Perspectives Chapter: Situated Innovation Readiness (SiR) in SMEs – A Multi-Level, Dynamic Capabilities Framework

Abstract

<jats:p>Innovation readiness captures a firm’s capacity to purposefully mobilize and reconfigure resources, capabilities, and relationships to generate, absorb, and exploit novel ideas. Although the concept is increasingly invoked in both scholarly and practitioner discourse, it remains theoretically fragmented and operationally under-specified, particularly for small and medium-sized enterprises (SMEs) operating under conditions of resource constraints and environmental turbulence. This chapter develops an integrative, multi-level conception of innovation readiness grounded in a systematic synthesis of the dynamic capabilities, absorptive capacity, corporate entrepreneurship, open innovation, and socio-technical systems literatures. Innovation readiness is conceptualized as a situated, evolving capability that emerges from the interaction of intra-firm organizational micro-foundations, inter-firm collaborative architectures, and extra-firm contextual conditions. Building on this synthesis, the chapter introduces the 3-Lens Situated Innovation Readiness (SiR) Framework as a diagnostic and strategic tool for SMEs. The framework enables firms to map their current readiness profile, identify critical misalignments and bottlenecks, and prioritize targeted tactical actions and strategic moves within a coherent, theory-informed structure. The chapter contributes to theory by integrating previously disconnected streams of research into a unified, dynamic account of readiness, and to practice by offering a disciplined, evidence-based approach to managing innovation capability in complex and shifting environments.</jats:p>