The Role of Innovation for Entrepreneurial Start Up and/or Firm Growth – Uniresearchers
Contents
1.Focus
2.Method
2.1 Data Analysis
3.Literature Review
4.Finding
4.1 Survey Analysis
4.2 Implication
5. Limitations
6. Conclusion
7.References
Focus
The paper is mainly focussed at exhibiting the role of innovation for entrepreneurial start up and/ or firm growth. Creativity or innovation is a significant driver for entrepreneurs to come up with novel business opportunities, and sheds light on the key role of innovation as the source of economic growth. It is prominent that creativity is undoubtedly fraction and parcel of the entrepreneurial skills necessary to effectively commence a venture and the beginning of the entrepreneurial process. The source of innovation is creativity, and it can guide to produce new business and perk up products to allow enterprises own more cut-throat abilities. Innovation is not only significant for companies, but also, or to play an imperative role when entrepreneurs take strategic decisions all through whole business creation procedure (Tu and Yang, 2013). Hence, it is essential to determine the importance of innovation for entrepreneurship by exploring different literary sources.
2.Method
2. 1 Data Analysis
The arguments in the paper have been presented by the analysis of different literary sources, such as latest peer-reviewed Journal articles; various resource-based research papers from the domain of considering innovation in enhancing entrepreneurship. The main reason for analysing these sources is that they demonstrate outstanding information in terms of theory, framework and arguments related to the importance of innovation in entrepreneurial firm start up and growth.
3. Literature Review
The consequences and role of innovation, technology and economic growth on entrepreneurship has been analyzed by Hussain, et al., (2011) in their research paper. In their research study, entrepreneurship has been defined as an art or science of innovation and espousing on risks in order to gain profit in the business. Basically, it means thinking out of the box and coming up with outstanding combinations. The theoretical background of the research study presents a theoretical framework in which innovation, technology and economic growth have been considered as autonomous variables and entrepreneurship has been regarded as a dependent variable (Sahut and Peris-Ortiz, 2013).
These research studies present analyses of the data with the help of correlations and regression model and it has been exhibited that the dissimilar variables (innovation, technology and economic growth) are very much correlated to the dependent variable entrepreneurship. The findings of this research study bring out the fact that there is a constructive relation between economic growth and entrepreneurship which is presented by H1 and also between the Innovation and Entrepreneurship which is presented by H2. The research pertinently mentions is that in western culture there is a optimistic association between entrepreneurship and technology, however in Pakistan its meaning exhibits that there is converse proportion (Hussain, et al., 2011). It has further been concluded in the research that technology and entrepreneurship are negatively related to each other, which is symbolized as H3 (Hussain, et al., 2011).
Gottlieb and Makower (2013) have also demonstrated in that technological innovation by entrepreneurs’ at healthcare sector aids in reducing cost of healthcare. The research states that entrepreneurs should engage into “frugal innovation.” This procedure supports the developments in technology that demean expenditures and at the same time, increases results. It has been stated that it is essential to do invocations in the healthcare system so that there will be a diminishment in expenditures. People always believe that technology reduces cost in the short term, but this has surpassed the benefits of implementing innovative technology. The theoretical background highlights that innovations in medical technology by entrepreneurs act drivers of long-term economic benefits (Audretsch, Coad and Segarra, 2014.).
Sarri, Bakouros, and Petridou (2010) have emphasized on the importance of entrepreneur training in relation to creativity and innovation as it is highly significant for the development of business. It is notable that for entrepreneurs/owners and/or executives of small & medium enterprises and micro companies creativity and innovation is highly substantial considering that they are positively related with the development of business. In this regard training intervention for creativity and innovation is of great value, however obstacles in concerning experience, financial resources, time, no risk aversive and infrastructure are important. Since, entrepreneurship innovation and creativity are regarded as the “creation of the future” (Sarri, Bakouros, and Petridou, 2010) efforts should be taken to train entrepreneurs to contribute imaginatively in the innovation economy.
It is notable that Tu and Yang (2013) have divided start-up process phase into initiation phase and implementation phase and investigated entrepreneurial innovation in both phases. Consequently, their study puts forward the first phase in the start-up process on behalf of the initiation phase, and in this stage the notion of entrepreneurial innovation is meaning that entrepreneurs base on their imagination boomingly commence new companies. The second phase in the start-up procedure on behalf of the implementation phase, and in this stage the notion of entrepreneurial inventiveness is signing that reorganizes all new products and service for execution in future expansion need.
