Dynamic capabilities thus reflect an organization's ability to achieve new and innovative forms of competitive advantage given path dependencies and market positions” (Teece et al., 1997, p.516) Focuses more on the competitive survival of the organization and not so much on the achieving a sustainable competitive advantage Managerial activities characterizing a capability as dynamic (Teece, 2007)-positioning today’s resources in a proper way for tomorrow Sensing: identification and assessment of opportunities outside organizational boundaries Seizing: mobilization of resources in terms of value-capture from these dedicated opportunities Transforming: renewal that is continuous The dynamic capabilities theory “provides an intellectual structure for businesspeople to start thinking systematically about why companies succeed or fail” (Kleiner, 2013, n.g.) Evolutionary approaches to organizations Understanding of the conditions under which organizational emerge, develop and cease to exist Theory fragments Inertia and change Niche width Resource partitioning Density dependence Age dependence Considering networks and dyads of firms as the unit of analysis to explain relational rents Idiosyncratic interfirm linkages are a source of relational rents Relational rent: “a supernormal profit jointly generated in P a g e | 64 64 New institutionalism an exchange relationship that cannot be generated by either firm in isolation and can only be created through the joint idiosyncratic contributions of the specific alliance partners” (Dyer and Singh, 1998, p.662) Sources relation-specific assets knowledge-sharing routines complementary resources/capabilities, and effective governance Sees the institution from a sociological prism Perceives a direct behaviour and interaction with society, not explicitly linked to the economic facet Strives to explain the why and the how of the emerging of institutions within a certain context The abovementioned table depicts the main seminal organizational theories, which have either already been discussed by the extant open innovation literature or have influenced this research, but at the same time do not fully capture (within this particular research context) the essence and intent of the human dimension and the insights and message the author wishes to convey. It is important here to highlight that since the research captures trust as a systematic and intersubjective social reality (including emotional, the cognitive and the behavioural dimensions) and does not intend to apply novel measurements in terms of capturing the open innovation performance element, these theories are not totally aligned to the objectives and the context of this research. Furthermore, the author argues that these theories tend to be a bit disconnected from the people, lacking a human touch. In addition these theories do not fully address the motivational side. Motivations are intertwined with the way management understands employees. This leads to behavioural norms and people are not simply seen as resource or visible capital. Moreover, the abovementioned seminal theories do not seem to grasp the humanistic prospect that this dissertation aspires to introduce; the integrative interaction between the individual attitude and corporate conditions. This interplay between the specific individual logic and the ad hoc corporate arena is realized via a magnitude of ethic-based responsible and transparent decision making, fair processes and practices and a corporate culture that becomes the agent of understanding and appreciating the human element. The primary incentive for the adoption of open innovation practices is the exchange of knowledge, which is transformed into new innovative products and services constituting a major competitive advantage for the firm (Barney, 1991). In order to achieve this endeavour companies foster external collaboration via permeable organizational boundaries facilitating this openness. This knowledge transfer is P a g e | 65 65 based upon the exchange of necessary resources and capabilities i.e. valuable tangible and intangible resources which remain at the firm’s disposal (Amit and Schoemaker, 1993). This exchange is not only monetary-driven but also behavioural, encapsulating an inherent experimentation attitude. It illustrates that individual growth becomes a cumulative conception leading to collective organizational growth. This counter-influx of external resources and their integration within the organization has a substantial impact on the firm’s behaviour, the strategic and tactical management of the organization (Pfeffer and Salancik, 1978). Furthermore, it creates a true culture of quality, maintained as coherent across an organization, which is perceived and motioned not solely by dint of pecuniary incentives but as a conditional and inherent element of the employees’ quiver of skills, values, behavioural norms and attitudes creating a sustainable and significant competitive advantage. The culture is materialized in virtue of “an environment in which employees not only follow quality guidelines but also consistently see others taking quality-focused actions, hear others talking about quality and feel quality all around them” and is driven by four foundational factors: “leadership emphasis, message credibility, peer involvement and employee ownership of quality issues” (Srinivasan and Kurey, 2014, p.24). Companies can embrace open innovation by forming interlocks, alliances, joint ventures, mergers and acquisitions so as to minimize resource dependencies and empower their organizational autonomy and legitimacy (Davis and Cobb, 2010; Drees and Heugens, 2013; Hillman et al., 2009). This interaction and ecosystem formation has also a societal effect, which is related to the sociological view of an organization denoted by the theory of new-institutionalism. This means that an organization does not function in solitude but within an institutional environment. Competitive advantage is important in terms of survival but the economic perspective is not enough; organizations need to establish legitimacy (Kostova and Zaheer, 1999; March, 1996). In this context, an organizational and individual readiness towards successful embeddedness within a cultural, social and political environment establishes norms that foster collaboration and openness both insideout and outside-in. Following upon the abovementioned analysis, the author debates that the core element of the inter-linkages between the exchange of resources, the formulation of collaborative ecosystems and the establishment of a legitimate ethos fostering this collaboration is the primary establishment of trust between organizations, which is firstly driven within a firm that is ready to collaborate effectively and bring value. In the financial industry, this becomes the incentive for setting in motion a set of P a g e | 66 66 organizational and individual forces that will leverage the core value of the firm. The agent for the formation for this internal organizational ecosystem is the effective and socially responsible management of the human element. However, the author reckons that this angle is not sufficient enough especially towards the striving to capture the human dimension of open innovation. The author believes that in order to capture the essence of the human dimension of open innovation, it is important to look beyond the traditional narrative of open innovation i.e. knowledge inflows and outflows. The author believes that (a) the knowledge exchange, inflows and outflows mechanisms are inadequate to fathom open innovation in its being and (b) the unquantifiable human dimension of open innovation must be perceived not only from the skills perspective but a whole ecosystem of additional non-pecuniary elements (people, minds, cultures, leadership) that correspond to a broader perspective engrained in the organizational dimension. “Over time, exposing one’s own vulnerability feels less risky and more worthwhile as people repeatedly witness and participate in conversations of their colleagues’ weaknesses and discussions of the undiscussable” (Kegan et al., 2014, p.50). Under this prism the author’s interpretation of weaknesses is not only limited to skills and competences but is driven further to the collective ecosystem of the human nature that includes, values, behavioural norms, motivational aspects and all the elements necessary to portray the human aspect within an enterprise, wishing to become primary open internally before opening up to the external globalized environment (Salampasis et al., 2014c). These realizations led the author to acknowledge the fact that the abovementioned theories, in the realms of this particular context, cannot fully institute a solid theoretical foundation for this particular and specific humanized aspect of open innovation. To that respect, the author contributes to the discussion on linking open innovation to seminal and established theories of innovation, management and economics by introducing the trust-embedded approach to open innovation, conceptualized in the realms of McGregor’s Theory X and Theory Y, in the endeavour to capture the essence of the human side of this paradigm, within the financial industry. P a g e | 67 67 Figure 8: Positioning of the Theory X and Theory Y (Developed by the author) The author argues that in order to capture and understand the essence of the human side of open innovation, there is a need to understand not only the skills and competences but the underlying human psychology, motivations and emotions that cause people to behave the way they do. This will also facilitate the development of an ethically responsible and humane approach to open innovation. The theory X and Y captures this dynamic interplay between the individual and organizational spheres explicitly endorsing the role of motivation, emotions and psychological norms, which are not adequately considered in the seminal organizational theories. Theory X and Theory Y has been used in human resource management, organizational behaviour, organizational communication and organizational development paving and facilitating the way to a multidisciplinary approach in the research and are aligned to the primary objective of this dissertation that caters for a multi-polar investigation of the human dimension of trust-embedded open innovation in the financial industry. The impetus of this research towards the appreciation and exploration of the human side of open innovation, except for the general calling for more academic P a g e | 68 68 exploration in the field, is empowered, inspired and found intellectual support in the seminal work of Douglas McGregor who in 1960 wrote the book The Human Side of Enterprise, aiming at building an “intrinsically motivating, actualizing organization and to create causes worthy of commitment” (Strauss, 2002, p.198) while placing in management’s way “a devastating critique of many traditional practices and a stimulating way of thinking about the proper role of the manager” (Stagner, 1961, p.317). The incentive to focus on the human side of open innovation in the financial industry emerges specifically from our urge to revoke the traditional view of organizational management and emanate the importance of the core human nature and behavioural element within the organizational setting (Marx, 1961) of a financial institution and the way managers’ attitudes affect the employees in such an organizational environment since a “managerial behaviour is a direct reflection of the manager’s assumptions about human nature” (Schein, 2011, p.157). A constitutional prerequisite of such an organizational setting is the prior examination from a managerial standpoint of all the assumptions related to the human nature in order to explore and realize the way that these cognitions have an effect on the managerial behaviour per se (Whittington and Evans, 2005). Furthermore, this managerial behaviour is related to the interpretation and understanding of power and how this can be perceived within either a transactional or transformational leadership approach. In this context, Burns (2003) argues that leaders are inclined to actual or potential power albeit power holders who are not necessarily leaders. The author proclaims that the human side of open innovation is ingrained within the study of the human dimensions of management evangelized by McGregor since “…the open/organic structures are being utilized effectively in developing economies that have traditionally embraced bureaucratic management…” (Head, 2011, p.205) and because it creates a mindset that “opens up to new ideas about the workplace and under appropriate conditions a tremendous amount of creative human energy can be unleashed throughout organizations” (Whittington and Evans, 2005, p.116) making this the perfect environment for the adoption and embellishment of open innovation practices. Especially within a financial institution mainly characterised by a silo-driven behaviourism, stagnant hierarchies and often inhuman working environments, getting ahead with open innovation means starting by understanding and trusting their employees, appreciating their human dynamics and opening up towards a sharing and democratic organization ready to accept and work with change, internal and external intellect, especially with such an unstable, uncertain, unpredictable, hazy and erratic worldwide surroundings. This is in line with the way profitability is perceived on the level of strategy and the argumentation P a g e | 69 69 that good people management is the primary element for its prediction than any other alternative factor (Whetten and Cameron, 1998). McGregor belongs to the same human relations school along with Maslow (motivation theory), Argyris (theories of action, double-loop learning and organizational learning), Herzberg (job enrichment, motivator-hygiene theory) and Likert (management styles), who also devoted their research into building similar concepts. In the same circle, falls also the model by Hackman and Oldham, which accentuates the existence of two variables in the triptych core job dimensionscritical psychological states-outcomes that moderate these relationships; the presence of a satisfaction-driven attitude towards “working conditions and the individual employee’s growth need strength” (Whittington and Evans, 2005, p.117). Companies must show their willingness to nurture a limitation/failure-acceptance and tolerance which reflects a growing edge for performance both on an individual and firm level (Kegan et al., 2014). This mindset will successfully be adopted only via the cultivation of an open, collaborative and collective spirit and the destruction of interior worlds within organizations. McGregor’s model on motivation and management is considered as a fundamental revolution of management theory, founded on the theory of psychology (Bobic and Davis, 2003). The unique value proposition of McGregor’s research, lies within the fact that employees should not be seen as an disposable and expendable commodity but as the core condition and most valuable resource of an enterprise which, which must not be neglected (Carson, 2005); on the contrary, from a management viewpoint, the organization should understand its employees and establish all these workplace conditions that will urge them not only to perform well but cultivate their inner need and desire to do well and build “a collective sense of purpose” (Douglas et al., 2014, p.66) reflecting a dynamic integration of individual and organizational goals (Marx, 1961). McGregor shares an opposing view compared to the scientific management theories by Taylor21, which perceive people as pieces of machinery and instruments of continuous production. There is debate regarding the terminology and there are voices stating that scientific management is mislabelled. “In reality Taylor and his contemporaries were approaching management not as a area open to scientific discovery, but rather as the application of previously established scientific laws and principles, in other words as a subfield of industrial engineering” (Head, 2011, p.202). Any further discussion falls out of the scope of this current analysis (Comment by the author). 21 P a g e | 70 70 McGregor based his research on the theories of behaviour of individuals at work while building upon the hierarchy of needs theory, developed by Abraham Maslow, whose contributions have been characterized “as foundational in the development of the neo-human relations school, or more specifically, organizational psychology” (Cooke and Mills, 2008, p.29). McGregor would always evangelize that “it is not a matter of strategy, but of managing people” (Bobic and Davis, 2003, p.259). This investigation led him towards the formulation of two contending models about human nature and motivation; Theory X and Theory Y. A brief description of these theories depicts the conflicting assumptions about human behaviour behind every management decision or action. Theory X refers to control (prevention of an opportunistic behaviour), autocracy and directive mindset i.e. the traditional managerial view and Theory Y refers into the integration of individual and organizational goals and empowerment, opening up to new attitudes in organizational psychology, driving a more democratic, consultative and participatory mentality (Heller, 1961; Strauss, 2002). It is important at this stage to underline that this research is not explicitly and solely based on McGregor’s model but “given today’s political, social and economic milieu” (Marx, 1961, p.75) and the “fundamental changes in our understanding of personality and motivation theory” (Bobic and Davis, 2003, p.240) it serves as a theoretical foundation and a stampede for theory contribution. This means that even though substantial correlations between Theory Y and the conceptualization of the human side of open innovation are straightforwardly observed, it is necessary need to bear in mind the context of open innovation and how McGregor acts in a complementary manner towards exploring, identifying and enriching the definition of the human dimension of open innovation. The following table describes in a synthesizing way the views of Theory X and Y and advances our thinking towards the developing of a conceptual model and conceptualized definition of the human dimension of the open innovation paradigm. P a g e | 71 71 Table 8: Theory X and Theory Y22 Variables People Human abilities and motivation factors Theory X Pecuniary incentives Feeling of security Lack of ambition Risk and responsibility aversity Self-centered behaviourism Work avoidance/laziness Unyielding towards changes No capacity to lead Passive follower Credulous Limited intellectual capacity Feeling of compulsion Dependency React to punishment Lack of inspiration Lack of imagination Failure to recognize Machine oriented mindset Little faith Top-down Variables People Tackling organizational problems Theory Y Desire for work and achievement Pecuniary and nonpecuniary incentives Fulfilment Self-direction Self-control Commitment Learning to accept Responsibility seekers Alignment to organizational objectives Physical and mental endeavour Motivational energies Human dignity Self-esteem Self-satisfaction Job enlargement and personal growth Self-actualization Imagination Efficiency Reliability Intelligence Creativity Ingenuity Creating conditions Table developed by the author based on the works by Baumgartel, H. (1960). The Human Side of Enterprise by Douglas McGregor. Administrative Science Quarterly, Vol. 5, No.3, pp.464-467; Cappelli, P. (2013). HR for Neophytes. Harvard Business Review, Vol. 91, No. 10, pp. 25-27; Heller, A. F. (1961). The Human Side of Enterprise by Douglas McGregor. Industrial and Labour Relations Review, Vol.14, No.3, pp.494-495; Jacobs, D., College, H., and Marryland, F. (2004). Book Review Essay: Douglas McGregor: The Human Side of Enterprise in Peril. Academy of Management Review, Vol.29, No.2, pp.293-296; Malone, Ch., and Fiske, T. S. (2013). “The Human Brand: How we relate to people, products and companies”. Jossey-Bass and Stagner, R. (1961). The Human Side of Enterprise by Douglas McGregor. The American Journal of Psychology, Vol.74, No.2, pp.317-319. 22 P a g e | 72 72 Rigid Control and Authority approach Autocracy Hierarchy Authoritarian dictatorship Control, defensiveness, unresponsiveness Integration and self-control Organizational functioning Contingency models “unitarist-oriented human relations doctrines” (Jacobs et al., 2004, p.294). “Lifer” model (Cappelli et al., 2014, p.75)23 Organizational functioning for goal accomplishment Orchestrating efforts towards the collective success on a firm level Participative architecture Value-based leadership “More open to understand how they are perceived and [...] greater willingness to respond and adapt accordingly” (Malone and Fiske, 2013, p.158) Managing and achieving change Incentives provision Appreciation of individual creative involvement Collective bargaining Participation in decision making processes Decentralization Delegation Performance appraisals McGregor believed that “The essential task of management is to arrange organizational conditions and methods of operation so that people can achieve their own goals best by directing their own efforts toward organizational objectives” (Bennis, 1972, p.141). This is in line with the author’s view of the human side of open innovation and the fact that the adoption of open innovation can act as the arch between human relationships and a new form of new humanism on the organizational level. The author does not agree with Schein’s (1975) utopian contour regarding the solely practical implications of cultivating the human behavioural aspect entwined in Theory Y as an exclusive responsibility of top management. Furthermore, the author believes that the human side of open Cappelli (2013, p.26) while discussing duties once belonged to human resources departments but are now transferred to line managers, in relation to meeting the organizational needs for talent, observes “a cultural shift from life-long employment to a more mobile workforce”. 23 P a g e | 73 73 innovation from a human resources viewpoint, precedences towards the customization of organizations to individual components and the fact that we move from the organizational and individual level to the human level. In this frame of reference the author is looking upon the creation of deliberately developmental organizations, which leverage personal growth to an organizational sustainable competitive advantage. This argumentation falls in the realms of the discussion around the foundational assumption of personal growth and the need for a structural basis that promotes a challenging and supportive environment leading to a community imbued with trust and reliability and creating a sense of safety for the employees (Kegan et al., 2014). P a g e | 74 74 CHAPTER 4: RESEARCH METHODOLOGIES 4.1. Introduction to research The discussion around the research methodologies aims at emanating a number of key elements regarding the ontological, epistemological, human nature and methodological approaches that have been adopted by the author within this respective research. This means that research must be theoretically developed upon a medley of solid epistemological, philosophical and methodological foundations (Northcote, 2012) reverberating the assumptions about the nature of the social world and the way in which that particular world could be studied (Burrell and Morgan, 1979). “Only if we have such an understanding can we examine these assumptions, challenge them if we think it appropriate, and behave in a different way” (Saunders et al., 2003, p.86). This is a critical element within the overall research since it promulgates what research is and how this understanding interconnects to the kind of knowledge, the validity of knowledge and the significance of this newly created knowledge that is being produced in this research. “Knowledge consists of those constructions about which there is a relative consensus (or at least some movement towards consensus) among those competent (and in the case of more arcane material, trusted) to interpret the substance of the construction. Multiple knowledges can coexist when equally component (or trusted) interpreters disagree” (Guba and Lincoln, 1994, p.113). The underlying rationale behind this overwhelming necessity is to tap into the research mindset of the author per se, by looking into the related philosophical underpinnings of research paradigms, while at the same time providing some solid argumentation on the applicability, the necessity and the importance of qualitative research towards the exploration of phenomena in human nature and social sphere, as a whole. Easterby-Smith et al. (2002) acknowledge the effect research philosophies have on quality of the research as a whole and more particularly on the reliability and validity of the research outcomes. The word research is often associated to the systematic search for information or is described as a systematic investigation (Burns, 1997). In simple terms this means that research is dealing with phenomena, which are either unknown or require further exploration, conceptualization and understanding (Verma and Mallick, 1999). In this frame of reference, research could be characterized as the systematic, controlled, empirical and critical investigation of hypotheses in relation to the perceived, as taken for granted, correlations of natural phenomena (Kerlinger, 1983). To that respect, the author accentuates the importance of research within the social sphere in terms of understanding, explaining and implementing theories of P a g e | 75 75 management in practice. Hence, the author suggests, that this respective research is a “conclusion-oriented study” since it follows the interests of the researcher. In conclusion-oriented research, “the goal may range from development of basic theory to applied and non-theoretical research, depending upon the interests of the researcher” (Verma and Mallick, 1999, p.2). However, this research also aims at bringing the gap between academia and practice; to that respect it also shares elements of “decision-oriented research” (Cronbach and Suppes, 1969) by exploring the recent trends in the ways organizations deal with open innovation while offering valuable and novel insights and information for decision-makers within the financial industry. A very important challenge for this research is the employment of the most applicable and suitable methodological tools and research strategy in order to tackle the researched topic, while providing realistic, scalable, actionable and novel research outcomes (Silverman, 1993), allowing for the nurturing of insights towards many contemporary topical issues. Furthermore, a critical element, which is strongly related to the panorama of social sciences, is the fact that the research methods are bound up with the perceptions, values, attitudes and behavioural norms of the researcher. The author believes that especially, in the field of innovation management, no researcher can solidly claim value neutrality, total freedom from assumptions, being unbiased and objective in terms of viewing the real world. To that respect Kuhn (1970, 1972) argues that science is not a rational and objective inquiry. The orientation of this dissertation is aligned to the general and foundational characteristics of research proposed by Verma and Mallick (1999). The following figure depicts all the relevant elements and characteristics of research, reflecting also the interconnected pathways from objective and research purpose to new knowledge development. P a g e | 76 76 Figure 9: Research corpus (Developed and visualized by the author based on Verma and Mallick, 1999) 4.2. Paradigm Guba and Lincoln (1994, p.105) view a paradigm as “a basic system or worldview that guides the investigator, not only in choices of method but in ontologically and epistemologically fundamental ways”. In a similar manner, Bogdan and Biklen (1998, p.22) define a paradigm as “a loose collection of logically related assumptions, concepts, or propositions that orient thinking and research”. The word paradigm originates from the Greek word paradeigma, which means pattern. Covey (1989) puts emphasis on the powerful effect paradigms have in the individual and collective cognition, awareness and mindfulness in terms of bringing into being the elemental lenses through, which people perceive the world around them. The discussion about paradigms originates from the German intellectual tradition and the differences between human sciences (geistwissenschaft) and natural sciences (naturwissenschaft), which cannot be approached and studied in the same research manner (Erickson, 1986). A number of theoretical paradigms are discussed in the extant literature: positivist, constructivist/interpretivist, transformative, emancipatory, critical, pragmatism and deconstructivist. Similarly, Gephart (2004) P a g e | 77 77 describes three philosophically distinct categories: positivism, interpretivism and critical postmodernism. Guba (1990) characterizes the paradigms through their: ontology, epistemology and methodology, creating a comprehensive view of how knowledge is perceived, what is the relationship between knowledge and the researcher and the kind of methodological strategies to be employed towards its discovery. According to Morey and Luthans (1984) extant literature has managed to picture and describe the underlying differences between these two approaches as follows: objective vs subjective (Burrell and Morgan, 1979), nomothetic vs idiographic (Luthans and Davis, 1982), quantitative vs qualitative (van Maanen, 1979), outsider vs insider (Evered and Louis, 1981) and etic vs emic (Morey and Luthans, 1984). The author argues that since a paradigm is a belief system, it can accommodate vicinity and a panorama of views, interpretations and understanding of the same research across disciplines and research communities. Avenier and Gavard-Perret (2008) suggest that in the field of social, organizational and management research, the prevailing philosophical perspectives-paradigms are two: the positivist, the constructivist and the interpretivist, capturing the underlying epistemology. Positivism, which has its roots in the “rationalistic, empiricist philosophy”24 of Aristotle and posterior philosophers and thinkers (Mertens, 2005, p.8) aims at reflecting “a deterministic philosophy in which causes probably determine effects or outcomes” (Creswell, 2003, p.7). It is primarily associated with natural sciences. This means that the positivist paradigm believes in the existence of an objective reality, which is independent to human behavior, since this reality is not constructed by the human mind (Perret and Séville, 2003). Positivism perceives truth through the lenses of facts, or as knowledge, which can be empirically tested. Following upon the causal functionality of the natural world or the “thesis of the unity of science” (Lee, 1991, p.343), positivism caters for theory testing or experience description “through observation and measurement in order to predict and control forces that surround us” (O’Leary, 2004, p.5). To that respect it is observed that positivism is primarily associated to quantitative methods employing data collection and analysis since it aims at unveiling the truth and presenting it by empirical means (Henning et al., 2004) in terms of explanation, prediction and control. In the same manner (Haralambos, 1985) argues that unobservable phenomena are not of importance for positivists. 24 Also known as, “logical positivism” or “logical empiricism” (Lee, 1991, p.343). P a g e | 78 78 On the other hand the interpretivist/constructivist or interpretative paradigm (a.k.a. humanistic, naturalistic, anti-positivist) intends to capture and comprehend “the world of human experience” (Cohen and Manion, 1994, p.36), heralding the inadequacy of natural science methods in terms of studying and understanding social reality due to the fact that the world is comprised of perceived intersubjectively created meanings (Lee, 1991), without the existence of a pre-determined nature or structure. By definition interpretivism/constructivism is the “view that all knowledge, and therefore all meaningful reality as such, is contingent upon human practices, being constructed in and out of interaction between human beings and their world, and developed and transmitted within an essentially social context” (Crotty, 1998, p.42). The mantra of interpretivism/constructivism could be perfectly summarized in the words of the Persian poet Mirza Ghalib as trying to “see the whole of River Tigris in its one drop of water” (Hussain et al., 2013, p.2375). A foundational characteristic of this paradigm is the fact that puts great importance to the views of the participants in relation to the situation being studied, honouring, at the same time, the impact of the research to the outside world. The interpretative/constructivist research is primarily employing qualitative data collection methods and analysis with the aspiration to “generate or inductively develop a theory or pattern of meanings” (Creswell, 2003, p.9) in the course of the research process. It is important here to clarify that interpretivism/constructivism is not the qualitative approach to research, even though qualitative methods possess a core and central position within interpretative research (Connole et al., 1995). Qualitative research comprises of a cluster of different methods and it is not a methodology or a research paradigm itself. Willis (1995, cited by Antwi and Hamza, 2015) suggests that interpretivists/constructivists are anti-foundationalists i.e. there is not a single or correct pathway and method towards knowledge creation. Similarly, Walsham (1993) calls attention to the element of interest both for the researcher and the research community as a whole. Even though a number of scholars tend to consider in a similar manner the interpretivist and constructivist paradigm, extant research depicts a number of differences especially in terms of their epistemological assumptions and methodological claims. Indeed intrepretivism and constructivism are related approaches to research, which characterize particular philosophical and cosmological views. Schwandt (1994, p.118) argues that interpretivism and constructivism are sensitising concepts: “Proponents of these persuasions share the goal of understanding the complex world of lived experience from the point of view of those who live it. This goal is variously spoken of as an abiding concern for the P a g e | 79 79 life world, for the emic point of view, for understanding meaning, for grasping the actor’s definition of a situation, for Verstehen. The world of lived reality and situation-specific meanings that constitute the general object of investigation is thought to be constructed by social actors”. It is important to underline that research scholarship has been using terms such as anti-positivism (Bilton et al., 1981), intepretivism, qualitative inquiry and naturalistic inquiry in terms of defining and characterising the interpretative paradigm. The following table projects the fundamental differences between positivism, interpretivism and constructivism, endorsing at the same time the adoption of interpretivism in the realms of this respective research. Table 9: Three research paradigms (Freely translated from Giordano, 2003, p.25) Positivism Interpretivism Constructivism Reality is a construction of knowing subjects who experience the world co-construction of subjects and interactions Reality is an objective fact, independent of the subjects observing it Reality is perceived/interpreted by knowing subjects Epistemology Independent Empathy Interaction Relation between the researcher and the research object The researcher does not interfere on the observed reality Objective of knowledge Describe, explain and confirm The researcher interprets what the actors tell or do, themselves interpreting the research object Understand The researcher coconstructs interpretations and perceptions with the actors Construct Process of knowledge construction Based on the discovery of regularities and causalities Based on the empathic comprehension by the representations of actors Based on the conception of a phenomenon or perception Ontology Nature of the research This research, as positioned, follows the fundamental concepts of the interpretivist paradigm. The reason behind this choice is the fact that positivism denotes a “…hypothetico-deductive, particularistic, objective, outcome-oriented and natural P a g e | 80 80 science world view”25,26, while interpretivism puts emphasis on an “inductive, holistic, subjective, process-oriented and social anthropological world view” (Reichardt and Cook, 1979, pp.9-10). This indispensable rationale is supported by the inherent intention of the author to understand values, beliefs and meanings of social phenomena, emanating and sending forth the Verstehen27 as an empathetic understanding. Therefore, by adopting the interpretative research paradigm, the author aims at unveiling both the inner and outer perspectives of human behavior (Rist, 1977) by shedding light to individual’s perceptions, understanding and interpreting their meaning, while developing novel insights and foresights in relation to the topical theme under study (Bryman, 2012; Grix, 2010), denoting a close interaction and vivid interplay between scientific research and real wold managerial applications. Through the adoption of the intepretivism, the author is interested in really getting into the world, which is actively constructed by human beings on an individual basis (Haralambos, 1985). Moreover, the adoption of this paradigm is endorsed by the author’s perception in relation to the constantly changing and globalized environment of business organizations and the diminished value a universal theory and view applicable to every kind of organizational entity would have. This is also in line with the fact within the interpretative paradigm, meanings are not static by nature but they are constantly being created, formulated, changed, modified and shaped through reciprocal action. The following table presents the underlying characteristics, categorized into the nature of reality (ontology), nature of knowledge and the relationship between the inquirer and the inquired-into (epistemology) and the procedure and principles (methodology) used. Or the rules of formal logic. “…satisfying the four requirements of falsifiability, logical consistency, relative explanatory power and survival” (Lee, 1991, pp.343-344). 27 Based on Schwandt (2000, p.193) verstehen can be comprehended in four ways: empathic identification, intersubjectivity, understanding the system of meanings (taking in “institutional and cultural norms, action-constituting roles and so on”) and philosophical hermeneutics. 25 26 P a g e | 81 81 Table 10: Ontological, epistemological and methodological stances of interpretivism (Developed by the author)28 Paradigm assumptions Questioning What is the form and nature of reality and, therefore, what is there that can be known about it? (Cohen et al., 2007) Is theory adequate enough to represent reality? (Kilduff et al., 2011) Ontology Epistemology Nature of reality and existence-what the world is (Henn et al., 2009) What is the nature of the relationship between the knower or would-be knower and what can be known? “It is the very base of knowledge-its nature Consequences for research activities Relativist Multiple, changing or diverse constructions of realities (Hipps, 1993), interpretation and meanings Reality is characterized by complexity, local and nature-specific and multilayered (Hussain et al., 2013) Reality can be explored and constructed through human interactions and meaningful actions Discover how people make sense of their social worlds in the natural setting by means of daily routines, conversations and writings while interacting with others around them Construction and interpretation of reality on an individual basis through the medium of ideological and cultural perceptions and attitudes Many social realities exist due to varying human experience, including people’s knowledge, views, perceptions, interpretations and experiences (Cohen et al., 2007) The researcher is ingrained into the employed research instruments depicting the research under study (Cohen et al., 2007; Crotty, 1998; Grix, 2010; Guba and Lincoln, 1994) Subjectivism Highly contextual Personal and unique nature of knowledge and truth Events are understood through the mental process of interpretation that is influenced by interaction with social contexts Based on Bryman, 2012; Chua, 1986; Cohen et al., 2007; Crotty, 1998; Easterby-Smith et al., 2002; Elliott and Timulak, 2005; Giorgi, 1975; Grix, 2010; Guba and Lincoln, 1994; Henn et al., 2009; Henwood and Pidgeon, 1992; Hill et al., 1997; Hipps, 1993; Howe, 2004; Hussain et al., 2013; Kilduff et al., 2011; Leiblich, 1998; Packer and Addison, 1989; Pintrich, 2002; Potter and Wetherell, 1987; Schwandt, 1994, 2000; Smith et al., 1999; Strauss and Corbin, 1998; Wertz, 1983. 28 P a g e | 82 82 and forms, how it can be acquired and how it can be communicated to human beings” (Cohen et al., 2007, p.7) Access to reality Nature and origin of knowledge and epistemological beliefs (Easterby-Smith et al., 2002; Howe, 2004; Pintrich, 2002; Schwandt, 2000) “Epistemological assumptions decide what to count as acceptable truth by specifying the criteria and process of assessing truth claims” (Chua, 1986, p.604). How can the inquirer (would-be knower) go about finding out whatever he or she believes can be known? Methodology29 Procedures and principles of investigation Demonstration of knowledge validity Those active in the research process socially construct knowledge by experiencing the real life or natural settings Inquirer and the inquired-into are interlocked in an interactive process of talking and listening, reading and writing More personal, interactive mode of data collection Further interpretation of the researchers’ insights and interpretations in the realms of concepts, theories and literature (Bryman, 2012; Cohen et al., 2007) Hermeneutic and dialectical (Guba and Lincoln, 1994) Delving into individuals or social phenomena by means of details, complexity and meanings (Schwandt, 1994) Processes of data collected by text messages, interviews and reflective sessions Research is a product of the values of the researcher Abundant methodologies (Qualitative research methods) Empirical Phenomenology (Giorgi, 1975; Wertz, 1983) Hermeneutic-interpretative research (Packer and Addison, 1989) Interpretative phenomenological analysis (Smith et al., 1999) Cohen et al. (2007) discuss about the importance of ontology and epistemology in relation to the methodology and the very strong ties among these three elements since the nature of reality and the ways of accessing reality determine the numerous ways of approaching, collecting and treating data. 29 P a g e | 83 83 Grounded theory (Henwood and Pidgeon, 1992; Strauss and Corbin, 1998) Ethnography Case study Symbolic interactionism Narrative research/analysis (Leiblich, 1998) Historical and documentary research Ethno methodology Protocol analysis Discourse analysis (Potter and Wetherell, 1987) Consensual qualitative research (Hill et al., 1997) It goes without saying that there is an on-going debate regarding the importance and differences between positivism and interpretivism in relation to the underlying differences, peculiarities and mysteries in the philosophy of research and knowledge creation sphere. Any further analysis on this issue is not falling within the scope of this research. In summary interpretivism serves the purpose of this respective research by: encompassing a paradigmatic character and an experience-near orientation seeing human action as meaningful and historically contingent facilitating the emergence of meanings from the research process encasing the researcher’s values being inherent in all phases of the research process providing a first-class opportunity to understand the distinctive nature of the people’s perceptions, beliefs, attitudes etc. and letting the researcher share and develop willingness to learn the culture of the people being studied, while embracing openness and a multidisciplinary mindset 4.3. Reasoning The importance of reasoning in the sphere of management research falls in the realms of being the bridge between the paradigm of the research and the actual usage of the methodological pathways employed in terms of knowledge generation and outcomes. It is the actual process of using extant knowledge, statements, axioms and argumentations in order to reach some concluding remarks, make predictions and formulate logical or illogical explanations. Based on the Aristotelian syllogistic, P a g e | 84 84 three forms of reasoning can be distinguished: inductive, deductive and abductive. In the same token, the purpose of this analysis is to send forth the cognitive reasoning process adopted by the author linked to the creative thought processes behind the theoretical lenses in relation to innovation management research (Cornelissen and Durand, 2014). Hausman (1993) suggests that the underlying logic behind abductive and deductive reasoning falls into their contribution of the researcher’s conceptual understanding of phenomena, whereas inductive reasoning provides empirical support to conceptual knowledge. 4.3.1. Inductive reasoning The purpose of inductive reasoning is the development and production of a general proposition or conclusions based on data or a set of particulars (Brown and Eisenhardt, 1997; Helmreich, 2007). It also considered as a bottom-up approach because the intention of the researcher is to shift from the particular to the universal or from concrete to abstract, in a form of generalization (Shepherd and Sutcliffe, 2011). “Inductive reasoning operates on elements that have already been conjured as facts […] within the epistemological frame […] within which the reasoning is to take place” (Helmreich, 2007, p.230). Inductive reasoning facilitates the understanding and delineation of complex data through the development of patterns, categories and themes allowing the emergence of relational inter-linkages between the research objective and findings (Saunders et al., 2003). However Carnap (1952) argues that even though inductive reasoning leads to generalization, this generalization is related to empirical laws but not to theoretical laws. 4.3.2. Deductive reasoning Deductive reasoning (researching conclusion based on established facts and evidence) is perceived as a top-down approach, which is based on factual premises and propositions in order to reach conclusions or convey the truth, following a logical and coherent way. This fact is interpreted in the context of pure logic and rationality. Based on the Aristotelian logic, deduction presupposes the existence of truth and falsity. Hoffmann (1997) denotes that the underlying logic behind deductive reasoning is the definition of the validity of one truth leading to another truth. An important parameter, which deserves acknowledgement, is the fact that deductive reasoning is possible even without the existence of reality, since propositions can also be assessed for being either true or false within a conceptual or logical system (Peirce, 1878). An interesting observation in relation to the interaction between deductive and abductive reasoning suggests that deductive P a g e | 85 85 reasoning is about preservation of the truth, while abductive reasoning is about truth production. 4.3.3. Abductive reasoning The word abduction was first introduced in 1597 by Julius Pacius in order to translate the Aristotelian apagoge. However, the term was defined in 1903 by semiotician Charles Sanders Peirce as “a method of forming a general prediction without any positive assurance that it will succeed either in the special case or usually, its justification being that it is the only possible hope of regulating our future conduct rationally” (Peirce, 1998, p.299). The substratal rationale behind abduction is the correlation and integration of facts within a wider context (Givón, 1989) being the conjecture to the best explanation i.e. the seeking of the best potential explanatory outcome among a cluster of explanations for a given observation (Lipton, 2004). Abductive reasoning is grounded on the logic behind looking for patterns within a phenomenon and the suggestion of a reasonable and plausible hypothesis from a theory (van Maanen et al., 2007). In this context Peirce (1934/1960) argues that abduction constitutes the only logical pathway towards the introduction and creation of new ideas. In this context the researcher under the prism of generality aims at extracting a proper mode of perception (Hoffman, 1997) about reality and the phenomena being studied. Abductive reasoning helps the researcher capture a cosmological view (Weltanschaüng) of the organized study of the world, by encouraging and nurturing creativity and intuitiveness, while allowing the bringing together of multiple insights from different disciplines in a form of an unproven or unverifiable assumption, which is considered as the seed of creative thinking and development (Wright, 1999). Following upon the abovementioned analysis on the interrelated peculiarities of inductive, deductive and abductive reasoning, the following observations can be derived. Table 11: Contrasting elements between the three forms of reasoning (Developed by the author) Reasoning Inductive Deductive Abductive Certainty Positive Positive Negative Productivity Negative30 Negative Positive Context-rationality Positive Negative Positive Svennevig (1997) argues that inductive reasoning can have a positive impact on productivity only when it is combined with abductive reasoning in the form of abductory induction. 30 P a g e | 86 86 It is important at this stage to state that this respective research follows at different stages an abductive and inductive reasoning approach. The author believes that embracing this bidirectional and circular or combined kind of inductive-abductive reasoning mode, in the realms of this research, is most appropriate, since this form of reasoning is a cerebral process, an intellectual endeavour that allows the creative synthesis and combination of antithetical concepts and elements towards the production of scientific accounts of management, a discipline totally embedded within social life and encased within human behaviour. The following table depicts disperse of the various forms of reasoning across the dissertation. Table 12: Forms of reasoning and methods applied in the research (Developed by the author) Publication 1 2 3 4 5 6 Description of the applied methods Literature review, creation of a conceptual model, semi-structured interviews Literature review, conceptualization, theoretical contribution Literature review, conceptualization, theoretical contribution Literature review, conceptualization, theoretical contribution Literature review, conceptualization, theoretical contribution31 Literature review, creation of a conceptual model, semi-structured interviews Form of reasoning Inductive/Abductive Abductive Abductive Abductive Abductive/Inductive Inductive 4.4. Research design Based on Myers (2009) the research design reflects the strategy of the research since it denotes the pathway from the underlying philosophical assumptions to research methodology and research procedures (data collection) allowing the development and conducting of the study in a manner characterised by order and effectiveness (Chenail, 2011). Mouton (1996, p.175) suggests that the research design serves to “plan structure and execute” the research in terms of maximizing the “validity of the findings”. The common classification of research methods is the distinction between qualitative and quantitative research methods, which share contrasting differences in terms of a) the nature of knowledge, b) the collection and analysis of data and c) the Publication V and VI have been written in parallel and within the process of conducting the interviews. The conceptual nature of publication V has been developed also in accordance to the outcomes from the interviews used as primary data for publication VI. 31 P a g e | 87 87 spectrum of generalization. The following table depicts an overview of the main characteristics that are distinctive in qualitative and qualitative studies. Table 13: Characteristics of qualitative and quantitative studies (Developed by the author) 32 Characteristics of Qualitative and Quantitative Studies Qualitative Studies Quantitative Studies Exploratory Confirmatory Naturalistic Controlled Subjective Objective Inductive Deductive Ideographic Nomothetic Descriptive/Interpretative Predictive/Explanatory The adoption of a qualitative paradigm is in alignment with the underlying purpose of this research and the exploration of the research questions (ref. Section 2.1), since it allows the understanding of the human behavior and its holistic nature facilitates any endeavour in terms of synthesizing. Furthermore, its discovery-oriented nature, the exploratory, expansionist, descriptive and inductive character, helps the author ground all the underlying assumptions of the phenomenological reality with the subjective way, projected in a holistic approach to the topic by conducting an indepth analysis in order to understand the situations from the perspective of all the actors or participants involved. 4.4.1. Multidisciplinary-based scholarship An integrative part of the research design is the approach adopted by the researcher, which denotes the mentality and the mindset of the researcher in terms of identification, creation, analysis and legitimization of the research activities. Furthermore, it captures the essence of the message the researcher wishes to pass to the external community regarding the applicability and the relevance of the research outcomes for academia, practice, policy-making and the societal sphere. “The world’s problems require a multidisciplinary skillset-that is, the combination and involvement of several academic disciplines or professional specializations to a topic or problem” (Terjesen and Politis, 2015, p.151). To that respect, throughout this research endeavour, the researcher has gone down the line of embracing a multidisciplinary approach. Multidisciplinary-based scholarship, contrary to the dominant institutional paradigm of discipline-based scholarship33, aims at drawing Based on Chenail, 2011; Elliott and Timulak, 2005; Reichardt and Cook, 1979. Knowledge emerges from a single discipline-scientific reduction approach (Ben-David, 1971 cited by Terjesen and Politis, 2015) 32 33 P a g e | 88 88 knowledge from various, different and diverse disciplines (Choi and Pak, 2006). The reasoning behind this choice falls primarily to the topic of the research per se and the willingness of the author to give to this academic research a more practitioner overtone, making sure that the research outcomes do not reflect an “abstract formality” (Janssen and Goldsworthy, 1996) but are fully connected to real-life situations and have a strong effect and influence on management practices (microphenomena), business and society. In the same token, the appropriateness of this choice is related to the author being given the opportunity to develop an integrative moment by drawing appropriately from multiple disciplines, so as, to be able to redefine and reconceptualise themes and issues outside the traditional, monolithic and path-dependent boundaries of innovation management research i.e. synthesizing cognitive structures. The author believes that this process can facilitate a new understanding of the complex phenomena of open innovation, trust and human dimension, being studied in this respective research. In a similar manner, the author has received inspiration and support for this choice by Jan Smuts and his 1926 book Holism and Evolution. The adoption of this multidisciplinary mindset, which depends to a greater extent to the granularity of the disciplines that are being considered, is determined by holism rather than reductionism, nurturing and encouraging the collaboration and cross-fertilization among disciplines. By this choice the author aspires to create creative and sustainable synergies by synthesizing multiple sources of knowledge, even from unrelated disciplines, in order to create new knowledge benefiting both society and individual scholarship. Furthermore, the adoption of a multidisciplinary approach provides a first-class opportunity in terms of adopting a multidisciplinary state of mind, opening up new theoretical perspectives and research pathways, along with, employing different methodological tools and sources of data generated in one discipline to another (Terjesen and Politis, 2015). The rationalization behind this approach falls into the fact that open innovation, human side and trust are phenomena, which are quite abstract, requiring active “search for connection across fields” (Terjesen and Politis, 2015, p.155). In the same manner, open innovation research still remains in the course of theory development (West et al., 2014), therefore the employment of literature-based conceptual developments, along with, exploratory and qualitative approach and analysis, that can encourage the development of repertoires of learning, is indeed required. In this frame of reference, the author is fully aligned to the argumentation that, for this particular context, qualitative methodology is considered as most suitable in terms of building upon credibility, persuasiveness, while embracing a holistic approach P a g e | 89 89 within the unfaltering reciprocation between theory, practice and real-life evidence (Graebner et al., 2012). In the same manner, this approach is perfectly aligned to the design concept and nature of this exploratory (Stebbins, 2001), primary (Maxwell, 2005) research, which aims at developing a conceptual model that depicts and explains the relationship among different variables and at the same time aspires to understand the cosmological view of the human side of open innovation in the financial industry through the eyes of participants (depicting aspects of life and working experiences within different organizational settings). 4.4.2. Methods The research methods, which have been chosen for this research, are qualitative by nature. “Qualitative research involves an interpretive, naturalistic approach to the world. This means that qualitative researchers study things in their natural settings, attempting to make sense of or interpret phenomena in terms of the meanings people bring to them” (Denzin and Lincoln, 2011, p.3, cited by Creswell, 2012, p.44). In a similar manner, van Maanen (1979, p.520) defines qualitative research as an “array of interpretative techniques that can describe, decode, translate and otherwise come to terms with the meaning, not the frequency, of certain more or less naturally occurring phenomena in the social world”. Also “all these [qualitative] methods rely on linguistic rather than numerical data, and employ meaning-based rather than statistical forms of data analysis” (Polkinghorne, 1983, cited by Elliott and Timulak, 2005, p. 147). Extant literature has shown and acknowledged the important contribution and suitability of qualitative research in management science (Bettis et al., 2015; Gephart, 2004; Lowe and Gardner, 2000) contributing to theory construction or generation, development of novel knowledge and findings from real-world settings on individual, collective, organizational, social and political phenomena, which unveil naturally (Patton, 2001). In this context, this qualitative research seeks “illumination, understanding and extrapolation to similar situations” (Golafshani, 2003, p.600). Furthermore, the qualitative approach of this research is in line with the choice of interpretivism paradigm since, this research aims at engaging “in research that probes for deeper understanding rather than examining surface features” (Johnson, 1995, p.4). The data collected and presented in this dissertation originate from interviews (primary data) and an extensive review of the corresponding existing literature. Furthermore, this research utilizes the triangulation of data, methods and theories so as to understand the complex phenomenon of open innovation in relation to the human element and trust, increasing at the same time P a g e | 90 90 the quality of this research. The following table provides a general overview of the methods that have been employed in all the respective publications. Table 14: Sources and analysis of data in the dissertation (Developed by the author) Methods Data Collection Semistructured interviews Literature review Data analysis Content analysis Categorization Publication I Publication II Publication III Publication IV X X Publication V Publication VI X X X X X X X X X X X X In this frame of reference, the author adopts a non-complexity mindset towards the research method. “When complexity means complexity, the results are usually a muddle” (Chenail, 2011, p.1715). To that respect, the choice of the research method has been grounded on the rationale that the complexity of the research lies upon phenomena, which are complex and elusive by nature. Therefore, the author embraces simple, but at the same time, effective and coherent procedures so as to conduct this exploratory and primary research. 4.4.3. Research methodology 4.4.3.1. Semi-structured interviews Interviews, being a common research method, have been a quite suitable and helpful form of data collection, reflecting the ontological philosophy and the interpretative paradigm adopted within this research. The employment of qualitative interviews, following an inductive reasoning, allows the unravelling of the interviewees ’own perspectives and points of view, while understanding valuable insights on what is relevant and important for the interviewee per se, in relation to each of the topical areas, along with flexibility and emergence of new concepts and ideas (Bryman and Bell, 2007). As a data collection method, interviewing participants “is an effective way of soliciting and documenting, in their own words, an individual’s or group’s perspectives, feelings, opinions, values, attitudes and beliefs about their personal experiences and social world, in additional to factual information about their lives” (Saldaňa, 2011, p.32), assuming that all this ecosystem of thoughts, attitudes, feelings, ideas and underlying thinking is reflected and stretched out in the provided P a g e | 91 91 responses34 (Sekaran, 2003). The interviews followed a semi-structured, open-ended pattern, taking the form of “guided conversations” (Yin, 2003, p.89), establishing “the topic for the respondent and then leave the respondent to structure and answer as is seen fit” (Vinten, 1995, p.27). Their semi-structured nature (Denzin and Lincoln, 2000) gives the opportunity to the researcher/interviewer to touch upon a vast number of topical themes by exploring the perceptions and the cosmological view of the interviewees and bring out valuable insights and constructive suggestions by deeply capturing and delving into the interviewee’s opinions35 (Bryman and Bell, 2007). Furthermore, this approach puts a strong emphasis “on the researcher’s ability to take the role of the other and to grasp basic underlying assumptions of behavior by seeing the definition of the situation through the eyes of the participants” (Deshpande, 1983, p.106). The author believes that, as a data collection method, interviews are quite advantageous in terms of catering for a direct contact with the interviewees (by nurturing a two-way communication in a form of a discussion), while obtaining detailed information, wide range of insights and richness of data with few participants. To that respect, the author argues that this form of communication, additionally, allows the building of trust between the interviewer and the interviewee, allowing the latter to appreciate the overall purpose of the research and gain a comprehensive picture of the interviewer to whom valuable and maybe confidential data and information are being trusted and shared. The ontology of relativism has been facilitated by the interviews since the author was able to explore additional topics he felt that there were related to the research questions, leaving also ample room for elaboration, providing a wider perspective in the context. This flexibility is provided by the interview guide, which is not considered as a standardized tool and it can be revised according to the circumstances and the development of the interview (Minichiello et al., 1992). It is also of notice to add that the impressions and reactions of the researcher have also been considered (Myers, 2009). Responses that are formulated and expressed within the interview process allowing the interviewee to freely express the point of views and opinions on a particular theme. 