Entrepreneurship and Innovation: Theory, Practice and Context (Springer Texts in Business and Economics)

This book provides an overview of the theory, practice and context of entrepreneurship and innovation at both the industry and firm level. It provides a foundation of ideas and understandings designed to shape the reader’s thinking and behaviour to better appreciate the role of innovation and entrepreneurship in modern economies, and to recognise their own abilities in this regard. The book is aimed at students studying advanced levels of entrepreneurship, innovation and related fields as well as practitioners (for example, managers, business owners). As entrepreneurship and innovation are largely indivisible elements and cannot be adequately understood if studied separately, the book provides the reader with an overview of these elements and how they combine to create new value in the market. This edition is updated with recent international research, including research and examples from Europe, the US, and the Asia-Pacific region. Contents List of Figures List of Tables 1: Entrepreneurship as a Social and Economic Process 1.1 Introduction 1.2 The Benefits of Entrepreneurial Activity 1.3 Necessity and Opportunity Entrepreneurs 1.4 Attitudes Towards Entrepreneurship as a Career 1.5 The Pursuit of High-Growth Firms 1.6 Global Trends in Entrepreneurship and Innovation 1.6.1 Shift from a ‘Managed’ to an ‘Entrepreneurial Economy’ 1.6.2 Rise of the ‘Knowledge Economy’ 1.6.3 Strategically Networked Innovation 1.6.4 Globalisation 1.6.5 Low, Mid and High-Technology Innovation 1.6.6 Social Entrepreneurship and Innovation 1.7 What Is an Entrepreneur? 1.8 The Entrepreneurship Domain 1.9 Defining Entrepreneurship 1.10 Managers, Entrepreneurs and Entrepreneurial Managers 1.10.1 Entrepreneurs and Small Business 1.11 Defining Innovation 1.12 Types of Innovation 1.13 Innovation Lifecycles 1.14 Sources of Innovation 1.14.1 Encouraging Entrepreneurship and Innovation 1.15 National Innovation Systems 1.16 Strategies to Encourage Entrepreneurship 1.17 Strategies to Encourage Innovation References 2: The Entrepreneur 2.1 Introduction 2.2 Common Characteristics of Entrepreneurs 2.3 Are Entrepreneurs Born or Made? 2.4 Entrepreneurial Motivation 2.5 Models of Entrepreneurial Motivation 2.6 Factors Influencing Entrepreneurial Behaviour 2.7 The Influence of Life Stage on Entrepreneurial Learning and Behaviour 2.8 Measuring Entrepreneurial Characteristics 2.9 General Enterprising Tendency (GET) Test 2.9.1 Need for Achievement 2.9.2 Creativity 2.9.3 Desire for Autonomy 2.9.4 Risk-Taking Orientation 2.9.5 Internal Locus of Control 2.10 Awakening the Entrepreneur: Application of the GET Test 2.11 Entrepreneurial Orientation 2.11.1 Measuring Entrepreneurial Orientation 2.11.2 Applying Entrepreneurial Orientation 2.12 The Dark Side of Entrepreneurship References 3: The Entrepreneurial Process 3.1 Introduction 3.2 The Entrepreneurial Process 3.2.1 Opportunity Screening 3.2.2 Marshalling Resources 3.2.3 Building the Capability of the Team 3.3 The Theory of Effectuation 3.4 The Entrepreneurial Process Model 3.5 3M Analysis for Opportunity Screening 3.5.1 Market 3.5.2 Money 3.5.3 Management 3.6 The New Venture Creation Process 3.7 A Study of the Process of Enterprise Formation 3.7.1 Actions Taken Prior to Launch or Abandonment 3.7.2 Triggers and Barriers to New Venture Creation 3.7.3 Implications of the Study 3.8 The Importance of Creativity Management 3.8.1 The Creative Thinking Process 3.8.2 Encouraging Creativity in the Workplace 3.9 The Effects of Time Pressure on Creativity 