Morong (n.d.) has shed light on the Schumpeter’s theory of entrepreneurship and has proposed that an entrepreneur is the one who has the vista to innovate, i.e. to accomplish creative combinations for the entrepreneurial firm. Dafna (2008) has elucidated that entrepreneurs should carry out such practice leadership expertise that can lead to changes and innovations in firms. This is because entrepreneurs as leaders have the capacity to influence innovativeness among their employees and the capacity to spot prospects in the market, which in turn will not allow firm to grow and develop, but to flourish in the competitive market place. Olakitan and Ayobami (2011) have also stated that power to innovate by having an internal locus of control supports the start up of entrepreneurial firms.
4. Finding
On the basis of the data collected from the selected secondary sources, there are some very determined case studies that were derived in this paper. These cases are the findings noted in accordance to practical success attained by some of the famous companies in the current business scenarios. Theoretical and empirical surveys made over the innovative performances of Facebook, Apple Inc. and Hubbard Foods are analysed in order to comprehend the role of innovation in the process of entrepreneurship.
Survey Analysis
Surveys based on Facebook, Apple Inc. and Hubbard Foods show that innovation has a great role to play in developing entrepreneurship.
The major entrepreneurial start-up that clearly demonstrates the role of innovation is Facebook initiated by Mark Zuckerberg, who sets the significant example of a strategic frame of mind and innovative approaches to do business. It is pertinent to note that Mark Zuckerberg was passionate to use the technology in an innovative manner that will people to connect around the world and put in all his efforts and hard work to attain it (Mustaffa, et al., 2011).
Zuckerberg being one of the most influential entrepreneurs never rested on tried strategies and techniques, rather used imaginable mindset to come up with a successful social networking site called Facebook. Furthermore, Facebook keeps on evolving because the corporation is always behind new innovations and developments and the passion shows that the company is always in the process of learning and innovation. The case study of Facebook as an entrepreneurial firm provides a priceless learning knowledge towards the importance of innovation of a thought or a product and how this innovation contributes in starting up a firm and in its growth and development (Mustaffa, et al., 2011).
In this regard, Autio, et al. (2006) have also elucidated the managerial, theoretical, and policy implications of entrepreneurial innovation. Entrepreneurial innovation comprises of the disorder of current industries and the generation of novel ones. It has been put forward by the authors that entrepreneur who uses innovation in order to create change and is all set to take the risk with the aim of making profits often generates a profit oriented business. It is highly important for an entrepreneur to maintain and manages his or her entrepreneurial firm with innovative products, services, processes and strategies so that opportunities can be grabbed and the business can be managed in an adequate manner.
Innovations in technology result into entrepreneurial firm growth and development because it makes processes easier that were earlier difficult to perform or bound to be conducted in high-cost settings and into less unrelenting, less unsafe, and less costly happenings. Authors have relied on only secondary data in their research and it has been found that although innovations in terms of technology increases in costs in the short term, but a lot of empirical analysis makes it clear that aggregate advantages very much overshadow expenditures.
According to the viewpoint of Swiercz and Lydon (2002), it is considerable that the key differentiating feature of entrepreneurs is that they have incredible imagination or capability to innovate that helps them in entrepreneurial start up. It is noteworthy that envisaging the growth of the entrepreneurial firm and acquiring market share from competitors is a normal thing, however envisaging innovative products and services that will transform people’s lives, their work, the way they live and communicate is an extraordinary thing that indeed allows an entrepreneurial firm to grow and develop.
In this context, the case study of Apple Inc. can be considered, which is the best real example to support the role of innovation, for starting and entrepreneurial firm and/or firm growth; and the innovative products of the company completely transformed the people’s lives and the whole world. Steve Jobs the legend entrepreneur and the owner of the company was finer in the commencement of innovation and interactive design and throughout his career, he concentrated on innovation (Hong and Cho, 2013). This aspect turned into Apple’s (entrepreneurial firm) competitive advantage and then become the driver of its start up, growth and development. Apple Inc. is the one of the highly valued technologically innovative company in the world and has got enormous appreciation because of its exceedingly innovative offerings. Consequently, it is a great example of entrepreneurship management and to demonstrate that how when an entrepreneur conquer challenges with innovation in term of offerings, operations or processes, it results into growth and success (Eckhardt and Shane 2003).
As an entrepreneur, the scheme of Steve Jobs was to sell innovative and new products with an affluent blend of art and technology so that an unproblematic and rationalized user experience can be delivered. This business innovative strategy took the organisation to the front position of consumer electronics and made Apple Inc. one of the most excellent technology companies in the world. The company was proficient in order to capture an outsized fan following due to its regular innovation in all its offerings in the market. The incessant value offering to customers with the help of its innovative offerings facilitated Apple Inc., to develop a highly loyal customer (Eckhardt and Shane 2003).