35 The author believes that in the framework of this respective research, interviewees’ opinions are not only influenced by personal feelings, tastes, or opinions but also from the working environment and the strategic intent of the representing enterprise per se, especially within the realms of the financial industry. This form of subjectivity cannot be avoided since the interviewee reflects and projects the views of the individual experience and working legacy within each respective financial institution. 34 P a g e | 92 92 In the realms of this dissertation 30 interviews have been conducted with Chief HR Officers, Chief Innovation Officers, C-Level Innovation Consultants and C-level Executives of major financial institutions in Europe, Americas and Asia-Pacific. This mosaic of views reflects the need to drive a globalized strategic orientation approach within the financial industry. Additionally, it ensures appropriateness and a wide range of characteristics of interviewees, accrediting pluralism and emergence of views and experiences under the prism of diverse organizational, cultural, societal, ideological, educational and political backgrounds. Furthermore, the primary data collected from these interviews put emphasis on the way the interviewees frame, structure and understand the reality, providing “elaborated accounts about particular experiences” (Elliott and Timulak, 2005, p. 150), along with personal understanding of feelings, thoughts and intentions. To that respect, this kind of primary data are mainly ideas, experiences, perspectives, assumptions and underlying thinking, elements that cannot be easily quantified or observed with normal or existing measuring scales (Bryman and Bell, 2007). All interviews, conducted, either in person or via teleconference (Skype calls), lasting approximately 60-90 min. each, were fully recorded and transcribed, keeping the wording intact. Each transcript, with a debrief note including the interviewer’s “reactions to participant attitudes, insights and the quality of the interview” (Cooper and Schindler, 2013, p.157), was sent back to the interviewees for additional corrections and comments. A written validation was provided by each interviewee along with a non-disclosure agreement, due to confidentiality reasons and to minimize potential bias. When available, secondary data from additional organisational knowledge channels e.g. annual reports, charts, available registers, company websites etc. were integrated in a triangulation process, ensuring construct validity and avoiding post-hoc rationalisation. 4.4.3.2. Literature review Since the primary purpose of this research is to make a theoretical contribution, existing literature has always been the starting point in the strenuous tug between theory and practice. Literature review has helped the author develop a synthesis, combining into a collection large volumes of information from a wider spectrum of disciplines and research fields (McKibbon, 2006; Tranfield et al., 2003). The adoption of a multidisciplinary approach towards synthesizing multiple sources of knowledge from various fields of research has been of great help in terms of conceptualization but at the same time in terms of highlightening weaknesses and P a g e | 93 93 shortcomings of extant research (McKibbon, 2006) addressing the research gap and the relevance of the research outcomes. Literature review has received criticism for being highly subjective lacking rigorousness and wide coverage (Cooper, 2010; Tranfield et al., 2003). However, being systematically conducted it can allow the emergence of objectivity along within a comprehensive critical analysis of the mainstream literature in relevance to the topic being studied (Hart, 1998). It is important at this stage to underline the integrative role of the intersection and the dynamic interoperability between literature and interviews. Both these methods have been extremely complementary in terms of providing new insights and relational combinations that have allowed for the emergence of additional elements to be explored and analysed, while connecting the research to the external environment of the empirical setting. In order to empower the multidisciplinary character and endorse the relevance of the research the most relevant academic and professional literature has been considered. The literature reviews have been based on databases provided by ISI Web of Science and Scopus so as to access high-quality journal articles, which have been complemented with books and consulting reports so as to give prominence both to academic and industry relevance and interpretative rigor. The selection of the sources to be included was determined based on the analysis of titles, keywords and abstracts along with expertize, external impact and knowledge trustworthiness of the respective institution (in relation to executive briefings and consulting reports). 4.4.4. Research procedure 4.4.4.1. Sampling The meaningfulness of a sampling strategy in the framework of an exploratory qualitative research is not about statistical measurement and vast representativeness, but it still deemed as necessary in relation to the research trustworthiness (Cooper and Schindler, 2013). In the realms of business research two sampling techniques can be perceived: probability and non-probability sampling (Saunders et al., 2003). Since the purpose of this research is not to offer statistical representativeness and a vast generalization of findings with a measurable degree of confidence (Hair et al., 2007) but to contribute to the discussion and theory-building by means of information-rich data collection, in depth analysis of valid and reliable insights and ideas, the author adopts the non-probability sampling strategy. This choice is also in line with the interpretative viewpoint adopted in this research, putting emphasis on the emerging theorizing opportunities rather that the statistical representativeness P a g e | 94 94 and adequacy of the chosen sample (Bryman and Bell, 2007). To that respect, the author argues that all the interviewees originate from different organizational settings and countries, depicting the heterogeneity of diverse contexts and pluralism of ideas and viewpoints, facilitating the identification of emerging patterns and themes, while contributing to theory development. In that event, the author believes that this is the unique value proposition and contribution of this respective research. The sample has been chosen based on: a) the reputation and trust benchmarking according to the 2013 and 2014 Thomson Reuters Trust Index36, b) the size of the workforce, the age (Van de Vrande et al., 2009) and location of the representative financial institution and c) the historical and actual attention to innovation, communicated externally, based on the 2012, 2013, 2014 and 2015 KPMG Luxembourg Banks Insights37 and the 2012, 2013 and 2014 Global Innovation Index Reports38, co-published by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO, an agency of the United Nations). The interviewees have been chosen according to their position, knowledge and portfolio, following a course of pre-interviewing in order to safeguard the alignment of their profiles to the research strategy. It is also important at this stage to mention the inherent difficulty of the financial industry to share information and accept having executives be interviewed, primarily due to confidentiality purposes and regulatory restrictions. The underlying purpose is to bring together people from the empirical setting (i.e. the financial industry) who are willing to share valuable information and know-how about the real world revolving around the industry and the organizational sphere, making a relevant contribution to the research. The choice of the interviewees is based upon the author’s personal common sense and judgement, recommendations (personal contacts), experience and individual profiles39. The author was responsible for matching the research question and the certain criteria set for the research (Adams et al., 2007) with the individual profiles of the interviewees by setting up Available online at http://financial.thomsonreuters.com/en.html (Not for referencing purposes) Available online at http://www.kpmg.com/lu/en/issuesandinsights/articlespublications/pages/luxembourg-bankinginsights.aspx (Not for referencing purposes) 38 Available online at https://www.globalinnovationindex.org/content/page/past-reports/ (Not for referencing purposes) 39 The author used multiple sources of information such as LinkedIn profiles, conference programmes in the field of innovation in and for financial services, consulting reports and whitepapers so as to identify the relevant and most appropriate profiles that would maximize the contribution to the research by providing relevant data and novel insights. 36 37 P a g e | 95 95 pre-interview discussions and exchange of information. This process has been extremely helpful because the author was able to assess the alignment and the wellinformativeness of the interviewees with respect to the research and at the same time allow time for the interviewees to become accustomed to the purpose of the research, understand the underlying logic and aim of the interviews and also make sure that the represented financial institution was in line with providing information and insights for the research purpose. Last but not least the author granted complete confidentiality to all the interviewees. 4.4.4.2. Analysis of the data The aim of data analysis is to provide novel insights on the human condition. These novel insights are encased in the observatory and discovery process on this data analysis (Saldaňa, 2011). The semi-structured interviews have been conducted based on an interview guide (pre-planned core of questions), which has been developed reflecting the contemporary and topical themes based on the literature along with the author’s pre-understanding and background. It is important here to mention that in order to increase the validity and the relevance of the research and formulate questions, which are of true relevance for academia and practice, additional sources of knowledge have been considered such as consulting reports, participation in forums, discussions on LinkedIn, posts on professional blogs and like-minded organizations etc. This practice has been extremely useful and the author strongly believes that it contributes to the unique value proposition of this respective research. In a sense, this practice has helped the researcher get an underlying confirmatory assessment of the argumentations and rational thinking presented in the research, while at the same time, giving the researcher the opportunity to eavesdrop the latest trends and themes, which are of topical interest to the industry and the research community itself. During the interview process, the interviewees had the opportunity to elaborate further or provide more relevant and rich information or even refuse to respond to a particular question. Qualitative data analysis includes a) working with data, b) organization of data, c) categorization into manageable units, d) coding, e) synthesizing and e) searching for patterns (Bogdan and Biklen, 1998; LeCompte, 2000). The qualitative data analysis, aims as a process, to discover patterns, concepts, themes and meanings. The attitude of the researcher, regarding the analysis of the interview transcripts is not only to answer the questions based on the data but also to read between the lines and try to give data a possibility to speak and also raise additional questions. Naturally this is an incremental and non-linear P a g e | 96 96 process, which matures and continuously develops along with the cognitive ownership of the overall corpus of the data (Saldaňa, 2011), including also iterative and recursive aspects with the literature. These qualitative data have been used inductively; however, a continuous iteration between analysis and theory in term of formulating research propositions and research outcomes has been an integrative part of the process. The author would also like to accentuate the incremental evolution and maturity of the process per se also in terms of seeing the big picture of the data, at first and then by means of categorization and organization, initiating the process of searching for patterns, conceptual categories, critical themes and meanings that emerge from the data, breaking down and putting back together data and reflections in order to re-construct an overall meaningful synthesis. 4.5. Trustworthiness of research Research scholarship, notwithstanding the adopted philosophy of science it emanates, needs show ability to assess the trustworthiness. This kind of trustworthiness and the ways in, which, it can be assessed and evaluated are primarily in line and in accordance with the research program and philosophy of science it embraces (Anderson, 1986). The quality of the research allows the understanding of “a situation that would otherwise be enigmatic or confusing” (Eisner, 1991, p.58). Stenbacka (2001) suggests that the quality of qualitative research reflects the generation of understanding, rather than, the purpose of explaining, which is primarily related to the evaluation of quantitative studies. The discussion around the quality of the research is embedded within the question posed by Lincoln and Guba (1985, p.290) on “How can an inquirer persuade his or her audiences that the research findings of an inquiry are worth paying attention to?” Existing literature advocates the debate around the use of criteria of goodness for qualitative research stating that the “holy trinity” of objectivity, reliability and validity does not account for assessing and evaluating qualitative research (Spencer et al., 2003, p.59). In the same vein, Garman (1996, p.15) believes that “qualitative research is relatively lacking in canons and conventions”. Alvesson and Skoldberg (2009) suggest that the process of evaluating this type of research must embrace a creative and open attitude towards blurriness, complexity and subjectivity, while Northcote (2012) brings attention to the critical co-existence of research paradigm, intention and epistemological beliefs adopted both by the researcher and the research participants. P a g e | 97 97 Since this research adopts the interpretivist research paradigm, the author intends to evaluate the quality underpinnings of this research by building upon the framework by Spencer et al. (2003) on the fact that the goodness of qualitative research should be contributory, defensible, rigorous and credible. Moreover, the author poses the use of trustworthiness instead of quality, suggesting that trustworthiness in this context is more relevant and applicable in terms of perceiving the goodness of this qualitative research. Trustworthiness is defensible (Johnson, 1997, p.282) while it helps the author establish confidence in the findings (Lincoln and Guba, 1985). To that respect, it is also important at this stage to underline that the author also intends to highlight the aesthetics parameter (Garman, 1996) in terms of recognising and acknowledging the emotional, personal, moral and spiritual characteristics embedded within this respective research endeavour (Northcote, 2012). The following table depicts the guiding principles and criteria that are taken into consideration, so as, to evaluate the trustworthiness of the qualitative nature and methods of this respective research. The author would like to highlight the fact that the indicators that are mentioned hereby reflect all the measures, including mitigation measures, aimed at avoiding biases and misinterpretation of this respective research. Internal validity Credibility d) c) b) a) Believable and trustworthy data and data analysis Construction of personal reality (Smith and Ragan, 2005) “The researcher is the instrument” (Patton, 2001, p.14) Credibility depends on the ability and effort of the researcher per se Goals d) c) b) a) Transparency of research process and method by articulating on every publication (where applicable) a robust description of the methodology (process of data collection and interpretation), clearly enunciating the underlying reason behind the choice of the particular research method, how it is linked to the research question and the token of appropriateness within the research objectives Rigorousness through the systematic and transparent collection, analysis and interpretation of data Prolonged engagement by maintaining a frequent and continuous contact with the interviewees and using this interaction not only for data collection but also for running diagnostic research in order to bring additional perceptions within the research Employment of multiple data gathering methods: documentation, semi-structured interviews, literature, participation in online for Indicators 40 Based on Adams et al., 2007; Bryman and Bell, 2007; Cohen and Crabtree, 2008; Driessen et al., 2005; Freebody, 2003; Garman, 1996; LeCompte and Goetz, 1982; Lincoln and Guba, 1985; Merriam, 1998; Northcote, 2012; Patton, 2001; Seale, 1999; Sekaran, 2003; Smith and Ragan, 2005; Spencer et al., 2003; Tracy, 2010; Wallendorf and Belk, 1989 . Guiding Principle (Quantitative) Guiding Principle (Qualitative) Trustworthiness of Qualitative Nature and Methods of Research Table 15: Trustworthiness of qualitative nature and methods of research (Developed by the author)40 P a g e | 98 98 Transferability External validity (generalizability) or applicability a) “Lies at the heart of issues conventionally discussed as validity and reliability” (Seale, b) a) f) g) e) a and webinars Triangulation across sources and methods, in terms of utilization of multiple researchers in the data collection, conceptualization, the formulation of conceptual developments, propositions and analysis. This has helped the researcher develop the interpretation from the interaction with the interviewees and acknowledge complementarity of insights. “The most critical technique for establishing credibility” (Lincoln and Guba, 1985, p.314). It is important to highlight that the triangulation across sources and methods has not been limited to the interviewees per se, but literature and other valuable sources of information in constructing an interpretation, have been considered. Such kind sources have the ability to provide a narrative and historical perspective that interviewees might not be able to provide (Wallendof and Belk, 1989). Theoretical and interpretative relevance Presentation of papers in conferences and peerreviewed journals so as to gain feedback, interpretations and conclusions. Additionally attendance and presentation to specific-interest conferences on financial services and successful interaction with practitioners and dedicated researchers in the empirical setting (Driessen et al., 2005) Provision of a detailed, rich description of the setting under study Provision of sufficient information to the reader P a g e | 99 99 Reliability or Consistency (Seale, 1999) b) a) c) b) Replication of research outcomes and propositions with similar subjects in similar contexts (Merriam, 1998) Practically impossible do to 1999, p.467) Complementarity of contexts (researcher and reader) Judgement of the context and phenomena allowing the reader and the community interested in the research to assess potential transferability of research outcomes and propositions to other settings c) a) b) f) e) d) c) so as to allow the reader assess, appraise and judge the potential applicability and significance of the research outcomes to other settings Framing and drafting of working hypotheses, which were discussed in detail with industry professionals and other researchers The inductive and abductive character of the research in terms of deriving information from literature (already validated quality inputs) and interviews (integrative interplay and projection of reality through real-life data) Accentuating the importance of the research, the worthiness of the topic and the significant contribution in terms of theory and practice (Cohen and Crabtree, 2008; Tracy, 2010) Comprehensive understanding and acknowledgment of the future research pathways this research is paving Documentation of data, methods and decisions Rich data and elaborated descriptions based on the extensive interview guide and the semistructured interviews41 All interviews have been recorded so as to 41 The author believes that it is very important to draw attention to the fact that during the interview process cross-interview comparability (Bryman and Bell, 2007) was ensured. Even though a pre-structured interview guide was in place, conducting interviews within different organizational contexts, settings and environments might require redesigning and revision of questions in terms of appropriateness and applicability. To that respect, the author ensured that there was ample room for flexibility (not following a strict logic) in terms of choosing which questions to ask, changing the order or even asking extra questions. This was in accordance to the answers provided by the interviewees that to a great extent reflect the attention, importance and relevance the interviewee wishes to bring as a contribution to the research. Dependability [“inquiry audit” (Lincoln and Guba, 1985, p.317); process (Lincoln and Guba, 1985) P a g e | 100 100 Confirmability and product of the research for consistency] Objectivity or Neutrality “How can one establish the degree to which the findings of an inquiry are determined by the subjects (respondents) and conditions of the inquiry and not by the biases, motivations, interests or perspectives of the inquirer?” (Lincoln and Guba, 1985, p.290). Confirmation of research outcomes and propositions c) instability of human behaviour and the multiple interpretations of reality Consistency of results with the collected data (Merriam, 1998) e) d) c) b) a) e) d) minimize bias [“Interviewers should not rely on memory because information recall from memory is imprecise and often likely to be incorrect” (Sekaran, 2003, p.231)] Interview transcripts have been sent back to the interviewees for cross-checking. The interviewees had the liberty to elaborate, refine, modify or even change the transcript until the content and the views included within the transcripts depicted accurately the perspectives of the interviewee Data interpretation and analysis have been discussed with the interviewees and other researchers so as to determine its plausibility Acknowledgement of limitations through a selfcritical account on the employed methodology All data are organized and are retrievable to the public The researcher’s biases, assumptions, worldview and theoretical orientation have been clarified upfront The researcher has catered for the transparency of his ideas (LeCompte and Goetz, 1982) and did not delude himself in terms of developing inferences that can neither be supported or being adequately grounded in the data and literature Correspondence between data and the reports has been examined by external qualitative research auditors. These auditors have provided comments on the rationale and plausibility of the interpretation and the adequacy of the data P a g e | 101 101 Integrity Affectiveness Excitement of research discoveries Emotional involvement Enthusiasm Eliminating the possibility of conflict between the researcher and the interviewees b) c) a) c) b) a) e) f) d) b) c) a) and literature Consideration of vitality and aesthetics (Garman, 1996) Sincerity (Tracy, 2010) Moral effort of the researcher throughout the research endeavour (Freebody, 2003) Honesty, responsibility and integrity (Adams et al., 2007; Bryman and Bell, 2007) No form of plagiarism The author avoided any form of obfuscation i.e. “Obscuring the research findings by the reporting style-for example, by not highlightening the results that are important or those that the researcher does not like” (Adams et al., 2007, p.35) Prolonged engagement and construction or rapport and trust between the researcher and the interviewees making sure that everything is clarified upfront and have mutual understanding on aspects, which cannot be discussed, aspects that are either sensitive or deemed confidential. Moreover, this kind of interaction has helped the researcher better assess the potential deceptiveness of the information provided by the interviewees Triangulation across sources, methods and researchers in terms of comparing information, insights and different ways of data analysis and interpretation Employment of skilful and creative interviewing techniques along with addressing questions and comments, which are not P a g e | 102 102 e) d) threatening, uncomfortable but cover a broader spectrum and agenda, giving also ample space for elaboration and reflection The research has also shown adaptability and sensitivity and has been open within the interviewees in terms of personal interests, goals, perceptions and behavioural norms. To that respect, the researcher was able to a greater extent connect to the interviewees as a fellow human being leaving aside the engaging role of the researcher. In addition, the research has not only relied to the respective interview guideline but has integrated supplementary and contextualized observations and background information so as to achieve the emanation of complementary elements, which in many cases have shed light and unveil additional aspects of the topics under research. The research safeguards the anonymity and the identity of the interviewees and all the data, the notes, the transcripts and the recordings are available for the interviewees and their institutions The researcher has acknowledged and appreciated any personal biases P a g e | 103 103 P a g e | 104 104 CHAPTER 5: SUMMARY OF PUBLICATIONS 5.1. Purpose of the research To develop a concise, concrete, dynamic and comprehensive conceptual model, which (a) examines the trust-embedded aspect of open innovation, (b) conceptualizes the framework of the human dimension of open innovation (c) empowers the integrative role of human resource management and (d) creates the prerequisites and the mindset to observe the emerging shift towards the building of human enterprises in the financial industry through the adoption of open innovation practices Why and How to Create a Corporate Culture and Environment for Trust-Embedded Open Innovation in the Financial Industry RQ1 What is the role of trust in relation to open innovation within the financial industry? RQ2 How is open innovation conceptualized under the prism of intraorganizational trust? Publication I Open Innovation and Collaboration in the Financial Services Sector: Exploring the role of trust Publication II Trust embeddedness within an open innovation mindset Publication IV Trust embedded open innovation: Literature review, synthesis and research propositions RQ3 What is the interplay between organizational readiness and trust-embedded open innovation adoption in the financial industry? RQ4 How do trust, readiness and human resource management practices conceptualize the human dimension of open innovation in the banking sector? Publication V Human resources management and open innovation adoption in the banking sector: a conceptual model RQ5 What is the profile of an open innovation leader and how to create the right organizational environment for employees to excel within an open innovation corporate environment in the financial industry, within and outside the organizational boundaries? Publication III Organizational Readiness for Open Innovation in the Financial Services Sector: The missing element of trust Publication VI Open innovation for “humanly-embedded” financial institutions: individuals and organizations at a crossroads Figure 10: Composition of the publications and their relationships to the research questions (Developed by the author) P a g e | 105 105 The publications are presented in this section with a brief summary, which reflects what the main idea of each paper is, what are the key findings and which are the main implications. Each paper is followed by an executive summary42 and some reflective comments which aim at underlining and highlighting the contribution of each paper from an individual and collective prism framing of this thesis. 5.2. Overview of publications Publication I: Open Innovation and Collaboration in the Financial Services Sector: Exploring the role of trust Objective This paper aims at exploring the role of trust within the financial services sector in relation to open and collaborative financial innovation. Financial services represent considerable share of the global economy. In the European Union (EU-27), financial services accounted for 5.9% of the Gross Value Added in 2010. There is a vast discussion about open innovation and the need for collaboration and knowledge sharing; however, in the process of building up this open and collaborative framework, trust does not yet seem to have a place in the academic debate. Relying on a review covering multiple literature streams and primary data collected from interviews, the relevant antecedents of trust in the financial services sector under this open and collaborative perspective, ex-post financial crisis are identified. Main contribution and role in the research This paper plays a very important role in the overall unfolding of the dissertation since it offers a very concise and critical view towards the status of the financial services sector, while introducing the core element of trust within the open innovation paradigm. The paper itself is being positioned both under a theoretical conceptualization and a managerial guideline since its multi-thematic attitude combined with primary data deriving from direct interviews within financial services professionals, active both in the Luxembourg and international market, feeds the reader with valuable and cutting-edge insights on the role of the financial industry, the understanding of financial innovation, while setting the stage for the importance of considering open innovation as part of the innovation endeavour The executive summary of all six publications is the abstract, which has been officially published in each respective publication. This note is being provided to avoid plagiarism misconduct. 42 P a g e | 106 106 within the financial industry and also the emanation of the role of trust as a core element of the open innovation paradigm per se encapsulated within the financial industry. The value proposition of this paper is encoded within two axes; on the one side the paper adopts a multidisciplinary attitude since it dives into different streams of academic literature, enriched within insights from consultancy and practitioneroriented whitepapers and publications covering a wide spectrum of research and capturing to a great extent the overall environment of the financial industry. This multidisciplinary perspective a) opens up the discussion on the missing element of trust, b) addresses the emerging need for more research towards the dynamic linkages between trust and open innovation within the financial industry and c) it synthesizes a variety of literature aspects, which facilitates the development of a solid argumentation. Figure 11: Conceptual framework (Salampasis et al., 2014a, p.470) On the other side, the interviews and the direct quotations included in the publication cater for a concrete development towards the relevance and contemporary alignment of the research to the financial industry, since the qualitative approach of the data analysis and the direct exposure of the author to the interviewees, assisted into the materialization of topical themes in pertinence to the prevailing issues within the financial industry. P a g e | 107 107 Figure 12: Theoretical framework in relation to open format question (Salampasis et al., 2014a, p.471) The abovementioned figure depicts the rational and relational pathway in the exploration of the role of trust within the open innovation paradigm in the financial industry following a combined inductive and abductive reasoning approach. As it has already been highlighted, the role of this paper is not only to provide some answers, but primarily to raise awareness of the importance of adopting an open and collaborative mental state towards the role of open innovation in the financial industry and the way the appreciation and attention to trust is linked to the culture of the sector by its very nature. The main outcome is the conceptualization of trust as a dedicated concept within the financial industry i.e. presentation how the industry understands trust, which are the calculative and non-calculative factors that shape, safeguard or endanger trust and how trust is positioned in the locus of the function of the financial industry ecosystem. In simple terms, the author argues that the unique value proposition of the paper, besides setting the stage and linking trust and open innovation, is the dedicated and explicitly focused mapping out of how trust is defined within the financial services sector. It is also important to pay attention to the fact that many of the calculative and non-calculative factors addressed here in this paper, have been of great importance since, directly or indirectly, have assisted in the development of the overall research and have promoted and encouraged this multidisciplinary and qualitative approach of the dissertation. P a g e | 108 108 Figure 13: Calculative and non-calculative factors (Salampasis et al., 2014a, p.475) Publication II: Trust embeddedness within an open innovation mindset Objective This paper explores the role of trust under the prism of open innovation. There is a vast discussion about open innovation and the need for collaboration and knowledge sharing; however, in the process of building up an open and innovative organization, trust does not yet seem to have a place in this process. The approaches of current literature fail to denote the relation between the importance and impact of trust within an open and collaborative environment under an organizational perspective. The objective of this conceptual paper is to elevate trust as a core element of open innovation as an organizational mindset by proposing a theoretical model leading to a re-contextualization of the current approaches of open innovation. Main contribution and role in the research This paper is foundational for this research since it provides a theoretically-based conceptual model depicting the aspect of trust in relation to open innovation. It introduces the research novelty of the trust-embedded open innovation mindset arguing that openness and collaboration is a way of thinking and open innovation in order to be meaningful within the organizational level, must be emplaced both in P a g e | 109 109 leadership and the people by and for themselves. The paper begins with a very detailed overview of the literature on innovation, open innovation and trust, presenting various research approaches while including both seminal works in the dedicated fields but at the same time the most recent publications both under an academic and practitioner oriented panorama. It is important here to mention that this attitude is being followed throughout all the publications being consistent with the primary research objectives that call for relevance, applicability and alignment of theory to practices. The aspiration of this paper has been to define the trust-embedded approach of the open innovation mindset and offer a re-contextualized definition that will pave the way of the future definition of the human aspect of open innovation. It is also important to mention at this stage that this paper, which is purely conceptual, albeit not inherently developed and perceived within the framework of financial industry, in itself, it shares many implications on the academic, managerial and societal essence, which are of great relevance to the industry and are mainly addressed in the next stages of the dissertation. The main challenge that this paper has been asked to address is the conceptualization of open innovation in the spectrum of trustembeddedness. The lack of conceptual models created a hindrance on how trust could be linked to open innovation. Figure 14: Antecedents of open innovation-conceptual framework (Salampasis et al., 2015a, p.41) P a g e | 110 110 Furthermore, the great abundance of literature on trust (covering many aspects, schools, philosophies, approaches and streams) and the inherent elusive and highly abstract concept caused additional problems in the conceptualization process. Since the overall aim of the research is to define the human side of open innovation under the prism of trust, this meant that trust would be conceived within the dynamic interplay between the individual and the organizational level. Hence, this paper introduces four elements, which are considered as the organizational antecedents of open innovation i.e. elements acting as pre-requisites for the adoption of open innovation practices. The identification of these four organizational antecedents has emerged from the synthesis of the various literature streams considered, the trends of open innovation and innovation management coming on the scene and the humanistic approach, which is imbued within the overall research. All these antecedents are linked to the open innovation paradigm, having as a common denominator the element of trust. This analysis has led to the juxtaposition of additional variables, which are related to the antecedents depicting their functional relation to trust. Table 16: Variables related to the antecedents of open innovation (Salampasis et al., 2015a, p.49) The mapping-out of these variables endorses the need for a multidisciplinary approach in the open innovation research, regardless of the empirical setting, while at the same time it captures the human element, which paves the pathway of the research, while establishing the conditional framework to conceptualize trust within the open innovation paradigm. Furthermore, they have facilitated the proposed P a g e | 111 111 definition of the trust-embedded open innovation mindset, which is acting as the theoretical foundation of the definition of the human side of open innovation. In this frame of reference, it also important to underline the fact that this paper develops measurable research propositions on the role of each of the abovementioned antecedents in relation to individual and collective interaction with trust, the role of trust in substance and what is dynamic interplay between the trust embeddedness approach towards open innovation adoption and performance. This creates a highly critical relevance of the conceptual model regarding the interpretation of the paradigm in managerial and practical terms, laying a concrete ecosystem of placing this trust-embeddedness in the locus of the organization, perceived as a collective existence of individuals. This means that the trustembedded open innovation paradigm is not disconnected from the overall purpose of innovation which aims at increasing the organizational performance but also increasing the societal and human capital, as being given prominence in this paper. Figure 15: A conceptualized definition of trust-embedded open innovation (Salampasis et al., 2015a, p.50) Publication III: Organizational Readiness for Open Innovation in the Financial Services Sector: The missing element of trust P a g e | 112 112 Objective This book chapter aims at exploring the role of trust as a core element towards the organizational readiness for open innovation within the financial services sector. Open innovation as a concept is perceived as an organizational mindset and its adoption and actual implementation require prior substantial changes within the organizational setting. Managing change is a highly challenging task which requires important and prompt readiness on an organizational level as a whole. Main contribution and role in the research The aim of this book chapter is to respond to the ways of creating a corporate culture and environment for open innovation to succeed and thrive within the financial services sector. It aspires to actively contribute to the on-going debate related to the dark side of open innovation in the framework of the organizational level of analysis. To that respect the conceptual nature of this book chapter investigates the concept of organizational readiness in relation to open innovation adoption in the financial services sector introducing the missing element of trust as a core ingredient in the process of developing and building an open innovation-friendly organization. In this frame of reference, this book chapter puts forth the trust-embedded approach to open innovation, which encases 4 integrative organizational elements acting as auditing mechanisms of open innovation in the financial services sector: knowledge sharing attitude, ambidextrous thinking, collaborative culture and diversity management. Figure 16: Trust embedded organizational readiness for open innovation adoption in the financial services sector (Salampasis, 2014, p.318) P a g e | 113 113 The book chapter offers a detailed analysis of the existing literature on organizational readiness stemming from various research fields and empirical settings, along with a critical approach to existing open innovation organizational readiness models. The figure above depicts the trust-embedded organizational readiness for open innovation approach in the financial services sector. This book chapter aims at contributing to the discussion evolving around the organizational readiness and barriers to open innovation, opening doors towards the adoption of a multidisciplinary approach to the study of organizational readiness by emanating the corporate culture and organization as the defining foundations on how organizations develop, evolve and define growth in terms of putting in place all the right mechanisms towards involving people and all the interrelated interactions. The four organizational antecedents of trust-embedded open innovation put forward a strategic intent and visionary culture becoming the defining foundation of how organizations grow and develop and the same time reflecting the kind of people, the working environment and the corresponding human and organizational interactions. This respective conceptual model distinctively departs from similar schemes and approaches, offering a newly-framed and multidisciplinary approach to open innovation. The author believes that in order to understand what open innovation means and tackle its organizational barriers there is a need to adopt an attitude towards synthesizing knowledge from various literature streams and concepts. The trust-embedded organizational readiness on open innovation approach in the financial industry is structured and conceptualized to be fully in line with the respective peculiarities and contemporary challenges of the financial industry, an industry striving for redefining its role within the global business environment, while accentuating a strenuous endeavour to embrace responsible innovation so as to re-establish the broken trust with the internal and external environment setting new bounds to growth and sustainable social impact. The organizational antecedents of this trust-embedded organizational readiness approach to open innovation cover a vicinity of multidisciplinary aspects, reflecting at the same time the profile of the people who would be part of such an open, inclusive and collaborative environment and the skills required to be acquired but also retained and develop across the organization. This potpourri encases many interrelated and dynamically interconnected elements that along with the solid layer of intraorganizational trust promote the legitimization of all the right conditions for open innovation to excel. P a g e | 114 114 Table 17: Variables of the organizational antecedents of open innovation (Salampasis, 2014, p.320) It is also important to underline that even though this contribution is conceptual by nature, the author sought advice and guidance from academics and leaders of the financial industry so as to endorse the relevance of the research outcomes and strengthen the importance of trust in the contemporary environment of the financial industry. Publication VI: Trust-embedded open innovation: Literature review, synthesis and research propositions Objective The concept of open innovation has been thoroughly investigated. The shift from a closed to an open innovation paradigm is recognized as the main element that fosters organizational performance. However, despite the abundant literature in the field, there is still an on-going debate regarding the organizational and human aspects of open innovation. This paper presents a conceptual model emanating the role of intraorganizational trust in relation to open innovation. Based on an extensive and multidisciplinary critical review of the literature, the organizational antecedents of open innovation are identified: knowledge sharing attitude, ambidextrous thinking, collaborative culture and diversity management. The paper highlights the role of trust as the inherent part of open innovation. In addition, it strongly suggests that: a) open innovation is an organizational mindset perceived via the direct relationship P a g e | 115 115 between the four organizational antecedents and open innovation adoption and b) intraorganizational trust moderates the individual relationships between the four organizational antecedents and the adoption of open innovation. By revisiting the theory of open innovation, the paper develops research propositions depicting the interplay between the organizational antecedents, intraorganizational trust and open innovation adoption. The paper shares academic and managerial implications and brings an alternative perspective in the open innovation paradigm. Main contribution and role in the research This paper is an extended and fully revised version of Publication II. The reason why a fully revised version was put in place is because in the realms of this research the author got the chance to revise several additional bodies of literature, including management, psychology, philosophy and economics. The author found that many distinguished scholars in the field are presenting a number of highly insightful views and perspectives on trust but still the direct interplay between trust and open innovation and the investigation of the organizational and human side of open innovation remain elusive and debatable. Furthermore, throughout the research, the author’s personal views, ideas and research horizons matured, leading to the realization that the previously published version was both incomplete and not fully elaborated. In this context, this paper investigates all these perspectives, reflects and integrates all these aspects into a single conceptual model followed by research propositions. Since the author has been drawing perspectives from a great variety of disciplines, which cater for valuable inputs to the development of the conceptual model, in substance, this paper presents a formulation of theoretical foundation in relation to the organizational and human aspect of open innovation that would trigger further research and perceive a highly needed multidisciplinary approach to open innovation. In addition, the author believes that the conceptual model introduced in this paper is highly applicable and has many implications for theory and practice. Digging a bit deeper in the paper itself, the author stresses out the more concrete interplay and presentation of all the linkages among the organizational antecedents, the element of trust and the adoption of open innovation. The trust-embedded open innovation is more clearly justified and positioned in the locus of the organizational environment encouraging openness and transparency both in the inside-out and outside-panorama. This shows that the primary focus lies fundamentally within the P a g e | 116 116 core of the organization creating a conglomerate of variables which need to be prior emplaced, envisaged, envisioned and nurtured on the firm level. Figure 17: The organizational aspect of trust-embedded open innovation (conceptual model) (Salampasis et al., p.40) It is important here to highlight that even though the dissertation does not proceed to any measuring pathways (this is considered one of the limitations of the respective paper and the dissertation in general) the way the conceptual model is being developed and the way the research propositions have been framed, open pathways for future research towards the measuring of all the relevant relationships in relation to open innovation adoption and performance. P a g e | 117 117 Table 18: Organizational antecedents of trust-embedded open innovation (Salampasis et al., 2014b, p.39) Table 13, depicts an analytical synthesis of various elements that aim to contextualize each of these antecedents. “At this point it is very important to highlight that these four concepts have been formulated based on various literature streams in order to capture their overall essence. This means that these concepts have not been pre-defined by the literature as such but they have been formulated by the authors, consisting of additional sub-elements (defined by the literature per se) synthesizing in each of the four concepts the overall panorama of the different streams of literature” (Salampasis et al., 2015a, p.41). Moreover, it is also important to clarify that some of these elements are measurable and others maybe not. Again the objective of this paper and the overall research is not to measure but allow meanings emerge from the multidisciplinary synthesis of the literature and present the elements that constitute each of these antecedents per se. One additional element, which deserves to be acknowledged, is the more detailed and enriched presentation of the variables engrossed within each individual organizational antecedent. In addition, the variables are being phrased in such a way, so as to assist the deep down diving to human side of open innovation. The abovementioned table does not provide an overall presentation of the related variables but on a second level of analysis, it depicts a strong and incorporative synthesis of theories and elements, which cater for the adoption of open innovation P a g e | 118 118 practices and the future identification of skills, behaviours, cultural elements, norms and attitudes on the individual level. Publication V: Human resources management and open innovation adoption in the banking sector: a conceptual model Objective Open innovation has received wide attention and has been explored in various sectors of the economy. However, despite the abundant literature in the field, there is an on-going debate around the organizational aspect of this paradigm. This conceptual paper aims at contributing to this debate by developing a conceptual model, which explores the relationship between human resources management practices and open innovation adoption in the banking sector. Based on an extensive literature review, the role of human resources management towards the adoption of open innovation in the banking sector is investigated in relation to two fundamental organizational elements: trust and readiness. The authors highlight the role of human resources management as a fundamental element towards the adoption of open innovation practices in the banking sector and strongly suggest that a) human resources management affects the adoption of open innovation in the banking sector and b) trust and readiness moderate the relationship between human resources management and open innovation adoption. The proposed research propositions depict a shift towards a more flexible and open human resources management system in the banking sector and the emergence of an innovative mindset empowering organizational performance. Main contribution and role in the research This publication aims at exploring the role and linkage between human resource management and open innovation within the banking industry. To that respect it develops a conceptual model that depicts the underlying and interconnected relations among human resource management, trust, organizational readiness and open innovation adoption. The rationale behind the choice of the banking sector resolves around its primary importance within the financial industry, the fact that it is of great relevance within the worldwide economy and because banking is all about the human element. The discipline of human resource management has acknowledged a dyadic transformation over the past years, which is related to the first shift from personnel management to human resources management and the second shift from human P a g e | 119 119 resources management to strategic human resources management. The first transformation is associated with the recognition of the real value of the human element within the organization and the fact that a systematic management can lead to the effective mobilization of human capital. However, it is important to highlight that this investment in human capital, bears substantial uncertainty and potential low return on investment particularly if handled with outdated talent management activities and beliefs on the way people are managed nowadays (Cappelli, 2013). The second transformation is intertwined to the alignment and association of human resources with the strategic intent and needs of the organization. This means that human resources management becomes a deep-rooted component of the core organizational strategy. This transformational mindset in the human resource management is aligned to the open innovation paradigm which “by breaking down traditional corporate boundaries […] allows intellectual property, ideas and people to flow freely both into and out of an organization” (Chesbrough and Garman, 2009, p.1). Needless to say, that this transformational mindset should not be gathered as a short-lived moment, but as a whole era and a long learning process, which must be clearly defined and managed accordingly, via the investment in the axiological element of an organization: the people (McComb, 2014). This publication discusses the importance of developing the right organizational climate for adopting open innovation practices within the banking industry. To that respect, it synthesizes multiple literature streams, bringing on board elements from organizational behaviour, organizational and human psychology. Furthermore, this publication extends the work of previous publications developed by the author aspiring to process a deeper view on the underlying mechanisms of organizational climate. In this frame of reference, the author argues that within the organizational sphere there are two distinctive elements, which require attention by human resource management: fair process and workplace bullying, with the latter being a serious phenomenon of psychological harassment that has been extensively observed within banking institutions especially under the relentless pressure of the current financial crisis and global monetary instability. To the author’s knowledge no other study from the existing literature, so far, adopts this anthropological pathway so as to connect fair process and workplace bullying to open innovation adoption. This approach depicts the extent of the dehumanization prevailing in the institutional locus and mindset of the banking industry and the need to establish organizational practices and norms that encourage collaboration, openness, sharing and P a g e | 120 120 trustworthiness and put the human element back into the strategic agenda of the industry per se. This publication pays tribute to the integrative role of human resource management towards developing and safeguarding a safe environment for open innovation to excel, thrive and have a positive impact. Especially within the realms of the financial industry, it is necessary to pay attention on the importance of the human element in terms of building sustainable competitive advantage. Financial institutions need to bring new talent, skills and mindset on board and at the same time shape new and existing employees and train them within an organizational culture imbued with the virtues of fairness, human respect, dignity, understanding, tolerance and engagement; elements that promote internal institutional trustworthiness and reflect a trusted brand to the outside world. Human resource management needs to establish practices that promote responsiveness, transparency and trustworthiness and encourage the adoption of open innovation practices within an industry much in need redefining and re-establishing its healthy relationship with innovation. Figure 18: Conceptual model: the organizational aspect of open innovation adoption in the banking sector (Salampasis et al., 2015b, p.14) P a g e | 121 121 Publication VI: Open innovation for “humanly-embedded” financial institutions: individuals and organizations at a crossroads Objective This qualitative empirical paper, by talking across discipline lines and adopting a multidisciplinary approach, aims at shedding light to the highly neglected and underdeveloped human side of open innovation by bringing insights from the financial industry. It contributes to the limited existing literature, unveiling the peculiarities of the dynamic interconnection between the individual and the organizational spheres. This multifaceted interconnection captures a) the profile of an open innovation leader and b) the organizational ingredients, practices and mechanisms contributing to the creation of an open innovation corporate environment. Primary data has been collected from 21 in-depth semi-structured interviews conducted with C-level Executives of major financial institutions in Europe, Americas and Asia-Pacific. This paper argues that there is an emergent need for sharpening the understanding that for open innovation to be meaningful and successful, in the financial industry, the human element must be put back on the agenda and strategic intent of the industry, per se, especially in the face of unprecedented global and organizational challenges. This paper shares novel academic and managerial implications on the dynamic co-dependence of the individual and organizational spheres towards embracing open innovation within “humanly-embedded” financial institutions. Main contribution and role in the research This paper aims at bringing an insightful view on the dynamic interrelation between the individual and organizational sphere in terms of identifying and overcoming the organizational barriers towards the adoption and implementation of open innovation in the financial industry, along with, unveiling the talent and individual readiness and mindset required to be part of an open innovation team. Open innovation is a connection-driven innovation paradigm that is empowered by human connections and relations. The open innovation paradigm has received a lot of attention and has incrementally become one of the most topical issues in innovation management research. Furthermore, a number of companies in different sectors have initiated the process of adopting open innovation practices and embed them in their institutional business processes. It is important though to realize that the process of creating institutions that show organizational readiness towards open innovation is far from easy. One of the most important impediments towards open innovation adoption is finding and P a g e | 122 122 upbringing the corresponding skills, nurturing the right mindset and creating the appropriate organizational environment so as to excel in open innovation within and beyond organizational boundaries. To that respect the following oxymoron is observed: a rising market need for open innovation but at the same time a substantial lack of distinctive skills combined with a fragmented state of mind and reluctance to work within an open and collaborative environment. To that respect, this respective paper suggests that for open innovation to be meaningful within the financial industry, the starting point is the development of dedicated training methods and curricula corresponding to the distinctive needs of the enterprises along with the ad hoc organizational culture. Education and training for open innovation, cannot be holistically perceived, since they both cater for multidimensional and multipolar implications on the way required and anticipated skills are being developed, an innovation mentality is being built, a multidisciplinary approach to innovation management is cultivated and the importance of societal and human elements towards the implementation and advancement of open innovation practices is being recognized. Relying on primary data deriving from 21 semi-structured interviews conducted with C-Level executives of major financial institutions around the globe, it offers a newly-framed approach on the way of preparing and sustaining towards open innovation within the financial industry. To that respect, based on this purview of insights and foresights this particular paper identifies and puts in perspective the elements required within the financial industry to streamline the people and organizations to excel within a corporate environment embracing open innovation practices. The dataset enriched with multiple visionary perceptions and wisdom unveils the multipolar peculiarities around organizing for open innovation by paying explicit attention to the human element and its interconnectedness to the organizational sphere. Banking Consulting in Financial Services Consulting in Financial Services Investment Banking Banking/Venture Capital Banking Banking Consulting in Financial Services HR & Risk Manager Human Resources & Industrial Rel. General Manager Human Capital Senior Associate Global Head of AM Operations General Partner Head of Quality and Innovation Chief Innovation Officer Managing Director N O P Q R S T U Europe Financial Services Consulting in Financial Services HR Manager K Consulting in Financial Services IT & Financial Services Global Ambassador J Head of Human Resources Banking Head of Human Resources I Board member (Talent Management & Recruitment) Investment Banking Human Resources Director H L HR Management Consulting Change Leader, Facilitator, Mentor & Executive Coach G M Europe Consulting in Financial Services Chief Executive Officer F Americas Asia-Pacific Europe Americas Europe Europe Asia-Pacific Europe Europe Europe Europe Europe Europe Europe Europe Europe Banking Consulting in Financial Services Europe HR Partner Consulting in Financial Services Senior HR Officer C Asia-Pacific Managing Director Banking Global Head Country HR B Europe Region E Banking A D Strategic Profile Position Country Human Resources Director Company Table 19: Overview of interviewees (Salampasis et al., 2015c, p.4) P a g e | 123 123 P a g e | 124 124 This “human-embeddedness” within financial institutions is the unique value proposition of open innovation since this can help the people embrace an open innovation mindset and strive towards meeting objectives and strategic goals in terms of organizational performance, while putting