3.10 Creating Rich Pictures 3.11 Applying Creativity Tools to Systems Thinking 3.11.1 Generators 3.11.2 Conceptualisers 3.11.3 Optimisers 3.11.4 Implementers 3.11.5 Stage 1 Initiation: Problem Finding 3.11.6 Stage 2 Testing Understanding: Fact Finding 3.11.7 Stage 3 Clarifying: Problem Definition 3.11.8 Stage 4 Ideation: Idea Finding 3.11.9 Active Divergence 3.11.10 Active Convergence 3.11.11 Stage 5 Evaluation: Solution Finding 3.11.12 Stage 6 Optimisation: Planning 3.11.13 Stage 7 Enabling Action: Acceptance Winning 3.11.14 Stage 8 Enabling Action: Implementing References 4: Entrepreneurship and Innovation in Large Firms 4.1 Introduction 4.2 The Entrepreneurial Manager 4.3 Large Corporations as Successful Innovators 4.4 A Model of Corporate Intrapreneuring 4.5 Challenges for Senior Management 4.6 Failure Tolerant Leadership 4.7 Unleashing the Intrapreneurs 4.8 Ten Principles of Intrapreneuring 4.9 The Process of Internal Corporate Venturing 4.9.1 Vicious Circles in the Definition Process 4.9.2 Managerial Dilemmas in Impetus Process 4.9.3 Indeterminateness of Strategic Context of ICV Development 4.9.4 Perverse Selective Pressures Exerted by Structural Context on ICV Development 4.10 Advice for Intrapreneurs 4.11 Developing HR Frameworks for Intrapreneuring 4.12 Creating the Innovative Organisation 4.12.1 Market Orientation 4.12.2 Innovative Leadership 4.12.3 Non-linear Strategic Planning 4.12.4 Ambidextrous Structure 4.12.5 Innovation Culture 4.13 Balancing Culture and Structure 4.14 Open Innovation and Absorptive Capacity 4.14.1 Open Innovation 4.14.2 Absorptive Capacity 4.14.3 Managing Open Innovation 4.15 Innovation in Public Sector Organisations 4.15.1 Key Challenges Facing Public and Non-profit Sectors 4.15.2 The Role Orientations of Public Agencies 4.15.3 Fostering Innovation in Public Organisations 4.15.4 Measuring Innovation in Public Organisations 4.15.5 Lessons from Innovation Within Public Organisations References 5: Innovation in Small Firms 5.1 Introduction 5.2 Definition of Small Firms 5.3 Characteristics of Small Firms 5.4 The “Myth” of Innovation in Small Firms 5.5 Advantages and Disadvantages of Small Firms 5.6 SMEs vs. Large Firms 5.7 Less Formality in Small Firms 5.8 The Entrepreneur and the Owner-Manager 5.9 Theories of Small Business Management 5.10 Causes of Small Business Failure and Success 5.11 The Growth Cycle of Small Firms 5.12 What Strategic Options Do Small Firms Have? 5.13 The Importance of Strategic Thinking 5.13.1 Entrepreneurship 5.13.2 Innovation 5.13.3 Strategic Networking 5.13.4 The Growth Vector 5.13.5 The Strategic Triangle References 6: Adoption and Diffusion of Innovation 6.1 Introduction 6.2 Three Innovation Paradigms 6.3 Generation and Diffusion of Innovation 6.4 Theories of Diffusion 6.5 Why Innovations Diffuse into Markets 6.5.1 Relative Advantage 6.5.2 Complexity 6.5.3 Compatibility 6.5.4 Trial-Ability 6.5.5 Observability 6.5.6 Usefulness and Ease of Use 6.5.7 Subjective Influences 6.6 The Critical Mass of Adoption 6.7 Diffusion of Innovation in Historical Context 6.8 Diffusion Adoption Patterns 6.8.1 Venturesome Innovators 6.8.2 Respectable Early Adopters 6.8.3 The Deliberate Early Majority 6.8.4 The Sceptical Late Majority 6.8.5 Traditional Laggards 6.9 The Innovation Decision Process 6.10 Innovation Adoption in Organisations 6.10.1 Managerial Intervention 6.10.2 Subjective Norms 6.10.3 Facilitating Conditions 6.10.4 Secondary (Individual) Adoption Process 6.10.5 Assimilation 6.10.6 Consequences 6.11 Rogers Innovation Adoption Model 6.12 Innovation Diffusion as a Social Process 6.12.1 Characteristics of the Innovation 6.12.2 Characteristics of the Innovator 6.12.3 Environmental Context in Which the Diffusion Is to Occur 6.12.4 The Role of Word-of-Mouth Communication 6.13 The Failure of Innovation Diffusion References 7: Planning, Business Models and Strategy 7.1 Introduction 7.2 The Value of the Business Plan 7.3 Do Business Plans Really Matter? 