Hsua, et al., (2014) have supported the fact that innovation is imperative in shaping the enduring success of an entrepreneurial firm. Authors have asserted the importance of innovation not only in terms of products and services, but also in terms of operations, business processes and strategies. The way firms generate their operations core competency by their entrepreneurial behaviour results into a paradigm shift in their future operations and business practices. Authors have presented the economic based clarification of innovation as well as the behaviour based clarification of innovation. The behaviour based clarification of innovation has claimed that an entrepreneurial direction should give rise to procedures practices and decision-making activities related with operations management operations and therefore, it will contribute to firm innovation (Georgellis, Joyce and Woods, 2000).
However, as per the economic based explanation, the key concept behind operations core competency is the ability of an entrepreneurial firm to act in response to external market forces promptly and differently. It is noteworthy resources or economic capabilities by their own cannot be a leading source of competitive advantage; they must be interpreted into operations core competency and innovations to attain competitive advantages. These activates of managers act as drivers following the combination and creation of existing resources and capabilities into innovative products and procedures Business activities are the mechanisms through which resources and capabilities are exposed to market (Hsua, et al., 2014).
In this regard the Hubbard Foods case study can be considered, which is an Auckland based company producing a range of breakfast cereals and founded by Dick Hubbard. It is considerable that the innovative ability of a small entrepreneur to develop and carry out strategy and management reporting systems in a different manner allowed the company to grow and prosper. The innovative action in this entrepreneurial firm is that it creates long-standing plans called as endpoints and for realizing the end points an elastic pathway is generated (Wennekers, Thurik & Reynolds, 2005).
Moreover, not only with the help of an innovative strategy, but with the support of a unique organisational culture the entrepreneurial firm successfully supported its managers to be innovative and to take deliberate risks. Entrepreneurs should not only generate innovative strategies to congregate their end points, but should also embed them into the organisation culture, rather than treating them as an unprepared activity (Frigo & Anderson, 2011).
4.2Implication
In terms of understanding the implication of the current topic, Alegre and Chiva (2013) have conducted research with the main aim of generating entrepreneurial orientation (EO) performance literature by delivering a broader picture that comprises two in-between steps; organizational learning capability (OLC) and innovation performance. It has been put forward in the article that organizational learning is the procedure by which companies alter their mental rules, models, processes, or knowledge, for sustaining and improving, which is extremely near to the notion of entrepreneurship (Okpara, 2007). However, innovation is the utilization of new ideas and it is a key outcome of the entrepreneurship function. In this regard, the chief objective of the research study is to investigate the associations between EO, OLC, innovation, and firm performance (Alegre and Chiva, 2013).
The research makes use of structural equation modelling for testing the hypotheses on a data set from Spanish and Italian ceramic tile manufacturers. The results show the value of OLC and innovation performance and the same should be increased by managers for boosting the positive EO–performance connection. It has been concluded that OLC and innovation play an intervening role in the EO–firm performance association and such mediations are pertinent for the purpose of getting an improved comprehension of the EO–firm performance association (Alegre and Chiva, 2013).
Thus, this paper has major implications for practitioners as it suggests executing an organizational learning approach and innovation performance when the management wants to follow EO.
Limitations
The implication of this paper is pertinent for entrepreneurs as it has mentioned the advantages and challenges both of executing new innovative devices for the growth and development of the entrepreneurial firm. However, the major limitation is that the findings are not supported by primary data and no sample has been used in the research work (Gottlieb and Makower, 2013).
Moreover, the limitations of this research is that it has focused on OLC and innovation performance as mediating links between EO and organizational performance, but other organizational issues can also be included, such as human resources interventions or adaptive and generative learning. In this regard, in future, the research should be done by including other factors as well so that signification implications can be presented (Alegre and Chiva, 2013).
Conclusion
Therefore, it can be concluded that the role of innovation in entrepreneurial start-ups and/or firm growth is highly substantial in light of the above-mentioned enunciations and real case study examples. This makes it apparent that entrepreneurs should unremittingly generate innovative products and services and bring innovation in their operations, processes and strategies so that they get a competitive advantage along with the capability to thrive for an enduring period of time.
Hence, this research has key future implications for managers as well as readers because it aids in understanding the relationship between innovation and entrepreneurship or entrepreneurial firm growth. However, the drawback of this research is that it has not been done based on primary data gathered from any authentic source, and therefore, in future, the research can be performed with the help of primary data from a suitable sample population. In this context, the future direction of this research is that it should be supported by collecting primary data or by supporting from real cases so that it can be effectively demonstrated that innovation allows the growth of entrepreneurial firms.
References
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