them in the locus of the innovation process. This facilitates the formation of a human connection within the individuals within the corporate environment and the emanation of trust, acting as a solid layer and catalyst of collaboration, taping at the same time the emotional wellbeing of the employees. Trust caters for creating and establishing an environment of sharing, transparency and willingness to forge a community spirit. This can help top management listen, understand, appreciate and acknowledge the people. Trust is the element that formulates the connection between the company and the people, embedding human connections in the core of the corporate DNA. The two-fold research prism of the paper leverages the potential and the need for further research in relation to the organizational and individual level of analysis of open innovation promoting the intuitiveness of implications deriving from the acknowledgement of the importance of paying equal attention both to the organizational and individual aspects of open innovation, hence brining on board elements that characterize not only the people per se but the organizational entity as a whole. The role of open innovation towards creating more inclusive, open, human and collaborative financial institutions seems to be playing a catalytic role in the creation and establishment of an inclusive and responsible capitalism. Table 20: Leadership traits of an open innovation leader in the financial industry (Salampasis et al., 2015c, p.6) Leadership Traits Key Elements Technical Understanding and Business Acumen Be a globally interconnected player Acknowledge the strength of social media Possess a strong knowledge of the financial industry on a macro level-market intelligence (strategic orientation, infrastructure, regulatory changes etc) along with a broad overview of the whole value chain Look for business opportunities across and along the whole spectrum of financial services Understand multilevel and multidimensional value propositions Be able to address many different topics that have an impact on several purposes Be commercially savvy and a good sales person Possess analytical, argumentation and negotiation skills P a g e | 125 125 Learning Agility Strategic Agility, Development and Execution Managing Complex Decisions Creating the New and Different Thought Innovation Leadership Be open to diversity, new ideas and alternative thinking Have high learning and development aspirations Possess innate dialogue and communication skills Develop techniques and capability so as to build keyword combinations to find the right people and partners Be open to change, Embrace failure and success Have the ability to adapt to change, be comfortable with ambiguity, show tolerance for uncertainty/capacity to work in frustration Perceive a long termism-strategic view/ability to capture the broad horizon Understand the vision of the company, define strategy, objectives, steps Be the driver of change and vision Manage talent globally Understand the impact of decision-making Define strategy and culture See ahead and anticipate future trends, needs and challenges Point the direction on where the business needs to lead Be able to manage information overload by “stirring through an information jungle” (Interviewee, D, com.pers) while ensuring minimum leakage of confidential data and not compromise the intellectual property of the organization Be able to proactively intervene to prevent and resolve conflicts Possess and develop combinative capabilities Have the ability to shift priorities easily as priorities present themselves See beyond traditional data and raise new questions Utilize personal and collective wisdom to reach solutions Embrace an execution mentality Create and translate value across and beyond organizational boundaries See solutions to problems Foster creativity and “think outside of the box” Cultivate thought leadership mentality-emotional capital Motivate and Inspire Counsel, coach and challenge Drive an entrepreneurial and intrapreneurial mindset Lead a long-term career plan mentality/loyalty to the individual career trajectory Create a culture of innovation Manage the creative process and facilitate effective brainstorming Analyse and project the unique value proposition of ideas P a g e | 126 126 Action Oriented Integrity and Trust Experience and Education Project idea potential, market penetration and user relevance Accelerate for the organization Take personal responsibility and share risks Relinquish control, involve, delegate, diffuse leadership Take pride and reward the members of the team Increase individual and collective absorptive capacity Have strong relationship building and management capability Be extrovert and team-player Have the ability to build a networking culture Take initiative and show willingness to move forward, take risks, develop and strive curiosity Have self-motivation, confidence, create and ignite passion Be self-disciplined, survive within complex organizational entities Show respect and ethical manner in the internal and external relationships Generate trustworthiness and loyalty Show integrity, empathy and accountability-social capital Manage people in a number of ways with humility Show loyalty to the company and honesty Show emotional intelligence Show Resilience Be culturally dexterous Be honest Demonstrate strong theoretical and practical knowledgeexpertise Possess innate multilingual competence Have international educational and professional exposure Be able to interpret complex regulations This is connected to the overall discussion of the strategic insight and orientation of the financial industry, which may be on the verge of one such change, a change that will lead to a more prosperous capitalism. The centripetal role of open innovation is really to endorse the diversity within the teams that have different, and clashing, ideas; henceforward being more innovative. In the financial industry, the open innovation leader denotes the cartography of a new type of leadership being constantly confronted with numerous, perplexed and Daedalean challenges such as cross-departmental collaboration among teams, knotty organizational structures, hierarchies and processes, volatile, turbulent global business environment, heavy regulation and business process specificities. To that respect, this showcases the skills, the behavioural norms, the values and practices required to support open innovation teams both within and across organizational boundaries. P a g e | 127 127 The abovementioned multi-elemental collage depicts the various aspects the profile of an open innovation leader within the financial industry entails, reflecting the strenuous endeavour to continuously understand the way these elements are shaped in an open innovation environment. This new type of leader brings forward ways of managing and leading encasing a wide perspective and variety of elements to be considered in the portfolio. The discussion around the new type of open innovation leaders emanates the need for adopting a type of transformational leadership (Bass, 1991) in the financial industry. The abovementioned leadership traits bring forward elements of inspiration, trust, openness and collaborative spirit. In the same manner, transformational leadership is of utmost importance in volatile and turbulent times, accentuating the necessity to safeguard and build long-lasting relationships within and outside the organizational boundaries. To that respect within the realms of the transformation of the financial industry and the adoption of more open and transparent practices “transactional style makes [the leaders] incompetent to lead in a new, transparent, transformational century” (Malone and Fiske, 2013, p.114). Figure 19: Organizational readiness mechanisms for open innovation in the financial industry (Salampasis et al., 2015c, p.9) The interconnection between the individual and organizational sphere uncovers the need to redefine the ways financial institutions attract talent and constantly shape P a g e | 128 128 these dynamic elements so as to fit within the ad hoc organizational culture and put together the right conditions for an open innovation corporate environment. It becomes important for financial institutions to re-establish their learning and development practices by bringing on board skills, capabilities and ingredients shift their functional arena towards the adoption of practices that embrace openness and reach-out the usually silo-driven business environment. “Trust plays a vital role and is directly proportional to the role of education since it encourages the need for the human side of innovation and the understanding that learning, experimenting and trying is the investment for the future developments in open innovation. Willingness to change comes from awareness; willingness to contribute derives from trust so changing organizational patterns, cultural hindrances, by fostering effective and trustworthy relationships is nurtured by education, by experiential learning and by the feeling of globalized and collaborative attitude” (Salampasis et al., 2015a, p.52). This realization caters for a number of implications related to the formulation of training curricula and programmes for open innovation, while adopting alternative learning mechanisms pinpointing at the same time the inherent needs of the organization per se. Training and teaching for open innovation means also encircling the learning outcomes and how to use talent acquisition and retention, combined with training sessions to indulge this new type of open innovation leader to act as a driver of open innovation within the financial industry, designate the way open innovation mindset is perceived in the industry per se and changing practices and modus operandi to reach across and out the organizational barriers into the external environment. It is also important to delineate that this approach is collective and iterative and is not only directed only top-down but also bottom-up. The following table provides an overall overview of all the publications contriving this PhD research. 44 43 Salampasis, D., Mention, A-L., Torkkeli, M. Salampasis, D., Mention, A-L., Torkkeli, M. Open Innovation and Collaboration in the Financial Services Sector: Exploring the role of trust Trust embeddedness within an open innovation mindset Authors Paper Salampasis, D., Mention, A-L., Torkkeli, M. (2015). Trust embeddedness within an open innovation mindset. International Journal of Business and Globalization, Vol.14, No.1, pp.32-57 Published following a double blind review process44 Salampasis, D., Mention, A-L., Torkkeli, M. (2014). Open Innovation and Collaboration in the Financial Services Sector: Exploring the role of trust. International Journal of Business Innovation and Research, Vol.8, No.5, pp.466-484 Published following a double blind review process43 Status Extensive multidisciplinary literature review. Introduces the theory of trust embedded open innovation and identifies 4 constructs as the organizational antecedents of open innovation: knowledge sharing attitude, ambidextrous thinking, Combination of literature review and an empirical qualitative approach (9 interviews C-Level executives of the financial services industry). Presents an overall review of the financial services sector, introducing the concept of trust within the open innovation paradigm Subject/relevance Publication url: http://www.inderscience.com/info/inarticletoc.php?jcode=ijbir&year=2014&vol=8&issue=5 Publication url: http://www.inderscience.com/info/ingeneral/forthcoming.php?jcode=ijbg II I No Table 21: Summary of appended papers (Developed by the author) Conceptual Qualitative: Semistructured interviews Method The author was the main writer. The author was responsible for the literature review. The concepts and conclusions presented The author was the main writer. The author was responsible for the literature review, study design, data collection, analysis and implementation. The implications and conclusions were written by the author. Author’s contribution P a g e | 129 129 46 45 Trust embedded open innovation: Literature review, synthesis and research Salampasis, D., Mention, A-L., Torkkeli, M. Salampasis, D. Salampasis, D., Mention, A-L., Torkkeli, M. (2014). “Trust embedded open innovation: Literature review, synthesis and research propositions”. Academy of Management Proceedings, 2014(1), Accepted following a double blind review of the paper and presented at the dedicated session46 Salampasis, D. (2014). “Organizational Readiness for Open Innovation in the Financial Services Sector: The missing element of trust” Book Chapter in “Innovation in financial services: a dual ambiguity” ed. Mention, A-L., Torkkeli, M. Newcastle: Cambridge Scholars Publishing, pp.295-336 Published following a double blind review process45 It revisits the theory developed on publication no.2, reformulates the conceptual model and the research propositions. Enriched with new literature Extensive literature review, synthesising and commenting on studies on organizational readiness for open innovation. Develops an integrative model under the prism of trust in the financial sector offering academic, managerial and policy level implications Conceptual Conceptual Publication url: http://www.cambridgescholars.com/innovation-in-financial-services Publication url: http://proceedings.aom.org/content/2014/1/13668.abstract?sid=fd8f152b-6e44-4b17-8da8-e53e5fb60a45 IV III Organizational Readiness for Open Innovation in the Financial Services Sector: The missing element of trust collaborative culture, diversity management. Develops a conceptual model and formulates research propositions The author was the main writer. The author was responsible for the literature review. The formulation of the concepts and the drawing The author was solely responsible for the paper. The paper was accepted by the editors to be published as a book chapter following a double blind review process. within the paper were the responsibility of the author in collaboration with the coauthors. P a g e | 130 130 47 A conceptual paper targeted in the operationalization of the trust embedded open innovation model towards the mobilization of the human side of open innovation via human resource management strategies. Offers extensive dedicated managerial implications within the banking sector Publication url: http://www.inderscience.com/info/ingeneral/forthcoming.php?jcode=ijbex V Salampasis, D., Mention, A-L., Torkkeli, M., (2015). Human resources management and open innovation adoption in the banking sector: a conceptual model. International Journal of Business Excellence, Vol.8, No.4, pp.433-457) Published following a double blind review process47 Human resources management and open innovation adoption in the banking sector: a conceptual model Salampasis, D., Mention, A-L., Torkkeli, M. doi:10.5465/AMBPP.2014.13668abstract, Philadelphia, USA propositions Conceptual The author was the main writer. The author conducted the literature review, formulated concepts and conclusions. The original working paper was presented at a dedicated conference session during the 2013 International Conference Innovation for Financial Services in Singapore, was submitted and accepted by the of the conclusions were written together with the co-authors. P a g e | 131 131 VI Open innovation for “humanlyembedded” financial institutions: individuals and organizations at a crossroads Salampasis, D., Mention, A-L., Torkkeli, M Salampasis, D., Mention, A-L., Torkkeli, M. (2015). “Open innovation for “humanly-embedded” financial institutions: individuals and organizations at a crossroads”. Proceedings of the 2015 R&D Management Conference, Pisa, Italy Accepted following a double blind review of the paper and presented at the dedicated session This empirical qualitative paper sheds light into the human-side of open innovation in the financial industry exploring the intersection between the individual and organizational sphere. By adopting a multidisciplinary approach it identifies a) the characteristics of an open innovation leader in the financial industry and b) the ways of building up a corporate environment for open innovation to excel within and across organizational boundaries. Talent retention/acquisition and training are identified as the major mechanisms for aligning the individual sphere and the corporate elements required for open innovation within an open and collaborative culture. Qualitative: Semistructured interviews The author was the main writer and solely responsible for the literature review. The author conducted the data collection. The research design and analysis were conducted in collaboration with the coauthors. The original working paper was presented at a dedicated conference session during the 2014 International Conference Innovation for Financial Services in journal following a double blind review process. P a g e | 132 132 Montréal following a double blind review process. P a g e | 133 133 P a g e | 134 134 As it can be seen from the table above the author is the initiator and the main writer of all the publications. It goes without saying that constant input and feedback has been received both from my two supervisors/co-authors and my colleagues via vibrant and highly reflective discussions characterized by equal participation, creative and open mindset and guidance both in the conception, the design and the final interpretation of the results and the research propositions. Both my supervisors have been extremely helpful in relation to the streamlining of the research, fully supportive in terms of assisting me to see and never forget the overall picture and for giving me priceless guidance regarding the analysis and interpretation of the data. Overall Vanhaverbeke and Cloodt (2006) suggest the following levels of analysis in order to understand expand and enhance the understanding on the open innovation paradigm: a) individual, b) firm/organizational, c) dyadic/alliances, d) inter-organizational networks and e) national and regional innovation systems. Based on the suggestions of Fredberg et al. (2008) three potential clusters, which require further theoretical development can be observed. Table 22: Suggestions for future research on open innovation (Developed by the author based on Fredberg et al., 2008) Dimensions of Open Innovation The Human Side of Open Innovation The Organizational Side of Open Innovation The locus of the innovation process The Extent of collaboration The complexity of open innovation Leadership Teamwork Motivation Organizational structure Organizational capabilities Open innovation processes The need for a multidisciplinary approach towards the trust-embedded element and the human dimension of open innovation is depicted in the abovementioned table. In this framework the research and more specifically all the dedicated publications strive towards the addressing of all the research questions creating a synthesis, leading to the integrative tool. Publication I sets the scene by presenting an overall overview of the current situation of the financial services sector, the lessons from the financial crisis and the need to focus on the loss of trust. It argues that trust cannot be P a g e | 135 135 perceived on a mono-directional prism and that an organizational needs to be trustworthy both inside-out and outside in. In also initiates the discussion towards the realization of the missing element of trust in the open innovation paradigm. Publication II synthesizes literature streams of innovation management, organizational behaviour and organizational psychology in the endeavour to create a conceptual model that connects trust and the open innovation paradigm. In order to conceptualize the trust-embedded open innovation mindset, four constructs, considered as the organizational antecedents of open innovation have been identified and genuinely analysed leading to the development of a conceptual model and the formulation of research propositions. Publication III is building upon the conceptual model developed in Publication II by analysing in detail the role of organizational readiness towards the adoption of the trust-embedded open innovation mindset in the financial services sector, offering a detailed, comprehensive and pervasive analysis of the literature. Publication IV revisits the research conducted in Publication II. At this stage it is important to highlight the fact that in the process of the research there are times that ideas and perceptions do not mature immediately, and combined to the continuous revising of the literature, the enrichment of the research with additional insights, foresights and literature streams, updating and reframing is important. At this stage the author reckoned that the developed conceptual model was not fully aligned to his beliefs and did not perfectly serve the purpose of the overall research. This resulted in taking a step back, revisiting all the research and reshaping the conceptual model adding also additional literature streams and research propositions in order to make it both academically savvy and applicable on the level of management. Publication V digs deeper in the role of the human side of open innovation and reflects upon a focused perception of the role of human resources management in the banking sector and how it mobilizes the human side of open innovation via the concepts of trust and readiness. This publication sets the conceptual model that depicts the dynamic shift from the organizational to the human sphere addressing the need for further and more systematic P a g e | 136 136 research on this particular field of open innovation. It is important at this stage to remind again that Publication V and VI have been developed in parallel and the interviews conducted in Publication VI have substantially influenced the development and conceptualization of the proposed model and research propositions in Publication V. Publication VI aims at uncovering the ways of creating a corporate culture and environment so as to adopt open innovation practices in the financial industry. It argues that talent acquisition/retention and training amplify dedicated individual skills, competences, values and incentives towards the cultivating of a collective open innovation organizational environment. By analysing primary data deriving from 21 interviews with C-Level Executives of major financial centres from around the globe, it unveils the multipolar and multidimensional profile of an open innovation leader within the financial industry, the necessity for the financial institutions to recognise the importance for organizing for open innovation by starting from the inside of the organization per se. The paper argues that the most important element of an organization is the people and the correct attention and value for the people and by the people must be put in place. People do play a very central leading role being the primary source of innovation and creativity, so the human element should have a strategic positioning in the financial industry. Intraorganizational trust shares a catalytic role within this endeavour in terms of creating humanly-embedded financial institutions. To that respect, all the publications are providing an exploratory analysis on the human and organizational side of open innovation in the financial industry bringing together and synthesizing multiple insights addressing the gap in existing research and underlining the particular set for challenges for organizations in terms of adopting open innovation practices. The exploratory nature provides valuable insights in terms of enriching and augmenting the conceptualization of the open innovation paradigm, while offering practical research outcomes for industry leaders and managers. Furthermore, it allows for an excelling understanding of the phenomena being studied and observed within the social cosmological sphere. The following figure depicts the rational and relational pathway of the research journey showing the incremental development of the research from the point of departure of open innovation towards the definition of the trust-embedded open innovation approach and the human side, being the intersection between the organizational and individual sphere. This approach leads to the realization that open P a g e | 137 137 innovation within the financial industry is meaningful only within human institutions endorsing the need for adopting a human-centricity mindset in the industry at large. Figure 20: Rational and relational pathway of the research (Developed by the author) P a g e | 138 138 CHAPTER 6: CONTRIBUTION 6.1. Introductory remarks This chapter aims at presenting the overall contribution of this research in the panorama of the open innovation research scholarship. The author wishes to highlight that this chapter will not repeat all the research outcomes that have already been discussed in previous chapters or the existing publications (based on which this dissertation has been developed) but will offer a synthesis and a number of final remarks around the topics and research questions discussed hereby. Revisiting the primary research objectives and goals set at the beginning of this research endeavour it is important to realize that an alignment can be observed and the fact that all the focused research questions have been addressed within the collective presentation of the dedicated publications. It is also important to perceive this research journey from the lenses of a priceless learning experience, which allowed the author for an exposure to various literature streams, methodological approaches and networking with academia, innovation practitioners and financial industry stakeholders48 in order to capture the relevance of the research outcomes towards the creation of a trust-embedded open innovation tool, which elevates the role of people in the creation of human financial institutions. The value proposition of this research is encoded in the fact that it employs a multidisciplinary approach towards the investigation of the open innovation paradigm. The author from the very beginning of this research aspired towards aligning his research profile and interest to the exploration of the human side of open innovation in the financial industry from an alternative prism, emanating various dark elements of the open innovation paradigm, while constantly reviewing a critical mass of the existing literature. The synthesizing attitude, the exploration and exploitation of various streams of literature and the highlightening of critical factors of open innovation, which have either been purposefully unexplored or have not been given the proper importance and attention, create a compound of new pathways towards the understanding of open innovation, its positioning into the This group has been highly neglected during the financial crisis and Dahrendorf (2010, p.19) denotes this is in a perfectly eloquent way that “For them what is important is not so much codetermination as the recognition of their interests by management. This furthermore presupposes that those in charge look beyond their computer screens and have in mind not just the profits and the bonus payments for the next quarter”. 48 P a g e | 139 139 research arena, while offering the opportunity for addressing further questions to be investigated in the future. An additional factor that empowers the value of this research is epitomized in the continual strive to constantly cater for the relevance and applicability of this research to the financial industry and the opportunity for the research outcomes to be used in a practical manner, so as, to assist financial institutions and other organizations, in a broadened perspective, understand the role and meaning of open innovation, appreciate the role of trust and put their attention back to the people and the creation of human enterprises. This materialization shall raise the awareness of establishing human norms within financial institutions that will facilitate the smooth recognition and adoption of open innovation practices. Revisiting and recognizing the human side of an organization becomes a reality nowadays than ever before. “The challenges produced by today’s rapidly changing environment-global competitiveness, diversity, ethical issues, rapid advances in technology and communications, a shift away from an exploitative to an ecologically sensitive approach to the natural environment and the growing expectation of workers for meaningful work and opportunities for personal and professional growth-require dramatically different responses from people and organizations” (Daft, 1998, p.22). The open innovation paradigm is inbred to this contemporary realism and even though it cannot be considered as a panacea, it can definitely act as a pioneer or even a Messiah towards changing the mindset of management styles by endorsing and entrusting the human side (foci on skills, competences, values, behavioural norms, attitudes and culture on the individual and organizational level). This is endorsed by the views of Kegan et al. (2014, p.52), who by taking the example of an investment firm, call towards the creation of a culture that fosters a sense of family ownership. They argue that by “experiencing yourself as incomplete or inadequate but still included, accepted and valued-and recognizing the very capable people around you are also incomplete but likewise valuable-seems to give rise to qualities of compassion and appreciation that can benefit all relationships”. This captures the true essence of the human aspect of any organization from a managerial standpoint and encourages a complete new way of thinking regarding the structure, the management, the culture and the behaviour of any organizational entity that wishes to drive an open and collaborative mindset. P a g e | 140 140 6.2. The trust-embedded dimension of open innovation The fundamental element of the open innovation paradigm considers the creation and prevalence of an open mindset, which leads to an organization that is portrayed by openness. This means that the organization needs to relinquish silo-driven approaches and exhilarate the adoption of a permeable-boundaries approach, which will facilitate the continual flow of knowledge, human and non-human assets. People are of fundamental importance since without them there can be no implementation of strategies, creation of customer relationships and management of innovation. The non-human assets are foreseen to contribute to a short-term preservation of an organizational competitive advantage and their expendable nature makes them obsolete towards a long-term range of view of organizational sustainability. It is important for the author to highlight that this dissertation understands open innovation as a structured, managed and governed innovation paradigm within but also outside the organization sharing many managerial implications towards its enactment and proliferation. Open innovation is about “finding creative ways to exploit internal innovation, incorporating external innovation into internal development and motivating outsiders to supply an on-going stream of external innovation” (West and Gallagher, 2006, p.319). This definition illustrates the propensity of seeking innovation outside stagnant organizational boundaries via the employment of external channels to market (Vanhaverbeke et al., 2008) and the cultivation of motivational pecuniary and non-pecuniary incentives and values contributing to an open approach towards leveraging innovation. The incentive for organizations to embrace open innovation practices lies within the endeavour of striving for a sustainable competitive advantage, the creation of value, growth, progressive change and an overall economic benefit for companies. Change, is related to a shift in the cultural mindset, which is important since it will cater both for successful utilization of innovation deriving from the external organizational environment and will foster collaboration with extraneous and peripheral partners (Dodgson et al., 2006; Schiele, 2010). On the other hand, the driving force behind open innovation lies on the necessity due to lack or limited resources, creative ideas and competences, both internally and externally. In order to truly adopt and implement open innovation successfully a collaborative attitude built on a communal ethos is necessary. Communal, unlike exchange relationships, cater for the consideration of mutual interests and needs P a g e | 141 141 (Clark and Mills, 1979; Fiske, 1991; Fiske, 1992), while nurturing and empowering trust in the long run (Malone and Fiske, 2013). Under this framework collaboration shares a disruptive power enabling the viewing of open innovation practices as “enabled democratized pathways to growth” (Wilson and Wigginton, 2013, p.76). By entwining open innovation, as a strategic imperative, unlocks an unlimited potential since companies become ready for exposure and capitalization of a foundational human objective; the inherent devoir of being and staying connected. Collaboration focuses both on processes and outcomes and shares a substantial impact on the way decisions on investments are being taken and how organizational behaviour is being altered. In addition, collaborative initiatives create a sense of shared competition, individual and collective performance, which is highly critical, especially, within a ferocious competitive environment. Bringing together, firms, which act in a competitive manner, have different organizational structures, cultures and values and possibly contradictory and opposite intentions regarding the outcomes and setting up a communication channel can be a highly strenuous task. This means that collaboration is not easy mainly due to numerous and full of complexity individual and organizational parameters. Furthermore, collaboration requires the existence of certain pre-requisites and conditions that will empower it and not stall or kill it even before the initiative is put in motion. One such element is the nurturing of a culture of trust. “Without trust, most collaboration efforts are unlikely to survive, however noble the cause and worthy the participants” (Nidumolu et al., 2014, p.80). This dissertation argues that in the context of the financial industry, open innovation, which is primarily founded on the free flow of knowledge, within and outside the innovation funnel, has not yet become a permanent practice because the current business model, which caters for the exchange of creative information and knowledge between businesses, investors, solution seekers, solution providers and innovation intermediaries is incomplete. This inadequacy is observed within the rising barriers around open innovation and is projected in the lack of trust that safeguards branding, ethical and equitable terms of exchange of properly used ideas and commercialized products and services. This trust-embeddedness of the open innovation culture shall ease the process of exchange and trading and will breed a sense of respect in the process of commercialization of knowledge, creative ideas, experiences and know-how without the existence of sluggish rules and regulations. Under this frame of reference, this dissertation argues that this way of thinking is judicious only within “high-trust” organizations. “Trust is built by people being P a g e | 142 142 transparent and authentic with one another” (Douglas et al., 2014, p.67). In simple terms, the author’s line of reasoning demonstrates that not only an organization needs to be open from the inside before opening up to the external environment but in order to open up it must be trustworthy as a brand name and an institution at the level of the inner part of the firm per se. This insinuates the fact that “the emphasis therefore needs to be on values rather than on value. The route to trust lies in seeing value creation not as an activity in itself, but as an outcome of behaviours that authentically reflect a company’s core values” (Nally, 2014, p.2). Existing research has neglected the elusive but of indispensable seriousness element of trust, failing to realize that open innovation is founded upon solid relationships where trust is an inherent element of their DNA. 6.3. Trust-embedded open innovation: the driver of competitive advantage, not competitor takeover Open innovation as a paradigm shares an inherent element of risk (within an economy that shares the fundamental problem of being risky) in terms of sharing company resources and approaches with the external world. This fear stems from the fact that the human aspect and the trustworthiness that open innovation should require, is what really scares top management. The mindset of only receiving rather than receiving and sharing, has been dominating the economy for a very long time, is truly an intimidating factor for open innovation. Capitalization of knowledge, skills and competences requires the driving of another type of mindset, which starts by investing to people, by thinking in a responsible and societal manner and strategically towards a long-term and sustainable growth and value creation. Open innovation caters for the transformation of our connected world to a collective vision, creating the situation and the conditions for economic growth to accelerate and become sustainable, managing the attainment of macroeconomic stability. It will shift the level of gravity from competitive to co-opetitional and collaborative attitudes, responding to the global demand for social, economic and political change. This trustworthy behaviour will also determine the level of loyalty by empowering the perception of similarity that will create linkages, legitimize empathy and increase cooperation. This dissertation argues that the hereby introduced trustembedded approach to open innovation engenders new rules in the global business arena, facilitating momentous changes, industrial restructuring processes and adoption of a long-term perspective throughout all the sectors of the economy. P a g e | 143 143 6.4. The human side of open innovation Following upon the overall analysis this dissertation proposes the following definition. To that respect, the human side of open innovation embraces the set of voluntary and involuntary organizational processes that link and incorporate individual aspects of knowledge, motivations, behavioural norms, attitudes, skills, incentives and values towards the formation of a collective panorama of culture, behaviour, psychology, cognition and communal ethos. This means that the human side of open innovation is relevant to a human relations embedded approach promulgating commitment to a “democratic value scheme” (Baumgartel, 1960, p.467), involvement of the “inner layers of the personality” on the organizational level (Heller, 1961, p.495) and is discerned within an environment that is characterized by a proclivity to “develop ´power-with´ instead of ´power-over´ and ´co-action´ to replace consent and coercion” (Wren, 1994, p.260, cited by Carson, 2005, p.454). The following figure puts in perspective and provides a visual aspect of the abovementioned definition, depicting the vicinity of linkages and elements discussed in the realms of this research. Figure 21: The human side of open innovation in the financial industry (Developed by the author) P a g e | 144 144 P a g e | 145 145 The novelty of this research lies within the fact that it gives credence to the fact that the human side of open innovation envisions the development of a business model that depicts the conversion from the univocal administrative side of innovation management towards a societal approach in matters of human and emotional interactions without disregarding the perceived effectiveness on a firm level. In simple terms this means seeing productivity and performance through the eyes of a humanistic approach integrating the organizational and individual prism by observing a dynamic, perpetual and cyclical rotation from the personal, interpersonal, organizational and inter-organizational level and vice versa. This dissertation is also exhilarated by the mindset calling for putting emphasis on not what you do but how you think, especially when it comes to performance understanding and measurement, on the incentives for innovation and on the realization that striving for excellence has a price (Raynor and Ahmed, 2013). Especially within the financial industry, this dissertation attaches weight to the fact that the integration of the human side of open innovation will act as a catalyst for both employees and management to effectively navigate through the deep waters of irresolvable uncertainty, rather than questing for its elimination (Head, 2011; Kay, 2012). In this context, it is of vital important to effectively realize that investing in the progress of the employees indicates that they are “becoming not only more capable and conventionally successful but also more flexible, creative and resilient in the face of challenges-for both personal and organizational growth” (Kegan et al., 2014, p.46). Moreover, the author is convinced that paying attention to the human dimension of open innovation in any organizational environment, including financial institutions, will give a chance to the people to make a pitch for “building political capital and a deep knowledge of the organization’s culture and resources” (Groysberg and Abrahams, 2014, p.66). Furthermore, this dissertation recognizes the multidisciplinary potential of investigating the human side of open innovation since it influences organization behaviour, organization theory, organization development, human resources management and innovation management. Last but not least, this research calls for paying attention to the distinction between an adaptive and an innovative approach in terms of building upon a trustworthy, human, open and collaborative organization. It is a matter of managing in an efficient and effective way and finding various ways “for managers and employees to capitalize on their strengths and rely on each other to overcome weaknesses” (Bobic and Davis, 2003, p.259). P a g e | 146 146 6.5. Open innovation in the financial industry: thinking beyond innovation (Quis custodiet ipsos custodes?) Based on all the insights received from existing literature, the interviews and the author’s personal perceptions, this dissertation argues that open innovation in the financial industry is indeed meaningful. This meaningfulness revolves around a number of very important factors. Open innovation is indeed a business trend that can have a meaningful function within the financial industry. Adopting open innovation practices within the financial industry can empower and foster collaboration between financial institutions representing a better chance for survival rather than trying to get by based on proprietary basis and existing legacy. Primarily the role of open innovation within the financial industry is perceived as a tool for finding and providing solutions to complex problems (streamlining operations, capturing new market niches and establishing a competitive advantage) and meeting business needs and objectives, while safeguarding trust through human branding and operational transparency. Furthermore, open innovation fosters stepping change and simplicity for customers, while at the same time nurturing activity, legitimacy and responsiveness. In a similar manner, open innovation facilitates actions of addressing the human behavior in terms of integrating processes and simplifying in terms of making it easier to do business. Simplicity is cognitive and is related to action-taking, while ease is the amount of effort required to take that particular action. The adoption of open innovation practices opens up sourcing and tapping on creativity and executional capabilities from people with new sets of skills that exist outside the financial industry. In this framework, this adoption puts a structure, objective, coaching and expertise around the inhere talent in the financial industry by providing guidance, focus and deliverables. Furthermore, open innovation caters for the development of new sorts of experiences for the financial industry, while empowering differentiation. Last but not least, open innovation is seen a vehicle and opportunity of building trustworthiness by using authority from the outside to verify hypotheses of new innovative product and service development. In the same token, open innovation can bring a change in the existing financial services paradigm in terms of leveraging and thinking on a new scale of skills, processes, services and business models. The open innovation leader constitutes a new type of leader epitomizing interconnected and interrelated elements that cover a P a g e | 147 147 wide spectrum of multidimensional characteristics. This profile captures the integrative interplay between the cognitive space (mental/physical skills and intellectual potentialities) and the motivational space (individual needs, psychological conditions, behavioural assumptions and cultural expectations), along with personal attributions and traits, including various demands on the job, perceptions of effort-reward fairness and innovative behaviour, while at the same time sharing numerous challenges ahead in terms of talent acquisition, retention and training. The financial industry open innovation leader is positioned at the core strategic DNA being responsible for infusing and diffusing an innovation culture within the organization. The open innovation leader is responsible for creating value and competitive advantage by reaching out and systematically identifying and commercializing new products and services developed with external partners, safeguarding market and customer relevance. The open innovation leader is the driver of creating an integrated open innovation capability within the financial institution, providing enthusiasm, methodology and creative thinking, translating challenges to opportunities, aligned to the ad hoc regulatory and compliance framework. In addition, the open innovation leader within the financial industry shall embrace coopetition for frictionless financial services navigating the new global financial architecture and building for the long term. Moreover, the open innovation leader can infuse the right mindset in terms of lessening fear of failure. An integrative role, the open innovation leader can play is educating the regulator on new opportunities and trends by providing (at least for now) a light approach in the periphery of the financial industry. This dissertation gives prominence to a collective intelligence approach towards open innovation accentuating the fact that this promising and highly important paradigm should not be considered as a panacea. It is true indeed that innovation is placed in the locus of the capitalist economy. This cognizance addresses a fundamental question of why we need innovation in general, underscoring a debate between innovation and adaptation. The financial industry failed to adapt to a dynamic changing environment on a global scale and this failure actually accelerated its nearly total destruction. This financial meltdown has completely rewritten the rules of business and capital management and has pointed towards the direction of changing mentality and dominant culture (Dahrendorf, 2010). It is very important to conceive that openness and innovation are not always the answer to the P a g e | 148 148 new trends and demands. The unprecedented and uncontrolled call for more innovation in the financial industry led to the baptising of products and services as innovative in alter for short-term growth, primarily incentivised by the strong emphasis put on liquidity (Bootle, 2012) and monetary satisfaction of shareholder value, completely forgetting the primary function and purpose of the industry per se. “The financial system is the economic equivalent of nuclear power. The market cannot be allowed to play out a discovery process with such dangerous material” (Bootle, 2012, p.8). Following the recent experience of the financial crises, this research calls for more attention and urges the financial industry not to treat the open innovation paradigm in the same way. Learning from the overall failure case of the financial system, financial institutions need to establish a managerial culture that will help them learn the why, the how and the when to adapt and adopt an open and collaborative approach towards innovation. This critical approach to open innovation addresses the question of what the actual benchmark for success is for the financial industry per se. In this frame of reference, open innovation in the financial industry also calls for expulsion of ignorance, irresponsibility and information asymmetries, regarding the consequences of employing risky behaviours both by financial institutions and individuals. “Playing with other people’s money” simply increases the distance between risk and responsibility (Guillén and Suárez, 2010). The adoption of open innovation practices engrained under the prism of trust seeds within the locus of the financial industry a societal purpose. Doing good for the society implies good growth and good business protecting the long-term interests of the society per se. “The public is no longer satisfied with corporations that focus solely on short-term profit maximization. People want corporations to consider broad human needs” (Eccles et al., 2012, p.43). Operating within an environment that has no rules and accepted norms and practices are constantly challenged, the trust embedded open innovation mindset will help financial institutions challenge their short, medium and long-term strategy planning in accordance to the volatile shift of the trends on a global scale. In other words it means to “keep your eyes firmly fixed on the long-term goals, while navigating through the immediate turbulence” (Nally, 2014, p.4). This argument is also in line with the fact that the future is unpredictable and the only certainty is disruption, especially in the eyes of the recent shaping and developments of Global FinTech Innovation Labs and entrepreneurial activities in the technology start-up scene (mobile payments, money transfers, loans, fundraising, asset management, alternative forms of finance, big data etc), showcasing emerging disruptions of trans-disciplinary nature, along with, P a g e | 149 149 the associated reworking of financial regulations, transparency, customer behaviour and sustainable growth. The adoption of open innovation practices in the financial industry will help financial institutions reach out, beyond the existing and prevailing narrative of innovation and look far ahead the traditional industrial and organizational boundaries. The nurturing of collaboration and perceived openness will help financial institutions maintain and leverage on their market leadership by utilizing technologies, know-how, talent, values and norms from different industries but also from organizations within the financial industry itself, so as, to develop and lead significant breakthroughs. Open innovation introduces words such as connectivity, mobility and experimentation. Tapping into a multitude of disciplines that financial institutions traditionally overlook, will leverage the true meaning and purpose of innovation within the financial industry that will not only lead to financial value but primarily create sustainable societal impact and purpose for humanity. P a g e | 150 150 CHAPTER 7: CONCLUSION AND DISCUSSION 7.1. Concluding remarks This dissertation responds to the need for further investigation of the underdeveloped human side of open innovation (Chatenier et al., 2010; Chesbrough et al., 2006; Gassmann et al., 2010; Vanhaverbeke and Cloodt, 2014). Furthermore, it acknowledges the fact that “heterogeneously distributed among firms” individuals become focal players in the open innovation implementation process, requiring different skills to perform diverse tasks (Bianchi et al., 2011, p.827). Moreover, the choice of the empirical setting addresses the necessity for further research in the role of open innovation in the financial industry, a sector of the economy not yet vastly explored in innovation studies (Gianiodis et al., 2014, Mention and Torkkeli, 2012). In addition, this dissertation emanates trust as a foundational prerequisite of open innovation, an element that has not been adequately considered within this innovation paradigm (Salampasis et al., 2014a). Trust is a concept, which is being constantly abused since its core meaning is usually neither understood nor always appreciated enough. The emergence of trust is observed within an ecosystem of people who share the same beliefs. The author argues that trust is a social reality and should be perceived as a human experience. It stems from a collective sense of common values, behavioural norms and beliefs. The uniqueness of trust is observed in the inherent element of vulnerability and risktaking attitude, since it nurtures a sense of confidence towards experimentation and risk-taking, a welcoming towards failure but ne plus ultra it empowers this inner strength to proceed to the exploration of the unknown. Trust caters for survival, since it creates a sense of purpose, a sense of cause and a sense of why. Trust creates real human connections and human bonding. Within an organizational environment trust plays a fundamental role in the creation of a feeling of individual and collective fulfilment and the establishment of globalized business ethics. This feeling is reflected within individual experiences (values and beliefs) and human interactions. The elevation of trust as a foundational element within the organization caters for the restoration of the human within the organizational humanity and establishes human organizations that respect the individual by creating a sense of individual and collective purpose. It is important to realize that companies operate within a global environment characterized by five global trends: advances in the technology and IT, changes in demographics, global economic shifts, urbanization, limited resources and climate P a g e | 151 151 change. All these global trends, which are engulfing both developed and emerging economies, have a direct impact of the way businesses operate but also on the expectations society has from the business sector itself. In this context the alignment of business behaviour to societal expectations, shows the level of business trustworthiness. This trustworthiness “is the foundation of a business’s licence to operate in any region or industry” (Nally, 2014, p.1). On these grounds, the elevation of trust as a core element of the corporate environment can ride waves of change, which will fundamentally reshape the economy and the society as a whole, conditional upon the proven showcase of readiness (individual and organizational). The trust-embedded approach to open innovation facilitates the formation of a human connection with the people inside the organization. People have long been neglected in the process of building up innovative organizations. People are the ones who embrace an innovative mindset and strive towards facilitating the meeting of business objectives and putting themselves in the centre of the innovation process. Collaboration among the key parts of the organization will take place provided that there is solid layer of trust. This trust-embedded approach to open innovation encourages the establishment of internal and external unbolted and uncluttered channels of communication that run interference for listening to these people, understanding who they are, what they care about and how they work. Understanding, acknowledging and really appreciating the fact that people are the drivers for making (open) innovation possible, this is what really fosters human connections. In this frame of reference, open innovation must be recognised both as a tool to solve people’s problems and meet businesses’ objectives. The financial industry operates within an environment full of complexity, uncertainty and interconnectedness. This means that “there is nothing inherently predetermined or inevitable” (Guillén and Ontiveros, 2012, p.65). The economic environment is very unstable and uncertain on a global scale. The financial industry needs to grow by leading a global mindset and by understanding the method of operating in a slow-growth environment. This dissertation argues that the adoption of an open and collaborative mindset towards innovation introduces the right vocabulary into a new way of management thinking. In addition, the author argues that existing sequential models of innovation management, which have been shaping policies, expectations and corporate strategies, must be revisited. In that event, the author argues that open innovation cannot thrive in organizations that do not demonstrate the right readiness to understand, adopt, implement and benefit from it, along with organizations that do not pay attention to the people and do not encourage the creation, advancement and evolution of human and stable working P a g e | 152 152 relationships. Financial institutions need to adopt a new managerial attitude and vocabulary, must re-think and re-consider what vision, growth, strategy and value mean, how the industry positions itself in the overall economic circle and how to focus on strategies that are non-prescriptive and more broadly sensitive to market changes and firm evolution. Financial institutions must drive a purpose, which is socially emplaced in the locus of their corporate vision and strategy. The appreciation and the proper attention given to the fundamental role of trust and the people’s side of open innovation can leverage in a potentially effective way the organizational transformation of the financial industry. It can also empower the real meaning of financial dynamism and innovation, calling for transparency, responsibility and skilled human resources; all these encapsulated within a system that caters for equilibrium between regulation, strategic foresight and human relationships. In addition, the adoption of open innovation in the financial industry could potentially foment and put back in the agenda the importance of ethics in economy and finance in the global sphere. Innovation, in and for financial services, needs to regain trust and stop being perceived suspiciously. In this framework, the author encourages financial industry professionals to perceive the financial crisis as an opportunity for transforming the economic mentality and the adoption of a trust-embedded and human approach to open innovation shall remind to all that the financial industry serves humanity. The introduction and adoption of the trust-embedded approach to open innovation in the financial industry acts as a catalyst towards perceiving innovation through the lenses of a human-centricity mindset. This anthropological view of open innovation needs to be ingrained in the strategic intent of the financial industry and promote active interaction among all the key facilitators and players within this strenuous process. This realization shall offer distinctive advantage and open new doors and horizons in relation to the meaning and focus of the next-generation of financial services and redefine organizational and financial innovation and enable new capabilities. To that respect, the author argues that the introduction of this human aspect, also in relation to financial innovation, can facilitate the challenge, which is “to create products and provide services that address the functions of finance without abusing client trust” (Scholes, 2011, p.18). “In today’s world, all companies need to be able to function in chaotic, unpredictable business environments” (Guillén and Garcia-Canal, 2012, p.104). This dissertation aspires to provide incentives and insights applicable and relevant not only to the financial industry but also to other businesses regardless of origin and P a g e | 153 153 sector. The trust-embedded approach to open innovation, introduced in this research, calls for realizing that massive transformations within the globalized business environment are yet to come. This approach to open innovation in the financial industry shall facilitate the shaping of all these changes giving the opportunity for developing the right efficacious critical tools for creating and managing human financial institutions towards the driving of a long-term sustainable, socially responsible and democratic success and growth prospect on a global scale. Overall the adoption of a trust-embedded approach to open innovation and the integrative attention to the human aspect will seek to play a constructive role towards laying the foundations for a new global financial architecture nurturing a societal impact. This dissertation argues that while this can take years, a major rethink of the role and structure of the financial industry is already in order. 7.2. Implications 7.2.1. Academic implications This dissertation brings in the open innovation research agenda a number of important academic implications. It contributes to the emerging theme of building a theoretical foundation around open innovation, while at the same time puts great attention on the human agenda, which has been so much neglected, unappreciated and not systematically addressed by existing research. In this frame of reference, it embraces a multidisciplinary mindset in the exploration these different or soft angles of the open innovation paradigm, which tend to be become the really hard ones. By synthesising different streams of literature from various disciplines it opens up the open innovation research agenda by going beyond the traditional research narrative of innovation management. The existing profound level of research on open innovation shows an abundant prism of different views and approaches, endorsing at the same time the relevance of the open innovation paradigm for academia, practice and policy-making. On the other hand, the author believes, that this explosive phenomenon also shows that open innovation is also in a sense lost in translation and moving too fast than it should. With still many unanswered questions related to definitional challenges, conceptualizations, theoretical foundations and lack of capturing the real meaning and applicability of this new paradigm, existing research tries to jump into measurement of firm performance, indicators and constructs. This speed is also projected into the limited adoption of open innovation practices in different industries. That shows a vicinity of understanding and multilingualism around what P a g e | 154 154 open innovation really is and where it should go further. In this frame of reference, the author has observed that the majority of the financial industry professionals interviewed for this research, either had not heard of the term open innovation before or were not sure how open innovation was defined and applied in their daily working life and professional context. This shows an immediate necessity for academic scholarship to delve into the definitional elements of the open innovation paradigm and bring forward idiosyncrasies and particularities, beyond the traditional innovation narrative. In a similar manner, the author argues that the existing research on open innovation has, to a greater extent, been primarily based on traditional innovation studies, failing to capture the novelty and the new elements of this openness to innovation, also in terms of utilizing research methods that usually lack creativity, intuitiveness and imagination. By this research, the author wishes to put emphasis on the need to embrace alternative methods, approaches and a novel research mindset by looking beyond the existing innovation discourse, entwining open innovation into alternative prims and disciplines that can help enrich the content, the context and the unique value proposition of this paradigm. In the same token, the author calls for revisiting the core of the open innovation paradigm and understand all the underlying mechanisms and their vital importance for the individual, the organization, the ecosystem and the society. Moreover, this research, by introducing an anthropological point of view, provides an alternative aspect in terms of understanding the human side of open innovation by departing from the prevailing research mantra that human is identical to individual, a stance that has mostly been adopted by existing literature. The author believes that this kind of differentiation is extremely important and relevant for current and future research, encouraging collaboration between management and anthropology research scholarship. Considering the multidisciplinary approach and research philosophy adopted in this dissertation, the author is definitely in favour such of collaboration49. This research is one of the first to explicitly bring on the agenda the element of trust as a conditional pre-requisite of the open innovation paradigm. Even though the aim For a detailed analysis around the obstacles and hurdles beyond this kind of collaboration please refer to the recently published paper by Stewart, A., and Aldrich, H. (2015). Collaboration between management and anthropology researchers: obstacles and opportunities. Academy of Management Perspectives, Vol.29, No.2, pp.173-192. 