I have always believed tha "Entrepreneurship without Innovation has no root and Innovation without Entrepreneurship has no fruit." However, I see many papers/cases on Entrepreneurship which has no Innovation but was set up as a micro/small business just to earn fo livelihood. They may be samall business but are they Entrepreneurial?
Actually, I believe that it is to narrow to say that innovation is needed for survival or even growth of new firms. I think the question is what is the firms competitive advantage. This might be innovation but could as well be location, price, etc. Indeed many entrepreneurial ventures are innovative but the reason for their success is that innovation leads to a competitive advantage. If not even highly innovative start-ups will fail.
I think like you in this case. After Drucker's description of entrepreneurship which mentions innovation is a must for entrepreneurship I think things changed. If someone starts a business without innovation we can call him/her as promoter/undertaker. But if someone brings innovation to product/service, management, marketing, manufacture or so on then we should call them as entrepreneurs. So with this belief entrepreneurship requires innovation.
Nowadays i n many cases entrepreneurship is limited to performative uses of Information and Communication Technologies. There is no real technological gap, just efficient operation of ICTs, sometimes at the expense of workers thrgough thier working or employment conditions.
You can see some examples of these situations in the following documents (strategic foresight studies which give a look of the present situation):
Article Will technology improve health and safety at work
Conference Paper Regulating the OSH impact on online platform economy (OSHA S...
Book Preview: Platformisation 2027
https://www.researchgate.net/publication/316243223_Modes_and_methods_of_production_in_France_in_2040Book Modes and methods of production in France in 2040
Michel
Nice inputs. No doubt the uses of Information and Communication Technologies has become a must for innovation and entrepreneurship but how do you maintain that there is no real technological gap. In every field of business like automobile, aviation, pharma etc. there is continuous innovation in the domain in addition to innovative uses of Information and Communication Technologies.
Cantillon, Say and Schumpeter were the pioneers in providing definition for Entrepreneur. However, Schumpeter (1947) was the first to bring the construct 'Innovation' in Entrepreneurship.
http://expertise.hec.ca/chair_entrepreneurship/wp-content/uploads/2008-03-Defining-the-Entrepreneur-Complexity-and-Multi-Dimensional-Systems-Some-Reflections.pdf
This was confirmed by Gutterman in his paper confirming that Schumpeter was one of the first to include innovation in the definition of entrepreneurship and believed strongly that the proper role of the entrepreneur was creating and responding to economic discontinuities. Others involved in the study of entrepreneurship focus on the personality traits and life experiences of the entrepreneur in an attempt to generate lists of common entrepreneurial characteristics—propensity for “risk taking”, need for achievement and childhood deprivation etc.
https://alangutterman.typepad.com/files/mec_02.06.2012.pdf
In the 21st Century, Governments, Business and Academicians alike consider Innovation to be an integeral part of Entrepreneurship.
Arun,
Strictly speaking you cannot have entretrepreneurship in the truest sense without innovation. Schumpeter 1934 defined an entrepreneur as the actor that creates new products, processes, markets.
However, there are a large body of persons that are operating businesses that are not innovating. The literature term these as replicative businesses ie they are simply repeatig a process or product that pre-existed before.
For example, if all a business does is to make bread the same way that bread has been made for hundreds of years, then there is no innovation although that business may be highly successful. But if a business successfully introduces new bread products to the market, or successfully introduces new efficiencies that reform the process for making bread, or successfully introduces bread into a market that did not exist before and so grows and expands the bread consuming universe, then those would be the behaviour and actions of an entrepreneur.
Silburn
Silburn
Innovation need not be only in the product or process. It can take place any place in the value chain or support services. Successful introduction of bread into a market that did not exist is surely an innovation - marketing innovation.
I think that entrepreneurship without innovation can neither be conceived nor can it prosper, though the degree of innovation in any business may vary depending on the entrepreneurs' personality (motivation, thinking and instincts) and expertise, and can relate to product, service or process. Why is innovation so critical? It is because this allows the entrepreneur to exploit resources and opportunities in a much more efficiently (and effectively) than others and hence command a better premium (monies) for the innovation conceived and applied by this entrepreneur. This process of monetization of innovation translates into entrepreneurship.
Well said Azam
The process of monetization of innovation translates into entrepreneurship. Thus, innovation is ingrained in Entrepreneurship.
