The Role of Open Innovation on Sustainable Competitive Advantage of Smes – Dubai as a Case Study

Open Innovation (OI), conceptualized as a strategic paradigm of purposive inbound and outbound knowledge flows across organizational boundaries, has emerged as a critical mechanism for enhancing firm competitiveness. By leveraging external knowledge sources and commercializing internal ideas beyond firm boundaries, OI enables SMEs to overcome resource constraints and strengthen innovation outcomes. These strategies are anticipated to increase a company’s Sustainable Competitive Advantage (SCA) when paired with a Creative Climate and Radical Innovation (CC&RI). Few studies have looked at the integration of OI and CC&RI inside Small and Medium Enterprises (SMEs), especially in the Middle East, despite the rising interest in this field. The mediating function of CC&RI in the relationship between OI and the SCA of SMEs in Dubai is investigated in this study. A conceptual model linking OI practices to SCA was developed and realistically assessed using data collected from 433 SMEs in Dubai. Tests using partial least squares path modeling revealed that OI greatly enhances SCA. Additionally, it was discovered that CC&RI positively mediated this association. These results demonstrate that the influence of OI on maintaining competitive advantage among Dubai’s SMEs may be significantly increased by encouraging radical innovation and cultivating a creative organizational atmosphere.