7.4 What Is Business Planning? 7.5 Types of Business Plans 7.6 Writing a Business Plan 7.7 Designing the Business Model 7.8 The ‘Business Model Canvas’ for Business Model Design 7.8.1 Customer Segments and Market Segmentation 7.8.2 The Customer Value Proposition (CVP) 7.8.3 Customer Relationships 7.8.4 Channels – Your Go to Market Mechanism 7.8.5 Revenue Stream – Capturing Value 7.8.6 Key Resources 7.8.7 Key Activities 7.8.8 Strategic Partners 7.9 The Role of Vision 7.9.1 A Vision to Align and Motivate 7.9.2 Don’t Confuse Planning for Clear Vision 7.10 How Entrepreneurs Craft Strategy 7.11 Developing Entrepreneurial Strategy 7.12 The Strategy Development Framework 7.12.1 TOWS Matrix Analysis 7.12.2 Assessing Competitive Threats 7.12.3 Assessing Market Opportunities 7.12.4 Assessing Resource Weaknesses 7.12.5 Assessing Resource Strengths 7.12.6 Dynamic Capabilities 7.13 Strategic Planning Responses 7.13.1 The Shopkeeper 7.13.2 The Salesman 7.13.3 The Administrator 7.13.4 The CEO 7.14 Use Your Common Sense References 8: Risk Management in Innovation 8.1 Introduction 8.2 Risk Management 8.3 Risk Management in Entrepreneurial Ventures 8.3.1 Proximity Effects 8.3.2 Informality 8.3.3 Resource Scarcity 8.4 Planning and Entrepreneurial Risk Perception 8.4.1 The Notion of Risk 8.4.2 Entrepreneurial Risk Perception 8.4.3 The Impact on Planning Behaviour 8.5 Plan or Just Storm the Castle? 8.6 Absorptive Capacity and the Management of Risk 8.7 Commercialisation and the Systematic Management of Risk 8.7.1 Fuzzy Front-End 8.7.2 New Concept Development 8.8 Assessing the Technical and Market Risk 8.9 Managing Risk, General Principles and Techniques 8.9.1 Technology Project Risk Model 8.9.2 Quantifying Risks 8.9.3 Failure Mode and Effects Analysis (FMEA) 8.9.4 Anchored Scales 8.10 Portfolio Management Approach 8.10.1 Value Maximisation 8.10.2 Balance 8.10.3 Strategic Direction 8.10.4 Right Number of Projects 8.11 Real Options Reasoning and Decision Tree Analysis 8.11.1 The First Chicago Method 8.11.2 Decision Tree Analysis 8.12 Assessing the Risk-Return for an Innovation: Innovation Rent 8.12.1 The Theory of Innovation Rents 8.12.2 Typology of Innovation Rents 8.12.3 The RENT Configuration and Planning 8.13 The Risk-Return of Commercialisation Pathways References 9: Disruptive Innovation and the Commercialisation of Technology 9.1 Introduction 9.2 Innovation as a Key Economic Driver 9.2.1 Patents, Trademarks and Productivity 9.2.2 Global Collaboration Is Critical 9.3 Defining Technological Innovation 9.4 Evolution of Strategic Technology Management 9.5 The Impact of the Fourth Industrial Revolution 9.6 The Strategic Management of Technology 9.7 Commercialisation of Disruptive Technologies 9.7.1 Consider the Readiness of the Market 9.7.2 Consider the End User 9.7.3 Beware Existing Market Players 9.7.4 Look for Market Gaps 9.8 Steps to Developing Disruptive Technologies 9.9 How NTT DoCoMo Created Japan’s G3 Network 9.10 Strategies for Disruptive Technologies 9.11 Market Adoption of Technological Innovation 9.12 Creating New Market Space 9.12.1 Blue Ocean Versus Red Ocean Strategy 9.12.2 Value Innovation 9.12.3 Creating New Market Space 9.13 New Product Development and Commercialisation 9.14 The Stage-Gate® Process 