49 P a g e | 155 155 of this research context is not to explore the role of trust in relation to innovation performance or openness, it contributes to the conceptualization of open innovation and to the understanding of the underlying mechanisms that need to be put in place for open innovation to function and thrive. Moreover, it is one of the first studies to explore the human dimension of open innovation in the financial industry via the lenses of an innovative theoretical contribution, combined with primarily data, capturing novel and rigorous insights from practice, endorsing both the relevance of the research for the industry but at the same time highlightening the necessity for similar studies that delve into the core of the open innovation DNA and explore all the hidden variables and elements, which are difficult to understand, capture and interpret. All in all, this dissertation raises the attention of embracing a holistic approach calling the research community for perceiving the big picture towards appreciating the eminence and power of open innovation. 7.2.2. Managerial implications The ultimate goal of open innovation is the creation of economic growth via the creative, sustainable and consistence utilization of internal and external knowledge, practices and pathways to market. It is all about reaching outside the organizational boundaries and facilitating the establishment of vertically disintegrated networks of innovation by connecting and bringing on board numerous and diverse companies into ecosystems. This innovation paradigm is based on openness and the continuous collaboration and interaction with all the integrative players of the value chain at all stages of the innovation lifecycle. Such an innovation paradigm needs to be embedded within an open governance system, bolstering the exchange of knowledge, while upholding technological breakthroughs in order to create new business opportunities for economic and societal impact. This open system, however, requires the nursing of a new set of capabilities, skills, mindset, habits and cultures, so as, to manage inbound, outbound and coupled knowledge exchanges. New innovative and cutting-edge methods of training delivery, dedicated training curricula customized to industrial needs must be put in place. Furthermore, it is important to comprehend and determine the learning outcomes, while bringing on board and adopting practices and methods of informal and non-formal education. Education is the cornerstone for sustainable development, responsible competition and continual business relationships. Educating, teaching and training for open innovation is an ever-lasting learning process and is the driver for bringing in new sets of skills, nourishing an open, connective and collaborative framework, while opening doors to a newly-framed approach to innovation management by supporting P a g e | 156 156 all the mechanisms standing in need for open innovation to thrive and sustain competitiveness. Learning to trust and acknowledging the importance of trust within organizations is a foundational element and it needs to be nurtured. Trust is “the unspoken, unwritten bond between fellow citizens that facilitates transactions, empowers individual creativity, and justifies collective action. In the global economic conditions with which we are currently faced, the social capital represented by trust is as important as physical capital” (Bruhn, 2001, p.5). To that respect the HR function, also within financial institutions, needs to empower this mindset by nurturing and encouraging a collective action towards collaboration and openness, making sure that strategic actions are translated into tangible deliverables and at the same time employees΄rights, motivations, willingness and aspirations are being acknowledged, respected and taken into account within the decision making process. This means developing a new business ethos that embraces not only capital growth and profitability but also other measures of business success, such as happiness, wellbeing etc. Furthermore, the HR function must become the important strategic partner of top management and be in the nexus of business and employee-employer relationships safeguarding the transition to the new era of open innovation within the financial industry, putting in place all the necessary integrative mechanisms and processes that shall foster and not hinder this endeavour. The discussion around the trust-embedded open innovation adoption within the financial industry puts at disposal many challenges for the managerial agenda. Nurturing and encouraging new forms of leadership, while cultivating a new mindset requires substantial changes in the organizational design and architecture but most importantly a behavioural change, a change in customs and traditional organizational and corporate narratives. The role of management and leadership is to bring up front the elements that establish and nurture a sustainable layer of trust within the organizational sphere, a trust mechanism that can act as a safety net and a persuasion pattern when it comes to reaching out to the outside world. Financial industry leaders have a long way ahead in terms of understanding the importance of innovation, openness, collaboration and cooperation with partners and stakeholders within and outside the silo-driven organizational and industrial barriers and need to adopt and institutionalize new mechanisms for reaching out to the rest of the world by bringing on board new skills, know-how, competences, behavioural norms, values and cultural elements. It is also a matter of adopting new forms of managerial practices and leadership components that shall assist them into understanding and appreciating the employees and allowing time and space for experimentation and P a g e | 157 157 innovative design thinking. This mindset will facilitate individual and organizational success away from the institutionalized short-term, market-estimate-driven business context that prevails nowadays. Another important parameter within the managerial sphere, but also interlinked to the policy agenda is the streamlining of dedicated innovation departments within financial institutions and the creation of chief innovation officer or open innovation leader functions. This shall assist the integration and consolidation of innovation activities and planning within financial institutions and at the same time bring on board new a talent within multidisciplinary job descriptions. But in order to do that it is important to put in place the right organizational design and architecture mechanisms that shall ease and facilitate the initiation of such practices. Another important parameter is related to the trustworthiness of the employees and the motivational elements individuals bring when it comes to working in financial institutions. The financial industry tends to attract employees due to the provision of high wages and bonuses. Here comes a matter of trustworthiness in relation to the pool of individuals interested in working within financial institutions. Managers should pay attention to the cognitive ability, personality and motivation of existing and potential employees and understand the incentives behind their choice to work for the industry. This realization can have implications in relation to the protection and promotion of products and services transparency. Lastly, this dissertation argues that the adoption of a trust-embedded approach to open innovation can have a positive impact on the reputation of financial institutions. By definition reputation is the “perpetual representation of a company’s past actions and future prospects that describes its appeal in specific contextual circumstances with respect to the different reputation criteria and a specific stakeholder group, when compared with a standard” (Ruiz et al., 2012 cited by Ruiz and Garcia, 2014, p.2). This means that the establishment of an open, transparent and trustworthy organizational environment can act as a major catalyst for adopting open innovation practices. This kind of organizational design can put in place relevant policies that can determine the level of reputation financial institutions wish to achieve towards improving competitiveness and safeguarding success and survival in the long-run. 7.2.3. Policy implications The adoption of a trust-embedded approach to open innovation as a way towards building more human financial institutions has an impact on the way policies, in P a g e | 158 158 relation to enterprise and financial sectors, are being formulated. It is important to realize that the multi-dimensional role of trust, its mechanisms and the way it is perceived cater for more formal protection. Financial institutions can become the democratizing agent and driver for wealth and prosperity, while at the same time caring about innovation and societal impact. This requires ceasing the obsession to maximize and satisfy shareholder value (to the expense of the customers, the employees, the industry and the provision of products and services) and start taking into consideration other stakeholder and societal concerns. For example a number of banks in Luxembourg, in relation to cooperation with partners, so as, to develop new or improve existing services adopt several modalities during inter-firm cooperation for innovation: contracts (e.g., non-disclosure agreements, partnership agreement, and etc.) (48.6%); secrecy (28.6%); intellectual property law (e.g., copyrights law, trademarks law, patent law, industrial design law, and etc.) (11.4%); and none (i.e. reliance on trust) (11.4%) (Martovoy et al., 2012) accentuating the relevance and importance of trust-embedded partnerships, in the realms of adopting open innovation practices. Hereby, the role of regulation probably contributes into safeguarding operations and assists in the formalization of the benefits of trust. To that respect, Mayer (2008, p.618) argues that trust, emerging from an ecosystem of informal relations, plays an equal and integrative role in the financial development as institutionalized and formal arrangements. He also believes that “to date inadequate attention has been devoted to them in comparison with their more formal regulatory counterparts”. 7.2.4. Societal implications The attention to the human side of open innovation in the financial industry also looks beyond the traditional narrative of innovation by emanating the role of the human element in relation to the creation of a sustainable societal impact, by means of social prosperity and security, through the empowerment of human development. To that respect, the nurturing of the trust-embedded dimension of open innovation needs to become the new convention within the financial industry, since it can empower the societal side of innovation and explore how the human side of open innovation can be linked to human development in terms of addressing contemporary worldwide challenges. In the same token, this approach can emanate and strengthen the humanity-society pillar of sustainable development and encourage socially responsible investments. Financial education, financial access for underbanked societies, creation of jobs, financial education and literacy, financial innovation and financial equality are the key challenges for human development, which must be addressed for a more sustainably developed future and the financial P a g e | 159 159 industry, by embracing the trust-embedded approach to innovation and paying serious attention to the human element, can bring down the prevailing dehumanization mindset and become the pioneer of this social change. 7.3. Limitations and avenues for further research While this research makes an innovative contribution in the existing open innovation research scholarship, the author acknowledges that there are several limitations worth noted. These limitations however are perceived as an incentive to take these respective research outcomes forward and open new and complementary pathways for further research in the topic and still in-infancy or emerging themes in the open innovation research agenda. The author acknowledges that even though the introduction of the trust-embedded approach to open innovation is founded both on existing seminal theories and practices, there is still limited conceptualization to that respect. It is important to ground open innovation in existing seminal theories of innovation, management and economics and try to analyse the phenomenon from different aspects contributing to a new theory development that would capture the whole grandeur of the open innovation paradigm. The author believes that open innovation requires an open approach in terms of conceptualization and suggests that not one but several theories could contribute towards the understanding of this paradigm. The theoretical foundations could capture different aspects of the open innovation paradigm. More explicitly, the linkage between trust, open innovation and human side in the realms of Theory X and Theory Y is one example, which, even though, it requires deeper conceptualization and testing, it still provides novel and cutting-edge insights on the magnitude and impact open innovation has in the existing research, endorsing the need for perceiving this paradigm with the eyes of multidisciplinarity. In the same token, this respective research considers open innovation as a whole without differentiating and examining the different and peculiar mechanisms and characteristics of the three open innovation processes or dimensions: inside-out, outside-in and coupled, or inbound and outbound and coupled accordingly. The author believes that in the endeavour to contribute to the theoretical discussions around open innovation, especially in the realms of putting together elusive notions, such as trust, the delineation of open innovation and the separate exploration based on each of the three processes and dimensions would have been extremely difficult and would have created more complexity. Further research is needed in terms of operationalizing the trust-embedded conceptual model in relation to each of the P a g e | 160 160 modes, while at the same time explicating the underlying mechanisms that can safeguard readiness for open innovation along with the individual characteristics required for excelling and being successful within each open innovation mode. Lack of statistical causal effect analyses considering potential moderation and mediation of trust. The notion of trust is extremely broad and wide and the literature revolving around the different element of this concept is literally boundless. Trust can be a social virtue but also a measurable economic driver that can have an impact on performance. Trust can have different definitional components and conceptualization in relation to the level and unit of analysis, the discipline, the empirical setting and can be operationalized according to the ad hoc research processes and expected research outcomes. There it shares an inherent difficulty in terms of understanding, measuring and improving. The author believes that potential casual moderation and mediation is a useful type of analysis that can help towards the explanation of complex and elusive phenomena, such as, trust. This realization is extremely crucial both for academia and practice. In the realms of this research, the author has been very careful in terms of choosing the right literature following a different set of criteria. Naturally, not all literature has been covered in this research and the notion of trust has not been operationalized in the context of the financial industry. Future research should aim at positioning trust in the realms of the open innovation paradigm by exploring the potential moderating, mediating and other effects in accordance to the conceptual model, the organizational antecedents of open innovation and the interrelated variables. Furthermore, future research should take into consideration the organizational enablers and barriers to open innovation in the process of operationalizing trust within an empirical setting. Organizational trust can be quantified and measured in relation to trust levels, trust components and trust effects. Other elements of trust measurement can include leadership trustworthiness (Kouzes and Posner, 2010) and employees trust within the organization (Gabarro, 1978). No measurement of individual and organizational readiness. The trust-embedded approach to open innovation in relation to the building of readiness within the financial industry does not offer any measurable indicators in relation to firm performance. Assessing individual and organizational readiness for implementation of trust-embedded open innovation practices is important in the realms of the financial industry. Individual, organizational and system factors need to be considered by future research, so as, to assess the influence of the trust-embedded approach in the capacity of financial institutions to adopt open innovation practices. The model suggested by Backer (1995) following the three stages of assessing, P a g e | 161 161 contextualizing and enhancing readiness could serve as a basis. Suggested measurable constructs can be the decision-making processes, organizational resources, attitudes towards change and organizational support for innovation and change (Panzano et al., 2005), institutional resources, motivational readiness, organizational climate (Lehman et al., 2002), culture, leadership, roles and styles, communication (Sharp et al., 2003 cited by Antoni et al., 2013), acceptance of new ideas, ability to respond to change, support in developing new ideas, orientation to improvement and innovation (Patterson et al., 2004), levels of awareness, familiarity, agreement, self-efficacy, outcome expectancy, inertia of previous practice (Cabana et al., 1999). Furthermore, the correlation between an employee΄s relationship with management/leadership, job profile and deliverables, knowledge, skills and social relations, as suggested by Hanpachern (1997, cited by Madsen et al., 2006), could become a good basis for validation within financial institutions. Lack of quantitative empirical examination of the correlation and possible causality between trust-embedded open innovation and firm performance. The conceptual model of trust-embedded open innovation comprising of the organizational antecedents of open innovation and the interrelated variables is of relevance for the research on open innovation contributing to theory building. Empirical evidence on the potential causal relationship between trust-embedded open innovation and a firm’s open innovation performance, in individual, organizational, economic and societal terms is necessary. Future quantitative empirical studies can investigate the potential multivariate casual relationships between trust-embedded open innovation and open innovation firm performance also bearing in mind the related firm size. Quantitative statistical causal effect analyses, considering the performance and measuring indicators of the respective variables, related to the hereby proposed conceptual model, are required to be developed in order to statistically project potential causality. An interesting aspect, in which these research outcomes could serve as a basis is in the understanding of the role of trust-embedded open innovation in terms of creating resilient societies. This type of research fits in the framework of the Horizon 2020 50 EU Research and Innovation Program and the Societal Challenge: Europe in changing world-inclusive, innovative and reflective societies. The Societal Challenge incorporates three pillars: inclusive societies, innovative societies and For more information please refer to the official webpage of the program at http://ec.europa.eu/programmes/horizon2020/ (Not for referencing purposes) 50 P a g e | 162 162 reflective societies. Potential research questions could revolve around the ways trust can be achieved, the processes and mechanisms needed to create cultures of trust, the ways in which trust can be engendered through collaborative and innovation processes, shared experiences, and shared values. The author acknowledges the fact that the limited, yet, diverse sample of the interviews allows neither for the generalization of the findings for the overall financial industry, nor for their transferability to other sectors. Similarly the author would caution about generalizing these findings, however, the author believes that the sampling, within the realms of a qualitative research, has been conducted, so as, to ensure a wide range of characteristics, without aiming at a statistical representativeness. This limited sample endorses the absence of a dedicated organizational unit of innovation within financial institutions (Anderloni and Bongini, 2009; Fasnacht, 2009) and the need for establishing and adopting all these elements for developing and shaping a dedicated innovation function (chief innovation officer or open innovation leader), a function that can nurture the streamlining of efforts in terms of enabling (open) innovation to thrive within the financial industry (Mention, 2012). In relation to the diversity of the sample, the point of observation reflects the inherent difficulty of the researcher to approach and receive information from financial industry executives due to confidentiality, secrecy and institutional practices, which cannot be disclosed to the public. These kinds of peculiarities prevail within financial institutions creating a hindrance for research scholarship to study the industry in detail, an industry being so selfrestricted and sealed, by nature, but at the same time so important for the global business world and economy. Last but not least the financial industry, in the realms of this research has been considered as a whole without always taking into consideration the potential peculiarities for specific sectors within the industry itself. The author has embraced the diversity of activities within the financial industry that require the lowest level of knowledge intensiveness within an open innovation mindset. Within the financial industry, there are specific operational modes. These modes are normally referred as tailored or customised meaning that despite the fact that they might exist in many sectors of the financial industry it does not necessarily mean that they can be applied to the financial industry as a whole (Salampasis et al., 2014a). Future research could segment the financial industry based on specific criteria and explore and explain the operationalization of the conceptual model within specific sectors. P a g e | 163 163 Additional avenues for further research can be questions related to the effective actions that companies need to take in order to develop skills and competences for open innovation, development of dedicated training programmes in order to nurture capabilities needed for excelling within an open innovation environment, the classification of concrete organizational structures that would nurture the adoption of open innovation practices, the impact open innovation practices have on regaining trust within the financial industry, the changes within trust, trustworthiness and distrust towards financial institutions before and after the financial crisis, ways of repairing trust within the organizational sphere and how open innovation adoption could facilitate this process, the identification of approaches, tools, practices and mechanisms different companies adopt, so as, to encourage openness, while putting in place organizational change models that can help companies connect and manage external partners and at the same time facilitate open, fair and transparent working environment for the employees. 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Business Innovation and Research, Vol. 8, No. 5, 2014 Open innovation and collaboration in the financial services sector: exploring the role of trust Dimitrios Salampasis* and Anne-Laure Mention Public Research Centre-Henri Tudor, 29 Avenue John F. Kennedy, L-1855, Luxembourg E-mail: [email protected] E-mail: [email protected] *Corresponding author Marko Torkkeli Lappeenranta University of Technology, Prikaatintie 9, FI-45100 Kouvola, Finland E-mail: [email protected] Abstract: This paper aims at exploring the role of trust within the financial services sector in relation to open and collaborative financial innovation. Financial services nowadays represent considerable share of the global economy. In the European Union (EU-27), financial services accounted for 5.9% of the gross value added in 2010 (Eurostat, 2011). There is a vast discussion about open innovation and the need for collaboration and knowledge sharing; however, in the process of building up this open and collaborative framework, trust does not yet seem to have a place in the academic debate. Relying on a review covering multiple literature streams and primary data collected from interviews, the relevant antecedents of trust in the financial services sector under this open and collaborative perspective, ex-post financial crisis are identified. Keywords: financial services sector; open innovation; collaboration; trust. Reference to this paper should be made as follows: Salampasis, D., Mention, A-L. and Torkkeli, M. (2014) ‘Open innovation and collaboration in the financial services sector: exploring the role of trust’, Int. J. Business Innovation and Research, Vol. 8, No. 5, pp.466–484. Biographical notes: Dimitrios Salampasis is a business innovation management researcher working at the Public Research Center Henri Tudor in Luxembourg. He holds a BA on Public and Business Administration and two Masters in European Studies and Educational Psychology. He is a recent graduate of the Master in Entrepreneurship and Innovation by the University of Luxembourg with first class honours. He is conducting research in the area of business innovation management. He has been working on publications and studies in the field of open innovation and innovation management. He received the Best Paper Award at the Innovation for Financial Services Summit in 2012. Copyright © 2014 Inderscience Enterprises Ltd. Open innovation and collaboration in the financial services sector 467 Anne-Laure Mention is leading a research unit focusing on innovation economics and management within the Public Research Centre Henri Tudor, Luxembourg. She is actively involved in research projects, mainly focusing on innovation and performance measurement and management in the financial and business to business services industries. Her research interests mainly concentrate on open and collaborative innovation, intellectual capital measurement and management, innovation and technology management. She has been a Visiting Researcher at McGill University, Canada and Ferrara University, Italy. She received an IBM Faculty Award for the project entitled ‘Towards accrued transparency of operations in the fund industry’ in 2011 focusing on organisational innovation. She is also a founding member of WICI, the Deputy Head of the ISPIM Advisory Board and a member of several scientific committees. Marko Torkkeli is a Professor of Technology and Business Innovations at the Lappeenranta University of Technology in Kouvola, Finland. His research interests focus on technology and innovation management, strategic entrepreneurship, growth venturing, and decision support systems. He has published in journals such as the Int. J. Production Economics, Int. J. Foresight and Innovation Policy, Int. J. Business Excellence, Int. J. Technology Management and Int. J. Technology Intelligence and Planning. He is a member of the editorial boards of the Int. J. of Services Sciences and the Int. J. of Innovation Management. He is a Visiting Researcher at INESC Porto, Portugal, a Docent of Technology-based Business at University of Jyväskylä, Finland and a Docent of Technology and Innovation Management at Helsinki University of Technology, Finland. He serves as the Director of Publications of the International Society for Professional Innovation Management (ISPIM). 1 Introduction The purpose of this paper is to identify the key antecedents of trust with the financial services sector. It is an initial approach to bring upfront a highly important issue regarding the role of trust towards the financial services sector under an open and collaborative perspective. It is apparent that the era of globalisation and the worldwide financial crisis have formulated a new set of rules within an extremely sensitive and constantly changing business environment. Turbulent, uncertain, violent, demanding, risky are some of the different words that have extensively been used by researchers and scholars to describe this new environment. The financial services sector would not have remained unaffected by the abovementioned situation. The importance of the sector under a worldwide perspective and the role of innovation bring upfront new issues regarding the role of the financial institutions, the customers and the peripheral stakeholders. The financial sector belongs to a broad ecosystem of financial institutions, regulatory bodies and service providers, among which ICT, legal, consulting and audit firms play a dominant role. This ecosystem is trying to get back on track by overcoming the consequences of the financial crisis and by regaining customers’ trust. In order to succeed into this extremely strenuous effort, there is a shift into “creating and then popularizing new financial instruments, as well as new financial technologies, institutions and markets” [Lerner and Tufano, (2011), p.6]. In other words, the focus lies up the adoption of innovative strategies and initiatives in financial services, which is usually referred to as financial innovation. Financial 468 D. Salampasis et al. innovation has been characterised as the “life blood of efficient and responsive capital markets” [Van Horne, (1985), p.621]. Looking at different examples of financial services offered by providers such as the digital wallet, the buying of company stock through Facebook, the cardless ATMs which scan the user’s palm in Japan or the government-backed digital currency in Canada, it is noticeable that there is a new opening in the paradigm of financial innovation which derives from the effective collaboration and openness of different providers and the financial sector per se. The establishment of different collaborative processes according to the type of partnership is to be observed. This lies within the paradigm shift towards open innovation and “whatever the process, setting up a trustful environment geared at developing win-win collaboration is the golden rule for open Innovation to deliver long term results” [Manceau et al., (2011), p.8]. 2 Overview of the literature and conceptual development Financial services are a vital sector in business and have received scarce attention in the academic literature concentrating on open innovation. There is a broad range of financial organisations providing financial services. These organisations include banks, credit card companies, insurance companies, consumer finance companies, stock brokerages, investment funds and some government sponsored regulatory enterprises (Chan and Fengwei, 2010). The contribution of financial services is of the utmost importance since they depict the dyadic direction of consumer and professional investors’ involvement. According to the 2008 OECD report, financial services firms had a major 7.9% contribution to the US GDP and considered as major employers, accounting for 4.5% of total US employment in 2004. Furthermore, 5.77 million people are employed which is equal to around 6% of total non-farm employment in the US (SIFMA Report, 2010). The report further states that “the wealth generated by the financial services industry contributed nearly 6 percent, or more than $828 billion, to 2009 US GDP” [SIFMA, (2010), p.4]. Haldane and Mandouros (2011), economists at the Bank of England, underline the importance of the financial sector stating that in 2009, financial intermediaries accounted for 8% of total GDP and 10% in the USA and in the UK respectively. Regarding the role of innovation in the financial services sector, two major and contrasting trends can be observed. On the one hand, the 2007 McKinsey Global Survey on Innovation in Financial services (2007, p.2) suggests that innovation “will be a major competitive battleground in the financial services industry”. On the other hand, there are voices which in relation to financial innovation underline a negative popularity perspective. This raises voices such as Krugman (2009) stating that “it is hard to think of any major recent financial innovations that actually aided society”. At the same time, this brings upfront the realisation that financial innovation has a significant differentiation point from innovation in other industries. Financial innovation is perceived under the context of a strategic approach and behaviour leading to value innovation or ‘conventional logic’ [Costanzo et al., (2003), p.259]. Studies on the service context by Gadrey et al. (1995), by Frame and White (2004) and by Avlonitis et al. (2001), identify types of financial service innovations which “are associated with different development processes in terms of activities, formality and cross-functional involvement as well as performance outcomes” [Avlonitis Open innovation and collaboration in the financial services sector 469 et al., (2001), p.334]. Moreover, the emergence of the role of the user who is willing to contribute both into the development of a service but also into the technology per se behind the implementation of collaborative services since “users often develop and self-provide important financial services before banks or other types of financial service producers begin to offer them” [Oliveira and Von Hippel, (2011), p.806]. Financial innovation as a concept is a research niche since it involves a four-level analysis. Financial innovation “embraces changes in the offerings of banks, insurance companies, investment funds and other financial service firms, as well as modifications to internal structures and processes, managerial practices, new ways of interacting with customers and distribution channels” [Mention and Torkkeli, (2012), p.11]. In order words, it encompasses the making and promotion of financial products and services (product innovation), development of new processes (process innovation), interaction with customers and development of new structures for the financial institutions (Mention, 2011b). All these changes and developments have had a great influence within the financial sector since they consist of changes within the process, the product and the services per se. This infusion of innovation is vital because it is related to the growth of the company per se. And growth has a double interpretation. Firstly, if the market is growing but the company fails to grow then the result is an immediate loss of market share (Costanzo et al., 2003) and secondly the development of the appropriate mechanisms that a company should possess in order to be able to achieve growth even within an already mature industry. Current examples of financial innovation depict a shift towards a more open and collaborative paradigm which stems from the open innovation mindset. Chesbrough and Crowther (2006, p.235) observe the potential applicability of open innovation models to industries beyond high tech arguing that “Open innovation may indeed have broader applicability, a crucial prerequisite if this concept is to supplant the current paradigm of industrial R&D”. Fasnacht (2009) has developed an “integrative open innovation model” presenting the dynamic environment which is perceived as a crucible of external factors such as the market, policy and regulation, customers, technology and economy. These factors combined with the global financial crisis are feeding the emergence of the need for a shift from the closed innovation to the open innovation paradigm. Inside the environment, Fasnacht depicts the necessary strategies to be implemented in order for this transition to be achieved. This environment is perceived as the organisation per se and the understanding of a new space and set of structural rules. The discussion of the role of open innovation in the financial services sector comes into a very unstable and uncertain period where global economies, especially in 2008–2009, experienced an unknowing global financial crisis with unparalleled and unmet consequences in the global financial systems and especially the banking system. The unexpected bankruptcy of Lehman Brothers, which is considered the biggest one in the US history and which created an enormous wave that surpassed and affected all the economies and financial markets around the globe, remains present in everyone’s mind. The European Union defined the financial crisis as “the disturbance to financial markets, associated typically with falling asset prices and insolvency among debtors and intermediaries, which spreads through the financial system, disrupting the market’s capacity to allocate capital” [Council, (2012), p.6]. In any case, open innovation in financial services is a new research area since it calls for an interdisciplinary approach to 470 D. Salampasis et al. define the role of open innovation paradigm and the impact that it has within the financial services industry (Mention, 2011a, 2011b; Mention and Torkkeli, 2012). Discussing the role of open innovation and collaboration within the financial services sector it becomes an apparent need to focus on the role of trust in the way this open collaborative framework and innovation network is being developed. Professor Tamar Frankel, Boston University School of Law, endorses this thinking by stating that that “trust is the lifeline of finance-building trust is essential” [Cosgrove-Sacks and Dembinski, (2012), p.8]. Tescher [World Economic Forum and Wyman, (2012), p.72] is also calling for trust in the financial services industry since “Trust is the currency of the financial services industry. One of the lasting consequences of the recent financial crisis is a lack of trust, which in turn creates an inhospitable environment for innovation”. 3 Research context and methods The methodological approach used denotes that this is an exploratory qualitative study which combines the use of literature approaches and primary data gathered from interviews. The reason for choosing to conduct an exploratory qualitative research is that is more aligned to the intention of contributing to theory development and to conceptualise the research area (Quint, 1976 cited by Knafl and Howard, 1984). This approach is duly justified by the willingness to deepen the understanding of an abstract notion, i.e. trust. The many complexities related to trust faced by managers and organisational researchers, creativity and flexibility become an imperative ally and this can be tackled via a qualitative approach (Gummesson, 2006). Furthermore, the use of interviews and qualitative work in this context has enabled the understanding of the meaning, enactment and participation of the interviewees (Cassell et al., 2006). Figure 1 Conceptual framework (see online version for colours) Open innovation and collaboration in the financial services sector 471 The exploratory literature review has been conducted by following a rational path leading from the general perception down to the specific reasoning and understanding the need for the elaboration of the research propositions. The conceptual framework which has been used brings forward the areas of innovation, open innovation, services, financial services, organisational behaviour and organisational change leading to the identification of the research gap in the area of trust. The aim has been to bring a ‘pragmatic approach’ [Lösch, (2006), p.135] in the study of the role of trust in open innovation and collaboration by choosing the sector of financial services. The intention here has been to identify the potential factors that influence and are influenced by trust within the financial services sector and try not only to communicate the view of the interviewees but also to emphasise on conceptual links and theory formulation on the basis of the research question. In order to be able to collect primary data it was decided to conduct interviews with professionals on the field who would be open in sharing their insights based on their experience. The collected primary data are used as “a catalyst for conceptualization” [Knafl and Howard, (1984), p.18]. It was considered of upmost importance to share a dyadic level in the analysis, by having representative voices both from the consulting perspective aiming at capturing a broader view of the financial services sector and then having also some more focused business examples to see the real function of innovation and the role of trust within the sector. Furthermore, this would allow the detection of potential generalisable and common patterns, in order to support the theoretical propositions (Lösch, 2006). The choice of the interviewees has been made according to their profiles, current positions and their potential contribution outcomes. It is important to underline the fact that the interviews, which most of them were not recorded for confidentiality reasons, were conducted more within a discussion format rather than a formalised framework. This is strictly in line with the willingness to capture the variety of perceptions from the respondents rather than to adopt a narrow and closed perspective on the investigated questions. Most of the interviews were conducted via Skype but also in person. Last but not least the interviewees are coming from different parts of the world and not only from Luxembourg leading to a more international rather than localised approach. Figure 2 Theoretical framework in relation to open format questions (see online version for colours) 472 D. Salampasis et al. The questions that have been used to formulate the interview guide consist of a mix of open format and semi-structured questions. This type of questions allows the respondent to think and reflect, give opinions and feelings and in a sense share the control of the discussion with the respondent. During the discussions authentic, full of insight and sometimes even quite unexpected answers were received. Qualitative questions belong to the category of open format questions. Open format questions “simply establish the topic for the respondent and then leave the respondent to structure and answer as is seen fit” [Vinten, (1995), p.27]. Figure 2 depicts the rational flow of information that the open format questions are driving in relation to role of trust within the open innovation mindset. The interpretation and analysis of the data has followed the qualitative data analysis model proposed by Seidel (1998) who encapsulates into the model three interrelated, interlinked and cyclical parameters; noticing, collecting and thinking. The variables emerging from the interview guide are encoded in a way that they can enable further investigation and discovery. On a first level they are seen as collection points denoting the significance of the primary data. On a second level they enable the rationality of the thought and dynamic feeling perceived from the discussant. On a third level they enable the continuation of discoveries about realities which still remain buried deeply and still need to emerge. The approach has been interpretative and inductive and it was decided to let all these variables emerge from the data as part of the noticing process that Seidel describes in his model. Since trust as a concept is related to complex social behaviour from a sociological point of view, this research strategy would bring a multidisciplinary and interdisciplinary dimension in the level of the analysis (Cassell et al., 2006). This approach has been chosen because many qualitative analytic strategies rely on the constant comparative analysis since it has helped into the development of conceptualisations of the possible relations between various pieces of data. In this qualitative study the purpose is to generate knowledge combining common patterns and themes also in relation to the experiences and ideas shared by the professionals interviewed, depicting this dynamic relationship between data analysis and data collection. The codes and the information emerging from the interviews cover a vast area of the financial services sector but also the innovation management in general. It is not easy to classify the attitudes of the interviewees but it is interesting to see the relation of behaviours and attitudes following Polk’s classification in the four patterns of resilience; dispositional, relational, situational and philosophical (Van Breda, 2001). The reason why this classification has been chosen is because it mainly depicts the inflow of information and attitudes of the interviewees leading to a formulation of a profile based upon the individual’s roles in society, the relationships with others and the individual’s worldview or life paradigm. 4 Towards a conceptualisation of trust in financial services 4.1 On the boundaries and definition of trust Trust is a formation characterised by a definite multidimensionality (Brattström et al., 2012) incorporating a number of elements and functions that exist individually, but neither necessarily interdependently nor constantly (Tyler and Stanley, 2007). “Trust Open innovation and collaboration in the financial services sector 473 tends to be somewhat like a combination of the weather and motherhood; it is widely talked about, and it is widely assumed to be good for organizations. When it comes to specifying just what it means in an organizational context, however, vagueness creeps in” [McAllister, (1995), p.24]. Based on the extensive existing literature (Fawcett et al., 2012; Gulati and Sytch, 2008; Schoorman et al., 2007), trust can be perceived in an individual level interpersonal level, between individuals and organisations, between organisations (interorganisational perspective) and between individuals and information systems. Each of the abovementioned pillars is aligned with a number of individual, adhoc, calculative and non-calculative characteristics that assist the contextualisation of trust. By definition trust is “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party” [Schoorman et al., (1995), p.712]. This is related to trustworthiness and on the expectations that the person has concerning the expected behaviour of the other person (Schoorman et al., 1995). Another definition of trust is “the mutual confidence that no party to an exchange will exploit another’s vulnerabilities” [Parkhe, (1998), p.221]. The consideration of both definitions leads to some initial observations (Parkhe, 1998); trust as a concept involves uncertainty by nature. Trust implies vulnerability, i.e., the risk of losing something valuable. The extent of value and the extent of this potential loss are normally perceived under an ad hoc perspective. Trust is proportional to behavioural functions meaning that it is placed upon a person whose behaviour cannot be controlled from the outside. This means that trust is put on something which cannot be directly controlled but potentially partly influenced. 4.2 Setting up the field: organisational, interorganisational and network For the scope of this analysis, trust is perceived under the interorganisational level. The interpersonal level despite the fact that is the engine that puts the notion of interorganisational trust in motion is undoubtedly related to psychological and sociological studies and an extensive analysis would be outside the boundaries and framework of this paper. The interorganisational prism is perceived under the facet of collaborative innovation. “An open collaborative innovation project involves contributors who share the work of generating a design and also reveal the outputs from their individual and collective design efforts openly for anyone to use” [Baldwin and Von Hippel, (2011), p.9]. A company should invest on the promotion and sovereignty of organisational trust in order to be able to come closer and cooperate with other companies sharing primarily organisational similarities (Gulati and Sytch, 2008). Organisational similarities are the key elements and characteristics that constitute two companies belonging to the same operational scope and based on existing research this leads to easier cooperation and promotion of interorganisational trust. Kanter (2011, p.75) argues that “Great companies assume they can trust people and can rely on relationships, not just rules and structures”. On the other hand, there is a subsequent relation between organisational similarities, the diversity of organisational backgrounds and the talent management which can on one hand lead to creativity but on the other hand, it can also lead to communicative dilemmas and usually conflicts. 474 D. Salampasis et al. The main perspective of inter-firm collaboration, even in the open innovation paradigm is focused on the firm-centric perspective referring to the how the firm creates value from an alliance rather than on how to jointly create value through the creation of joint assets. Dyer and Singh (1998, p.662) refer to the term of ‘relational view’ arguing that “as a supernormal profit jointly generated in an exchange relationship that cannot be generated by either firm in isolation and can only be created through the joint idiosyncratic contributions of the specific alliance partners”. Trust under the interorganisational perspective analysis can be perceived either as dispositional or relational (Gulati and Sytch, 2008). Dispositional trust mainly reflects expectations about the trustworthiness of others in general (Gurtman, 1992) whereas relational trust pertains to a specific dyadic partner (McAllister, 1995). It is argued that relational trust is related to collaborative innovation. By definition collaborative innovation is a part of open innovation focusing into the building of long lasting relationships and collaborations that interrelate into the creation of commonly perceived value while open innovation is the generic theory of inbound and outbound conception. In the context of these collaborative frameworks trust has important psychological, sociological and economic properties simultaneously (Parkhe, 1998). Last but not least, an important angle which needs to be taken into consideration is the impact of culture within the scope of trust meaning the role that both the intercultural environment and cooperation affects the development of interorganisational trust and what is the potential role of open and collaborative innovation within a multicultural paradigm (Heffernan, 2004). Everyone involved in intercultural and international partnerships and relationships is always concerned about trust (Davis et al., 2008). However, it is important here to distinguish the context within two different levels, intra-firm and inter-firm intercultural and international environment. Inter-firm trust is depicted in the relationship between two companies whereas intra-firm trust it is perceived within one company. This distinction is very important since it entails different elements of understanding trust. 5 Trust and open innovation in financial services In this paper, trust is perceived within the financial services sector under an inter-organisational perspective, i.e., a B2B innovation network. Due to the complexity of many of the financial services, trust plays a significant role in the development and maintenance of successful relationships in the financial services sector (Chan and Fengwei, 2010). Vanston (2012) discusses two kinds of trust in relation to the financial services sector. The first one is related to the trust developed between participants in a financial transaction and the other one refers to the expression or trust by the population at large in the financial sector. This paper concentrates on the role of trust and its drivers under the organisational perspective in the realms of an open innovation collaborative mindset. Open Innovation is based upon the establishment of trustful and open business model partnerships. Partnerships adopting an open innovation mindset are bound to be built upon trust. “Trust becomes a fundamental element to open innovation-internally as well as externally” [Manceau et al., (2011), p.45]. Creating and maintaining relationships which are based on trust leads to the reduction of transaction costs, risk and builds upon long term relationships (Skardon, 2011). “Trust within the context of B2B innovation Open innovation and collaboration in the financial services sector 475 networks is complex, as it depends on both the personal characteristics of the key staff and the trust relationship between organizations” [Skardon, (2011), p.86]. The interpretative analysis of the interviews has shown a substantial number of calculative and non-calculative factors which are related to the importance and establishment of trust within the financial services sector under an open and collaborative prism and which are presented in Figure 3. Figure 3 Calculative and non-calculative factors (see online version for colours) Based on Figure 3, a highly important parameter to be explored and specifically underlined lies within the fact that there is an observation of a circular relation between both pillars and this relation is encapsulated around trust. This leads to the identification of the antecedents of trust in the financial services sector within an open innovation and collaborative perspective. The calculative and non-calculative factors presented in Figure 3 are embedded in the antecedents of trust which are discussed in detail. The main findings and outcomes deriving from the interviews on the role of trust are now introduced, and confirm that trust represents a highly valid element emerging as an absolute basis to all kinds of relations. 6 Organisational collaborative culture Trust has a bottom-line part within the financial services sector in terms of operational perspective, collaboration, branding and marketing of innovation. Trust requires a lot of time and patience to be built however it is more likely that nowadays financial services organisations despite the fact that they realise the role of trust, it is either not mentioned or simply taken for granted. Trust is encapsulated within the organisational perspective in 476 D. Salampasis et al. relation to multicultural human resources and reflects upon the organisational trust and image when it comes to cross-border relationships and collaborative activities. Trust sometimes is more referred to confidentiality, security and execution (Interviewee B. Personal Interview. 7 June 2012). This remark underlines a critical parameter since it shows that trust is mostly related to the pragmatic and practical way rather than something that is deeply imbued within and outside the organisational boundaries. Trust encompasses different perspectives, elements and beliefs which are far beyond official agreements. This is also related to the internal changes enabling the connection of two or multiple different ecosystems into a collaborative value capture and co-creation. The future of finance lies through the collaboration of different actors to provide services to clients (Interviewee E. Personal Interview. 8 June 2012). The collaborative mindset fits into the added value of every partner since it is highly dependent on the needs of the customers. Collaboration with other specialised organisations and professionals in the field is of paramount importance since it brings upfront the creation of a new collaborative platform which will change the ‘current shape’ and support real substantive changes (Interviewee H. Personal Interview. 24 July 2012). These changes have a reflection on the identity of the company, repositioning itself and a new corporate culture which is based upon four values: service excellence, performance, expertise and discretion. It is important to understand that collaboration is not easy to accomplish. From an organisational perspective, the way an organisation collaborates is dependent upon the strategy of the mother company. Organisations need to be the orchestrators of competences and drive the ability of adopting a new corporate culture since this orchestration of competences brings the right competences together in order to be able to find sustainable and long-lasting solutions for customers and partners (Interviewee H. Personal Interview. 24 July 2012). 6.1 Proprietary legacy Trust within the financial services sector is a part of the proprietary legacy an organisation is coated within since it drives the way to open innovation and collaborative initiatives (Interviewee B. Personal Interview. 7 June 2012). This legacy can be understood in a dyadic level both positively and negatively; positively in the sense of branding and marketing, the validity enacted within the experience and image of the organisation. On the other hand, difficulty to change and institutionalisation of practices based upon past paradigms can lead to the loss of trust. This of course is highly related to the character and the history of a company and has a diversified impact on the competitive advantage within the market. In order for an organisation to reflect trust on the outside, the same organisation must build an internal organisational trust paradigm. Trust among the staff must be built and this must be the purpose of the strategic orientation of the organisation (Interviewee H. Personal Interview. 24 July 2012). 6.2 Solid regulatory framework The measurement of the downside concerning the conceiving of trust is also related to the impact that the specific practice has on the customer per se. Trust needs time to be built Open innovation and collaboration in the financial services sector 477 but only seconds to be destroyed. And for open innovation and collaboration trust plays a paramount role which is directed by non-disclosure agreements since the approach is perceived only after the formalisation of a specific collaborative framework. This formalised framework can lead to partnering driven by a defensive and offensive play since the main decision to be taken is the necessity to keep the existing market share and continue with a business as usual but on the other hand put different angles and criteria on the table realising the way to make people understand why they would change what they are doing for something new. It is important to look into innovative regulation and not a regulation that blocks innovation on the level below (Interviewee I. Personal Interview. 24 July 2012). Laws should be flexible enough to attract investors fostering a framework where trustworthy partnerships can be initiated and not limited. 6.3 Societal orientation Financial services organisations need to have empathy (Interviewee A. Personal Interview. 5 June 2012), i.e., developing the right competence to learn how to listen carefully and sense the needs of the public. The customer needs to be put on the core of the product/service process and through this dynamic interrelation a collaborative spirit imbued with trustworthy feelings will emerge. This new framework will lead to the financial continuity and the durability of an open innovation and collaborative culture in the financial services sector. Trust depends on the willingness to contribute to the social act and it is an ability embedded in the both human nature and the organisational culture. The word paramount is explicitly used so as to denote the importance of trust within the open innovation mindset and that trust through this openness and collaborative spirit will be amplified throughout the individual cells to the society and to other institutions like banks and financial services organisations. 6.4 Simplicity A key antecedent of developing trust within the financial services sector is the role of simplicity. Edward de Bono in his well-renowned book Simplicity (2010) underlines the fact that simplicity can be discussed under the human nature and common sense perspective. He also states that simplicity bares no natural orientation but it has to be made to happen. Within the financial services sector it is becoming apparent that simplicity has become a new buzzword and is highly related to trust. Simplicity can be perceived dyadically; simplicity is related to clarity which leads to confidence and to non-complicated tools which are easy to use but at the same time share many levels of security. Springford (2011, p.7), taking into account the customer/consumer perspective argues that “Consumers want a simple and clear interaction with financial services that have a positive impact on their everyday lives and the industry must continue to respond with innovative propositions that support this desire”. Solely creating a competitive environment in the financial service marketplace does not denote a sufficient parameter ensuring better agreements, trustworthiness and customer trust (Interviewee D. Personal Interview. 8 June 2012). Financial products and services are characterised by a unique nature and competition as such does not reassure consumer’s trust. Springford (2011, p.15) believes that “encouraging a few more consumers to become a bit more active is 478 D. Salampasis et al. both wishful thinking and will not remove providers’ ability to exploit the inertia of the majority”. 6.5 Entrepreneurial attitude A highly interesting and unexpected angle is related to the ‘fertile ground’ that trust needs to nurture (Interviewee I. Personal Interview. 24 July 2012). Cultivating an organisational entrepreneurial and intrapreneurial mindset is definitely related to risk. However, the differentiation point lies within the realisation co-risk taking, especially within an open and collaborative framework. Clients and partners know immediately how to work with entrepreneurs and they are more than willing to offer their ‘personal touch’ into value co-creation. So trust becomes the responsibility and the willingness of all involved parties. 6.6 Financial education Another very important parameter which has not been widely expressed is the need for efficient and effective financial education and consumer protection (Interviewee C. Personal Interview. 