May be can! The type of entrepreneur in the field are direct business without growth. The business run in the routine condition, every day, every weeks, month and years produced goods and servicess and deliveried to customer or buyer no changes. There are the routine enterpreneurship as a vs innovation ?
@suwandi
Routine business is not enterpreneurship. They are maintenance business. Enterprises either grow or die. You can't ride a cycle and be stationary; if you don't move sitting on a cycle, you are bound to fall down. Even multinational have to innovate otherwise they perish like Kodak etc. Innovation, to me, is an essential ingredient of entrepreneurship.
There are different types of newness and it is an essential component for entrepreneurship. It can be 'New-to-the-World' often referred to as Discontinuous/Radical Innovations. This can be witnessed by way of disruptions owing to AI and Block-chain. The other kind is 'New-to-the-market' and the third is 'New-to-the-Firm' which may be incremental change. To nurture and sustain entrepreneurship it is important to innovate.
Yes, it can - everyday entrepreneurship, which is fully conform with Shane and Venkataraman's definition of it :)
No doubt, small business or a family firm can be entrepreneurial. Those of small business or a family firm that innovate survive and and grow while those which do not innovate decline and eventually fold up. Of course, the degree and type of newness/novelty might be totally different for these firms compared to a high-tech start-up.
Both entrepreneurship and innovation are rich, wide ranging concepts and are variously interpreted used. In the Schumpertain sense, there cannot be entrepreneurship without innovation. Yet surely it is possible for a small firm to act entrepreneurially, looking for opportunities that may be innovative?
Although you propose innovation is vital for survival, let's not forget that innovation is also very risky. There may be a case to be made for incremental innovation as a type of entrepreneuring,
Alistair
From your comments, I understand that innovation is vital for survival; at the same time you mention that let's not forget that innovation is also very risky.
Yes, innovation is risky; higher the level of innovation, higher the risk. But you agree that a case can be made for incremental innovation as a type of entrepreneuring. Increamental innovation, after all is innovation of lower category. Thus, even for small business some type of innovation is necessary to remain afloat.
Absolutely Arunaditya, and remember too that most innovations fail. It seems there is a good argument for incremental innovation. Perhaps just staying ahead of the game, rather than trying to disrupt it!
Disrupting is just one (rare) way of innovation. Staying ahead of the game, too, requires innovation though of an increamental nature.
In a limitated context and geography, even immitation can be innovation!
Yes. Entrepreneurship can be without Innovation but, Entrepreneurship without innovation is not associated with Total Factor Productivity (TFP).
The one off entrepreenur criteria is creativity and innovation, if entrepreneur without innovation he can survive with low or without growth in business.
I do not subscribe to the idea that Entrepreneurship can be without Innovation. Any entrepreneur, whether start up or in growth phase has to innovate otherwise her business will fold up or taken over by someone else.
Marco
The referred article states, innovative start-ups survive longer than their non-innovative counterparts." I will go a step further and state that "non-innovative start-ups have no future. They are destined to die."
Actually, I believe that it is to narrow to say that innovation is needed for survival or even growth of new firms. I think the question is what is the firms competitive advantage. This might be innovation but could as well be location, price, etc. Indeed many entrepreneurial ventures are innovative but the reason for their success is that innovation leads to a competitive advantage. If not even highly innovative start-ups will fail.
No doubt, innovation leads to a competitive advantage. It is also true that at times even highly innovative start-ups fail.These cases arise when the innovation is breakthrough innovation and not yet accepted by the society. These are the cases where the entrepreneur does not get the first mover advantage. It is the 2nd or the 3rd entrepreneur who makes money through such innovation as the society, by that time, has experienced the benefit of the innovation.
Society needs entrepreneurs. A new restaurant, even if it only replicates existing ideas, always faces the small innovations of each day: menu, schedules, customer relationships and staff.
Roberto
you are right that a new restaurant, even if it only replicates existing ideas, always does small innovations each day: those in menu, schedules, customer relationships and staff. Obviously, you are accepting that the new restaurant is doing innovations. It is not necessary that every start up does disruptive innovation which is few and far between.
Some micro-enterprises are developing without product, process, technological, marketing innovations, etc. However, many technological startups nowadays base their development and competitive advantage on technological, product, service, marketing or other innovations.
On the other hand, innovativeness may refer to various activities, i.e. not only entities operating on the market under competitive conditions. It may also apply to public institutions, financial institutions, research institutes, etc.