9.14.1 Spiral Development Via Stages and Gates 9.14.2 Criticism of Stage-Gate® 9.15 The Lean Start-Up Process 9.15.1 Principles of Lean Start-Up 9.15.2 The Lean Start-Up Framework 9.16 Best Practice in NPD 9.17 The Innovation Diamond 9.18 Commercialisation Pathways for Disruptive Innovation 9.18.1 Commercialisation Pathways and Innovation Rent Analysis References 10: Screening Opportunities and Assessing Markets 10.1 Introduction 10.2 Causes of Innovation Failure 10.2.1 Neglected Strategy and Market Assessment 10.2.2 Neglected Execution and Product-Technology Road Mapping 10.2.3 Not Recognising What It Takes to Succeed 10.3 The Customer Development Process 10.3.1 Customer Discovery 10.3.2 Customer Validation 10.3.3 Developing Customer Archetypes and the Customer Analysis Process 10.4 Customer Value Proposition and Erosion Effects 10.4.1 NPD and CVP Analysis 10.4.2 CVP and Erosion Effects on the Innovation Rent 10.4.3 CVP and Erosion Effects on the Length of the Lifecycle 10.5 Listening to the Voice of the Customer 10.5.1 Quality Function Deployment 10.5.2 House of Quality Analysis 10.5.3 Kano Model Analysis 10.5.4 VOC CAGE Model 10.5.5 Techniques for VOC Research 10.5.6 Affinity Diagrams 10.6 Outcomes Based Market Research 10.6.1 Probe and Learn 10.7 From Discovery to Development 10.7.1 Defining the Product 10.7.2 Product-Technology Road-Mapping 10.8 Integrating the Customer Discovery and NPD Processes References 11: Team Building, Company Leadership and Strategic Alliances 11.1 Introduction 11.2 Leadership in Entrepreneurial Companies 11.2.1 Leading Practices of Fast Growth Entrepreneurs 11.2.2 Building an Awesome Organisation 11.3 Developing Effective Management Boards 11.4 Blueprinting the Senior Company Leadership 11.5 Creating Entrepreneurial Teams 11.6 Leadership in Innovation 11.6.1 Transactional Leadership 11.6.2 Transformational Leadership 11.6.3 Management and Situational Leadership 11.6.4 Follower Versus Leader Directed Behaviour 11.7 Managing Growing Entrepreneurial Ventures 11.7.1 Lessons from Successful Entrepreneurs 11.8 Strategic Partnering 11.8.1 Reasons for Small Firms to Partner 11.8.2 Reasons for Large Firms to Partner 11.8.3 The Process of Strategic Partnering 11.8.4 The Risks of Strategic Partnering 11.8.5 How Small Firms Can Deal with Large Firms in Alliances 11.8.6 Getting the Best from the Alliance 11.8.7 Financial Partnering in Commercialisation 11.8.8 Leading Customers as Strategic Partners 11.9 The Decision to Partner 11.9.1 Considerations of Marketing Resources 11.9.2 Considerations of Technological Resources 11.9.3 Considerations of Financial Resources 11.10 Strategic Assets and Organisational Rent in the Context of Strategic Alliances 11.10.1 The Relationship Between Firm Strategic Assets and Strategic Industry Factors 11.10.2 Configuring the Firm’s Resources and Capabilities to Generate Organisational Rents 11.10.3 Developing Strategic Assets via Team Building, Company Leadership and Strategic Alliances References 12: Financing the Venture 12.1 Introduction 12.2 The Financing Gap for Entrepreneurial Firms 12.3 The OECD Scoreboard of SME and Entrepreneurial Financing 12.3.1 Key Findings from the OECD Scoreboard on SME Financing 12.4 Sources of Entrepreneurial Capital 12.4.1 Bootstrap Financing 12.4.2 Benefits of Bootstrap Financing 12.4.3 Cash Flow Financing 12.4.4 Debt Financing 12.4.5 Benefits of Debt Financing 12.4.6 Short-Term Debt Financing 12.4.7 Intermediate-Term Loans 12.4.8 Long-Term Loans 12.5 Securing Debt Financing 12.5.1 Business Banks 12.5.2 Factoring, Leasing and Financing Companies 12.5.3 Insurance Companies and Merchant Banks 12.5.4 Trade Creditors 12.6 What Are Banks Seeking? 