8 June 2012). Learning has always been connected with errors and learning from mistakes always leads to the realisation of the problem and the implementation of sustainable solutions. Financial education and financial consumer protection does not only mean understanding the financial mechanisms of the market but also being able to understand the usefulness of innovative, products, services and the new interfaces provided by the financial services organisations. It is the way to make people understand why they should change a current practice to something new not being pushed but by being educated and led into every step of the process (OECD/INFE, 2012). Trust plays a vital role here and it is directly proportional to the role of financial education. Defined by the OECD as “the process by which financial consumers/investors improve their understanding of financial products, concepts and risks and, through information, instruction and/or objective advice develop the skills and confidence to become more aware of (financial) risks and opportunities to make informed choices, to know where to go for help, and take other effective actions to improve their financial well-being” [OECD/INFE, (2012), p.7], it encourages the need for the human side of innovation and the understanding that learning, experimenting and trying is the investment for the future developments in financial innovation. Willingness to change comes from awareness; willingness to contribute derives from trust so changing organisational patterns, cultural hindrances by fostering effective and trustworthy relationships is nurtured by education, by experiential learning and by the feeling or globalisation and collaborative attitude. Trust plays a vital role in the financial services sector and is highly related to the customer. The profile of the customer today has changed a lot, since customers are much better informed and much more careful when it comes to negotiations, asset and wealth management agreements (Interviewee H. Personal Interview. 24 July 2012). This leads to questioning and challenging the competences, the products and services offered. So as a matter of fact, financial organisations need to invest on the customers through the development of effective and efficient expertise, by being self-critical and by finding new ways of development. Open innovation and collaboration in the financial services sector 7 479 Discussion and conclusions Trust is expressed as the most overused and abused word (Fawcett et al., 2012) in any analysis that tries to fathom the correlation between different parameters which initiate openness and lead to mutual long-term value creation (Dahlander and Gann, 2010). Trust is usually taken for granted since it is perceived as an element of mere importance; yet appreciating the concept under a down reaching spectrum it becomes immediately apparent that trust is the conditio sine qua non of any kind of social, business oriented interaction and cooperation. Trust in the financial services sector is denoted bidirectionally. This means that the customer, the client, the user has an expectation of an embedded trustworthiness in the relationship with the organisation per se meaning that trust should be explored and not exploited and be the starting point for a sustainable relationship. A relationship is embedded within a partnership since this is the pathway to a collaborative framework and perspective. Trust is also about sharing interest and passion since it allows by the openness that it creates the emerging of ideas and their introduction to the people who are living in different environments and have a certain social life but who are urged by their willingness to contribute and take a step forward. Financial innovation is related to trust in the process of changing. Financial innovation is about understanding the customer, appreciating the information from the partner and differentiating from the competition (Interviewee I. Personal Interview. 24 July 2012). Financial innovation is focused on the how, on the process of perceiving the difference because at the end every client, every partner will get the same. A stronger process innovation development leads to understandable tools, content and information. Financial innovation also shows the ability to evolve in order to be ready for the future. By evolving under an organisational and competences-oriented perspective based on customer and partner needs easies the process of creating a competitive advantage by differentiation. This requires a clear strategy and the ability to make choices. Innovation means to have the ability to decide, to admit being wrong, to have the ability of fast realisation and understanding that if something is not working it is the time to stop. Innovation means to be able to make hard and difficult choices and the ability to say no (Interviewee H. Personal Interview. 24 July 2012). Trust is a critical aspect and this uncovers other aspects which influence open innovation strategies, aspects that cover a vast space in the research. These factors have a substantial impact in the managerial and strategic perceptions, the way the mechanism in the financial services sector is functioning and the way the flow of information in relation to the extensive need for organisational and substantial change of mindset with the financial services sector as a whole and not only in the peripheral services. Bearing in mind the current debt and subprime financial crises which have been creating all these fundamental consequences, the necessity for substantial changes call for the emergence of alternative mechanisms, of getting back to the basis and trying to comprehend the way the globalised financial market and the financial services sector functions in terms of sustainability, affectivity and efficiency (Interviewee F. Personal Interview. 8 June 2012). Regaining trust both in terms of customer-oriented activities but also within the sector per se will be the correct starting point in the changes yet to come. Trust is broken from normal people to the financial services sector whereas within professionals there is a trustworthy relationship within the clients (Interviewee I. Personal Interview. 24 July 2012). Trust is a must within a professional or personal relationship 480 D. Salampasis et al. and it is more easily nurtured within a familiar environment deployed mainly into family businesses (Interviewee D. Personal Interview. 8 June 2012) Open innovation is the vehicle to regain trust (Interviewee G. Personal Interview. 2 July 2012) and at the same time trust plays a paramount role in open innovation as an organisational mindset. In other words, trust is embedded within the open innovation mindset and denotes the starting point for any collaborative activity. Trust is very hard to achieve in management. It takes time and it is highly dependent upon internal and external factors both intra and extra organisation. It is a matter of behaviour, of attitude and of cultural adoption. Trust is not just a word and realising that management is not a single entity but made up by diverse individuals, agendas and mechanisms requires having consistency with ethical and moral values. The financial crisis has created a new realisation of our financial world and has led to the destruction of institutionalised practices and has emerged the motivation for change. Regaining trust will be successful within change, within a creative destruction process (Interviewee I. Personal Interview. 24 July 2012). The financial services sector needs to change and start thinking differently both in terms of product, process and service innovation. The financial services sector needs to regain trust and this will come alongside existing leadership styles in order to re-enforce credibility, leverage and impact and top management should facilitate high performance teams, motivated workforce, respect and effective and socially responsible strategies. 8 Implications, limitations and future research In terms of the academic perspective, this study opens up the ground for new research in the area of open innovation in relation to organisational behaviour, organisational change and the role of trust as a core element of open innovation. The contextualisation of open innovation within the financial services sector and the role of trust have a great impact within the development of collaborative initiatives both on a local, national and international level. Another parameter which gives room for further exploration is the role of financial education and financial consumer protection and how to develop guidance and implementation methodology that will assist policymakers into turning these policies into effective practices. In terms of managerial perspective, effective collaboration and financial innovation have an impact in the financial services in terms of marketing and the profile of the financial services user. Top management needs to realise the social and economic factors affecting the demand for financial services and the implications that they have on the needs and profile of the user behaviour. This is also applied to the building of sustainable user relationships, the process of this relationship development and the impact that the technology has in the delivery of the financial services. It is important to underline the fact that there are some limitations deriving from this study which deserve to be acknowledged. First, the choice of the sample may affect the findings from this study. The reason behind this lies within the fact that financial services organisations follow a strict disclosure of information policy, meaning that it is very difficult to share information which is not required to be made publicly available such as product features. Furthermore, the different professional background of the interviewees might have an influence in their way of interpreting the questions and elaborating on their Open innovation and collaboration in the financial services sector 481 answers during the discussion. Second, the generalisability of the results within the sector itself is in question. Within financial services, there are may be specific forms of innovation, let aside services in general. These forms are normally referred as tailored or customised meaning that despite the fact that they might exist in many sectors of business to business services does not necessarily mean that they can apply to the financial services sector as a whole (Micuda, 2011). This is the fact that it is methodologically correct to focus on the study of a single sector instead of trying to make generalisations which argued of their rationale and feasibility. In addition to the above the calculative and non-calculative factors have been identified but not explicitly classified. Moreover, the analysis has been conducted ex-post the financial crisis. An interesting approach would be a historical approach which would try to conceptualise trust combining ex-ante and ex-post data of the financial crisis using time series and leading to a more macroeconomic perspective or the role of trust. Replicating this study by using a large sample of both financial services organisations and consulting professionals would strengthen the exploratory findings of our study. Similarly, despite the fact that the following questions do fall off the scope of the current analysis, we believe that it is important to address the relationship between risk and trust, trust and distrust, violation and trust despair and trust measurement in relation to open innovation, would be important extensions of this study. There is a need for new insights and studies in the area of open innovation in the financial services sector. Since trust is a core important element and is completely aligned with the theory of open innovation it definitely deserves academic attention, re-thinking and revisiting. 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Appendix List of interviewees Interviewee Name and surname Role Organisation Country A Smorenberg Harry Independent Strategist in the Financial Services Smorenberg Corporate Consultancy Netherlands B JB McCarthy Development Director Financial Services Innovation Centre Ireland C Gusev Daniel Innovation Adviser Promsvyazbank Russia D Eleanor de Rosmorduc Communication Officer Luxembourg for Finance Luxembourg E François Drazdik Senior Industry Affairs Adviser Association for the Luxembourg Fund Industry Luxembourg F Tom Rasque Coordinator Private Banking Group Luxembourg G Prof. Hans-Gert Servatius Professor, Founder Management Systems Network Germany H Patrick Schols CEO International Wealth Insurer S.A. Luxembourg I Dr. Laurent Müller Partner Muller & Associés Luxembourg Publication II Salampasis, D., Mention, A-L., and Torkkeli, M. Trust embeddedness within an open innovation mindset Reprinted with permission from International Journal of Business and Globalization Vol. 14, No. 1, pp. 32-57, 2015 © 2015, Inderscience Publishers 32 Int. J. Business and Globalisation, Vol. 14, No. 1, 2015 Trust embeddedness within an open innovation mindset Dimitrios G. Salampasis* and Anne-Laure Mention Public Research Centre-Henri Tudor, 29 Avenue John F. Kennedy, L-1855, Luxembourg Email: [email protected] Email: [email protected] *Corresponding author Marko Torkkeli Lappeenranta University of Technology, Prikaatintie 9, FI-45100 Kouvola, Finland Email: [email protected] Abstract: This paper explores the role of trust under the prism of open innovation. There is a vast discussion about open innovation and the need for collaboration and knowledge sharing; however, in the process of building up an open and innovative organisation, trust does not yet seem to have a place in this process. The approaches of current literature fail to denote the relationship between the importance and impact of trust within an open and collaborative environment under an organisational perspective. The objective of this conceptual paper is to elevate trust as a core element of open innovation, perceived as an organisational mindset, by proposing a conceptual model leading to a re-contextualisation of the current approaches to open innovation. Keywords: open innovation; collaboration; trust; ambidexterity; culture; mindset; diversity management; knowledge sharing. Reference to this paper should be made as follows: Salampasis, D.G., Mention, A-L. and Torkkeli, M. (2015) ‘Trust embeddedness within an open innovation mindset’, Int. J. Business and Globalisation, Vol. 14, No. 1, pp.32–57. Biographical notes: Dimitrios G. Salampasis is a Doctoral Researcher at the Public Research Centre Henri Tudor in Luxembourg. His research is focused on business innovation management and organisational behaviour and more specifically in the field of open innovation in financial services. He is also pursuing his PhD on Industrial Engineering and Management at the Lappeenranta University of Technology in Finland. He holds a Bachelor in Public and Business Administration and three Master degrees in European Studies, Educational Psychology and Entrepreneurship and Innovation (First Class Honours). He has extensive working experience in the public and private sector in Greece and abroad and has participated in numerous conferences around the world as a speaker, facilitator, trainer and rapporteur. He received the ISPIM Best Paper Award in September 2012. Copyright © 2015 Inderscience Enterprises Ltd. Trust embeddedness within an open innovation mindset 33 Anne-Laure Mention is leading a research unit focusing on innovation economics and management within the Public Research Centre Henri Tudor, Luxembourg. She is actively involved in research projects, mainly focusing on innovation and performance measurement and management in the financial and business to business services industries. Her research interests mainly concentrate on open and collaborative innovation, intellectual capital measurement and management, innovation and technology management. She has been a Visiting Researcher at Singapore Management University, McGill University, Canada and Ferrara University, Italy. She received an IBM Faculty Award for the project entitled ‘Towards accrued transparency of operations in the fund industry’ in 2011 focusing on organisational innovation and an award for the project entitled ‘Measuring the impact of open innovation’ in 2013. She is also a founding member of WICI, the Deputy Head of the ISPIM Advisory Board and a member of several scientific committees and editorial boards. Marko Torkkeli is a Professor of Technology and Business Innovations at the Lappeenranta University of Technology in Kouvola, Finland. His research interests focus on technology and innovation management, strategic entrepreneurship, growth venturing and decision support systems. He has published in journals such as the Int. J. Production Economics, Int. J. Foresight and Innovation Policy, Int. J. Business Excellence, Int. J. Technology Management and Int. J. Technology Intelligence and Planning. He is a member of the editorial boards of the Int. J. of Services Sciences and Int. J. of Innovation Management. He is an affiliated faculty member at Singapore Management University, a Visiting Researcher at INESC Porto, Portugal, a Docent of Technology-based Business at University of Jyväskylä, Finland and a Docent of Technology and Innovation Management at Helsinki University of Technology, Finland. He serves as the Director of Publications of the International Society for Professional Innovation Management (ISPIM). 1 Introduction The aim of this conceptual paper is to develop research propositions on the role of four specific concepts (knowledge sharing attitude, ambidextrous thinking, collaborative culture and diversity management) on the adoption of open innovation practices and the effect of trust based upon an extensive and consistent review of the literature. The concept of open innovation, despite the fact that it is considered as a new area of research, is hardly new. To some extent, innovation has always been open (West and Gallagher, 2006). By definition, open innovation is “the use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the markets for external use of innovation, respectively” [Chesbrough et al., (2006), p.1]. Open innovation puts under a functional umbrella the obvious: the fact that we all live in an open knowledge space era where the flow of information is permanent, knowledge transfer and access to information is beyond understanding and in order to succeed in this highly competitive, constantly changing and demanding business world, openness and collaboration are considered the key facilitators of this process. 34 D.G. Salampasis et al. The added value of open innovation as a concept is the fact that it gave a name and embraced practices and attitudes which have been in existence throughout time but would take place subconsciously in the absence of an operational framework to structure them. An emerging shift from a closed to an open innovation model is observed, where valuable know-how, ideas, practices and experience come from both inside and outside the company, leading to a remarkable flow of ideas and resources regardless their inward or outward origin (Chesbrough et al., 2006; Dahlander and Gann, 2010). Enkel et al. (2009) herald that not coping with open innovation under an organisational perspective leads to serious competitive disadvantages. The driving force for companies to adopt the model of open innovation is their propensity to establish a competitive advantage and to be able to maintain innovation leadership within a highly competitive business environment. Open attitudes allow a free knowledge flow between the parties and therefore support the innovativeness of the firm (Päällysaho and Kuusisto, 2011). However, being too open is not necessarily interpreted as a benefit for the firm’s innovation performance (Drechsler and Natter, 2012). Despite the fact that it is widely acknowledged that open innovation is the key for future business success, it is not yet vastly adopted in terms of company structure and approach (Buntz, 2010). For this reason, this paper perceives open innovation from a different angle, since it is more than a paradigm, a process, a framework (Chesbrough et al., 2006) or a business model (Rasmussen, 2007); but an organisational mindset, which in order to be perceived under a collaborative aspect requires another core element: trust. This conceptual paper is based on an extensive and comprehensive review of the literature, fostering the contribution to theory development and the conceptualisation of the research area (Knafl and Howard, 1984). This approach is duly justified by the willingness to deepen the understanding of an abstract notion, i.e., trust. The literature review has been conducted based on a conceptual framework which brings forward the research fields of open and collaborative innovation, organisational behaviour and organisational change. This has helped the authors define with precision and accuracy the research problem and to ensure its core understanding. The purpose of conceptualisation was to get initially a basic insight into the topic and also valuable hints concerning the design, research strategy and focus of the main study leading to the development of the proposed conceptual model (Lösch, 2006). This conceptual paper follows the cognitive processes proposed by Morse. These processes involve comprehending, synthesising, theorising and recontextualising or putting new knowledge back into the context of how the other researchers have articulated the evolving knowledge (Walker et al., 2008). In this context, trust is examined in relation to four main concepts which are proposed as the organisational antecedents of open innovation; knowledge sharing attitude, ambidextrous thinking, collaborative culture and diversity management. All these concepts and their interrelated conceptual relationships are examined in detail within the following sections. The conceptualisation enables the definition of the role of trust towards open innovation as an organisational mindset. 2 Literature review: open innovation The purpose of this review is to present the mainstream and contemporary literature in the field of open innovation by introducing the concept of open innovation, its various Trust embeddedness within an open innovation mindset 35 interpretations and approaches and to smoothly pave the way towards the identification and exploration of the missing element of trust. Open innovation is “a new way to bring innovations to market and create value from company’s IP. It is in a contrast to a traditional closed innovation model where company’s own research results are used to create new innovations and products only for the company itself” [Viskari et al., (2007), p.1]. The concept of open innovation has received wide acceptance (Huizingh, 2011; Lichtenthaler, 2011) but also criticism (Linstone, 2010; Trott and Hartmann, 2009). From a management and strategy perspective, open innovation “has become the latest management buzzword” [Hagel and Brown, (2008), p.27] because open innovation has managed to “summarize a set of socio-political and economic changes” (Schroll, 2009a). The core element of the concept is the interrelation between the inbound, outbound and coupled processes (Chesbrough and Crowther, 2006; Gassmann and Enkel, 2004; Lichtenthaler, 2011) referring to the mutual competence that companies should possess and nurture in order to be able to receive and operationalise know-how from the outer part and layer of the organisation per se and at the same time be able to avoid disclosure of information, competences and R&D in terms of sharing and openness (Spithoven et al., 2011). The inbound process refers to the in-sourcing of external knowledge by means of licensing in, spinning in, acquisition and collaboration alongside the value chain (Savitskaya et al., 2010). The outbound process refers to the external utilisation of internal knowledge and more specifically the performance of potential value creation from the ‘surplus of research’ which would remain unused (based on the closed innovation model) but now it can be utilised by fitting itself within another business models [Savitskaya et al., (2010), p.11]. The coupled process is defined as “linking outside-in and inside-out by working in alliances with complementary companies during which give and take are crucial for success” [Gassmann and Enkel, (2004), p.1]. Open innovation is a porous business model aligned to the notion of transparency, openness and sharing [Chesbrough, (2003), p.37], or the fact that the boundaries of the firm become permeable. Open innovation leads to an open culture, an open business model and an operational absorptive capacity (Lichtenthaler and Lichtenthaler, 2009; Spithoven et al., 2011) which is elaborated through the correspondence and interrelation of a substantial number of factors such as sincerity, long lasting relationships, long term cooperation and common/mutual value creation. The absorptive capacity is related to the exploration of external knowledge (Cohen and Levinthal, 1990) and the ability of the firm to generalise ‘commercialisable outputs’ after having passed the procedure of value recognition, validity, implementation and internal knowledge conceptualisation [Kostopoulos et al., (2011), p.1336]. The functionality of open innovation lies upon the shift from a closed to an open paradigm. Helfat clearly illustrates this propensity to the open paradigm. “Closed innovation springs entirely from internal company innovation activity, largely in the form of organized R&D” [Helfat, (2006), p.86]. On the other hand, the open innovation model advances its emergence from “sources external to the company in combination with supplementary internal company innovation activity” [Helfat, (2006), p.86]. Almirall and Casadesus-Masanell (2010, pp.44) present a simulation model showing the trade-off between benefits of discovery and costs of divergence, discussing that discovery “might 36 D.G. Salampasis et al. arise not from the exercise of full strategic freedom but from restricting the available choices and learning from those made by others”. Open innovation is defined as “systematically relying on a firm’s … capabilities of internally and externally carrying out the major technology management tasks … along the innovation process” [Lichtenthaler, (2011), p.77]. This is interpreted as an interorganisational knowledge transaction which helps the firm sustain and develop new knowledge. However, it is vital for organisations to bear in mind that it is not only important to be able to acquire knowledge but also having the right mechanisms to manage and implement it further. This is known as ‘knowledge management capacity’ and it refers to the dynamic capability, “which reconfigures and realigns these knowledge capacities” [Lichtenthaler and Lichtenthaler, (2009), p.1315]. Knowledge management capacity helps towards the better understanding of the way a firm can profit from open innovation since it denotes the mechanism of examining the inward and outward knowledge flows within the organisational process. It is important to underline here the different perspective that this procedure has on an ad-hoc basis. It depends upon the capacities, the mechanisms, the structural foundations, the collaborative and learning culture which is infused within the organisation per se. Open innovation, as a concept, has developed throughout the years and has been associated with several other concepts such as open source (West and Gallagher, 2006), user co-creation (Franke and Piller, 2004), user centred innovation and customer integration by von Hippel and distributed innovation (Sawhney and Prandelli, 2000). Another classification, proposed by Schweisfurth et al. (2011), identifies five concepts and research streams of open innovation; collective invention, user-innovation networks, common based peer production, crowdsourcing and open-source innovation. Building on that, the concept of open innovation has been identified in separated discussions within the literature since there is an emergence of sub-areas of open innovation such as “globalization of innovation (collaboration), outsourcing of R&D (utilization of external knowledge), early supplier integration, user innovation and external commercialization of technology” [Viskari et al., (2007), p.5]. Simanis and Hart (2009) bring upfront an alternative prism which lies upon the role of structural and embedded innovation. The structural innovation paradigm has substantial consequences in the societal, customer and environmental leads of life. Societies are simply a group of consumers waiting for their needs to fulfilled, relationships become transactions, the natural environment is used only as a source of raw material and a general attitude of a mass consumer market which will lead to a better quality of life is born. The embedded innovation paradigm brings upfront the concept of business intimacy. Business model intimacy is based upon the relational model of identity and a community creation. It creates a sense of belonging, on shared vision practices and creates a sense of responsibility to the community. Embedded innovation and business intimacy symbolise a new conceptualisation of value creation which is not based only on the competitive advantage but elevates the creation of long lasting and trustworthy relationships. Through these relationships a unique platform for sustainable growth is formulated and new horizons for companies and the society are being opened. The embedded innovation paradigm promulgates collaborative attitudes Trust embeddedness within an open innovation mindset 37 and mutual learning since it is enacted within a community based environment, giving absolute emphasis on relationship, team building and equal partnerships. It encourages the endorsement of engagement which is a new way of thinking by instilling responsibility and commitment and creates an ecosystem of people and institutions that respect the values of the enterprise. Through these community-based practices diverse people are working together towards the creation of sustainable and common value. “Innovation isn’t enabled by new relationships, it is the relationship” [Simanis and Hart, (2009), p.83]. The authors argue that the embedded innovation paradigm (communities) is related to the distributed innovation paradigm (Bogers and West, 2012), which encapsulates user innovation by von Hippel and open innovation by Chesbrough and other processes such as cumulative innovation, social production and co-creation. Distributed innovation is perceived as a “metacategory for prior research on innovation processes that cross organizational boundaries or take place entirely outside an organization” (Schroll, 2011b). It is important to underline here the difference of these perspectives stemming from the motives, the nature, the relevance, the commercialisation and the nature of innovation (Bogers and West, 2012). Open innovation as a model enables businesses to build a structured “innovation ecosystem that uses networks of external partners and focuses on developing core internal competencies” (Trapp, 2010). This shows that open innovation is perceived under collaborative innovation. A highly important element for the development of new products and services is the encouragement of collaborative innovation with customers or users (Greer and Lei, 2012). Collaborative innovation is set within a framework of a peer to peer or network perspective and is managed through synergies. “Firms that manage to create a synergy between their own processes and externally available ideas may be able to benefit from the external creative ideas of outsiders to generate profitable new products and services” [Dahlander and Gann, (2010), p.704). Collaborative innovation can be perceived dyadically via the involvement of lead users (Oliveira and von Hippel, 2011), and the customers such “as through participatory design, empathy, trust and modularization” [Greer and Lei, (2012), p.64]. It derives from the structural differences within the organisation regarding the flow of information and ownership besides the structural mechanism of coordinating this infusion of information (Satzger and Neus, 2010). “Open innovation is based on collaborative relationships-organisational alliances and partnerships” [Slowinski and Sagal, (2010), p.38]. Going back to core of open innovation it is apparent that collaborative relationships are of utmost importance since “in case the asset is not available internally, the firm must locate the asset in the outside world” [Slowinski and Sagal, (2010), p.38]. The context of open innovation depicts the mutual engagement of two or more partners who are willing to work together by sharing ideas, know-how, experiences and knowledge in a joint effort to generate value from innovative outcomes (du Chatenier et al., 2010). Du Chatenier et al. (2010) perceive three levels of collaborative innovation: management of interorganisational collaboration process, management of the overall innovation process and creation of a new collaborative knowledge. 38 D.G. Salampasis et al. Interorganisational collaboration takes place when organisations share both authority and responsibility so as to formulate a planning and an implementation strategy in order to find a solution to a problem (Zhao et al., 2012). Zhao et al. (2012, p.617) describe it as the situation when “different organizations work together to address problems through joint effort, resources, decision-making and share ownership of the final product or service”. There are many types of relationships among organisations such as information sharing, business transactions, etc. Collaboration is one of them revealing the fact that there lies the creation of an interorganisational collaboration network. Collaborative innovation cannot be perceived under one single form. In order to expand their competences, their know-how and create a substantial competitive advantage companies share the need to form alliances, partnerships and collaborative networks with outsiders in order to overcome potential capacity limitations, knowledge gaps and be able to jointly work into new projects, services and promote innovative and dynamic relationships (Pisano and Verganti, 2008). Successful business relationships are built on trust meaning that the starting point of a relationship empowerment must be related to trust (Kanter, 1994). The abovementioned literature review reflects the emergence of a new paradigm shift from closure to openness. It has shown that open innovation shares various and complex interpretations, leading to a vast and alternative approaches catering for a difficulty towards its adoption and implementation. Furthermore, it becomes apparent that open innovation as a concept can be related to other fields of study and elements demanding a multidisciplinary approach. Last but not least the inherent element which belongs to the DNA of open innovation, i.e., trust has been merely discussed, consisting a major gap in the existing literature, a gap that is addressed and investigated in this paper. 3 Open innovation mindset and the role of trust Linking open innovation and trust can be quite challenging due the lack of an existing theoretical framework and the different research methods to be used to tackle abstract and elusive notions. This section is dedicated to the exploration of trust as a concept by bringing together and synthesising different research fields and literature streams. This definition paves the way towards the identification of four specific concepts (knowledge sharing attitude, ambidextrous thinking, collaborative culture and diversity management) considered as the organisational antecedents of open innovation. The investigation of the role of trust in relation to the four organisational antecedents of open innovation leads to the realisation of open innovation as an organisational mindset. Open innovation can be perceived as a paradigm, a culture, a business model, a concept, a notion, a strategy and a managerial buzzword. Understanding the role of open innovation within the era of open knowledge, cooperation, interaction and mutual understanding, the authors believe that open innovation needs to embrace all the relevant core elements and perspectives that elevate it not as panacea or the ultimate solution (Trapp, 2010), but as a natural perception, as something that is inherent, something that flows in the organisation’s blood. Trust embeddedness within an open innovation mindset 39 This paper argues that open innovation is an organisational mindset, is the ultimate ensemble that drives the mechanisms of organisational culture, business model and organisational behaviour, is the light that denotes identity, is the spark which promotes creativity, collaboration and community engagement, is the pioneer of organisational trust. A mindset (also known as dominant logic, cognitive map, mental model, strategy frame and belief structure) refers to the knowledge structures that top managers use to make strategic decisions. It is encompassed in two facets: complexity and proactive/reactive thinking (Nadkarni et al., 2006). In order to explore the role of trust within an organisational mindset such as open innovation a prior understanding of the concept of trust becomes imperative. 3.1 Definition of trust Trust is a formation characterised by a definite multidimensionality (Brattström et al., 2012), incorporating a number of elements and functions that exist individually, but neither necessarily interdependently nor constantly (Tyler and Stanley, 2007). “Trust tends to be somewhat like a combination of the weather and motherhood; it is widely talked about, and it is widely assumed to be good for organizations. When it comes to specifying just what it means in an organizational context, however, vagueness creeps in” [McAllister, (1995), p.24]. Based on the extensive existing literature (Fawcett et al., 2012; Gulati and Sytch, 2008; Mayer et al., 1995; Schoorman et al., 2007) trust can be perceived at an individual level, interpersonal level, between individuals and organisations, between organisations (interorganisational perspective) and between individuals and information systems. By definition, trust is “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party” [Mayer et al., (1995), p.712]. This is related to trustworthiness and on the expectations that the person has concerning the expected behaviour of the other person (Mayer et al., 1995). Another definition of trust perceives “the mutual confidence that no party to an exchange will exploit another’s vulnerabilities” [Parkhe, (1998), p.221]. 3.2 Setting up the field: organisational, interorganisational and network The definition of trust brings upfront the need of determining the level of investigation: individual, interpersonal, organisational and interorganisational. For the scope of this analysis, trust is perceived under the organisational and on a second level of analysis on the interorganisational level. The organisational prism is perceived under the facet of collaborative innovation. “An open collaborative innovation project involves contributors who share the work of generating a design and also reveal the outputs from their individual and collective design efforts openly for anyone to use” [Baldwin and von Hippel, (2010), p.9]. A company should invest on the promotion and sovereignty of organisational trust in order to be able to come closer and cooperate with other companies sharing primarily organisational similarities (Gulati and Sytch, 2008). Organisational similarities are the key elements and characteristics that constitute two companies belonging 40 D.G. Salampasis et al. to the same operational scope and based on existing research this leads to easier cooperation and promotion of interorganisational trust. Kanter (2011, p.75) argues that “Great companies assume they can trust people and can rely on relationships, not just rules and structures”. In this context, a subsequent relation between organisational similarities, the diversity of organisational backgrounds and talent management can be observed. This relation can promote creativity but can also lead to communicative dilemmas and usually conflicts. The main perspective of inter-firm collaboration, even in the open innovation paradigm, is focused on the firm-centric perspective referring to the how the firm creates value from an alliance rather than on how to jointly create value through the creation of joint assets. Dyer and Singh (1998 p.662), refer to the term ‘relational view’, arguing that, “as a supernormal profit jointly generated in an exchange relationship that cannot be generated by either firm in isolation and can only be created through the joint idiosyncratic contributions of the specific alliance partners.” Trust under the interorganisational perspective analysis can be perceived either as dispositional or relational (Gulati and Sytch, 2008). Dispositional trust mainly reflects expectations about the trustworthiness of others in general (Gurtman, 1992), whereas relational trust pertains to a specific dyadic partner (McAllister, 1995). Voices such as Brownlie and Howson (2005), argue that trust depicts solely as a relational entity and cannot be perceived under an isolation perspective. “Trust occurs as individuals extract the known factors while bracketing off or suspending the unknown factors to avoid confusing decisions with uncertainty” [Powell, (2011), p.29]. The authors argue that relational trust is related to collaborative innovation. By definition, collaborative innovation is the implementation of open innovation focusing into the building of long lasting relationships that interrelate into the creation of commonly perceived value while open innovation is the generic theory of inbound, outbound and coupled mechanisms. In the context of these collaborative frameworks, trust has important embedded psychological, sociological and economic properties (Parkhe, 1998). An important angle which must be taken into consideration is the dyadic impact of culture within the scope of trust. This impact refers to the effect that both intercultural environment and cooperation have on the development of interorganisational trust and to the potential role of open and collaborative innovation within a multicultural paradigm (Heffernan, 2004). It becomes apparent that everyone being involved in intercultural and international partnerships and relationships is always concerned about trust (Davis et al., 2008). However, it is important here to distinguish the context on two different levels: the intra-firm and inter-firm intercultural and international environment. Inter-firm trust is depicted in the relationship between two or more companies, whereas intra-firm trust it is perceived within the locus of one company. This distinction is very important since it entails different elements of understanding the role of trust. 3.3 Open innovation and trust The non-existence of a theoretical framework linking open innovation and trust is the driver of this research. Open innovation is a broad topic requiring a multidisciplinary approach. Trust embeddedness within an open innovation mindset 41 In order to develop the theoretical analysis, the research is based upon four concepts the authors are considering as the antecedents of open innovation under an organisational prism: knowledge sharing attitude (Lichtenthaler and Lichtenthaler, 2009, 2010), ambidextrous thinking (Birkinshaw and Gibson, 2004a, 2004b; Probst et al., 2011), collaborative culture (Zhao et al., 2012) and diversity management (visible, invisible, talent management, organisational backgrounds) (du Chatenier et al., 2010; Thomas and Ely, 1996). The following subsections further debate in detail the role of each antecedent in relation to trust. At this point, it is very important to highlight that these four concepts have been formulated by the authors based on various literature streams in order to capture their overall essence. This means that these concepts have not been pre-defined by the literature as such but they have been formulated by the authors, consisting of additional sub-elements (defined by the literature per se) synthesising in each of the four concepts the overall panorama of the different streams of literature. Figure 1 Antecedents of open innovation-conceptual framework (see online version for colours) Note: Developed by the authors 3.4 Knowledge sharing attitude Both forms of open innovation are related to the knowledge management mechanism, within the open innovation paradigm, are encoded within internal knowledge exploration and external knowledge exploration based upon the effect that interorganisational relationships have on the knowledge maintenance (Lichtenthaler and Lichtenthaler, 2009). Inbound open innovation is related to the absorptive capacity of the organisation (Lichtenthaler and Lichtenthaler, 2010), which denotes the inherent ability of the organisation to effectively and efficiently exploit external knowledge within the framework of the fact that “the ability to evaluate and utilize outside knowledge is largely a function of the level of prior related knowledge” [Cohen and Levinthal, (1990), p.128]. On the other hand outbound open innovation is related to the desorptive capacity of the 42 D.G. Salampasis et al. organisation referring to the “capability of external knowledge exploitation which is complementary to internal knowledge application in a firm’s own products” [Lichtenthaler and Lichtenthaler, (2009), p.1321]. The way absorptive capacity is perceived is through the identification of firms having the ability to distil and understand, more efficiently than other companies, the core elements of value based on the abundance of public information leading to competitive rarity (Torkkeli et al., 2009). When firms are working with open innovation they are open in terms of knowledge sharing, building up on existing platforms and creating new knowledge. New knowledge is often perceived as a product of a firm’s capability to generate applications from existing platforms (Lichtenthaler and Lichtenthaler, 2009). Gaining access to external knowledge means that firms need to be open and willing to transfer some of their own knowledge (Chesbrough et al., 2006). This is related to the organisational connective capacity which is the ability of an organisation to perceive knowledge outside of the firm (Lichtenthaler and Lichtenthaler, 2009). It is important here to distinguish the knowledge outflows and inflows under the perspective of dual interests of two firms sharing and exchanging knowledge since in a network of multiple firms trying to exchange knowledge the dynamic relationships and the flow of information is more complex (Torkkeli et al., 2009). Within cooperation both partners need to start sharing knowledge in order to contribute to the establishment of the cooperation and put it in motion. This denotes the willingness of both parties to elaborate further and to make sure that the cooperation unfolds in order to cater for more knowledge sharing. Trust plays a vital role here since it leads to the creation of long-term trustworthy relationships, openness and developed absorptive capacity. “Knowledge sharing refers to the provision of task information and know-how to help others and to collaborate with others to solve problems, develop new ideas or implement policies or procedures” [Wang and Noe, (2010), p.117]. It is different from knowledge transfer and knowledge exchange because on the one hand, knowledge transfer describes the movement of knowledge and on the other hand, knowledge exchange consists of knowledge sharing and knowledge seeking. The emergence of an open knowledge-based environment, confronts the capability and the capacity that organisations possess in the management of new projects and actions taken so as to improve their performance within is changing, uncertain and risky business environment (Aubry and Lièvre, 2010). “The organization’s ability to leverage knowledge means finding, nurturing and supporting the communities that already share knowledge about key topics” [Cheng et al., (2008), p.449]. The salient question lies upon the development of the necessary mechanisms which shall enable the external environment monitoring and the assessment of the shared data. This is related to the firm’s ‘combinative capability’ referring to the ‘capability to synthesize and apply current and acquired knowledge’ [Rasmussen, (2007), p.5], denoting that this knowledge transfer and the firm’s combinative capability can drive the need for effective and efficient collaborations. Obtaining information and bringing new ideas and knowledge within the organisation is not enough. Organisations cannot keep knowledge stored and unused. Strategic leadership must ignite employees’ creativity by encouraging new ideas and curiosity. This leads to the creation of a knowledge-sharing culture which incorporates trust and real openness and builds upon new knowledge creation, learning, sharing and free revealing. This means that inbound and outbound open innovation is highly related to the creation of a knowledge-sharing organisational culture. Trust embeddedness within an open innovation mindset 43 An interorganisational relationship with a specific integrated collaborative behaviour can function as a forum for open and free exchange of information and as a platform for the creation of shared perceptions (Simsek, 2009). Contemporary organisational behaviour and management have the propensity to develop a more multidisciplinary nature. This leaves space for openness to be perceived under different angles and perspectives since openness can lead to creative solutions and knowledge sharing (Aubry and Lièvre, 2010). Even though the development of a knowledge-sharing culture fosters competitive advantage, knowledge sharing per se is highly difficult to accomplish. Ideas by nature are intangible; nevertheless the transmission is really difficult to accomplish (Cheng et al., 2008). An open knowledge transfer mindset takes place within a knowledge-sharing culture. Openness requires trust; Cheng et al. (2008), argue that trust is developed and formulated through mutual respect. Trust is impossible without mutual respect since it is a matter of managing values and principles that support the organisational values, understanding and respect. Cheng et al. (2008, pp.450–452) present a model describing the relationship among trust, knowledge sharing and firm performance. Firm performance is divided into the two factors of short and long-term performance. Cheng et al. (2008, p.452), denote the fact that “firm performance does not occur in a vaccum but is determined by a certain set of strategic choices made by firm managers”. Knowledge sharing requires flexibility and freedom on how the available solutions will be chosen. Verganti (1999) presents the need for an adoption of a planned flexibility model which is related to the capacity of interactive shift from the exploitation to exploration mode (ambidexterity) and the emergence of a new quality of judgement and experience development. This is very important because it depicts the interrelation of knowledge and ambidexterity in a sense that exploration and exploitation are being put in the core of the organisational learning without being treated as separate modes and solely under the prism of strategy implementation (March, 1991). Proposition no. 1 Knowledge sharing affects open innovation adoption. Proposition no. 2 Trust moderates open innovation adoption. 3.5 Ambidextrous thinking The rationale behind the interrelation between open innovation and ambidexterity lies within the dynamic capabilities an organisation perceives, in order to be able to sustain competitiveness, promote differentiation and develop openness mechanisms in order to support the knowledge sharing procedures. Teece et al. (1997, p.516), perceive dynamic capabilities as “the firm’s ability to integrate, build and reconfigure internal and external competences to address rapidly changing environments”. The authors argue that in order to be able to talk about open innovation within organisations, it is important to lead an ambidextrous thinking and strategy towards sensing the need of change and at the same time being able to develop the right actions in order to reply to all these existing opportunities and threats. 44 D.G. Salampasis et al. Ambidexterity is an organisational ability to master both adaptability and alignment leading to long-term success (Birkinshaw and Gibson, 2004b). Exploration concerns the ‘experimentation with new alternatives’ while exploitation refers to the “refinement and extension of existing competences, technologies and paradigms” [March, (1991), p.85]. The primary characteristic of an ambidextrous firm is the ability to both generate and manage “familiar, mature, current or proximate knowledge (exploitation) and unfamiliar, distant and remote knowledge (exploration)” [Filippini et al., (2012), p.318]. O’Reilly and Tushman (2011) propose five elements which are important for managing ambidexterity. One of them is related to “the articulation of a common vision and values which provide for a common identity within the organization” [O’Reilly and Tushman, (2011), p.9]. Common identity creates a sense of belonging, a sense of trust and a long-term cooperation which is enforced by the motivation work together under an exploratory and exploitative prism. The authors argue that trust as a core element of ambidextrous thinking, denotes a vital differentiation of the organisation per se since it encapsulates other values such as fairness, accuracy; all these are depicted within the strategic orientation of the organisation leveraging the trustworthy profile and making the opening process smoother. Birkinshaw and Gibson (2004b) denote the strong relationship between trust and the building-up of contextual ambidexterity which calls for individual employees to make choices between alignment-oriented and adaptation-oriented activities in the context of their day-to-day work and on an organisational level can be perceived as the collective orientation of the employees toward the simultaneous pursuit of alignment and adaptability (Birkinshaw and Gibson, 2004b). In simple terms this means that the incorporation of ambidexterity in the organisational trust, along with stretch, discipline and support is one of the antecedents of ambidexterity which under an organisational perspective enables individuals to bring forward initiative, cooperative attitude, brokering skills and multitasking abilities (Birkinshaw and Gibson, 2004a). Trust is part of the social support behaviour-framing attributes which expresses the need for ambitious goals establishment within a cooperative environment encouraging employees into a dynamic interaction, collaboration and knowledge sharing. Trust is categorised in the social support of the dimension of organisational context since it caters for security and latitude both having an indirect impact on the organisational performance through the shaping of individual and collective behaviours (Birkinshaw and Gibson, 2004b). Probst et al. (2011) discuss the characteristics of ambidextrous leadership and consider trust as an important element in relation to a non-micro-management attitude and the building up of strong long-lasting relationships which can function both under an official and unofficial perspective. Team building, the ability to work together as a team and autonomy denote a framework which functions under a trust-based environment and fosters constructive and effective relationships. Through this participatory style a creative and trustworthy bonding is being created which advances the “emergence of a strong superordinate identity shared by the team, which creates a sense of belonging and commitment” [Probst et al., (2011), p.331]. Ambidexterity is related to dynamic relationships leading to mutual exploration of new knowledge. Relationships are interpreted within a collaborative attitude, incorporating new and existing knowledge into product, process and services development. The authors argue that trust plays an important part both in the openness, the propensity to something new and the building up from existing knowledge and ideas, breaking up the boundaries, both within the organisation, as it redefines the frontiers Trust embeddedness within an open innovation mindset 45 of knowledge transfer and externally, as it uses formal and informal forms of communication and creativity, in order to develop effective coordination and participation of partners in the enhancement of knowledge transfer and knowledge sharing routines within a collaborative culture. Proposition no. 3 Ambidextrous thinking affects open innovation adoption. Proposition no. 4 Trust moderates open innovation adoption. 3.6 Collaborative culture Open innovation is aligned to collaboration in the development of new ideas, products and services, consisting a vital element for true openness. Collaboration is emphasised within the interorganisational cooperation with an impact not only on the company level but also on the regional and country levels (Savitskaya et al., 2010). Prabhu et al. (2010, p.11), bring upfront the role of corporate culture as a key to radical innovation in firms. They consider culture as “a core set of attitudes and practices shared by members of a collective entity such as a nation or a firm […] culture is reflected in shared knowledge and standard operating procedures”. “Innovation relies strongly on interaction and the ability to interact” [Tsou and Hsu, (2011), p.361]. This means that innovation can be diffused only through relationships. A collaborative culture is the element that fosters people to work together, to share and be able to co-create long-lasting value. There is a relationship between emotional intelligence, team trust and creativity mindset which develops a collaborative culture within the firm (Barczak et al., 2010). This authors argue that this collaborative culture enables the organisation firstly to launch a trustworthy image and secondly to nurture successful partnerships working on innovative products and services. Furthermore, the quality of collaboration has a positive impact on creativity and team performance which are the key elements of successful partnerships (Barczak et al., 2010). Blackwell and Fazzina (2008) argue that the future of open innovation is highly related to the collaborative, team-based culture companies have embraced, since it denotes a distinctive advantage towards the implementation and leveraging of open innovation in comparison to the companies that have more rigid boundaries among functions and lines of business. Fadel (OECD, 2012), incorporates collaboration as a vital skill for the promotion and the existence of innovation. Collaboration along with creativity, critical thinking and communication, are considered as higher-order skills or 21st century skills, essential both for work performance and knowledge absorption. Collaboration is a precursor to innovation and is considered as an imperative element regarding the solution of long-term structural difficulties on a societal perspective. A key driver of collaboration is the establishment of a sustainable competitive advantage (Mention and Asikainen, 2012). This means that a firm should be examined based on its behaviour within an alliance or network rather than on a single basis. Inter-firm collaboration is a means of organisational learning since it drives the enhancement of all the necessary key competences leading to the acceleration of innovation and effective collaboration. Powell (1998) argues that it is not only important for firms to learn from collaborations but it is of utmost importance to understand the 46 D.G. Salampasis et al. importance of adopting a collaborative attitude and learning all the necessary mechanisms of collaboration. An important element to be explored, which is highly related to the empowerment of collaboration within open innovation model, is the role of culture. Hofstede (1991, 2001), presents the five dimensions of culture explaining that the behaviour depicted by individuals and organizations stems from “their cultural peculiarities which are measured through collectivism vs individualism, level of power distance, uncertainty avoidance, masculinity or femininity and long-or short-term orientation” [Savitskaya et al., (2010), p.13]. The role of trust plays a fundamental role within a collaborative environment since it emerges from the cultural signs of a ‘collectivistic culture’ [Savitskaya et al., (2010), p.14], leading to the formulation of long lasting partnerships and trustworthy relationships. Collaboration has many faces and can take place within different organisational levels and globalised environment. Globalisation means international collaborations within international business environments and an internationalised economy. Trust plays a fundamental role in international collaborations since the nature and level of trust differ across borders and also institutional and cultural matters have a substantial impact on the way trust is perceived. The relation between trust and culture can be perceived either as etic (culture-general or universal) or emic (culture-specific), in a cross-border situation [Zaheer and Zaheer, (2006), pp.21–22]. Different approaches and interpretations of trust have substantial implications in the international collaborations. Asymmetries exist between partners and can be observed within the possession of resources, knowledge, growth and capabilities. However, asymmetries can be also perceived under a social base perspective such as the imbalance of trust which is influenced by national cultural origins, prejudices and stereotypes (Zaheer and Zaheer, 2006). These types of asymmetries have a substantial dual impact on the management and performance of an interfirm relationship especially on an international perspective. Chua et al. (2012), directly address the necessity of learning to work with people from different cultures so as to collaborate creatively. Chua et al. (2012), bring upfront the concept of cultural metacognition referring to a person’s reflective thinking about his or her cultural assumptions. They argue that managers who are experienced in thinking about their cultural assumptions (cultural metacognition) are more likely than other managers to develop an affect-based trust perceptiveness in their structured relationships with people from different and diverse cultures resulting in the empowerment of creative collaborations. This is related to the metacognitive cultural intelligence which leads to the engagement of sharing fostering intercultural creative collaboration (Chua et al., 2012). In their paper, the authors also examine the role of cultural awareness in the development of more effective innovation by using two types of trust; cognitive which is an intellectual appreciation of another person’s skills, abilities and reliability and affective which is an emotional belief that another person is willing to share the best personal and pure interests. They argue that affective trust is really essential in creative collaboration since despite the fact that collaboration merely involves the sharing of labour, creative collaboration is dependent upon the sharing of new ideas. The authors argue that this leads to the observation that only through the existence of high affective trust would two partners share the willingness of starting to freely exchange new ideas. Furthermore, this observation promotes an open attitude towards the appreciation and acceptance of Trust embeddedness within an open innovation mindset 47 differences and the development of a culture that welcomes diversity, assimilation and inclusive attitude. Proposition no. 5 Collaborative culture affects open innovation adoption. Proposition no. 6 Trust moderates open innovation adoption. 