Best wishes
What you talk about are two different kinds of entrepreneurship: one is opportunity based, and is often based on innovation, and the other one is neccesity based, which characterises survival as the major goal. In this second case, innovation is often perceived as too risky.
Is necessity based business creation an example of Entrepreneurship?
Enterprenuership needs innovation to have a competitive edge, look at the tenderprenueral culture that we have pre-existing, most companies are unable to innovate beyond the contracts they get and that means there life span is for that particular project.
Answer to Arinaditya Sahay: if you take a look at Global Entrepreneurship Monitor ( GEM), thwy distinguish between the two ( neccessity vs. opportunity), but do not question if it is entrepreneurship.
In my opinion, yes, I agree with the above theses suggesting that not every enterprise is innovative, not every economic activity is based on a specific innovation. Entrepreneurship can be correlated with innovation but this correlation does not always have to be constant and strong. Innovative economic enterprises are usually correlated with entrepreneurship. However, not every business venture is innovative.
Dear Arunaditya Sahay, Yes, I fully agree that if a company is not innovative in any way, it may soon be forced out of the market by competitors that are more innovative. On the other hand, resolving the issue of relations between the concepts of innovation and entrepreneurship in a supranational approach is a complex matter. The reason is the uneven definition of the concepts of innovation and entrepreneurship in the context of starting and conducting specific types of economic activity in individual countries.
Best wishes
Dariusz Prokopowicz
Dariusz
I entirely agree with you that the definition of the concepts of innovation and entrepreneurship is uneven in different contexts and in different countries. How do we, as researchers, make it uniform across the globe and across contexts?
Dear Arunaditya, thank you for confirming my theses. I agree that there is a lack of a globally developed system of full standardization and unification of defining the concepts of entrepreneurship and innovation. In individual countries, unequal interpretations of these concepts and / or their practical application are created, i.e. in the situation of determining which activity is characterized by higher entrepreneurship and which product, service, technology, technological improvement, logistics, marketing, rationalization solutions, a new type of material, raw material, etc. is considered innovative and which has the features of novelty but is not innovative. In individual countries, uneven interpretations of these terms and / or their practical application are created for the current needs of specific programs for granting public funds that should activate entrepreneurship and / or innovation in the region and / or the country. Depending on the amount of funds allocated in these support programs for the development of selected business entities, and how many applications are received with a request for a grant for the development of some new and perhaps innovative products, technologies, logistics processes, online sales solutions, etc. definitions of innovation are interpreted accordingly. This is also because the assessment of the level of innovation is not strictly the scoring of quantitative factors but only to a significant or dominant extent is based on the assessment of the qualitative characteristics of the tested innovation of products, services, technologies, processes, etc. Therefore, the scope of the assessment of innovation is too large on the subjective assessment, which is carried out by the person assessing the applications submitted by economic entities applying for a non-repayable grant or repayable loan under governmental, public programs that are aimed at activating entrepreneurship and innovation. To increase the scope of objectivity of assessments and the precision of determining what is innovative and what is not innovation, the scoring process should be based solely or mainly on scoring assessment of extracted and precisely defined quantitative factors shaping and describing issues related to innovation. In this way, the process of assessing the level of innovation will be objectified and interpretations of the concepts of innovation will be unified. In this way, it will be possible to apply more automation of assessment processes using ICT information technologies. The assessments will be able to be carried out remotely via the Internet in automated, computerized scoring systems, the scope of the objectification of assessments will increase, the number of errors accidentally or intentionally made by people conducting these assessments will decrease, i.e. the scope of the operational operational risk of errors made will decrease, and thus will decrease the scope of unreliable, improperly assessed applications will improve and the effectiveness of innovation activation programs will be improved by granting subsidies from public funds.
Best wishes
Dariusz Prokopowicz
Arunaditya Sahay Dariusz Prokopowicz Mirna Leko-Šimić
The most insightful view that I ever came across on the topic is from Peter Drucker. He says innovation is the instrument of an entrepreneur. He defines an entrepreneur as somebody who endows something with value. In his view, nothing is of value until someone has a use for what you make.
Net, you cannot be entrepreneur without being innovative. The level of innovation does not have to be Silicon Valley type, even "necessity driven entrepreneurs have to do something different or do something in a different way.
Entrepreneurship is based primarily on innovation, even in an organization called organizational innovation, managemerial and transactional or commercial innovation
innovation is risk investment
- the retorica of innovation not the same as practice
- 'status quo bias' is the strongest economical incentive (Thaler)
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