12.6.1 How to Deal with the Bank 12.6.2 What Information Should Be Presented to the Bank? 12.7 Equity Financing 12.7.1 Seed Capital Funding-Family, Friends and Fools 12.7.2 Business Angels 12.7.3 Crowdfunding 12.8 The Nature of Venture Capital 12.8.1 Formal Venture Capital Financing 12.9 The Venture Capital Process 12.9.1 The Nature of Venture Capitalists 12.9.2 The Nature of Venture Capital Investors in Australia 12.9.3 What Do Venture Capital Investors Look for? 12.9.4 Deal Structures 12.9.5 Preparing a Terms Sheet and Structuring the Deal 12.9.6 Exit Strategy 12.9.7 Due Diligence References 13: Intellectual Property Management 13.1 Introduction 13.2 The Nature of Intellectual Property 13.3 Formal IP Rights 13.3.1 Patents 13.3.2 Trademarks 13.3.3 Designs 13.3.4 Geographical Indication 13.3.5 Plant Breeders’ Rights 13.4 Automatically Granted IP Rights 13.4.1 Copyright 13.4.2 Copyright Changes Since the Australia-US Free Trade Agreement 13.4.3 Circuit Layout Rights 13.4.4 Confidentiality and Trade Secrets 13.4.5 What Should an NDA Contract Look Like? 13.5 Developing an IP Strategy 13.5.1 IP Assets Register 13.5.2 Checklist for Protecting IP Assets 13.6 Innovation Management for Business Growth 13.7 IP Rights as an “Isolating Mechanism” 13.7.1 Causal Ambiguity 13.7.2 The Boundaries of IP Rights 13.8 How IP Rights Impact NPD Using Stage-Gate® 13.8.1 Idea Screen: From Discovery to Scoping 13.8.2 Second Screen: From Scoping to Business Case 13.8.3 Go to Develop: From Business Case to Development 13.8.4 Go to Test: From Development to Testing 13.8.5 Go to Launch: From Testing to Launch 13.9 Licencing 13.9.1 The Factors 13.9.2 Risks and Benefits of Licencing 13.10 Valuing IP Assets 13.10.1 The IP Valuation Process 13.10.2 The Measures References 14: Social Entrepreneurship and Co-operative and Mutual Enterprise 14.1 Introduction 14.2 Social Entrepreneurship and Innovation 14.2.1 Not Just Non-profit 14.2.2 The Realm of Social Entrepreneurship 14.2.3 Social Innovation as an Emerging Concept 14.3 Developing a Social Economy 14.3.1 Economic Rationalism and the Third Way 14.3.2 Rise of the Social Economy 14.4 The Social Enterprise 14.5 The Social Entrepreneur 14.5.1 Robert Redford and the Sundance Institute 14.5.2 Muhammad Yunus and the Grameen Bank 14.5.3 Victoria Hale and the Institute for One World Health 14.6 Co-operative and Mutual Enterprise 14.6.1 Co-operative and Mutual Enterprises (CMEs): A Global Network 14.7 CMEs as a Unique Form of Enterprise 14.7.1 The Rochdale Society and Co-operative Principles 14.8 The CME Business Model 14.8.1 Purpose 14.8.2 Member Value Proposition 14.8.3 Share Structure 14.8.4 Governance 14.8.5 Membership and Community 14.8.6 Key Resources and Processes 14.8.7 Outputs: Profits and Economic and Social Performance 14.9 Social Enterprise and the Role of Co-operatives 14.9.1 Strengths of the Co-operative Enterprise 14.9.2 Blueprint for a Co-operative Decade 14.9.3 Benefits of Co-operative Membership 14.9.4 Weaknesses of the Co-operative Enterprise 14.10 The Five Generic Problems of Co-operative Enterprise 14.10.1 The Free Rider Problem 14.10.2 The Horizon Problem 14.10.3 The Portfolio Problem 14.10.4 The Control Problem 14.10.5 The Influence Cost Problem 14.11 The New Generation Co-operative 14.12 The Co-operative Lifecycle Model 14.13 The Theory of Community-Based Enterprise 14.14 Enhancing Social Enterprise and Innovation 14.15 Strategies for Enhancing Social Entrepreneurship 14.16 Strategies for Enhancing Social Innovation References