3.7 Diversity management A parameter of ultimate importance in the exploration of the role of trust within open innovation, is the role of diversity within the organisation and how it is effectively, efficiently and proactively managed. Diversity management becomes a vital element since its effective implementation is directly proportional towards a more tolerant organisational culture contributing to more universal products or services (Joubert and de Beer, 2012). Diversity is a contextual phenomenon and this becomes evident since people are not the same so it has to be observed on an ad-hoc basis (Hooghe et al., 2009). People come from different backgrounds, different leads of lives, cultures, mindsets, they have different needs, expectations, visions and perceptions. Diversity, as a concept, can be perceived under a three-level perspective; demographic, informational and behavioural (Jarzabkowski and Searle, 2003). “Managing diversity is inextricably linked to trust” [Powell, (2011), p.32]. The key challenge is the creation of a safe, trustworthy and inclusive environment open to everyone who wishes to bring something new and create value. Powell observes perfectly the fact that “trust is the missing cement to bind relationships based on managing diversity” [Powell, (2011), p.27]. The rationale behind this lies within the fact that an organisation driving specified strategy, visions and culture must be able to accomplish all these by encouraging internal and external collaboration, active participation and give equal chances and opportunities. Trust plays a major role within this framework since it is the resultant which converges and brings together all the abovementioned factors to a common aim. Trust is contextualised here both as organisational and individual. Joubert and de Beer (2012, p.8356), endorse the abovementioned argument since they consider mutual trust as the key “requirement for effective management of diversity”. They observe that a low level of trust among employees leads to a substantial number of hindrances to effective diversity management. Thomas and Ely (1996, p.79), argue that “a diverse workforce increases organizational effectiveness. It will lift morale, bring greater access to new segments of the marketplace and enhance productivity”. In a nutshell, this denotes that diversity is good for the business. A simple but core argument is the fact that a company should realise what diversity means, how organisational diversity is defined and how the experience of being a diverse organisation has an impact on the effectiveness, the image, the structure and the promise to be delivered (Thomas and Ely, 1996). Diversity management is merely about acceptance. It is about fundamental and substantial changes on the organisational leaderships, the values, the attitudes, the behaviours and the culture diffusion within the organisation per se. It about the encouragement of learning something new, of developing the competence to accept something different, to delve into the deep understanding of a new human entity, behaviour, attitude and cultural background. 48 D.G. Salampasis et al. The driver of diversity management is the call for equality and fairness. Thomas and Ely (1996) argue that so far companies have implemented two practices which will be discussed here; “the discrimination and fairness paradigm and the access and legitimacy paradigm” (p.80). The first paradigm lies within the assumption that diversity can be managed internally by increasing the number of different identity groups. It is apparent that this practice simply does not foster diversity management within an organisation but creates diversified clusters without any potential collaboration and interaction. The second paradigm is based upon “the acceptance and celebration of differences” (p.83). Every single person has something new to bring, something new to offer and carries valuable experiences, ideas and approaches. The solution here is to create a framework so as to subsume all these elements and factors for everyone to learn, use and share. In the same study, Thomas and Ely (1996), propose a new paradigm which “connects diversity to work perspectives and is called learning and effectiveness paradigm” (p.85). This paradigm is based upon the propensity of employees to take decisions and choices at work according to their own personal and cultural background and the attitudes that this background underlines. It is also related to the realisation of the companies’ willingness to incorporate all the abovementioned perspectives within the work of the organisation. This means that the incorporation of different perspectives and their adoption within the organisational framework can help the organisation frame a different strategic orientation in terms of creativity, opening up to new insights and foresights and empowering the dynamic ability to nurture a sustainable demographic composition within the organisation per se. In relation to the discrimination and fairness and the access and legitimacy paradigms, the learning and effectiveness paradigm calls for organisational internalisation of differences leading to effective learning and sustainable growth. It incorporates the core ideas of the other two paradigms; promotion of equal opportunities and acknowledgement of cultural differences among people and recognition of their value and leads to the final argument that “we are all on the same team, with our differencesnot despite them” [Thomas and Ely, (1996), p.86]. Diversity management is not something that can be implemented individually. Thomas and Ely (1996), underline the necessity for a holistic approach leading to the designing of new processes, procedures and trainings which will lead on encouraging group participation, team building effective collaboration within a trustworthy, open and imbued by solidarity environment. Proposition no. 7 Diversity management affects open innovation adoption. Proposition no. 8 Trust moderates open innovation adoption. The abovementioned analysis shows that trust plays a paramount role in every aspect of life including business oriented perspectives, strategy, business innovation management and relationships. On the other hand open innovation is interpreted and realised under the organisational level within its antecedents: knowledge sharing attitude, ambidextrous thinking, collaborative culture and diversity management. The non-apparent interrelations among these elements and trust emerge from the analysis above determining the fact that trust is embedded within open innovation practices and is highly related to organisational culture, change, leadership and creative thinking. Trust embeddedness within an open innovation mindset 49 3.8 Conceptual model In order to be able to conceptualise the research field and try to study the linkage between open innovation and trust, it is important to develop a conceptual model. Figure 2 Variables related to the antecedents of open innovation (see online version for colours) Note: Functional relation to trust. Source: Developed by the authors Looking upon the role of open innovation adoption and innovation performance as dependant variables and the four antecedents of open innovation as independent variables, the following figure summarises the factors discussed in the abovementioned analysis in relation to trust, as per classification suggested. In this context, the authors propose a re-contextualisation of the open innovation definition which encapsulates all the elements and parameters discussed in the analysis above. “Open innovation is a dynamic organizational mindset that encourages the exploration and exploitation of diverse knowledge inflows and outflows, leading to innovation continuity and incremental organizational change, through the establishment of trustworthy, culturally sensitive and sustainable relationships.” The authors also assume that the adoption of open innovation has a positive effect on innovation performance, since open innovation as an organisational mindset “puts forward the non-linear, dynamic and interactive nature of the innovation process” [Mention, (2011), p.44] characterised by interaction, cooperation on innovation and effective collaboration, ensuring a continuous committement to innovation (Mention and Torkkeli, 2012). 50 D.G. Salampasis et al. Figure 3 A re-contextualised definition of open innovation (see online version for colours) Source: Developed by the authors Figure 3 depicts the relation between the four antecedents of open innovation towards the adoption of an open innovation organisational mindset and how trust moderates in between. On a second level analysis, it relates the adoption of open innovation and innovation performance. The four antecedents of open innovation are ‘filtered’ through a layer of trust, leading to the adoption of an open innovation organisational mindset. This is a cumulative relationship between trust and the four independent variables, depicting the actual embeddedness of trust in the core concept of open innovation. 4 Conclusions, limitations and avenues for further research This section is dedicated to the presentation of some learning outcomes deriving from this research. Furthermore, some limitations which are addressed in the research deserve acknowledgment. Last but not least this paper recognises the importance of this research and recommends some pathways for future research contributing to the field of open innovation management and its multidisciplinary approach. 4.1 Conclusions 4.1.1 Building up an open innovation organisational mindset Openness does not mean elimination of organisational structure. An important challenge that firms face today is the creation of a “systematic openness’ to reconfigure their Trust embeddedness within an open innovation mindset 51 existing knowledge capacities in order to be able to adapt within the current competitive and highly demanding business environment [Lichtenthaler and Lichtenthaler, (2009), p.1334]. Openness means having the ability to create networks, to share information and keep good ideas alive resulting to new initiatives and innovations. Kanter (2011, p.78) perfectly denotes that “leaders in great companies can tell a different story about the basis of their decisions. In doing so, they are able to produce new models for action that can restore confidence in business and will change the world in which we live”. Finding good ideas outside the organisation by following the not invented here mindset is easy. The most difficult task however is to be able to implement and set up all the necessary processes to be able to “find, capture and commercialize ideas and creating a corporate culture that promotes and protects these processes” [Jaruzelski and Holman, (2011), p.1]. So the two core elements of open innovation are initially an open culture to new ideas and effective and efficient processes to capture and act upon these ideas. The challenge is to be able to develop the appropriate skills within the organisation in order to be able to find the correct partners and foster sustainable and long lasting affiliations. Choosing the right mode of collaborative innovation falls into the consideration of a substantial number of variables and elements (Pisano and Verganti, 2008). However, it is important to accentuate that the mode of collaborative innovation which will be chosen to cater for the incentive of the firm per se, is highly related to the role and extent of trust that is flourished among the potential key players. In order to really adopt an open innovation mindset, substantial organisational changes need to take place and most importantly for the companies to realise the importance of these organisational changes. The organisation per se, must have the right mechanisms in order to be able to manage both the external and internal knowledge and make an effective and efficient use of it. It is also important for an organisation to be able to understand and foresee potential opportunities, be able to assess not only the monetised outcome but also the long-term relationships, partnerships and potential growth. Aligned with the need for important organisational changes is the fact that companies need to change a lot of their processes and activities in relation to intellectual property (IP), since IP unites various forms, informal and formal measuring of protection and open innovation go hand in hand (Al-Sharieh et al., 2012). Of course all these changes share substantial risk, time and cost and the key point for an organisation is to be able to balance all these with the actual gains that the adoption of the open innovation mindset can bring. Open innovation is not for everyone. The authors agree with the argumentations by Jaruzelski and Holman (2011), stating that open innovation has a meaning for the companies whose strategies are driven by finding and testing as many ideas as possible and having the ability and the right mechanisms to assess, integrate, engage, develop, produce and bring the best ones in the market to cater for new customer needs and insights. If a company for example is a fast-follower then it must cultivate and develop other equally important and effective capabilities that will create a competitive advantage and differentiation. Open innovation is hard and it requires a lot of skills, competences and time in order to bring success. The key word is discipline in order to be able to diagnose the way to create economic value with open innovation, to be able to bring inside the organisation all the new capabilities, tools and processes in order to support the right type of actions for driving an innovative company ahead. 52 D.G. Salampasis et al. The authors believe that an open innovation culture is emerging; however, for the time being it is not transformational but has an evolutionary and fragmented propensity. Bearing in mind that losing control of intellectual property is a vital element for many organisations and this remains the primary reason of showing reluctance to follow the open innovation paradigm, should they need to be certain that advantages from potential cooperation would outnumber disadvantages and monetised risk (Päällysaho and Kuusisto, 2011). 4.1.2 Learning to trust Trust is expressed as the most overused and abused word (Fawcett et al., 2012), in any analysis that tries to fathom the correlation between different parameters which initiate openness and lead to mutual long-term value creation (Dahlander and Gann, 2010). Trust is usually taken for granted since it is perceived as an element of mere importance; yet appreciating the concept under a down reaching spectrum, it becomes immediately apparent that trust is the conditio sine qua non of any kind of social, business oriented interaction and cooperation. Trust plays a vital role and is directly proportional to the role of education since it encourages the need for appreciating the human side of open innovation and the understanding that learning, experimenting and trying is the investment for the future developments in open innovation. Willingness to change comes from awareness; willingness to contribute derives from trust, so changing organisational patterns, cultural hindrances, by fostering effective and trustworthy relationships is nurtured by education, by experiential learning and by the feeling of globalised and collaborative attitude. This paper has shown that trust can be perceived in a multilevel perspective. The main challenge is to create suitable conditions which will nurture the building of trust “across personal-organizational-structural tiers in an increasingly uncertain world” [Powell, (2011), p.27]. It is important to remember that trust is ‘fragile and intangible’ but at the same time it drives collaboration which is necessary under conditions of uncertainty and risk [Jarzabkowski and Searle, (2003), p.2]. 4.2 Implications In terms of academic perspective, this study opens up the ground for new research in the field of open innovation in relation to organisational behaviour, organisational change and the role of trust as a core element of open innovation. In terms of managerial perspective, it is important to stress out the fact that open innovation within an organisation comes mainly from the top management. It is of utmost importance for managers to be able to understand the need for the establishment of trustworthy and sustainable relationships which can lead to innovative products and services. It is important to underline the elements of the environment where top management functions; an environment full of uncertainty, complexity and with insufficient or incomplete information. This is related to the development of strategic capacity and the ability to understand the signals deriving from the market and to foster a collective and collaborative action. Furthermore, the realisation of the antecedents of open innovation and the need for incremental and sometimes radical organisational change formulate the mechanism of adoption, education, effective and efficient decision making. This shares important implications in lifelong learning and training within Trust embeddedness within an open innovation mindset 53 human resources management since it brings upfront the understanding and appreciation of the link between organisational learning and development of the conditions for an open and trustworthy environment. From a social perspective, it is interesting to observe out the applicability of open innovation as an organisational mindset in relation to developed and emerging markets. Innovation is not only for developed but also for emerging markets. So there is a need for tailored models regarding the role and implementation of open innovation within organisations in emerging economies and their appreciation to openness and collaboration. An open innovation mindset needs to be cultivated within an organisation embracing vision and willingness to creatively collaborate. 4.3 Limitations It is important to underline the fact that there are some limitations deriving from this study which deserve to be acknowledged. First of all, trust being a contextual phenomenon and an ‘intangible quality’ [Jarzabkowski and Searle, (2003), p.15] creates a problem of generalisation since different interpretations can be conducted. Secondly, the paper is solely based upon a literature review analysis without taking into consideration data collected from interviews or other methods of research. 4.4 Future research The authors believe that the linkage between trust and open innovation requires a strong theoretical background, while at the same time this paper opens up the field for further research in the area business innovation management. 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(2012) ‘Simulating inter-organizational collaboration network: a multi-relational and event-based approach’, Simulation, Vol. 88, No. 5, pp.617–633. Publication III Salampasis, D. Organizational Readiness for Open Innovation in the Financial Services Sector: The missing element of trust Reprinted with permission from the Book Innovation in financial services: a dual ambiguity pp.295-336, 2014 © 2014, Cambridge Scholars Publishing Publication IV Salampasis, D., Mention, A-L., and Torkkeli, M. Trust embedded open innovation: Literature review, synthesis and research propositions Reprinted with permission from the Proceedings Academy of Management Meeting, 2014 © 2014, Academy of Management nu al M ee ti ng . Trust embedded open innovation: Literature review, synthesis and research propositions An Authors Su bm iss ion #1 36 6 8a cc ep ted fo rt he 20 1 4A ca de my of M an a ge me nt Dimitrios Salampasis, CRP Henri Tudor, [email protected] Anne-Laure Mention, CRP Henri Tudor, [email protected] Marko T. Torkkeli, Lappeenranta U. of Technology, [email protected] 13668 Trust embedded open innovation: Literature review, synthesis and research propositions ABSTRACT The concept of open innovation has been thoroughly investigated. The shift from a closed to an open paradigm is recognized as the main element that fosters organizational performance. However, despite the abundant literature in the field, there is still an on-going debate about the organizational aspects of open innovation. The aim of this paper is to develop a conceptual model emanating the role of intraorganizational trust in relation to open innovation. Based on an extensive and multidisciplinary critical literature review, the organizational antecedents of open innovation are identified: knowledge sharing attitude, ambidextrous thinking, collaborative culture and diversity management. Each of these antecedents is perceived and operationalized by a number of sub-antecedents. This paper highlights the role of trust as the inherent part of open innovation. In addition, this paper strongly suggests that: a) open innovation is an organizational mindset perceived via the direct relationship between the four organizational antecedents and the open innovation adoption and b) intraorganizational trust moderates the individual relationships between the four organizational antecedents and the adoption of open innovation. By revisiting the theory of open innovation, the paper develops research propositions depicting the interplay between the organizational antecedents, the element of intraorganizational trust and the adoption of open innovation. The paper shares academic and managerial implications by bringing an alternative perspective in the field of open innovation. Keywords Open Innovation; trust; mindset; adoption; knowledge sharing attitude; ambidextrous thinking; collaborative culture; diversity management; managerial; conceptual model 1 13668 Introduction The concept of open innovation, despite the fact that it is considered as a new area of research, is hardly new. To some extent, innovation has always been open (West, & Gallagher, 2006). By definition, open innovation is “the use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the markets for external use of innovation, respectively” (Chesbrough, Vanhaverbeke, & West, 2006: 1). This reflects an emerging shift from a closed to an open innovation model, where valuable know-how, ideas, practices and experience come from both inside and outside the company, leading to a remarkable flow of ideas and resources regardless their inward or outward origin (Chesbrough et al., 2006; Dahlander, & Gann, 2010). Open innovation puts under a functional umbrella practices and attitudes which have been in existence throughout time but would take place subconsciously in the absence of an operational and structural framework. Not coping with open innovation, can result in serious competitive disadvantages (Enkel, Gassmann, & Chesbrough, 2009). The driving force for companies to adopt open innovation practices is their propensity to establish a competitive advantage and be able to maintain innovation leadership within a highly volatile and turbulent business environment. Despite the abundant literature in the field of open innovation, there is still debate about the organizational aspects of open innovation. This study aims at contributing to this debate by perceiving open innovation from a different angle, since it is more than a paradigm, a process, a framework or a business model; but an organizational mindset, which requires another core element: the prior existence and establishment of intraorganizational trust. This paper is based upon a thorough review of the literature, fostering the contribution to theory development and the conceptualization of the research area. This approach is duly 2 13668 justified by the willingness to deepen the understanding of such an abstract notion as trust. The literature review brings forward the research fields of open and collaborative innovation, organizational behaviour and organizational psychology. This facilitates the precise and accurate definition of the research problem and ensures its core understanding. This conceptualization serves towards the initial capturing of the basic insight into the topic and the valuable hints concerning the design, research strategy and focus of the main study leading to the development of the proposed conceptual model. Literature Review This section is dedicated to an extensive review of the literature in the field of open innovation and the introduction of the missing element of trust. This review synthesizes various literature steams highlightening the need for a multidisciplinary approach in the field of open innovation. The paper adopts the four cognitive and essential sequentially processes proposed by Morse (1994), which involve the stages of comprehending, synthesizing, theorising and recontextualizing or putting new knowledge back into the context of how the other researchers have articulated the evolving knowledge (Walker, Cooke, & McAllister 2008). In this research context, trust is examined in relation to four main concepts which are proposed as the organizational antecedents of open innovation: knowledge sharing attitude, ambidextrous thinking, collaborative culture and diversity management, enabling the definition and the role of intraorganizational trust within the open innovation paradigm. Open innovation is defined as “a paradigm that assumes firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology” (Chesbrough, 2003a: xxiv). The core of the concept is the triangular relationship among inbound (outside-in), outbound (inside-out) and coupled 3 13668 (bidirectional) open innovation processes (Chesbrough, & Crowther, 2006; Enkel et al., 2009; Gassmann, & Enkel, 2004). As a concept, it has received both wide acceptance (Huizingh, 2011) and criticism (Linstone, 2010; Trott, & Hartmann, 2009). Open innovation is a porous business model aligned to the notion of transparency, openness and sharing (Chesbrough, 2003b: 37), or the fact that the boundaries of the firm become permeable. Open innovation leads to an open culture, an open business model (Lichtenthaler, & Lichtenthaler, 2009; Spithoven Clarysse, & Knockaert, 2011), elaborated through the correspondence and interrelation of a substantial number of factors such as sincerity, long lasting relationships, long term cooperation and mutual value creation. As a concept, open innovation has developed throughout the years and has been associated with several other concepts such as open source (West, & Gallagher, 2006), user cocreation (Franke, & Piller, 2004), user centred innovation and customer integration (Baldwin, Hienerth, & von Hippel, 2006; Baldwin, & von Hippel, 2011; Oliveira, & von Hippel, 2011), peer to peer innovation (Satzger and Neus, 2010) and distributed innovation (Bogers, & West, 2012; Sawhney, & Prandelli, 2000). Open innovation as a model enables businesses to build a structured innovation ecosystem that uses networks of external partners and focuses on developing core internal competencies, underlining its collaborative nature. A highly important element for the development of new products and services is the encouragement of collaborative innovation with customers or users (Greer, & Lei, 2012). Collaborative innovation is set within a framework of a peer to peer or network perspective and is managed through synergies. “Firms that manage to create a synergy between their own processes and externally available ideas 4 13668 may be able to benefit from the external creative ideas of outsiders to generate profitable new products and services” (Dahlander, & Gann, 2010: 704). “Open innovation is based on collaborative relationships-organizational alliances and partnerships” (Slowinski, & Sagal, 2010: 38). In this context it depicts the mutual engagement of two or more partners who are willing to work together by sharing ideas, know-how, experiences and knowledge in a joint effort to generate value from innovative outcomes (du Chatenier, Verstegen, Biemans, Mulder, & Omta 2010). In the realms of this collaborative spirit, du Chatenier, et al., (2010) perceive three levels of collaborative innovation: management of interorganizational collaboration process, management of the overall innovation process and creation of a new collaborative knowledge. In order to expand their competences, their know-how and create substantial competitive advantage, companies share the need to form alliances, partnerships and collaborative networks with outsiders in order to overcome potential capacity limitations, knowledge gaps, develop the ability to jointly work into new projects and promote innovative and dynamic relationships (Pisano, & Verganti, 2008). Successful business relationships are built on trust meaning that the starting point of a relationship empowerment must be related to trust (Kanter, 1994) and more specifically the establishment of intraorganizational trust. The missing element of trust Chesbrough (2012) identifies three main boundaries hindering the adoption of open innovation; human capital mobility, the presence of internal R&D and the need for IP rules to enable open innovation. There are voices, however, arguing that the primary factor is the lack of trust (Molina-Morales, Martínez-Fernández, & Torlò, 2011; Wang, Yeung, & Zhang, 2011); a realization leading to a trust embededness approach towards open innovation. Westergren and 5 13668 Holmström (2012: 210) argue that trust in an “underappreciated but potentially high valuable source of value in open innovation networks”. The authors argue that open innovation and trust cannot be perceived and analysed independently. In order to investigate the dynamic relationship between open innovation and trust, it is important to firstly become accustomed to this elusive and highly abstract notion. Defining trust “Virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time. It can be plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence” (Arrow, 1972: 357). Trust is “instinctive, unstrategized and, as a feeling, is close to love” (Blomqvist, 1997: 272). Furlong (1996: 1) regarding the conceptualization of trust, states that “despite the plethora of material emerging on the subject [...] trust remains an elusive notion [...] resulting in a confusing potpourri of definitions applied to a host of units and levels of analysis [...] led to a proliferation of definitions each used in a different context”. Trust has received wide attention as a phenomenon having been approached and investigated under various research prisms and disciplines. As a concept it has undergone sociological, psychological and cognitive conceptualizations contributing to the significance of the notion while attracting considerable research efforts (Kramer, & Tyler, 1996; Kramer, 1999; Lane, & Bachmann, 1998; Misztal, 1996; Seligman, 2000; Sztompka, 1999). Trust is “one of the basic variables in any human interaction” (Blomqvist, 1997: 271) since it shares a major influence towards every human aspect. Dunning, Fetchenhauer, and Schlösser (2012) discuss trust not only as an economic act but as a social and emotional act. Emotions do definitely play a fundamental part in the cognitive and psychological elaboration of 6 13668 trust in two ways; in terms of anticipated emotions and in terms of immediate emotions. This leads towards a clear distinction between the cognitive and the emotional base of trust by adopting the notion of “blending knowledge and ignorance” and “good reasons” and perceiving trust as “a mix of feeling and rational thinking” (Lewis, & Weigert, 1985: 972). Trust is a formation characterised by a definite multidimensionality (Brattström, Löfsten, & Richtnér, 2012), incorporating a number of elements and functions that exist individually, but neither necessarily interdependently nor constantly (Tyler, & Stanley, 2007). Based on the extensive existing literature (Fawcett, Jones, & Fawcett, 2012; Johnson, & Grayson, 2005; Gulati, & Sytch, 2008; Mayer, Davis, & Schoorman, 1995; McAllister, 1995; Ring, & van de Ven, 1994; Schoorman, Mayer, & Davis, 2007) trust can be perceived at an individual level, interpersonal level, between individuals and organizations, between organizations (interorganizational perspective) and between individuals and information systems. In terms of conceptualization, this paper adopts the definition proposed by Mayer et al., (1995: 712) that trust is “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party”, referring to the “extent that people can trust others, they can work together to create benefits that each individually cannot generate alone” (Dunning et al., 2012: 687). This definition sheds light upon the different correlations between trust propensity, trustworthiness and trust in the process towards the building upon organizational trust (Colquitt, Scott, & LePine, 2007). These characteristics lead upon the conceptualization of organizational trust which is perceived later on in the locus of open innovation. 7 13668 Setting up the field: organizational trust For the scope of this analysis trust is perceived under the organizational level and is defined as the “employees’ collective perception regarding the trustworthiness of their organization” (Li, Bai, & Xi, 2012: 372). Being a multifaceted phenomenon, several forms of organizational trust have been explored by scholars, covering the fields of organizational behaviour, management, organizational psychology, economics and sociology. Organizational trust can be perceived under the following forms: interorganizational trust (i.e. the trust between two organizations), intraorganizational trust which refers to the dyadic relationship between workers and supervisors, workers and senior leadership (Dirks, & Ferrin, 2002; Starnes, Truhon, & McCarthy 2010), between workers at the same hierarchical level (Chen, Chen, & Chu, 2008; Clark, & Payne, 1998; de Gilder, 2003) and interpersonal trust which is developed within work groups and teams and can be also perceived under the prism of organizational trust (Dirks, 1999). This paper argues that the precondition for interorganizational collaboration encouraging the adoption of open innovation practices, is the prior establishment of intraorganizational trust. Every company should first and foremost invest on the promotion and sovereignty of intraorganizational trust in order to then be able to come closer and cooperate with other companies sharing primarily organizational similarities (Gulati, & Sytch, 2008). On the other hand there is a subsequent relation between organizational similarities, the diversity of organizational backgrounds and the talent management which can on one hand lead to creativity but on the other hand it can also lead to communicative dilemmas and usually conflicts. 8 13668 This interorganizational prism is perceived under the facet of collaborative innovation. Interorganizational collaborative innovation takes place when organizations share both authority and responsibility so as to formulate a planning and an implementation strategy in order to find a solution to a problem. This is precisely the unique value proposition of the organizational aspect of open innovation which is facilitated by the predominant establishment of intraorganizational trust. Exploring the relationship between Open Innovation and Trust Trust engenders a substantial number of benefits on an organization level which can be perceived in different perspectives; problem solving, communication, quality improvement, employees commitment, employees satisfaction, reduction of transaction cost, productivity enhancement, profitability, continuance of collaboration, team performance and organization health (Sankowska, 2013). Understanding the role of open innovation within the era of open knowledge, cooperation, interaction and mutual understanding, the authors believe that open innovation needs to embrace all the relevant core elements and perspectives that elevate it not as panacea or the ultimate solution, but as a natural perception, as something that is inherent, something that flows in the organization’s blood. This is the reason why this paper perceives open innovation from a different angle arguing that is more than a paradigm, a process, a framework or a business model. Open innovation is a trust embedded organizational mindset. This is founded on the fact that open innovation is not a solely knowledge-based process as prior literature depicts, but is driven upon an entire ecosystem of values, characteristics and attitudes. Knowledge exchange and sharing is one of the means but not necessarily the primary aim. 9 13668 The trust embedded organizational mindset is the ultimate ensemble that drives the mechanisms of organizational culture, business model and organizational behaviour; is the light that denotes identity, is the spark which promotes creativity, collaboration and community engagement, is the pioneer of intraorganizational trust. A mindset (also known as dominant logic, cognitive map, mental model, strategy frame and belief structure) refers to the knowledge structures that top managers use to make strategic decisions. It is encompassed in two facets; complexity and proactive/reactive thinking. Due to the fact that open innovation is a broad topic and in order to develop the conceptual model, the research is based upon four concepts the authors are considering as the organizational antecedents of the adoption of open innovation: knowledge sharing attitude, ambidextrous thinking, collaborative culture and diversity management. -----------------------------------Insert Figure 1 about here -----------------------------------Knowledge Sharing Attitude Nonaka (1991: 96) states that “in an economy where the only certainty is uncertainty, the only sure source of lasting competitive advantage is knowledge…” inspiring the development of related concepts such as the knowledge-based organization (Blackler, 2002) and the knowledgebased advantage (McEvily, & Chakravarthy, 2002). Sustainable competitive advantage is related to the knowledge-based view of an organization and can be realized via the process of exploration, exploitation and knowledge retention (Schmitt, Borzillo, & Probst, 2012). The three open innovation processes are related to the knowledge management mechanism encoded within internal knowledge exploration and external knowledge exploration based upon the effect that 10 13668 interorganizational relationships have on the knowledge maintenance (Lichtenthaler, & Lichtenthaler, 2009). Inbound open innovation is related to the absorptive capacity of the organization and the dynamics of inward technology transfer (Lichtenthaler, & Lichtenthaler, 2010) denoting the inherent ability of the organization to effectively and efficiently exploit external knowledge since “the ability to evaluate and utilize outside knowledge is largely a function of the level of prior related knowledge” (Cohen, & Levinthal, 1990: 128). The absorptive capacity is also related to the exploration of external knowledge (Cohen, & Levinthal, 1990) and the ability of the firm to generalize “commercializable outputs” after having passed the procedure of value recognition, validity, implementation and internal knowledge conceptualization (Kostopoulos, Papalexandris, Papachroni, & Ioannou, 2011: 1336). Absorptive capacity is an intraorganizational phenomenon and is perceived through the identification of firms having the ability to distil and understand, more efficiently than other companies, the core elements of value based on the abundance of public information leading to competitive rarity (Reference C). Outbound open innovation is related to the desorptive capacity of the organization and the dynamics of outward technology transfer, referring to the “capability of external knowledge exploitation which is complementary to internal knowledge application in a firm’s own products” (Lichtenthaler, & Lichtenthaler, 2009: 1321). In other words desorptive capacity crystalizes the ability of the organization to identify technology transfer opportunities and to transfer technology to the recipients (Lichtenthaler, & Lichtenthaler, 2010). Open innovation is defined as “systematically relying on a firm’s … capabilities of internally and externally carrying out the major technology management tasks … along the innovation process” (Lichtenthaler, 2011: 77). This is interpreted as an interorganizational 11 13668 knowledge and technology transaction which helps a firm sustain and develop new knowledge. However, it is vital for organizations to bear in mind that it is not only important to be able to acquire knowledge but also to have the right integration, management and implementation mechanisms. This is known as “knowledge management capacity” referring to the dynamic capability, “which reconfigures and realigns these knowledge capacities” (Lichtenthaler, & Lichtenthaler, 2009: 1315). Knowledge management capacity helps towards the better understanding of the way a firm can profit from open innovation since it denotes the mechanism of examining the inward and outward knowledge flows (coupled open innovation) within the organizational process. It is important to underline here the different perspective that this procedure has on an ad-hoc basis. It depends upon the capacities, the mechanisms, the structural foundations and the collaborative and learning culture which is infused within the organization per se. When firms are working with open innovation they are open in terms of knowledge sharing, building up on existing platforms and creating new knowledge. “Knowledge creation partially mediates the relationship between trust and innovativeness; and knowledge transfer partially mediates the relationship between trust and knowledge creation” (Sankowska, 2013: 85). New knowledge is often perceived as a product of a firm’s capability to generate applications from existing platforms (Lichtenthaler, & Lichtenthaler, 2009). Gaining access to external knowledge means that firms need to be open and willing to transfer part of their own knowledge (Chesbrough et al., 2006). This is done in the context of creating an ecosystem of intraorganizational and interorganizational knowledge maintenance and developing the right capabilities of knowledge reactivation and knowledge channelling (Lichtenthaler, & Lichtenthaler, 2010). This is related to the organizational connective capacity which is the ability 12 13668 of an organization to “retain knowledge outside its organizational boundaries” (Lichtenthaler, & Lichtenthaler, 2009: 1320). The emergence of an economy of knowledge confronts the capability and the capacity organizations possess in the management of new projects and actions taken so as to improve their performance within changing, uncertain and risky business environment (Aubry, & Lièvre, 2010). “The organization’s ability to leverage knowledge means finding, nurturing and supporting the communities that already share knowledge about key topics” (Cheng, Hailin, & Hongming, 2008: 449). The salient question lies upon the development of the necessary mechanisms which shall enable the external environment monitoring and the assessment of the shared data. This is related to the firm’s combinative capability referring to the capability to synthesize and apply current and acquired knowledge, denoting that this knowledge transfer and the firm’s combinative capability can drive the need for effective and efficient collaborations (Kogut, & Zander, 1992). Even though the development of a knowledge-sharing culture fosters competitive advantage, knowledge sharing per se is highly difficult to accomplish. Ideas by nature are intangible; nevertheless the transmission is really difficult to accomplish (Cheng et al., 2008). Related to knowledge intangibility is knowledge retention within an organization especially due to employee downsizing. Schmitt et al. (2012: 61) propose that “firms with high levels of collaboration are less likely to experience knowledge losses through employee downsizing than firms with low levels of collaboration”. This endorses the fact that collaboration plays a highly critical role towards the transferring of tacit knowledge, fostering the multiple collaborations between the employees and denoting an emerging shift from an individual to collective mindset and knowledge sharing. This collective mindset can only be cultivated and constructed only under the presence of intraorganizational trust. 13 13668 An open knowledge transfer mindset takes place within a knowledge-sharing culture. Openness requires trust; Cheng et al. (2008: 452), argue that trust is developed and formulated through mutual respect. Trust is impossible without mutual respect since it is a matter of managing values and principles that support the organizational values, understanding and respect. They present a model describing the relationship among trust, knowledge sharing and firm performance. Firm performance is divided into the two factors of short and long-term performance denoting the fact that “firm performance does not occur in a vacuum but is determined by a certain set of strategic choices made by firm managers”. In this context “the abundance of external knowledge has a direct impact on innovative performance and a firm’s search strategy in terms of breadth and depth” (Garriga, von Krogh & Spaeth, 2013: 1134). Knowledge sharing requires flexibility and freedom on how the available solutions will be chosen. Verganti (1999) presents the need for an adoption of a planned flexibility model which is related to the capacity of interactive shift from the exploitation to exploration mode (ambidexterity) and the emergence of a new quality of judgement and experience development. This is very important because it depicts the interrelation of knowledge and ambidexterity in a sense that exploration and exploitation are being put in the core of the organizational learning without being treated as separate modes and solely under the prism of strategy implementation (March, 1991). Proposition 1: Knowledge sharing attitude is related to ambidextrous thinking and vice versa Proposition 2: Knowledge sharing attitude affects open innovation adoption Proposition 3: Trust moderates the relationship between knowledge sharing attitude and open innovation adoption 14 13668 Ambidextrous Thinking The rationale behind the interrelation between open innovation and ambidextrous thinking lies within the dynamic capabilities an organization perceives, in order to be able to sustain competitiveness, promote differentiation and develop openness mechanisms supporting knowledge sharing procedures. Teece, Pisano, and Shuen (1997: 516), perceive dynamic capabilities as “the firm’s ability to integrate, build and reconfigure internal and external competences to address rapidly changing environments”. Brem and Viardot (2013) argue that more open innovation means more ambidexterity since there is an increasing number of stakeholders involved in the exploration and exploitation phases. Ambidexterity is an organizational ability to master both adaptability and alignment leading to long-term success (Birkinshaw, & Gibson, 2004b). In ambidextrous organizations we see a simultaneous presence of activities which can be either mature or emerging (van Looy, Martens, & Debackere, 2005). The core of ambidexterity lies within the exploration and exploitation practices. Exploration concerns the “experimentation with new alternatives” while exploitation refers to the “refinement and extension of existing competences, technologies and paradigms” (March, 1991: 85). The primary characteristic of an ambidextrous firm is the ability to both generate and manage “familiar, mature, current or proximate knowledge (exploitation) and unfamiliar, distant and remote knowledge (exploration)” (Filippini, Güttel, & Nosella, 2012: 318). O’ Reilly and Tushman (2011: 9), propose five important elements in managing ambidexterity. One of them is related to “the articulation of a common vision and values which provide for a common identity within the organization”. Common identity creates a sense of belonging, a sense of trust and a long-term cooperation which is enforced by the motivation work 15 13668 together under an exploratory and exploitative prism. Trust as a core element of ambidextrous thinking, denotes a vital differentiation of the organization per se since it encapsulates other values such as fairness and accuracy; all these elements are depicted within the strategic orientation of the organization leveraging a trustworthy profile and making the opening process smoother. Birkinshaw and Gibson (2004b) connote the strong relationship between trust and the building-up of contextual ambidexterity which calls for individual employees to make choices between alignment-oriented and adaptation-oriented activities in the context of their day-to-day work. On an organizational level it can be perceived as the collective orientation of the employees toward the simultaneous pursuit of alignment and adaptability. In simple terms, this means that intraorganizational trust, along with stretch, discipline and support as organizational antecedents of ambidexterity enable individuals to bring forward initiatives, cooperative attitudes, brokering skills and multitasking abilities (Birkinshaw, & Gibson, 2004a). Trust is part of the social support behaviour-framing attributes which express the need for ambitious goals establishment within a cooperative environment encouraging employees into a dynamic interaction, collaboration and knowledge sharing. Trust is categorized in the social support of the dimension of organizational context since it caters for security and latitude; both having an indirect impact on the organizational performance through the shaping of individual and collective behaviours (Birkinshaw, & Gibson, 2004b). Probst, Raisch, and Tushman (2011) discuss the characteristics of ambidextrous thinking and consider trust as an important element in relation to a non-micro-management attitude and the building up of strong long-lasting relationships which can function both under an official and unofficial perspective. Team building, the ability to work together as a team and autonomy denote a framework which functions under a trust-based environment and fosters constructive 16 13668 and effective relationships. Through this participatory style a creative and trustworthy bonding is created advancing the “emergence of a strong superordinate identity shared by the team, which creates a sense of belonging and commitment” (Probst et al., 2011: 331). Ambidexterity is related to dynamic relationships leading to mutual exploration and exploitation of new knowledge. Relationships are interpreted within a collaborative attitude incorporating new and existing knowledge into innovative product, process and service development. Trust plays an important part both in the openness, the propensity to something new and the building up from existing knowledge and ideas. It breaks up the boundaries, both within the organization as it re-defines the frontiers of knowledge transfer and externally as it uses formal and informal forms of communication and creativity in order to develop effective coordination and participation of partners in the enhancement of knowledge transfer and knowledge sharing routines, within a collaborative culture. Proposition 4: Ambidextrous thinking is related to collaborative culture and vice versa Proposition 5: Ambidextrous thinking affects open innovation adoption Proposition 6: Trust moderates the relationship between ambidextrous thinking and open innovation adoption Collaborative culture Open innovation is aligned to collaboration in the development of new ideas, products and services, consisting a vital element for true openness. Collaboration is emphasized within the interorganizational cooperation with an impact not only to the company level but also to the regional and country levels. 17 13668 Innovation relies strongly on interaction and the ability to interact. This means that innovation can be diffused only through relationships. A collaborative culture is the element that fosters people to work together, to share and be able to co-create long-lasting value. This is reflected within an inherent relationship between emotional intelligence, team trust and creativity mindset which develops a collaborative culture within the firm (Barczak, Lassk, & Mulki, 2010). This collaborative culture enables the organization firstly to launch a trustworthy image and secondly to nurture successful partnerships working on innovative products and services. Furthermore, the quality of collaboration has a positive impact on creativity and team performance which are the key elements of successful partnerships (Barczak et al., 2010). Blackwell and Fazzina (2008) argue that the future of open innovation is highly related to the collaborative, team-based culture, companies have embraced, since it denotes a distinctive advantage in the implementation and leveraging of open innovation in comparison to the companies that have more rigid boundaries among functions and lines of business. The driver of collaboration is the establishment of sustainable competitive advantage. Interorganizational collaboration is a means of organizational learning since it drives the enhancement of all the necessary key competences leading to the acceleration of innovation and effective collaboration. Powell (1998) argues that it is not only important for firms to learn from collaborations but it is of utmost importance to understand the importance of adopting a collaborative attitude and learning all the necessary mechanisms of collaboration. This collaborative culture that will breed trust and cross-organizational collaboration can be put in place also via the realization from a managerial standpoint that conflict is natural and necessary. “Conflict so often viewed as a liability to be avoided whenever possible-can be valuable to a company that knows how to manage it” (Weiss, & Hughes, 2005: 101). 18 13668 An important element to be explored, which is highly related to the empowerment of collaboration within open innovation model, is the role of corporate culture. Prabhu, Tellis, and Rajesh (2010: 11) consider culture as “a core set of attitudes and practices shared by members of a collective entity such as a nation or a firm […] culture is reflected in shared knowledge and standard operating procedures”. Trust plays a fundamental role within a collaborative environment since it emerges from the cultural signs of a collectivistic culture, leading to the formulation of long lasting and trustworthy relationships. Collaboration is highly relevant within an international context and is directly perceived within the open innovation paradigm. Globalization means international collaborations within international business environments and an internationalized economy. Trust plays a fundamental role in international collaborations since the nature and level of trust differ across borders and also institutional and cultural matters have a substantial impact on the way trust is perceived. In this culture context, the relation between trust and culture can be perceived either as etic (culture-general or universal) or emic (culture-specific), in a cross-border situation (Zaheer, & Zaheer, 2006). Different approaches and interpretations of trust have substantial implications in the international collaborations. Asymmetries exist between partners and can be observed within the possession of resources, knowledge, growth and capabilities. However, asymmetries can be also perceived under a social base perspective such as the imbalance of trust which is influenced by national cultural origins, prejudices and stereotypes (Zaheer, & Zaheer, 2006). These types of asymmetries have a substantial dyadic impact on the management and performance of an interorganizational relationship, especially on an international level. In this context three major elements fostering this relationship are presented; cultural metacognition, global dexterity and emotional intelligence. 19 13668 Chua, Morris and Mor (2012) directly address the necessity of learning to work with people from different cultures so as to collaborate creatively. They bring upfront the concept of cultural metacognition referring to a person’s reflective thinking about his or her cultural assumptions. They argue that managers who are experienced in thinking about their cultural assumptions (cultural metacognition) are more likely than other managers to develop an affectbased trust perceptiveness in their structured relationships with people from different and diverse cultures resulting in the empowerment of creative collaborations. This is related to the metacognitive cultural intelligence which leads to the engagement of sharing and fostering intercultural creative collaboration. Molinsky (2013a) presents a tool which facilitates the achievement of a simultaneous behavioural adaptation to new cultural contexts while staying authentic and grounded in your own natural style. This is a matter of developing the capability to switch behaviours and overcome the emotional and psychological challenges of doing so. Global dexterity functions as an antecedent to/predictor of organizational trust in the sense that the more global dexterity people have within the organization, the more open are they likely to be towards innovative practices. The authors demonstrate that in order to be able to foster a collaborative culture, especially within globalized environments the psychological and emotional cross-cultural behavioural adaptation is a paramount driving force crystalized within a trustworthy environment (Molinsky, 2013b). As a concept, emotional intelligence has been vastly examined in various contexts and levels (Dulewicz, & Higgs, 1999; Goleman, 1995; Salovey, & Mayer, 1990). The authors contend that emotional intelligence and emotional transparency belong to the core elements of a sustainable relationship development and team building. Teams are considered as the foundation of the organization and in order to work effectively they require the establishment of mutual trust, 20 13668 focus and commitment to the strategically set goals. Harvey, Bimler, Evans, Kirkland, and Pechtel (2012: 629) argue that emotions “encapsulate interactional contexts and is a universal phenomenon”. They bring forward a number of elements constituting the core of emotions; emotional relationship, emotional acceptance, emotional availability, emotional philosophy, emotion coaching, emotional attitude, emotional boundaries, emotional self-acceptance and emotion regulation. All these elements are crystalized within the way emotions are understood and managed within their influential power towards a person, a team and an organization also in relation to inclusion, creativity and performance. Under an intraorganizational and interpersonal perspective, trust among members, a sense of group identity and a sense of group efficacy constitute the essential elements of group effectiveness. This promotes an open attitude towards the appreciation and acceptance of difference and the development of a culture imbued with diversity, assimilation and inclusive attitude. Proposition 7: Collaborative culture is related to diversity management and vice versa Proposition 8: Collaborative culture affects open innovation adoption Proposition 9: Trust moderates the relationship between collaborative culture and open innovation adoption Diversity Management A parameter of ultimate importance in the exploration of the role of trust within open innovation is the role of diversity within the organization and how it is effectively, efficiently and proactively managed. Diversity management becomes a vital but at the same time an en vogue element since its effective implementation is directly proportional towards a more tolerant organizational culture contributing to more universal products or services (Joubert, & de Beer, 21 13668 2012). Diversity is a contextual phenomenon and this becomes evident since people are not the same meaning that it has to be observed on an ad-hoc basis (Hooghe, Reeskens, Stolle, & Trappers 2009). People come from different backgrounds, different leads of lives, cultures, mindsets, they have different needs, expectations, visions and perceptions. Polat (2012) identifies the demographic, socio-cultural and individual characteristic differences contributing towards the development of a diversified organization which must be effectively managed in order to create an organizational synergy. “Managing diversity is inextricably linked to trust” (Powell, 2011: 32). Lauring and Selmer (2012) argue that group trust is positively associated with value, linguistic and informational diversity. The key challenge is the creation of a safe, trustworthy and inclusive environment open to everyone who wishes to bring something new and create value. Powell (2011: 27) observes perfectly the fact that “trust is the missing cement to bind relationships based on managing diversity”. An organization driving specific strategy, visions and culture must be able to accomplish all these by encouraging intraorganizational and interorganizational collaboration, active participation and give equal chances and opportunities. Trust plays a major role within this context since it is the resultant that converges and brings together all the above mentioned factors to a common setting. Joubert and de Beer (2012: 8356) endorse the abovementioned argument by considering mutual trust as the key “requirement for effective management of diversity”. They observe that a low level of trust among employees leads to a substantial number of hindrances to effective diversity management. Thomas and Ely (1996: 79), argue that “a diverse workforce increases 22 13668 organizational effectiveness. It will lift morale, bring greater access to new segments of the marketplace and enhance productivity” denoting that diversity is good for the business. A simple but core argument is the fact that a company should realize what diversity means, how organizational diversity is defined and how the experience of being a diverse organization has an impact on the effectiveness, the image, the structure and the promises to be delivered (Thomas, & Ely, 1996). Diversity management is merely about acceptance. It is about fundamental and substantial changes on the organizational leadership, the values, the attitudes, the behaviours and the culture diffusion within the organization per se. It about the encouragement of learning something new, of developing the competence to accept something different, of delving into the deep understanding of human entity, behaviour, attitude and cultural background. The driver of diversity management is the call for equality and fairness. Ruigrok (2012: 17) discusses ways of overcoming the triple hurdle of diversity management. He explicitly argues that “turning diversity rhetoric into action has been more difficult that more companies are willing to admit openly. Companies are facing a triple hurdle in implementing diversity management policies and most companies have only taken the first hurdle”. The three-hurdle typology refers to: obtaining top executive support, making a difference and managing diversity. An interesting parameter to be briefly explored falls in the realms of linking knowledge sharing attitude and diversity management. The establishment of a knowledge sharing attitude must take into account the diversity of national culture in which the organization exists and the diversity within the organization. Hustad (2008: 399) argues that even though diversity may depict some contradictory characteristics “may also enhance creativity and innovation where radical new insights arise from different perspectives introduced by the participants”. This 23 13668 linkage is related to the personality factors that emerge within the organizational context and facilitates the way of creating a positive attitude towards knowledge exchange and sharing. Last but not least “diversity of teams plays an intriguing role in stimulating and inhibiting knowledge sharing between team members” Rosendaal (2009: 4). Diversity management is not something that can be implemented individually. It is important to build upon approaches that facilitate the canalization of “the differences into work through individual and organizational goals by accepting the individual differences the way they are and without discriminating any individual or group” (Polat, 2012: 1410). Thomas and Ely (1996), underline the necessity for a holistic approach leading to the designing of new processes, procedures and training sessions, which will lead on encouraging group participation, team building effective collaboration within a trustworthy, open and imbued with solidarity and the development of concrete evidence on the ways and the rationale behind the relationship between diversity management and organizational performance (Ruigrok, 2012). Proposition 10: Diversity management is related to knowledge sharing attitude and vice versa Proposition 11: Diversity management affects open innovation adoption Proposition 12: Trust moderates the relationship between diversity management and open innovation adoption Development of the Conceptual Model The abovementioned analysis has shown that trust plays a paramount role in every aspect of life. In relation to open innovation the authors observe an embededness of trust leading to the realization of the open innovation paradigm as a trust embedded organizational mindset, sharing strong organizational, managerial and societal implications at all levels of the organization. 