Open innovation is a growing issue in today’s manufacturing industries, especially within small and medium size enterprises (SMEs). Due to resource scarcity, SMEs need to be collaborated to share knowledge and expertise to develop innovative products or processes in order to be competitive. In this research study, generic concept on open innovation is elaborated along with required innovation model and methodology. In addition to, a framework is proposed in order to facilitate open innovation management within collaborative partner industries. Fundamental issues associated with business network for open innovation are outlined in this study along with possible challenges for open innovation. This research study is concluded with managerial implications and with future works.