24 13668 Hence, this trust embededness is highly related to organizational culture, change, leadership and creative thinking. The following table summarizes the factors discussed in the abovementioned analysis in relation to trust, as per classification suggested. -----------------------------------Insert Figure 2 about here -----------------------------------Open innovation is a highly complex phenomenon since it crystalizes many different, interrelated disciplines and elements. This is why its adoption is only meaningful in human organizations where trust must be seen as a catalyst. The following figure depicts the relationships between the four organizational antecedents of open innovation towards the adoption of a trust embedded open innovation organizational mindset and how trust moderates in between. In simple terms, this figure shows that open innovation must be primarily captured within the locus of the organization and cannot be perceived without the existence of trust, primarily, on an intraorganizational and interpersonal level and then on an interorganizational and alliance or network level. This means that trust is an inherent element of the open innovation’s conceptual DNA. -----------------------------------Insert Figure 3 about here -----------------------------------In this context, the authors propose a re-contextualization of the open innovation definition, which encapsulates all the elements and parameters discussed in the analysis above: Open innovation is a dynamic organizational mindset that encourages the exploration and exploitation of diverse knowledge inflows and outflows, leading to innovation continuity and 25 13668 incremental organizational change, through the establishment of trustworthy, culturally sensitive, diverse and sustainable relationships inside and outside the organizational boundaries. The authors’ argumentation is in line with the fact that “implemented well, open innovation should include a process-a set of activities whose purpose is to find or generate good ideas, technologies and the infrastructure needed to adapt and support those activities. In this way, open innovation becomes an organizational mindset” (Tuff, & Jonash, 2009: 3). Conclusions In this paper, the authors bring an alternative reading, contributing to the extensive and existing open innovation literature by giving special attention to the core but neglected element of trust. The aim of this paper is to see open innovation from a different research prism by exploring the role of intraorganizational trust in relation to open innovation in terms of re-contextualizing the existing definition of open innovation. The originality of this study is founded on the fact that to the best of our knowledge no studies in the field of open innovation management exist that explicitly emanate intraorganizational trust as an inherent element in the open innovation DNA, perceiving open innovation as an organizational mindset and bringing together a multidisciplinary approach in the study of open innovation by combining the disciplines of organizational behaviour, organizational and cognitive psychology, innovation management and sociology. This multidisciplinarity is necessary when it comes to dealing with two multidimensional and multifaceted phenomena; trust and open innovation. 26 13668 In this context some concluding remarks that capture the abovementioned analysis are necessary to be presented at this final stage: these remarks share important academic and managerial implications which will be discussed later on. Trust is expressed as the most overused and abused word (Fawcett et al., 2012), in any analysis that tries to fathom the correlation between different parameters which initiate openness and lead to mutual long-term value creation (Dahlander, & Gann, 2010). Trust is usually taken for granted since it is perceived as an element of mere importance; yet appreciating the concept under a down reaching spectrum; it becomes immediately apparent that trust is the conditio sine qua non of any kind of social, business oriented interaction and cooperation. The study has shown that trust can be perceived in a multilevel perspective. The main challenge is to create suitable conditions which will nurture the building of trust “across personal-organizational-structural tiers in an increasingly uncertain world” (Powell, 2011: 27). It is important to remember that trust is “fragile and intangible” but at the same time it drives collaboration which is necessary under conditions of uncertainty and risk (Jarzabkowski, & Searle, 2003: 2). Open innovation is hard and it requires a lot of skills, competences and time in order to bring success. The key word is discipline in order to be able to diagnose the way to create economic value with open innovation, to be able to bring inside the organization all the new capabilities, tools and processes in order to support the right type of actions for driving an innovative company ahead. The authors believe that an open innovation culture is emerging; however, for the time being it is not transformational but has an evolutionary and fragmented propensity. Bearing in mind that losing control of intellectual property is a vital element for many organizations and this 27 13668 remains the primary reason of showing reluctance to follow the open innovation paradigm, should they need to be certain that advantages from potential cooperation would outnumber disadvantages and monetized risk (Päällysaho, & Kuusisto, 2011). Implications This study brings upfront some very important academic, managerial and societal implications. From an academic point of view, it opens up the field for new research in the area of open innovation in relation to organizational behaviour and the role of trust as a core element of open innovation. It calls upon the need for a broader and multidisciplinary approach towards innovation management and the exploration of the multidimensional phenomenon of open innovation in relation to other disciplines and contexts. In terms of managerial perspective, it is important to stress out the fact that open innovation within an organization comes mainly from the top management and this is why it must be considered as an organizational mindset. Managers should understand the need for trustworthy and sustainable relationships which can lead to innovative products and services, increasing the firm performance and creating a sustainable competitive advantage. This is discerned within an environment full of uncertainty, complexity, with insufficient or incomplete information. Hence, the development of a strategic capacity to facilitate the understanding of the signals deriving from the market and to foster a collective and collaborative action, become imperative. Especially from a human resources management side, the realization of the organizational antecedents of open innovation and the need for change, formulates the mechanism of adoption, education, effective and efficient decision making bringing upfront the understanding and 28 13668 appreciation of the link between organizational learning and the development of the established conditions for an open and trustworthy environment. From a societal perspective, it is interesting to observe out the applicability of open innovation as a trust embedded organizational mindset in relation to developed and emerging markets. Innovation is not only for developed but also for emerging markets. The authors observe a need for tailored models regarding the role and implementation of open innovation within organizations in emerging economies. A trust embedded open innovation mindset needs to be cultivated within an organization embracing vision and willingness to creatively collaborate, cocreate value, elevate its competitive advantage, differentiate, avoid the commodity trap and become more human. Limitations and avenues for future research This study shares some limitations deserving acknowledgement. First of all, trust being a contextual phenomenon and an “intangible quality” (Jarzabkowski and Searle, 2003: 15) creates a problem of generalization since different interpretations can be conducted. Secondly, the paper is purely conceptual, solely based upon a thorough review of the literature, without taking into consideration other sources of data. Furthermore, the choice of the four organizational antecedents of open innovation is based upon the collective reflection and interpretation of the literature and no other proxy has been used. The authors also assume that the adoption of the trust embedded open innovation has a positive effect on innovation performance, since open innovation as an organizational mindset “puts forward the non-linear, dynamic and interactive nature of the innovation process” (Reference A: 44) characterised by interaction, cooperation on innovation and effective collaboration, ensuring a continuous commitment to innovation (Reference B). In this context, 29 13668 empirical testing (qualitative and quantitative) of the theoretical model in relation to its impact on open innovation adoption, innovation performance, human resources management and openness within an organization is necessary. 30 13668 REFERENCES Arrow, K.J. 1972. Gifts and Exchanges. Philosophy and Public Affairs. 1(4): 343-362. Aubry, M., & Lièvre, P. 2010. Ambidexterity as a competence of project leaders: A case study from two polar expeditions. Project Management Journal. 41(3): 32-44. 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Exploring preconditions for open innovation: Value networks in industrial firms. Information and Organization. 22(4): 209-226. Zaheer, S., & Zaheer, A. 2006. Trust across Borders. Journal of International Business Studies. 37(1): 21-29. 37 13668 Figure 1: Organizational antecedents of open innovation adoption 38 13668 Figure 2: Organizational antecedents of trust embedded open innovation 39 13668 Figure 3: The organizational aspect of open innovation adoption (conceptual model) 40 Publication V Salampasis, D., Mention, A-L., and Torkkeli, M. Human resources management and open innovation adoption in the banking sector: a conceptual model Reprinted with permission from International Journal of Business Excellence Vol.8, No.4, pp.433-457, 2015 © 2015, Inderscience Publishing Int. J. Business Excellence, Vol. 8, No. 4, 2015 433 Human resources management and open innovation adoption in the banking sector: a conceptual model Dimitrios G. Salampasis* and Anne-Laure Mention Public Research Centre-Henri Tudor, 29 Avenue John F. Kennedy, L-1855, Luxembourg Email: [email protected] Email: [email protected] *Corresponding author Marko Torkkeli Lappeenranta University of Technology, Prikaatintie 9, FI-45100 Kouvola, Finland Email: [email protected] Abstract: Open innovation has received wide attention and has been explored in various sectors of the economy. However, despite the abundant literature in the field, there is an on-going debate around the organisational aspect of this paradigm. This conceptual paper aims at contributing to this debate by developing a conceptual model, which explores the relationship between human resources management practices and open innovation adoption in the banking sector. Based on an extensive literature review, the role of human resources management towards the adoption of open innovation in the banking sector is investigated in relation to two fundamental organisational elements: trust and readiness. The authors highlight the role of human resources management as a fundamental element towards the adoption of open innovation practices in the banking sector and strongly suggest that; a) human resources management affects the adoption of open innovation in the banking sector and b) trust and readiness moderate the relationship between human resources management and open innovation adoption. The proposed research propositions depict a shift towards a more flexible and open human resources management system in the banking sector and the emergence of an innovative mindset empowering organisational performance. Keywords: banking sector; open innovation; trust; financial services; human resources management; organisational readiness; fair process; workplace bullying; human side of open innovation. Reference to this paper should be made as follows: Salampasis, D.G., Mention, A-L. and Torkkeli, M. (2015) ‘Human resources management and open innovation adoption in the banking sector: a conceptual model’, Int. J. Business Excellence, Vol. 8, No. 4, pp.433–457. Biographical notes: Dimitrios G. Salampasis is a Doctoral Researcher at the Public Research Centre Henri Tudor in Luxembourg. His research is focused on business innovation management and organisational behaviour and more specifically in the field of open innovation in financial services. He is Copyright © 2015 Inderscience Enterprises Ltd. 434 D.G. Salampasis et al. also pursuing his PhD on Industrial Engineering and Management at the Lappeenranta University of Technology in Finland. He holds a Bachelor in Public and Business Administration and three Master degrees in European Studies, Educational Psychology and Entrepreneurship and Innovation (First Class Honours). He has extensive working experience in the public and private sector in Greece and abroad and has participated in numerous conferences around the world as a speaker, facilitator, trainer and rapporteur. He received the ISPIM Best Paper Award in September 2012. Anne-Laure Mention is leading a research unit focusing on innovation economics and management within the Public Research Centre Henri Tudor, Luxembourg. She is actively involved in research projects, mainly focusing on innovation and performance measurement and management in the financial and business to business services industries. Her research interests mainly concentrate on open and collaborative innovation, intellectual capital measurement and management, innovation and technology management. She has been a Visiting Researcher at Singapore Management University, McGill University, Canada and Ferrara University, Italy. She received an IBM Faculty Award for the project entitled ‘Towards accrued transparency of operations in the fund industry’ in 2011 focusing on organisational innovation and an award for the project entitled ‘Measuring the impact of open innovation’ in 2013. She is also a founding member of WICI, the Deputy Head of the ISPIM Advisory Board and a member of several scientific committees and editorial boards. Marko Torkkeli is a Professor of Technology and Business Innovations at the Lappeenranta University of Technology in Kouvola, Finland. His research interests focus on technology and innovation management, strategic entrepreneurship, growth venturing and decision support systems. He has published in journals such as the Int. J. Production Economics, Int. J. Foresight and Innovation Policy, Int. J. Business Excellence, Int. J. Technology Management and Int. J. Technology Intelligence and Planning. He is a member of the editorial boards of the Int. J. of Services Sciences and the Int. J. of Innovation Management. He is an affiliated faculty member at Singapore Management University, a Visiting Researcher at INESC Porto, Portugal, a Docent of Technology-based Business at University of Jyväskylä, Finland and a Docent of Technology and Innovation Management at Helsinki University of Technology, Finland. He serves as the Director of Publications of the International Society for Professional Innovation Management (ISPIM). 1 Introduction The aim of this conceptual paper is to address the role of human resources management towards the creation of an environment that paves the adoption of open innovation practices in the banking sector. The banking sector is perceived in a world full of variability and uncertainty. By embracing open innovation, banks respond to the “calls for a more heterodox, opening approach […] and seem eager to bring ideas from outside the old macroeconomic core” [Fox, (2013), p.98]. This feeling of relative openness, while driving an innovative mindset and attitude, requires from the banks to put in place human resources management policies and practices that bring into being employees who are open, collaborative, flexible, risk averse, tolerant to ambiguity and uncertainty and who are imbued with motivation and incentives, leading to better innovation outcomes (Chen Human resources management and open innovation adoption 435 and Huang, 2009). In this context, a need for a more participative management practices challenging the strategic orientation of human resources management strategies in the banking sector is observed (Sparrow, 1996). This research contributes to the literature by putting a special focus on the organisational prism and perspective of open innovation, touching upon the under-developed and poorly investigated human side of open innovation and innovation in general (du Chatenier et al., 2010; Fredberg et al., 2008; Gassmann et al., 2010; Kanter, 2006) in the context of the banking sector. The current volatile, turbulent and constantly changing world, creates challenges in the management of an organisation regardless the aim, function, orientation and size. “Globalization, worldwide competition, deregulation and ever-new technologies drive the ongoing reassessment of the organization” [Burton et al., (2011), p.3]. This is related to the fact that financial markets are prone to instability, a fact that is an inherent proclivity towards the paving of a future full of uncertainty. This leads to required changes in the organisational design which include structural components (goals, strategy and structure) and human components (work processes, people, coordination, control and incentive mechanisms). The human side of an organisation is the core element in this changing and challenging globalised environment and is the linkage of the interplay between the execution of the organisational strategy, the innovation life-cycle and the firm performance. Needless to say that this process of change, elaborated in the DNA of the organisation, is ongoing, including changes in the human and structural components on a short-term and long-term perspective. Human resources management in the banking sector has been facing numerous challenges, especially after the near collapse of the financial system due to the current debt and subprime crises. These crises have created a new set of rules in the global business and financial market and have a substantial impact within the financial services sector ecosystem; an ecosystem, which is undergoing a tremendous loss of trust under a financial, marketing and organisational aspect. This new set of rules has been paving the way towards structural changes, including more tight regulatory requirements, consolidation of companies, increasing competition, more demanding and informed customers, continuous advances and technological developments and higher costs in the new service development (Niebudek, 2013). The rationale behind this research is in line with both “the human and the organizational side of open innovation, areas that are highlightened as important fields for further research” [Elmquist et al., (2009), p.326]. The paper develops a conceptual model, connecting human resources management practices and open innovation adoption via the interrelated organisational elements of trust and readiness. The paper develops research propositions exploring the role of human resources management towards the adoption of open innovation practices in the banking sector, especially within such an ever-unpredictable world. The quality of human resources management is an inherent element of this organisational readiness (Low et al., 2011). Roper et al. (2008, p.972) argues that “high quality human resource contribute strongly to both the product and process innovation decisions and innovation process” and is one of the major antecedents and necessary elements of open innovation (Wang et al., 2012). The core of the concept of open innovation falls in the realms of open organisational boundaries and the constant inflow and outflow of knowledge. The role of human resources management is critical since knowledge and experience is being transferred and 436 D.G. Salampasis et al. exchanged among firms also through the transfer of human resources. Human factors denote a highly critical element in the innovation process but the primary requirement is the establishment of the right work environment (Prather, 2010). In this context, open innovation as a concept is perceived as a trust embedded organisational mindset (Salampasis et al., 2013) and its adoption and actual implementation require prior substantial changes within the organisational and managerial setting (Gassmann et al., 2010). This is highly relevant particularly today, “when trust levels among both employees and customers are so low and background noise is so high, organizations must work very hard to communicate what’s going on if they are to be heard and believed” [Goffee and Jones, (2013), p.102]. Managing change is a highly challenging task prerequisiting important and prompt readiness on an organisational level, especially, in human resource management, an organisational unit highly critical in open innovation but, at the same time with the lowest level of autonomy (Chesbrough and Brunswicker, 2013). The conceptual character of the paper is driven by a multidisciplinary approach, synthesising different streams of literature: human resources management, open innovation, organisational behaviour and organisational psychology. The authors strongly assert that this multidisciplinary approach is the most appropriate method to investigate such a complex and multi-level field of research endorsing the need for more studies towards the direction of clustering the organisational side of open innovation in the banking sector. 2 Literature review This paper explores the interplay between open innovation, human resources management and organisational behaviour in the banking sector, contributing to the strand of literature on the role of open innovation in the aspect of its drivers and impacts. It is important here to highlight the fact that apart from the mainstream academic literature, policy and managerial reports have been used from various consultancy firms with dedicated activities in the banking sector. The authors argue that this source of knowledge is vital towards the conceptualisation of a concrete, precise and contemporary picture of the banking sector and the enrichment of the research field with cutting-edge insights that share valuable implications on a managerial and policy level. The new and highly challenging worldwide business and economic environment requires adaptation, flexibility and immediate replies to change. It becomes apparent that the involvement of a modern human resources management function becomes an imperative action and is required to show both support and realisation towards the business and the strategies per se (Mayo, 2012). The development of consistent human resources management practices cater for the achievement and realisation of the strategic objectives of the firm (Huselid et al., 1997). Unfortunately, things are not as easy as they seem. The effectiveness of human resources management depends upon the initiation of mindsets, cultural behaviourism, processes and capabilities. The human factor is an inherent part of organisational climate and the amalgamation of behavioural norms has an impact on this climate. Climate can be conceptualised via six different factors that have an influence towards an organisation’s working environment: “its flexibility-that is, how free employees feel to innovate unencumbered Human resources management and open innovation adoption 437 by red tape; their sense of responsibility to the organization; the level of standards that people set; the sense of accuracy about performance feedback and aptness of rewards; the clarity people have about mission and values; and finally the level of commitment to a common purpose” [Goleman, (2000), p.81]. Human resources management is often described by various terms such as organisational management, manpower management, talent management, personnel management and people management. It is important here to underline that there is a strong debate and numerous concerns regarding the prevailing terminology in the field. This debate derives from the fact that human beings cannot be seen as only as commodities or resources, underlying the fact that there a creative and social aspect behind human beings working in a productive enterprise. This paper does not aim to address this debate further, because such an analysis would be outside the primary scope of this research. Human resources management encapsulates three different but highly interrelated fields: organisational theory, industrial engineering and behavioural science. The organisational theory looks upon the needs of the human beings and explores the ways that human resources management can drive a pragmatic approach based upon an adjustment attitude and specific situation. The industrial engineers theory presents a mechanistic orientation and an economic motivation and human resources management should be able to provide “incentives and working conditions in a way that facilitates the most efficient use of the human machine” [Herzberg, (2003), p.92]. The behavioural science theory appreciates individual and collective attitudes in relation to the established organisational and psychological climate. The human resources management priority should be the creation of a safe environment that aligns the organisational strategy and climate to the values of the employees via incentives, motivation and education and the empowerment of the human side of the enterprise that would foster organisational development and improves organisational culture (McGregor, 1960). Following upon the traditional view of human resources management, for managerial and non-managerial employees, three major areas can be identified: staff recruitment, motivation, training and performance management and the development of capabilities aligned to the individual, team and organisational level towards the realisation of the ad hoc business strategy (Finegold and Frenkel, 2006). In this context Ulrich (1996) perceives human resources management via four functions: alignment of human resources and business strategy, reengineering of the organisational processes, a listening and responding attitude towards the employees and the management of change and organisational transformation. These abovementioned functions effectively contribute to the mobilisation of human capital and offer an alternative view in the way human resources management has been traditionally perceived. Human capital along with physical capital and organisational capital belong to the resource ecosystem of an organisation (Tsai and Liao, 2011). “The concept of human capital is most usefully viewed as a bridging concept-that is, it defines the link between HR practices and business performance in terms of assets, rather than business processes” [Baron and Armstrong, (2007), p.6]. Human capital is one of the main linkages in the bank’s search for excellence and the service-profit chain (Harker and Zenios, 1998). This means that the human capital consists of the value of knowledge, skills and experience inherent to the individual employees of an organisation (Edvinsson 438 D.G. Salampasis et al. and Malone, 1997). This value is inherent both on an individual and organisational level, the latter, being perceived as a human ecosystem. A substantial body of the literature leverages the importance of human resources management in relation to the competitive advantage an organisation seeks to establish (Collins and Clark, 2003; Delaney and Huselid, 1996; Martinsons, 1995; Wright et al., 2005). Kanter (1983) argues that firm performance is highly dependent on progressive human resource practices. “Human resource management perspective, has long argued the need to develop effective methods of recruiting, evaluating and compensating employees to enhance organizational performance” [Marcoulides and Heck, (1993), p.222]. Rupietta and Backes-Gellner (2013, p.2) identify four taxonomies that combine human resources management systems and human capital pools to achieve superior performance: single skill concentration, empowerment, vocational skill mix and organisational learning, arguing that these four taxonomies “substantially differ in terms of human capital diversity, application of human resource management practices and the environmental dynamism of the firm”. People are considered as the cornerstone of an organisation and the role of human resources management is multifaceted and highly challenging since it mobilises human capital. From an organisational perspective this means that the management of people within the organisation must be an essential element of the firm’s ability to reach and realise its goals. “People represent the intellectual capacity of the firm. This is especially true in today’s knowledge-intense enterprise” [Burton et al., (2011), p.125]. This intellectual capacity is related to the human capital which subsumes both individual skills and knowledge, both of which can be found both inside and outside the organisational boundaries (Sarkar and Costa, 2008). It is important to underline that human resources management cannot be perceived holistically since there is a great number of parameters that reflect upon the individuality with the primary one being the kind of the organisation. However, reflecting upon the existing perception of the role of human resources management we see a surprising oxymoron; the management of the human resources is still being mainly driven by procedural, operational and bureaucratic attitudes lacking a place in the locus of strategic thinking and innovation process (Sheppeck and Militello, 2000). Human resources management can be seen via a multiple level spectrum. A high-level framework is developed in the architecture level. Policies cater for the operationalisation of this framework. The critical part is the alignment of architecture and operationalisation to the human resources so as to achieve maximum value. “In large complex organizations such as banks, different subsystems of human resource management govern different groups of employees and these subsystems should also be properly aligned” [Harker and Zenios, (1998), p.12]. This alignment is expected to maximise the value and foster the adoption of innovation. In this context, Büschgens et al. (2013, p.6) believe that “an organizational focus on innovation is positively related to the presence of a developments culture” linking the role of human resources to the creation of an organisational developmental behaviour and ecosystem. This means that the cultivation of an innovative intention and mindset falls in the realms of human resource development. This brings a contradictory view towards the administrative aspect of innovation which is related to the managerial aspects of an organisation and it includes organisational structures, administrative processed and human resources (De Massis et al., 2013). Human resources management and open innovation adoption 439 Human resources management practices have a direct effect on the adoption of innovation practices within an organisation especially when they are combined with “the decentralization of decision making, delegation and knowledge sharing and various pecuniary and non-pecuniary incentives” [Fu, (2012), p.513]. Human resources have a substantial and primary influence to the whole organisational and institutional entity contributing to the character, the identity and the entire organisational culture. Furthermore, “human resource systems can be powerful tools for communicating aspects of organizational culture” [Kondra and Hurst, (2009), p.46]. Human resources contributes to the building of organisational knowledge-based performance (Minbaeva, 2013) since it is of highest importance regarding the success of professional services firms (Swart and Kinnie, 2010). An important parameter to be addressed here is related to the participation of human resources in the inter-organisational knowledge and skills which are catered by the adoption of open innovation. Open innovation as a concept has received both wide acceptance and strong criticism and has attracted a substantial body of research. Open innovation is realised in the realms of the fact that innovation becomes more democratic and ideas can originate from any organisation and any individual (King and Lakhani, 2013). Under this perspective Chesbrough (2001) argues that “not all the clever people work for us: we must find a way to tap into these other human resource”. This is related to the role of human resources in terms of empowering external knowledge sources that lead to effective internal labour efficiencies and create a positive environment and ecosystem that fosters innovation (Gianiodis et al., 2010). The 2012 Report on Open Innovation by the European Commission (p.25) endorses this direction by stating that: “within a knowledge society, intellectual capital to enable innovative competence requires human capital to release their individual intellectual capital in cooperation with organizational knowledge acquisition processes”. The reason why firms adopt open innovation is because they “are seeking to embed open innovation more deeply in their cultural DNA” [Euchner, (2012), p.11]. Open innovation adoption has already been investigated in different scopes and industries, both in the manufacturing and services sectors, SMEs and large enterprises (Spithoven et al., 2013) also in relation to environmental influences (Savitskaya, 2011). Approaches include the bio-pharmaceutical industry (Abd-Elaziz, 2012; Chiaroni et al., 2009), health care (Bullinger et al., 2012), manufacturing firms (Laursen and Salter, 2006), food and drink industry (Bigliardi and Galati, 2013; Lazzarotti et al., 2012), software firms (Harison and Koski, 2010), the telecommunication industry (Bigliardi et al., 2012), the transportation industry (Ollila and Elmquist, 2011), the public sector (Lee et al., 2012; Papadopoulos et al., 2013) and most recently in academic medical research (Guinan et al., 2013) and the global banking industry (Gianiodis et al., 2013). The managerial and organisational barriers towards the adoption of open innovation are related to organisational and cultural issues especially when it comes to the interaction with the external ecosystem of partners, stakeholders, customers and competitors (Bigliardi and Galati, 2013). Surprisingly, even though open innovation is a vastly discussed and debated topic “scarce attention dedicated to study the organisational and managerial implications of this new paradigm” [Chiaroni et al., (2009), p.287]. The exploration of the role and the new issues related to the human resources arena (Petroni et al., 2012), especially with regards to the openness of the firm and the extent of collaborative initiatives (Fu, 2012; Lazzarotti and Manzini, 2009) deserves further investigation. Petroni et al. (2012, p.171) argue that the traditional model “for managing 440 D.G. Salampasis et al. human resource has been abandoned as a result of the introduction of open innovation practices”. Dasgupta (2012, p.3) connects human resources to the creation of a learning organisation, which by definition is “an organization which facilitates the learning of all its members and continually transforms itself”. This requires the positioning of the human resources strategy in the core of the overall corporate strategy by the encouragement and establishment of human resources development initiatives across the whole organisation. du Chatenier et al. (2010) while exploring in detail the competences needed towards the adoption of open innovation, underline the need for further and deeper examination of the human side of open innovation. This human side of open innovation contributes to the appreciation of personnel education and realisation of the need to adopt organisational open innovation strategies that foster both the inside-out and out-side in environment by creating value (Podmetina et al., 2013). In the realms of the shifting of the locus of innovation outside the strict boundaries of big companies, the role of human resources management is considered as the catalyst towards the promotion of an environment of open innovation (Chesbrough and Vanhaverbeke, 2011) and becomes the key KPI towards the measurement of the open innovation process (Perkmann and Walsh, 2007). Human resources, being an integrative part of the intellectual capital have an important effect on the extent and the level of organisational absorptive capacity and as a rational result on the adoption of open innovation (Harison and Koski, 2010). Robertson et al. (2012) take this consideration a step further with the necessity of retention and operationalisation by the human resources. Spithoven et al. (2013, p.545) address the issue of firm size and organisational internal resource, arguing that “larger firms are in a better position to engage in innovative collaboration as they do have the human resource [...] to collaborate effectively with different types of innovative partners”. Salampasis et al. (2013) bring upfront a different prism in the capturing of the concept of open innovation by focusing on the human and organisational side of open innovation and more specifically in the core element of trust. “Innovation is the key challenge of the knowledge-based economy and innovation requires the exchange of ideas, which in turn depends on trust” [Kim and Mauborgne, (2003), p.9]. Intraorganisational trust is an inherent part of the open innovation’s DNA and is primarily connected to the management of human resources. Tzafrir (2005, p.1600) while underlining the linkages between trust, human resource practices and firm performance argues that “HR managers are more likely to offer training and shape internal promotion system when trust is high” and that “firms exhibited higher organizational performance when trust is high”. Vanhala and Ahteela (2011) analyse the effect of human resources management practices on interpersonal organisational trust requesting the promotion of fairness and functioning of human resources management practices. In the same context, the OECD Policy Brief on ‘Open innovation in global networks’ [OECD, (2008), p.6] states that: “successful open innovation also depends on trust and the open character of the business model. As knowledge become companies’ key resource, open innovation needs to be embedded in an overall business strategy that explicitly acknowledges the potential use of external ideas, knowledge and technology in value creation. Owing to the integration of different technologies, industry borders are shifting or even disappearing, necessitating new business models and organizational structures, including the effective management of human capital”. Human resources management and open innovation adoption 441 Since this paper explores the role of human resources management in the banking sector, a sector belonging to the financial services ecosystem, a brief but concise description of the relationship between service innovation and human resources management is required. “Service innovation is cross-disciplinary and multidimensional. It is often in deep synergies with other intangible assets (human capital, information system, clients, stakeholders, brand and reputation” [BusinessEurope, (2011), p.4]. This is in line with the human side of services and the adaptations required addressing service innovation challenges (Bitner et al., 2008). In this context it is important to develop “new measures on the human capital which role is central in services firms and structural capital in the context of service-sector firms” [Mention, (2011), p.51]. The 2013 Deloitte Report on the ‘Elements for successful growth in financial services’ emanates human resources as one of the four categories of the growth strategies in the financial services sector. The report states (p.22) that: “No discussion of growth would be complete without addressing the role of talent. As members of a service industry, financial services companies rely on the skills of their people to prosper. New business models, new products, and new markets require managers and employees who can not only develop strategies for growth, but also execute them effectively”. This means that human resources becomes one of the key elements in the discussion of sustainable growth in the financial services sector, an element that distinctively caters for the success of the sector in such turbulent and highly uncertain and unstable environment. In this context, employees’ satisfaction combined with performance evaluation, feedback and recognition become core incentives with regards to the relationship between human resource management and organisational performance in the banking sector (Bartel, 2004). “Banking has been and will always be a people business”. This is the argumentation of Dr. Chakrabarty, Deputy Governor of the Reserve Bank of India since human resources management becomes an inherent part of the DNA of banks, because banking is a service industry. Human resources development and management is highly related to the competitiveness of the banking sector since it brings value both on an individual and organisational level (Singh, 2013). Human resources management is linked to enhanced corporate performance especially in the banking sector and the organizational success (Hartel et al., 2007). This means that bankers “are expected to adopt innovative human resource management practices as an important tool of copying with turbulence associated with the banking sector” [Adegoroye and Oladejo, (2012), p.174]. This adoption of innovative practices however can meet hindrances such as contextual factors, organisational behaviour, national culture, technical and strategic inefficiencies (Afiouni, 2007). These hindrances share important linkages and a variety of intensities which must be taken into consideration while implementing a human resources management strategy. Last but not least Gianiodis et al. (2013) in their upcoming paper ‘Open service innovation in the global banking industry: inside-out versus outside-in strategies’ question “the delivered wisdom that service innovation is inconsistent with private and public returns in this industry and that organic innovation is the low cost strategic alternative choice for changing institutions in this context”. They argue that both approaches can share successful results. The management of human resources towards the adoption of open innovation practices can lead to the development of an innovative culture. Thompson and Heron (2006) present three dimensions of employment relationship which have a direct effect on 442 D.G. Salampasis et al. innovation performance: psychological contract, affective commitment and knowledgesharing behaviours. They argue that the socialisation of employees and the forging a strong personal identification and the alignment of individual and organisational values and purposes bring better value rather than the solely knowledge-driven behaviour. In other words open innovation adoption has a better performance outcome if a holistic ecosystem of knowledge, value, behaviour, attitude and culture is being created, i.e., an organisational climate. 3 Organisational climate for the adoption of open innovation in the banking sector The abovementioned literature review has brought upfront an emergent challenge towards the development of an organisational climate that can embrace the adoption of open innovation practices. The main source of this climate formation is the people who create a trustworthy environment encouraging internal collaboration, knowledge sharing and opening up existing silo-driven attitudes on the one hand and on the other an organisational readiness towards open innovation which initiates a destruction of corporate boundaries and the establishment of open business models. Tagiuri and Litwin (1968, p.27) define organisational climate as: “a relatively enduring quality of the internal environment of an organization that a) is experienced by its members, b) influences their behaviour and c) can be described in terms of the values of a particular set of characteristics (or attitudes) of the organization”. Burton et al. (2004) developed two dimensions of this organisational climate: tension and readiness to change. By definition tension is “the degree to which there is a sense of stress or a psychological edge in the work atmosphere” [Burton et al., (2011), p.143]. The abovementioned psychological edge is incorporated by a number of organisational factors and for the purpose of this analysis we focus on the elements of trust and readiness. Trust has received wide attention as a phenomenon having been approached and investigated under various research prisms and disciplines. As a concept it has undergone sociological, psychological and cognitive conceptualisations contributing to the significance of the notion while attracting considerable research efforts (Kramer and Tyler, 1996; Kramer, 1999; Lane and Bachmann, 1998; Misztal, 1996; Seligman, 2000; Sztompka, 1999). In terms of conceptualisation this paper adopts the definition proposed by Mayer et al. (1995, p.712) that trust is: “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party”, referring to the “extent that people can trust others, they can work together to create benefits that each individually cannot generate alone” [Dunning et al., (2012), p.687]. Organisational readiness as a concept being associated with change has been vastly explored in different sectors including the public sector (Nor et al., 2011; Cinite et al., 2009; Maheshwari and Manjari, 2010), the private sector focusing on the corporate level (Abdinnour-Helm et al., 2003), the information systems (Cui and Liu, 2010; Mouzakitis and Askounis, 2010), the educational sector (Nordin, 2012), the health care sector (Fuller et al., 2007; Gagnon et al., 2011; Snyder-Halpern, 2001; Hagedorn and Heideman, 2010; Stamatakis et al., 2012; Williams, 2011) and the health services sector (Helfrich et al., 2009; Rütten et al., 2009). Human resources management and open innovation adoption 443 By definition, readiness is: “a mindset that exists among employees during the implementation of organizational changes. It comprises the beliefs, attitudesand intentions of change target members regarding the need for and capability of implementing organizational change. Readiness for organizational change is important to any change effort because the state of readiness for change may influence the strategy followed throughout the change effort” [Armenakis and Fredenberger, (1997), p.144] or “an individual’s beliefs, attitudes and intentions regarding the extent to which changes are needed and the organization’s capacity to successfully undertake those changes” [Armenakis et al., (1993), p.681]. This means that readiness for change is a combination of organisational (Armenakis et al., 1993) and individual models (Prochaska et al., 2001). Change requires adaptation and this incentive for change has a positive effect on firm performance. “Climate is a main source of inertia as well as an effective means to guide innovation. Leaders, by creating a clear vision, can reduce the ambiguity surrounding employees. This creates shared sense of the world that guides employee actions for better organizational performance” [Burton et al., (2011), p.153]. In order to explore the highly intense relationship between human resources management, trust and readiness on an organisational level, the paper perceives a different angle by investigate the role of fair process and workplace bullying. The raison d’être behind the choice of these two organizational elements lies within the fact that both of them perfectly depict the way the internal environment of the organisation really functions and are denoted as the integrative element of the human side of this organisational climate. Fair process, a dimension of human psychology, is an inherent human need striving for individual recognition, aiming at the development of organisational mechanism that fosters collective thinking and decision making, giving the opportunity to the employees to share ideas, have their ideas taken seriously and being offered the chance to understand the rationale behind the decision making process and the outcomes that have a collective effect to the organisation as a whole (van der Heyden et al., 2005). Employees are not only interested in the outcome but also in the actual process that leads to the explicit outcome. “For a decision process to be seen as fair, the people affected must have the opportunity to give input and possibly influence the decision, and the decision process and rationale must be transparent and clear” [Wu et al., (2008), p.1]. This is also related to the perceived trustworthiness of the authority in terms of non-exploitation or threatening of the employee’s social identity (van den Bos et al., 1997). Various studies argue that this fair process has a substantial impact on the firm performance, the employees’ commitment and motivation and the development of trust of all the individuals involved in this process (Kim and Mauborgne, 2003; van der Heyden et al., 2005). In this context this trustworthiness stemming from this fair process acts as a facilitator towards collaborative initiatives and motivation for sharing knowledge, ideas and psychological norms. Transparency and clarity moderate the relationship between the employees and the management since they are one of the most empirically important drivers of fair process (Cao et al., 2011). The inherent psychological mechanism that people possess so as to identify cheating, i.e., in situations which are characterised by ambiguity, malicious intentions and vagueness can lead to an emotional resignation or trigger retributive justice, situations which have a highly negative impact towards the establishment of a trustworthy environment (van der Heyden et al., 2005; Wu et al., 2008). This means that trust and cooperation between employees and organisational systems thrives when 444 D.G. Salampasis et al. employees participate in a fair process, regardless the outcome and because the later “have contributed to shape them, have been given a chance to make them their own and hence appreciate them much more” (van der Heyden et al., 2005, p.21). When employees become part of the problem and contribute to the solution, they embrace a collective responsibility attitude, they safeguard and re-estate their commitment and motivation towards the solution of the problem. By embracing a voluntary cooperation demeanour, they share knowledge, apply their creativity and willingness to offer. This is why employees must be primarily seen and valued as human beings and not only as resources, assets or capital (Kim and Mauborgne, 2003). The authors argue that unfair processes within the organisation can be perceived as an indirect form of workplace bullying endangering a trustworthy environment and fostering a loss of faith both among employees and also between employees and management. A number of studies, has shown that workplace bullying exists among banking employees and is becoming a serious problem especially because of the financial crisis (Giga and Hoel, 2003; Gök, 2011; Spyridakis, 2009). Heames et al. (2006, p.348) define workplace bullying as the: “repeated actions and practices that are directed to one or more workers, which are unwanted by the victim and which may be done deliberately, or unconsciously, but clearly cause humiliation, offence and distress and may interfere which job performance and/or cause an unpleasant working environment”. The phenomenon of workplace bullying has been associated with other terms such as harassment (Björkqvist et al., 1994), victimisation (Einarsen and Raknes, 1997) and emotional abuse (Einarsen et al., 2003). Gök (2011) argues that workplace bullying negatively affects organisational performance, job satisfaction and has a substantial impact to the employees. Workplace bullying also caters for economic and legal risks leading to sometimes unbearable economic costs for the organisation. Poilpot-Rocaboy (2006) strongly states that workplace bullying is a serious phenomenon of psychological harassment and that HR managers are the ones who must combat it within organisations. This psychological harassment caters for more serious consequences in the psychological, sentimental and cognitive behaviour of the employees rather than the physical violence. Workplace bullying is explicitly linked to the organisational culture in terms of individual encouragement to reveal such behaviours. “If perpetrators may indeed have some common characteristics making them prone to bullying, they will not exhibit such behaviour unless they are in an organizational culture that rewards, or at least is permissive of such behaviours. The interaction of individuals and the work context is an essential component of the psychological harassment behaviour” [Poilpot-Rocaboy, (2006), p.7]. Di Martino et al. (2003) highlight an interesting parameter of workplace bullying in relation to organisational change in the context of sustaining an organisational competitive advantage. Dramatic change processes can have a consequential effect on the development of employee relationships. This is also connected to the fair process parameter since organisational restructuring, if perceived via an autocratic prism, can lead to the loss of trust and be discerned as a risk factor of bullying (Poilpot-Rocaboy, 2006). Spyridakis (2009) approaches the phenomenon of workplace bullying under an anthropological prism within the banking sector. In this context, he argues that the emergence of this phenomenon is due to the relational interplay between power and authority, which is observed and developed within the workplace. In his research, Human resources management and open innovation adoption 445 Spyridakis approaches the phenomenon within an ecosystem of existing conditions that facilitate the formation of perceptions, attitudes, behavioural norms and relationships. Spyridakis (2009) observes a horizontal deployment of the phenomenon within the workplace arguing that the phenomenon is multi-level and multi-dimensional, not solely limited to the managerial level but also developed in the interpersonal and employee level. It also is important to bear in mind that workplace is an arena that formulates dedicated organisational culture and behaviour and is perceived as a collective crucible of a dynamic co-existence of expectations, attitudes, opinions, rivalries and identities. In the context of the banking sector Spyridakis (2009, p.359) argues that employees intensively experience the phenomenon of workplace bullying “acknowledging the fact that it shares a submissive attitude and production of a surplus value and catering for inhuman and under pressure working conditions” [quoted from Spyridakis (2009) and translated from Greek into English by the authors]. Banking employees are being constantly challenged to safeguard not only their personal dignity and value but their inherent right for work. The organisational environment is the core antecedent of the creation and establishment of an environment in which collaboration, openness and trust can thrive and foster the adoption of open innovation practices in the banking sector. Human resources management must fend for the organisational culture and the way work is organised and become the leveraged mechanism that contributes to the establishment of the right quality circumstances under which work is taking place. At this stage it is important to underline the fact that the development of this conceptual model is being built upon the authors’ prior research emphasising the role of trust and readiness on the organisational level as the main antecedents of the adoption of open innovation (Salampasis, 2014). This prior research is acting as a facilitator towards the development both of the conceptual framework but also the research propositions. The abovementioned overall analysis leads to the development of a number of research propositions. All these research propositions are being conceptualised in an integrative conceptual framework that depicts all the relevant dynamic relationships. • Research proposition no. 1: Human resources management affects the adoption of open innovation in the banking sector. • Research proposition no. 2: Trust moderates the relationship between human resources management and the adoption of open innovation in the banking sector. • Research proposition no. 3: Organisational readiness moderates the relationship between human resources management and the adoption of open innovation in the banking sector. • Research proposition no. 4: The characteristics of trust shape the characteristics of organisational readiness in the banking sector and vice versa. Figure 1 highlights the role of human resources management in terms of creating a trustworthy and organisationally ready internal environment that can adopt open innovation practices. This adoption of open innovation offers a world-class opportunity to the firm in terms of opening up the silo-driven organisational boundaries and cultivating an organisational climate built on resilience that through its diversity expands the corporate horizons. This means that the management of human resources requires: “a marked departure from traditional management principles, processes and practices or a 446 D.G. Salampasis et al. departure from customized organizational forms that significantly alters the way the work of management is performed” [Hamel, (2006), p.4]. Figure 1 4 Conceptual model: the organisational aspect of open innovation adoption in the banking sector (see online version for colours) Discussion Our analysis depicts a new trend in the banking sector towards the adoption of open innovation practices and the realisation of the importance of human resources management as an inherent ally in the process. This process of strategic transformation and the fact that the simultaneous delivery of both results and attention to issues both on short and a log term perspective requires a new set of rules in the way human resources management is perceived in terms of an embedded next-generation capabilities development culture and the revision of the actual role and importance of human resources in the organisational level. Regarding the role of human resources management in the evolving financial sector we support the fact that even though banks, security house and insurance companies offer increasingly similar services “the educational and occupational profiles of their workforces have not become substantially more alike” [Demsetz, (1997), p.1]. The banking sector is trying to recover from the almost devastating financial crisis and this recovery is slow and complex, especially in the realms of such a competitive industry. Words such as growth, sustainable profitability, transparency, integration and management of big data strategic orientation, capital adequacy and the development of new and reliable resource of revenues originating from customised products and services are put back into the agenda and always under the fact of empowering and augmenting the business value stemming from the customer relationships especially today that customer behaviours and expectations are becoming more and more demanding. Human resources management and open innovation adoption 447 The highly complex regulatory environment can be seen both as a safety net but also a hindrance towards this development since time and regulatory compliance, especially within a worldwide spectrum remains one of the top challenges the banking sector is facing. This is in line with the emerging technologies era and the extensive use of social media that bring flexibility, adaptability, standardisation, integration, efficiency and effectiveness. Even though there is a strong debate around the adoption of open innovation in the banking sector, an emerging shift and transformational attitude of the industry can be observed which can open up the environment for the development of a more flexible, open, competitive and collaborative organisational culture. The development and maintenance of such an environment will only come through highly skilled human resources and the realisation of the value of the people in the banking sector. Better education and training of the human resources in the banking sector “will strengthen many of the behavioural aspects of open innovation, including networking and collaboration skills and corporate entrepreneurship” [Wang et al., (2012), p.422]. This training will support banking development and encourage the cultivation of skills which are an inherent part of the institutional strengthening process (Carlson, 1997). In the realms of this ecosystem, the management of human resources can become a vehicle putting the sector in the locus of open innovation practices. This mindset will also facilitate the regaining of trust, especially from the side of the customer/user perspective, which has been severely damaged or even lost to a great extent because of the financial crisis. This is in line with the findings of the 2013 PWC Global Private Banking and Wealth Management Survey that a more dynamic human capital, resulting from an effective and efficient human resources management, will be the inherent element towards the rebuilding of trust and reputation and the answer to the operational and organisational efficiency attitude. “Human capital management increasingly will be the source of competitive advantage. Organizations need to increase their focus on talent management and building a culture where employees can flourish” [PWC, (2013), p.28]. This competitive advantage will originate from employees who possess both the skills and qualifications required but at the same time showing the capacity of quick response and adaptation in all the current and future challenges. Overall, a changing role on the human resources management can be perceived in the banking sector through the realisation that effective human resources management must involve leaders, managers and the employees. Human resources management must be put in the core of the corporate strategy as new concepts such as employee engagement and employment branding begin to emerge. Human resources management seems to start forming a partnership with management and a desired organisational decentralisation as part of developing skills, competences and leaders and by giving incentives and opportunities. Furthermore, there is an emerging trend of building human organisations, where a foundation of trust is being established and the fact that we recruit and hire whole people and not simply resources or capital. Management is inherent to human beings and we believe that open innovation can only be realised within such human organisations. This means that the people need to be put in the locus of the open innovation process so it is important to realise the key factors that engender and enable the human side of open innovation requiring cognitive changes in the mindset of the management (Bigliardi et al., 2012). 448 D.G. Salampasis et al. Openness does not mean elimination of organisational structure. An important challenge that firms face today is the creation of a systematic openness to reconfigure their existing knowledge capacities in order to be able to adapt within the current competitive and highly demanding business environment [Lichtenthaler and Lichtenthaler, (2009), p.1334]. Openness means having the ability to create networks, to share information and keep good ideas alive resulting to value capture and value co-creation. Kanter (2011, p.78) perfectly denotes that: “leaders in great companies can tell a different story about the basis of their decisions. In so doing, they are able to produce new models for action that can restore confidence in business and will change the world in which we live”. Finding good ideas outside the organisation by following the not invented here mindset is easy. The most difficult task however is to be able to implement and set up all the necessary processes to be able to “find, capture and commercialize ideas and creating a corporate culture that promotes and protects these processes” [Jaruzelski and Holman, (2011), p.1]. So the two core elements of open innovation are initially the existence of an open culture to new ideas and the establishment of effective and efficient processes capturing and acting upon these ideas. The challenge is be able to develop the appropriate skills within the organisation in order to be able to find the correct partners and foster sustainable and long lasting relationships. Choosing the right mode of collaborative innovation, falls into the consideration of a substantial number of variables and elements (Pisano and Verganti, 2008). However, it is important to accentuate that the mode of collaborative innovation which will be chosen to cater for the incentive of the firm per se, is highly related to the role and extent of trust that is flourished between the potential key players. Banks must be very cautious when adopting set performance metrics to specific elements of an open innovation effort. In order for the above to be realised and to really be able to talk about a pure and not spurious or simply rhetorical open innovation adoption, an adoption leading to tangible performance outcomes, it is necessary to prioritise upon the managerial perspective of building upon the management of human resources, i.e., the people who will be the ones to become the drivers of open innovation adoption and focus upon their skills, competences and cognitive capabilities identification and building. 5 Conclusions The aim of this paper has been to identify the role of human resources management towards the creation of an environment that would embrace and encourage the adoption of open innovation practices in the banking sector. Banks need to be part of the era of disruptive change. The authors argue that in order to do that, banks need to look inside, rethink their internal culture and structure and start from the people. This means that the employees are the agents of this change since they will understand it, support it and embrace it as their own. Change in the banking sector requires, responsiveness, transparency and trustworthiness and all these objectives must be reflected, reinforced and encouraged by the organisational culture. The unique value proposition of open innovation is to moderate this new approach. Human resources management becomes the inherent element by the establishment of an organisation that would encourage the employees to cut across organisational Human resources management and open innovation adoption 449 boundaries and adopt such practices in the organisational structure. On the other hand the creation of a trustworthy, fair and safe environment will pave the way of engaging management and employees in a collective process to freely experiment, exchange ideas, learn to collaborate and diffuse this culture across the entire organisation. Open innovation is about sharing ideas and entrusting collaboration across companies. In order to succeed on that, ideas need to be shared and collaboration between individuals must be initiated. 6 Implications, limitations and avenues for future research 6.1 Academic implications The paper opens up the research of open innovation in the field of human resources management by paving the way to a more multidisciplinary approach. The human side of open innovation is still quite underdeveloped taking also into consideration the fact that open innovation as a concept even if it is considered a mainstream buzzword is not yet vastly adopted especially in the banking sector. Opening the discussion of the emerging role of human resources management in the banking sector regarding the establishment of organisational trust and readiness of the industry towards the adoption of open innovation practices, caters for a broadened approach and study of human resources management. This study also bridges different research streams and disciplines creating knowledge valuable both under an academic but also a practical perspective. 6.2 Managerial implications This paper shares important managerial implications that apply both the management of the banking sector but also in the pure human resources departments. It is important to realise that transformation is not easy and requires investment, time and understanding. Biro (2012) presents some key elements regarding the role of human resources management in relation to effective leadership: investment in leadership development, creation of a collaborative culture, development of communication skills, driving and sustaining real accountability, being human and rewarding emotional intelligence. Another important element to be explored by the banking leadership is the necessity to build on diversity both in terms of talent but also in terms of knowledge. This diversity will create value via the development of innovative products and services and will foster the establishment of trust embedded partnerships with other banking intuitions, externally and the building of a global organisation internally characterised by a culture of openness and innovation. The role of human resources management here is paramount towards the provision of employees possessing a vision and imagination to nurture future generations of innovators. Human resources must be considered as the driver for organisational evolution and it becomes a unique opportunity for the banking sector and financial services to invest on the management of human resources and “subsequently hardwire into their organization’s DNA the ability to generate breakthrough innovation on a continuous basis” [KPMG, (2013), p.16]. Regarding the role of open innovation, a more social human resources management attitude must be perceived and it is the realisation of leadership to appreciate the role of human resources by creating a communal ethos within the organisation through the 450 D.G. Salampasis et al. development and engagement of employees. This employee-employer relationship needs to be characterised by an extracted and instilled value, the matching between personal and organisational values and the non-attention solely to shareholder value (Goffee and Jones, 2013). This will also facilitate both a transformation of the industry to the adoption of more open and innovative strategies and the regaining of trust both inside the company and also outside of the strict corporate boundaries. The adoption and development of an active social media policy will empower the focus on social engagement and lead to proactive communication strategy with the bank customers and also become more responsive to offering solutions. The industry needs to stop functioning within a silo and become more open with a cross-cultural perspective and a global outlook (Unruh and Cabrera, 2013). This means that different services, information and attitude need to be reflected under the functional umbrella of a single brand. The adoption of open innovation will create a forward looking, social-banking institution. This is the actual meaning of open innovation: moving from the institution to the individual. This caters for the realisation that if the banking sector wants to regain trust, then things must start evolving from the inside of the organisation. You cannot ask for trust if you are not trustworthy as an organisation. Last but not least human resources management becomes a crucial element to bank stability since a positive relationship between human resources formation and financial sector development is observed (Outreville, 1999). 6.3 Limitations and avenues for further research There are some limitations that deserve to be acknowledged. Firstly, the paper is purely conceptual, solely based upon a thorough review of the literature, without taking into consideration other means of data. Secondly the paper investigates the banking sector as a whole without taking into consideration potential differences between retail banking, investment banking, universal banks, central banks and Islamic banks. This paper also paves the avenues for further research on the human side of open innovation in the banking sector. 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(2008) ‘A model of fair process and its limits’, Manufacturing and Service Operations Management, Vol. 10, No. 4, pp.1–17. Publication VI Salampasis, D., Mention, A-L., and Torkkeli, M. Open innovation for “humanly-embedded” financial institutions: individuals and organizations at a crossroads Reprinted with permission from the Proceedings R&D Management Conference, 2015 © 2015, R&D Management Open innovation for “humanly embedded” financial institutions: individuals and organizations at a crossroads Dimitrios G. Salampasis1, Anne-Laure Mention2 and Marko Torkkeli3 1 Luxembourg Institute of Science and Technology, Luxembourg. [email protected] Luxembourg Institute of Science and Technology, Luxembourg. [email protected] 3 Lappeenranta University of Technology, Lappeenranta, Finland. [email protected] 2 This qualitative empirical paper, by talking across discipline lines and adopting a multidisciplinary approach, aims at shedding light to the highly neglected and under-developed human side of open innovation by bringing insights from the financial industry. It contributes to the limited existing literature, unveiling the peculiarities of the dynamic interconnection between the individual and the organizational spheres. This multifaceted interconnection captures a) the profile of an open innovation leader and b) the organizational ingredients, practices and mechanisms contributing to the creation of an open innovation corporate environment. Primary data has been collected from 21 in-depth semi-structured interviews conducted with C-level Executives of major financial institutions in Europe, Americas and Asia-Pacific. This paper argues that there is an emergent need for sharpening the understanding that for open innovation to be meaningful and successful, in the financial industry, the human element must be put back on the agenda and strategic intent of the industry, per se, especially in the face of unprecedented global and organizational challenges. This paper shares novel academic and managerial implications on the dynamic co-dependence of the individual and organizational spheres towards embracing open innovation within “humanlyembedded” financial institutions. 1. Introduction Human nature is a complex collage; difficult to understand, unveil and unpack all the hidden and respective peculiarities, along with unpredictable human actions, distinct attitudes, goals, motivations and behavioural explanations. In addition, organizations are living systems with all their integrative parts entangled, characterized by complexity, primarily, when working with human beings, the “raw materials” of the organization’s process (Hasenfeld, 1983), making it almost impossible to fully capture their way of functioning and the ecosystem of interrelated dynamics involved (Weick, 1979). At the same time, in the context of the financial industry, an emergent need for an inherent contextual understanding and appreciation of the role individuals and top management play in the process of value creation, value capture and value sharing from adopting and implementing open innovation practices is observed. This necessity is driven by a combination of emerging challenges, trends and customer needs the landscape of the financial industry is facing (mobile applications, big data analytics, sharing economy, social media, payments, lending, savings, third-party solutions/platforms/utilities etc), especially with regards to the role of technological innovation, regulatory changes, compliance requirements, the loss of relevance of traditional financial services from a customers’standpoint (Accenture 2020 Banking Report, 2013; Millennial Disruption Index) and the fact that financial institutions are no longer deemed trustworthy (Edelman Trust Barometer, 2014). To that respect, the driving forces that shape the industry resolving around technological developments, collaboration models, consolidation activity, interoperability across players and penetration of market participants, change the nature of the industry itself. Within this fierce competition, the financial industry must be prepared for change, within an environment that is no longer “business as usual”, in terms of institutional adaptation, modernization and change of mindset in order to sustain its relevance and competitive advantage, leaving also room for becoming a globally effective social industry, economically and socially sustainable (Davis and White, 2015). For this to happen, financial institutions need to adopt open innovation practices that will help them “embrace the technology-driven changes and look for new opportunities rather than protecting and preserving antiquated business models” (Hernaes, 2015, n.g.) in terms of remaining relevant to their customers. “It is encouraging that many banks are receptive to the idea of open innovation, collaboration and Fintech investment and also are prepared to sacrifice current revenue in order to move to new business models. But banks need to innovate faster, become more nimble and develop a more entrepreneurial culture if they are going to compete effectively and meet customers’needs” (Holley, 2015, n.g.). In this context, in order for open innovation to succeed, it is important for financial institutions to understand the emerging role and characteristics of the open innovation leader, while at the same time create the right conditions within the corporate environment for this human nature to excel and thrive, especially within conditions of uncertainty. All in all, it is of moment to acknowledge that the human and organizational elements are totally intertwined in the process of making open innovation possible within the financial industry. This view is emboldened by the fact that organizations are perceived as a way of ordering the flux of human action, catering for its channelling to some kind of outcome by formalizing meanings, rules and norms (Tsoukas and Chia, 2002). Furthermore, this view caters for a reflection on Peter Drucker’s management theories and his heuristic approach on the fact that organizations must operate within the societal norms of morality and ethics, taking always into account the fact that, on the one hand, people are the most valuable resource for an organization and on the other hand, top management must seek to support people to freely perform. This way of thinking is indeed once again contemporary, especially within the financial industry, where an emerging devoir to realize the upcoming human to human business philosophy and paradigm shift, comes to light. To that respect, acting in response to the need for further investigation on the under-developed human side of open innovation (du Chatenier et al., 2010; Elmquist et al., 2009; Gassmann et al., 2010; Perkmann and Walsh, 2007; Salter et al., 2014; Sartori et al., 2013; West et al., 2006; Wynarczyk et al., 2013), this paper introduces a “humanly-embedded” approach to open innovation in the financial industry. By analysing internal management structures and elements along with the identification of individual characteristics, this paper contributes to the discussion on the role of open innovation within the financial industry, an industry, not yet vastly explored in innovation studies, despite its primary contribution to the overall worldwide economy (Gianiodis et al., 2014; Mention and Torkkeli, 2012, 2014; Schueffel and Vadana, 2015). In this frame of reference, the following two research questions are hereby being discussed: 1. What is the profile to excel and lead in an open innovation environment, within and across organizational boundaries? 2. What are the organizational ingredients and ways contributing to the creation of the right corporate open innovation environment and culture, within and across organizational boundaries? Twenty one in-depth semi-structured interviews with C-level Executives of major financial institutions have been conducted, offering an abundant vicinity of insights, foresights and perspectives. The rationale behind the need to focus on open innovation and explore the embeddedness of the human element within the organizational sphere of financial institutions, is not only prescribed by the literature, but also from the necessity to integrate an alternative prism in the ways financial institutions perceive their business relationships with individuals and especially with their employees. This relationship, especially within the context of the financial crisis, has been experiencing a tremendously strenuous impact and loss of trust both inside-out and outside-in, according to the recent findings of the 2014 Edelman Trust Barometer. Hence, its redefinition is really about promoting a long-term financial security and trustworthiness (Fergusson, 2011) by forming a human connection with the people inside the organization, in the realms of open innovation, as a connection-driven innovation paradigm (Salampasis et al., 2014). Furthermore, the authors consider this discussion topical since the ability to innovate becomes a strategic prerequisite for the financial industry’s growth and success and the adoption of open innovation practices can foster collaboration and facilitate the rethinking of the industry’s existing business model and value proposition, within an increasingly complex and volatile world. The paper is structured as following: Section 2, projects an overview of the relevant literature. Section 3, presents the methodological tools and the argumentation regarding the appropriateness of the methodological approach. Section 4, expounds a comprehensive analysis of the research outcomes, offering a detailed analysis and synthesis towards addressing the two research questions. Sections 5, manifests the research contribution, concluding remarks, implications for academia and practice, while, acknowledging limitations and putting emphasis on avenues for further research. 2. Literature Review Despite the vast acknowledgement of the importance of the role of the human element within the open innovation research agenda, the organizational aspect is the one that still prevails at most (Shalter et al., 2014). The “humanly embedded” organizational culture of managing people and the collective prism of behaviours and skills, which is considered as the “soft side” of business, is usually neglected (Pfeffer, 1994). A conditional factor for successful open innovation management is the development of organisational capabilities and managerial competence fostering the exploration, exploitation and retention of internal and external knowledge (Wynarczyk et al., 2013). This realisation is encapsulated within the complex interplay between individuals and teams towards a formation of an organisational culture and strategy (Lichtenthaler et al., 2011) and the existence of specialised knowledge, skills and learning structures (Lichtenthaler, 2004). EasterbySmith and Prieto (2008) underline the importance of human processes as a dominant element, which cannot be overlooked by knowledge management. Open innovation means adopting a new mindset and paying attention to the development of diverse and expanded capabilities within a corporate framework (Van de Vrande et al., 2010). In relation to this change of mindset, Salter et al (2014) observe an incompatibility between the requirements for open innovation and the existing modus operandi, resulting in numerous challenges (getting the right mindset, building partnerships, starting the conversation and taking advantage) in terms of daily work execution, formal and informal procedures and development of individual work roles. The human factor of open innovation, along with resources, organizational systems and culture, belongs to the internal barriers of open innovation adoption (Sartori et al., 2013). The role and new issues related to the human resource management (hereinafter HRM) arena, especially with regards to the openness of the firm and the extent of collaborative initiatives, show that the traditional model “for managing human resource has been abandoned as a result of the introduction of open innovation practices” (Petroni et al., 2012: 171). Open innovation adoption requires personalisation, communication and a collaborative mindset; organizations need to start collaborating and opening up, first internally and then externally (Salampasis et al., 2014). To that respect, open innovation is purposeful when collaboration among key parts of the organizational sphere takes place only when a solid layer of organizational trust exists (Salampasis et al., 2015a). Innes et al. (2007) depict the formal and informal nature of collaboration under the prisms of a network approach, while Innes and Booher (2010) introduce the existence of “collaborative rationality” in relation to the creation of a participatory environment. Surowiecki (2005: 57) evinces the fact that “collective decisions are likely to be good ones when they’re made by people with diverse opinions reaching independent conclusions, relying primarily on their private information”. Due to the financial crisis, the landscape of the financial industry has been drastically altered. Adopting open innovation practices is difficult due to various organizational factors and monetary reasons (Schueffel and Vadana, 2015). Salampasis et al. (2015b) argue that there is a need to adopt a “human-centered” mindset and attitude towards open innovation in the banking industry. This means developing practices within an organizational culture, which contribute to the formation of a “humanistic behavioural norm”, which can act as a catalyst for open innovation leaders in the financial industry to “reach out beyond the confines of their organization for ideas and solutions, for the innovations that will enable their organizations to excel” (Seltzer and Mahmoudi, 2012: 3). This is particularly relevant for the financial industry, which is often characterized as being dehumanized (Salampasis et al., 2015b), mainly, due to perplexed hierarchical structures and a silo-driven mindset, hampering the incentive, motivation and impulse for organizational transformation and change (Vermeulen et al., 2007). Padilla-Melendez and Garrigo-Moreno (2012) argue that moving from the organizational to the individual level, various factors including motivation, recognition and training in dedicated skills, motivate the engagement in knowledge transfer exchanges. Salampasis et al. (2015b), introduce additional factors including intraorganizational trust, fair processes and leadership, in the course of action to adopt open innovation practices in the banking industry. The human side creates an ecosystem of social relations, cultural factors and sense-making. In this context, management must “unleash the human potential of employees and build the flexible company only by stripping away mechanistic assumptions and trappings and dealing with the human side of the organization” (Kelly, 2000: 145). Skills, knowledge and commitment are considered as constitutional elements of innovation towards the prevailing of a value creation mechanism (Youndt et al., 1996), requiring effective HRM practices and determining the employer-employee relationship (Rousseau and Greller, 1994). Furthermore, open innovation leaders need to create a trustworthy environment, integrate individual and partner goals and establish equilibrium among different levels of power (du Chatenier et al., 2010). Human skills and capabilities share substantial influence towards the adoption of open innovation practices (Mortara et al., 2009; Schroll and Mild, 2011). Mannix and Neale (2005) underline the existence of skills, personal traits, psychological and cultural norms, social network, demographic attributes and values, while Mortara et al. (2009) classify four types of open innovation skills: introspective, extrospective, interactive and technical. Martino and Bartolone (2011) identify the soft skills for open innovation success by sketching the profile of employees dealing with open innovation processes, around intrapreneurial skills, communication skills, inherent relationship building and maintenance capacity, fast learning, tolerance in terms of uncertainty, passion and optimism. This human aspect is also directly linked to organizational performance (Felin and Foss, 2005) contributing to the appreciation of personnel education. In this context, the role of education, the development and the diffusion of human capital, act as a major catalyst towards the promotion of an environment of open innovation (Podmetina et al., 2013) becoming the key KPI towards the measurement of the open innovation process (Perkmann and Walsh, 2007). This paper, by building upon the existing open innovation research scholarship, aims at contributing to the discussion around the human and organizational aspect of open innovation by providing insights from the financial industry in terms of investigating the intersection between the individual and the organizational peculiarities. It aspires to understand and appreciate the importance of the human element and unveil ways and mechanisms for succeeding and excelling in open innovation (both within as well as across organizational boundaries) in the realms of the financial industry, an industry where “the concept of open innovation is only very scarcely applied” (Schueffel and Vadana, 2015: 1); an industry striving to redefine its identity, its strategic intent and its relevance. 3. Research Design The qualitative research approach, adopted hereby, caters for the generation of new insights by providing rich context about empirical phenomena, either in terms of extending prior research outcomes or by exploring new research questions (Bettis et al., 2015). The employment of qualitative interviews, following an inductive reasoning, allows the unravelling of the interviewees ’own perspectives and points of view, while understanding valuable insights on what is relevant and important for the interviewee per se, in relation to each of the topical areas, along with flexibility and emergence of new concepts and ideas (Bryman and Bell, 2011). Twenty one qualitative interviews have been conducted with Chief HR Officers, Chief Innovation Officers and Clevel Executives of major financial institutions in Europe, Americas and Asia-Pacific. This mosaic of views reflects the need to drive a globalized strategic orientation approach within the financial industry. Additionally, it ensures appropriateness and a wide range of characteristics of interviewees, accrediting pluralism and emergence of views and experiences under the prism of diverse organizational, cultural, societal, ideological, educational and political backgrounds. Table 1: Overview of Interviewees The theoretical sample has been chosen based on: a) the reputation and trust benchmarking according to the 2014 Thomson Reuters Trust Index, b) the size of the workforce, the age (Van de Vrande et al., 2009) and location of the representative financial institution and c) the historical and actual attention to innovation, communicated externally, based on the 2014 KPMG Luxembourg Banks Insights and the 2014 Global Innovation Index. The interviewees have been chosen according to their position, knowledge and portfolio, following a course of pre-interviewing in order to safeguard the alignment of their profiles to the research strategy. It is also important at this stage to mention the inherent difficulty of the financial industry to share information and accept having executives be interviewed, primarily due to confidentiality purposes and regulatory restrictions. The interviews followed a semi-structured, open-ended pattern, taking the form of “guided conversations” (Yin, 2003: 89), establishing “the topic for the respondent and then leave the respondent to structure and answer as is seen fit” (Vinten, 1995: 27). All interviews, conducted within a period of seven months, either in person or via teleconference (Skype calls), lasting approximately 60 min. each, were fully recorded and transcribed, keeping the wording intact. Each transcript, with a debrief note including the interviewer’s “reactions to participant attitudes, insights and the quality of the interview” (Cooper and Schindler, 2014: 157), was sent back to the interviewees for additional corrections and comments. A written validation was provided by each interviewee along with a non-disclosure agreement, due to confidentiality reasons and to minimize potential bias. When available, secondary data from additional organisational knowledge channels e.g. annual reports, charts, available registers, company websites etc. were integrated in a triangulation process, ensuring construct validity and avoiding post-hoc rationalisation. The abovementioned table shows the profile of the interviewees, the sector and the location of the organization. All interviewees represent multinational financial institutions, being in line with existing research, which suggests that larger and older firms share the likelihood of being more involved within open innovation practices leading to internationalization activities contrary to smaller and younger companies (Clausen and Pohjola, 2009; Van de Vrande et al., 2009), without of course disregarding the fact that young, micro and SMEs practice open innovation (Wynarczyk, 2013). 4. Findings 4.1. Open Innovation Leader Mapping the profile of an open innovation leader in the financial industry is really about encouraging the adoption of a different kind of employee; an employee who is primarily aligned to the corporate culture: “… we are looking closely on each skill and experience that we require […] we are really working to make sure that the person is matching […] we check the personality, the attitude […] that matches our culture or can provide something to Maitland. We also make sure that the person has the skills, the technical skills required […] someone has the right skills, the right experience and the right attitude […] sometimes the attitude that the person has, does not match to the company culture. The person could be perfect for another company but not in ours, just because our culture is not the culture that person has”. In agreement, “… you look for the value fit of individuals, but first you look at your own values as a company” (Interviewee, I, com.pers). Education plays a very important role, especially, nowadays, due to globalization and the fact that people are being constantly exposed to new ideas, know-how, experience, multi-cultural and multi-lingual environments. “We recruit people, who were trained in a country which is not based on their nationality. We think that this gives the company a collective entry point and we focus on this kind of opening in terms of this mentality to the external world” (Interviewee, F, com.pers). An open innovation leader in the financial industry encapsulates a range of vision related to strong technical and theoretical expertise. Mix of business and legal studies, understanding and interpreting the regulatory framework, international exposure and orientation, multilingual competence, cultural dexterity, open mindset, willingness to multitask and collaborate; all coated within an entrepreneurial and intrapreneurial mentality. “You need to be an entrepreneur; always looking for excellence in providing a very high quality of services” (Interviewee, C, com.pers). On top of strong analytical skills, argumentation and negotiation skills and focusing on detail are of preeminent value. Leadership skills and traits are more focused on the ability of an individual leader, or a leader to be, not only to subsume contradictory and multiple views and decisions, but mainly to execute. Execution is a really essential aspect, since executives often remain in the sphere of strategy and innovation without proceeding to the execution phase. “It is a blend of good technical knowledge that is backed up and supported by an ability to actually get things done […] We are not looking just for technical persons or just for project management. We are looking for the best people to have skills on both sides. You do not find them very often but these are the sort of people that are looking for and have as a priority” (Interviewee, J, com.pers). An additional characteristic, which deserves recognition, is the proof of flexibility, which is about safeguarding that an open innovation leader is adaptive, self-disciplined and can survive within complex organizational entities full of perplexed reporting procedures, multiple decision-making bodies and hubs. This requires people who are patient, showing willingness to try hard, not get easily disappointed and drive a longterm solution mindset. “And I may say that I am not looking for someone just doing what I ask to do, I am looking for someone who is going to do what I ask to do and also suggest recommendations and see where the business is going” (Interviewee, E, com.pers). For a financial industry open innovation leader, the “market view” is indispensable, requiring a mixture of strong operational experience as much as having the ability to work with other organizations. “They have their environment view of the company in, which they work in, but they do not always have the view of what they have on the outside” (Interviewee, M, com.pers). What’s more, flexibility means, being comfortable to work in collaborative borderless environments and eager to share sufficient information, listen to the information, build upon the respective requirements and then convert them into such a way that it can bring an added value. The discussion with the interviewees materialized additional elements, which share an axiological importance and acknowledgement within the open innovation paradigm: a) advanced relational skills to build meaningful relationships; part of the meaningfulness of the relationship is about the 1) common understanding, 2) willingness to add value and part of that means openness, b) curious confidence, i.e. trying to make a difference, being able to challenge and acknowledging mistake. “Because from that basis you can share things without worrying whether they are right but also the fact that they are potentially wrong allows you to learn. And this isn’t about being brave or being the most outspoken; it is a kind of an internal confidence about that it is OK to say this, because I am doing this with the right intention and I am going to make my intention known” (Interviewee, G, com.pers) and c) dialogue skills, encased in maturity and respect; understanding the nature of dialogue, being proficient in using incisive questions, caring enough to think carefully about the questions to be asked, the question that are incisive towards the ad hoc situation. “That’s a fairly rare commodity because it is something we do not tend to nurture […] so there is definitely something about dialogue skills and I do not believe that interviews tend to allow us to bring those out” (Interviewee, U, com.pers). The following table (developed by the authors) depicts the multifaceted spectrum of characteristics an open innovation leader within the financial industry needs to possess, nurture and constantly develop, so as to excel individually and collectively, within and across organizational boundaries, accelerate and unlock the potential of the organization within numerous constantly changing conditions of the global business environment. The development of the table has been based on the interviews but also on information received from industry forums and real job descriptions and openings so as to strengthen the relevance of the findings. Table 2. Leadership Traits of an Open Innovation Leader in the Financial Industry The heretofore mapping of the profile of an open innovation leader in the financial industry, unveils multiple peculiarities and challenges, which need to be addressed internally, requiring changes in many aspects of the organizational sphere. This realization is in line with the argumentation posed by Tsoukas and Chia (2002: 570) that “we need to stop giving ontological priority to the organization, making change an exceptional effect, produced only under specific circumstances by certain people (change agents)”. Open innovation within the financial industry entails the elements of ambivalence and unpredictability, requiring a many-sided and different logic leadership to realize and nurture it, while coping with the unknown and in great uncertainty. This on-going metamorphosis of global dynamics makes change being always present, necessitating the overall understanding of the organization. The authors argue that the required individual elements reflect, in a sense, the collective culture and the components, which are vital for establishing open and collaborative organizations. Furthermore, this mapping shows an amalgamation of multiple facets and particulars that frame the individual sphere and cover multipolar aspects of the human nature. Far-reaching is also the fact that the profile of an open innovation leader in the financial industry reflects the evolution of a new type of leader. “I think the need for leadership qualities will increase […] I am not saying that we do not need the other profile, I am saying we need both, but I think we need to focus also on the fact that if you want a competitive edge you need to have the right people driving this competitive train and acknowledging that relations and relationship building and all these are much more important than just an ordinary chat with your colleague” (Interviewee, T, com.pers). 4.2. Organizational Readiness for Open Innovation The previous paragraphs have sketched the individual characteristics of an open innovation leader in the financial industry. Attracting such talents, means that the corporate environment must be able to offer this kind of workplace, by putting in place the necessary mechanisms and conditions to nurture such individual characteristics, while embracing the preferences of the next generation (Davis and White, 2015). The purpose of this section is to investigate, based on the components of the individual sphere, the respective ingredients of an open innovation corporate environment and the pathway to its successful creation, within the context of financial institutions. Traditional financial institutions are usually characterised by introversion and a silo-driven environment, mainly driven by the brand name of the respective organization, which does not always allow the exploration of the market and the competitors. “We are so good, so great that we cannot see, or do not want to see, or we believe that it is worthless looking at our competitors” (Interview A, com.pers). In any context, business or people, especially in the framework of organizational change, introversion is a serious hindrance. The only way to move forward and foster an environment of open innovation is by becoming extrovert. “Open innovation practices can be applied if the mindset and spirit of collaboration and openness is in place” (Interviewee O, com.pers). In the same frame of reference Johnson (2010: 42) argues that “the trick to having good ideas is not to sit around in glorious isolation and try to think big thoughts. The trick is to get more parts on the table”. To accomplish this endeavour, there is an inherent need to create conditions that promote trust, destroy silos and encourage dialogue and free expression of ideas and thoughts. It is essential to be organized in such a way so as to believe in collaboration and partnership, at all levels of the organizational entity. It means working very actively across different countries, with different skillsets, different organizations (banks, technology companies, governments etc). Top management must be visible across countries, manifest the leadership, especially when not being in the same geographical place, which certainly is an exhilarating challenge. At the same time, this requires the establishment of a very open culture towards working with other organizations and a robust intellectual property i.e. a vast amount of activities with other financial institutions, customers, the public and the private sector. It requires shifting from a very silo-driven, a very narrow framework to one that is much broader, inclusive, much more strategic, much more open, one that embraces diversity, encourages complementarity in the respective working groups and gives individuals the opportunity to develop within an organization in a much more holistic way. Integration is one of the key internal sorts of behaviour trades that must be engendered between the different areas. Top management should go beyond the comfort zone, leading the endeavour of finding out about other areas and how the organization works by means of educating other people and learning from them. This practice denotes a two-way process of going beyond the barriers, the kind of invisible barriers that exist within the organization. Within the open innovation paradigm this shall run the interference for knowledge-sharing, knowledge-creation (cross-divisional knowledge) while vouching for the nurturing of organizational trust. Furthermore, top management should be approachable to work with each one the employees in different areas, to embrace willingness to delegate, acknowledge and reflect the willingness to trust the employees to deliver their duties in a proper way without having to adopt monitoring and surveillance practices and actually embrace the willingness to work and bring everyone on board. It needs to embrace an alternative way of thinking, far from controlling people and provision of monetary incentives as a form of motivation (McGregor, 1960). These practices “grease the wheels” for challenging the organization to do better and adapt to new ways of working. “The partners in our firm are very open, they adopt an open-door policy that is really working well here, they invite any employee to listen something about new business developments […] employees are really involved in the business and the life of the organization” (Interviewee, Q, com.pers). This approach is educational, collaborative, is about mutual trust and about giving the employees a sense of responsibility by delegation. It encourages employees to come on board, to become motivated by being creative, more motivated by developing new financial products and by having a greater purpose and social benefit. “I am trying to share with them and to recognize their work […] actually I am trying to build this relationship with everybody […] but to do that we need make people much engaged and to get them motivated and feel happy within the company and that is what I am trying to do […] push them to do more than they can do”. (Interviewee, R, com.pers). Open innovation in the financial industry is meaningful when the organization’s culture is translated across organizational, national and international boundaries. Creating more human financial institutions requires this key glue: “it’s the organization’s values, the organization’s culture, what does the organization stand for, what does it want to achieve, who are the senior leaders for everyone irrespective the country and the operation” (Interviewee B, com.pers). In order to build an open innovation corporate environment within the financial industry two major practices have been identified: talent acquisition-retention and training. Open innovation adoption in the financial industry displays a willingness to innovate and adopt know-how and practices from other industries. Bringing in new skill sets from other companies, skills that have slightly different forms of incentives, opens doors to new incentives. From a human standpoint, the real value is on finding the right people. To that respect, the trends in the talent acquisition and retention, especially within big organizations, will be towards resource process outsourcing, pooling labour resources, shared management development, shared training methods, shared R&D and shared recruitment in the direction towards the development of employee referral plans and establishment of an employer brand. The establishment of an employer brand will be built upon a shared value between companies that have the skills, companies that are focused on niche markets requiring specialized profiles and this can happen by outsourcing and sharing the value chain. So within the talent acquisition process, open innovation can play a strategic role in terms of realizing the power of words and communication towards the creation of common understandings in opening up all stages of the recruitment process. This openness leads to a formation of a galaxy of players that collaborate within the talent acquisition lifecycle creating new dominant designs, which are adopted by financial institutions as solutions to their unmet needs. It is important to underline that this process does not only lead to the identification of new talents, but also to new business opportunities, new partnership opportunities, building business cases that together with marketing and sales functions shall also strengthen the reputation of the respective financial institution with a major impact on the firm’s innovation strategy and performance, both in terms of breadth and depth. An opportunity towards building collaborative and open financial institution emerges also through training sessions. This is an operation in relationship-based cultures, providing the employees with the necessary technical and sub-skills. “It is really about learning from managers’ own experiences; so we get our own managers to come and talk and then we bring out some external speakers to talk about leadership and about culture and about innovation” (Interviewee, H, com.pers). They serve as a quality indicator, securing that the employee is properly trained, complying with the existing regulation, the spectrum of activities and services provided by the financial institution and the needs of the respective market. Additionally, they serve as team-building activities letting on for a collaborative spirit in the working environment, encouraging and cultivating an interdepartmental and multi-level approach to the management of employees, the understanding of their needs, attributes and motivations. “People are working with everybody so there a valuation from each part with everybody”. (Interviewee, K, com.pers). For that to look different, in a learning organization, enlightened managers are needed; managers who understand the value of training, managers who communicate that to their staff making sure they understand. This is the actual inner spectrum; that’s about a learning organization, that’s about a leader that is embedding learning and development in practice. This collaborative environment, increases the learning objectives, allows the nurturing of skills and competences, required by the market, increases the employability range and makes employees curious enough to adapt themselves and be open to new subjects and specializations by cultivating an open mentality. Furthermore, this kind of interactions provide time and space for the upbringing of a creative, connective and collective mindset. Successful communication aligned to the strategic goals is a challenging and strenuous task. Training sessions assist employees (especially the ones belonging to the lower levels of hierarchy) to comprehend and appreciate the internal functions, the combinative forces of the interrelated internal dynamics and perceive the criteria and the rationale behind both certain actions and decisions. Based on the abovementioned analysis, open innovation in the financial industry is meaningful only within organizations that embrace learning and development. The evolution of open innovation within the financial industry will begin with an evolution in learning. It is observed that even though the strenuous process to create an open innovation corporate environment is primary related to top management, the interrelated internal dynamics and combinative forces, that shall bring the employees on board this process by creating a communal ethos within the organizational sphere, must be put in place so as to translate the required the individual and organizational ingredients to a corporate environment. To sum up, in order for open innovation to make a difference and patronize a foundational change in the financial industry, the starting point is about profiling the organization and creating an organizational and innovation identity: strategic vision, insights and foresights, profile and types of people. This is encapsulated within the talent acquisition and retention process, making sure that the right people enter and fit within the organizational culture. Then it is about leadership development, motivation and nurturing of the employees to innovate with purpose and within the course of business ethics. This is done via training sessions that safeguard that people develop themselves in alignment to the organizational culture, behaviour and strategic intent, translating the individual sphere across the organizational boundaries. Figure 1. Organizational Readiness for Open Innovation in the Financial Industry (Developed by the authors) 5. Conclusion and avenues for further research 5.1. Contributions The research outcomes address cutting-edge topical issues of the human aspect, encapsulated within a dynamic interplay between the individual and organizational sphere in relation to open innovation adoption by providing novel insights in the context of the financial industry on a) the profile of an open innovation leader and b) the ways to build an open innovation corporate environment In this context, some closing remarks deserve attention and consideration. The role of open innovation within the financial industry is interpreted as finding solutions to complex problems (streamline operations, capture new market niches and establish a competitive advantage) and meeting business needs and objectives, while safeguarding trust through human branding and operational transparency. Furthermore, the open innovation leader constitutes a new type of leader epitomizing interconnected and interrelated elements that cover a wide spectrum of multidimensional characteristics. This profile captures the integrative interplay between the cognitive space (mental/physical skills and intellectual potentialities) and the motivational space (individual needs, psychological conditions, behavioural assumptions and cultural expectations), along with personal attributions and traits, including various demands on the job, perceptions of effort-reward fairness and innovative behaviour, while at the same time sharing numerous challenges ahead in terms of talent acquisition, retention and training. The financial industry open innovation leader is positioned at the core strategic DNA being responsible for infusing and diffusing an innovation culture within the organization. The open innovation leader is responsible for creating value and competitive advantage by reaching out and systematically identifying and commercializing new products and services developed with external partners, safeguarding market and customer relevance. The open innovation leader is the driver of creating an integrated open innovation capability within the financial institution, providing enthusiasm, methodology and creative thinking, translating challenges to opportunities, aligned to the ad hoc regulatory and compliance framework. Within the financial industry, open innovation is meaningful within learning organizations that show willingness to primarily understand the people and the individual working relationships, along with organizational values, visions, strategies and place in the market, reach out to attract the right people on a global scale and then safeguard constant development by putting in place all the respective mechanisms and organizational elements that shall empower the creation of an open innovation corporate environment. Financial institutions need to invest a lot in becoming actual learning organizations by infusing and nurturing to their employees the willingness to learn to collaborate, to open-up and create an inclusive culture. This will be done by bringing on board the right people (talent acquisition and retention) and by aligning existing and future workforce to the culture, behaviour and strategic intent of the organization (training). This process depicts the dynamic trajectory from the micro level (profile and career perspectives) to a macro-level i.e. developing the right profile to perform and become economically competitive in the global landscape (Hoffman et al., 2014). Organizing for open innovation is a continuous and incremental learning process that brings forward issues related to open corporate governance. It includes patterns that cannot be pre-determined especially when relations between people and organizational entities are developed within unpredictability and uncertainty. These patterns on the one hand safeguard sustainability but on the other hand act as drivers of change within the continual remodelling of organizational dynamics. The authors argue that open innovation is a participatory innovation paradigm meaningful within human organizations that embrace collaboration and transparency, while cherishing openness, trustworthiness, respect and assiduity to the human element. Open innovation for “humanly embedded” financial institutions captures the creation of a human brand focusing on novel approaches to leadership and to engaging with people in financial institutions. In the same manner, the quality of HRM practices and people is an inherent element of this organizational readiness and the authors believe that this is one of the major antecedents and necessary elements of open innovation. Within this process, open innovation can play an integrative role, since it can be the driver of regaining trust and building upon more human financial institutions, while defining a new sustainable growth trajectory for the industry. 5.2. Implications In relation to academic implications, this research, by talking across discipline lines and different backgrounds, explores the multifaceted human side of open innovation in the financial industry, responding to the call for further research regarding the consideration of the organizational context and environment (Chesbrough and Bogers, 2014). The rationale behind this research is in line with both “the human and the organizational side of open innovation, areas that are highlightened as important fields for further research” (Elmquist et al., 2009: 326). This paper opens up the research of open innovation in relation to the human element by paving the way to a more multidisciplinary approach. The human side of open innovation is still quite underdeveloped taking also into consideration the fact that open innovation as a concept, even if it is considered a mainstream buzzword is not yet vastly adopted, especially in the financial industry, where is still quite amorphous undergoing various interpretations. The discussion on the emerging role of the human element and the organizational readiness for open innovation in the financial industry caters for a broadened approach and research, synthesizing different research streams and disciplines to create valuable knowledge both under an academic and a practitioner perspective. From a managerial standpoint, top management needs to realize that human beings are considerably complex entities having distinct skills, attitudes, motivations and goals. Working in an organizational environment means that people experience conflicting goals, unequal knowledge and are exposed to different levels of challenges and controls. In this context, adopting open innovation practices is definitely a challenging and incremental procedure for top management in the financial industry. This study provides both the tools and rationale for creating an open innovation-friendly environment while facilitating the process of turning open innovation into an organizational capability. Open innovation are very scarcely applied within the financial industry. This realization was strongly depicted by all the interviewees, who many also showed a lack of understanding of the actual meaning and interpretation of open innovation. In order for the industry to benefit from the adoption of such practices there is a need for establishing formal, well-structured open innovation management teams, with a dedicated portfolio, diversification of roles and complementarity in terms of scientific/technological knowledge and nonscientific/technological expertise. This open innovation management team shall facilitate the adoption, management, implementation and utilization of open innovation practices and establish new norms of action within financial institutions. Open innovation within an organization comes primarily from the top management, being responsible for nurturing this kind of mindset within the organization. Within the financial industry it is of utmost importance for top management to be able to understand the need for establishing trustworthy and sustainable relationships, which can lead to innovative products and services. Trust along with friendship and team-working are considered as “socially complex resources ... difficult to imitate” catering for the creation of competitive advantage (Barney, 1995: 55). This is a leadership philosophy; it is about leading and motivating people. If an environment of trust can be created, greater trust with the clients that want to work with the organization will be engendered. So it is of note for leaders in the financial industry to understand the substantial impact of trust and engagement within organizations. This realization is reflected into the employeeemployer relationship. The authors embrace the suggestion by Hoffman et al (2014) regarding the need to establish an employee-employer alliance: companies investing in career transformation/career trajectory by embedding transferable learning across the organizational sphere, while individuals investing into making the company adaptable within the respective industry and driving a competitive advantage. This type of alliance suggests a new model for organizing in terms of employment and building a trustworthy corporate environment for open innovation to thrive. It is important to underline the elements of the environment where top management functions; an environment full of uncertainty, complexity and with insufficient or incomplete information. The adoption of open innovation practices in the financial industry can help into the development of a strategic capacity and the ability to understand the signals deriving from the market and foster a collective and collaborative action. Finally, the authors also argue that this “humanlyembedded” aspect can also culminate the discussion on the role of the financial industry per se, by becoming the catalyst to the strenuous endeavour of redefining capitalism (on a macro-level) and moving from an economic-driven to people-driven organizational and strategic rationale. 5.3. Limitations and Avenues for Further Research While this paper contributes to the understanding of the role the intersection between the individual and organizational spheres plays in adopting open innovation practices within the financial industry, the authors acknowledge there are several limitations worth noted. The limited, yet, diverse sample allows neither for the generalization of the findings for the overall financial industry, nor for their transferability to other sectors. Similarly the authors would caution about generalizing these findings, however, they believe that the sampling, within the realms of a qualitative research, has been conducted so as ensure a wide range of characteristics, without aiming at a statistical representativeness. Since individuals being “heterogeneously distributed among firms”, become focal players in the open innovation implementation process, they require different skills to perform diverse tasks (Bianchi et al., 2011: 827). This heterogeneity is conceptualised within an ecosystem of skills, personal traits, psychological and cultural norms, social network, demographic attributes and values. To that respect, future research in the financial industry is needed to a) develop variables and metrics to capture this “humanly-embedded” approach and individual open innovation behaviour in the workplace, b) assess the impact on open innovation performance and the overall strategic intent, c) unveil the different categories of skills, competencies, behavioural norms, personality traits and d) investigate the integrative role of HRM practices in relation to open innovation adoption and performance. Furthermore, questions about mindset, motivations, emotional factors and how the human factor challenges organizational complexity of open innovation are indeed seeking answers. Indicators of performance should also embrace aspects not strictly related to financial and economic performance (e.g. well-being for employees, employee and customer retention, growth) in a sort of chain-like fashion. Moreover, the shift of financial institutions towards becoming learning organizations requires the development of dedicated training curricula to embrace open innovation practices. It is important to determine the learning outcomes, the methodology and the learning approaches along with the acknowledgement of skills and capabilities retained from non-formal learning. This depicts a shift to an integrated capability development mindset with fundamental changes in performance assessment, career development, talent retention and acquisition and use of technological breakthroughs to redefine and engage employees within the organizational sphere. Despite the limitations, the authors believe that the research outcomes offer a newly-framed, multipolar approach by contributing to the larger discussion on the importance of the human and organizational aspects of open innovation in the financial industry, in a world characterised by non-linearity, disorder and unpredictability. Understanding the people and creating human organizations are the prerequisites for open innovation to have a meaning and impact. The financial industry as the driving force of the worldwide economy needs to look outward and grasp the full sight of the global picture. This can happen by embracing this “humanly-embedded” mindset moving from knowledge to human economy, nurturing a human capitalism and philosophy within the complexity and uncertainty norms of the 21st century. Acknowledgements The authors would like to thank all the interviewees and the respective financial institutions for their willingness to share information, insights and valuable know-how and for embracing this research with enthusiasm and professionalism. References Accenture, (2013) 2020 Banking Report. Available online at http://www.accenture.com/SiteCollectionDocuments/PDF/ Accenture-Banking-2020-POV.pdf [Last accessed: 15.04.2015]. Barney, J. (1995) Looking Inside for Competitive Advantage. 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