Managing Technology Entrepreneurship and Innovation

Paul Trott, Dap Hartmann, Patrick van der Duin, Victor Scholten, J. Roland Ortt

• Publisher: Routledge
• Year: 2015
• Print ISBN: 9780415677226
• eBook ISBN: 9781317498193
• Topic: Business
• Subtopic: Business General
• Index: Business

Managing Technology Entrepreneurship and Innovation is the first textbook for non-business based entrepreneurship courses, focussed on students with a background in science and technology. Its comprehensive, rigorous and yet accessible approach originates from the authors' considerable experience mentoring students as they turn their technological ideas into real-life business ventures. .

The text is separated into three parts providing a roadmap for successful entrepreneurial projects:

Part I focusses on how to create your venture, turning technology into businesses and how to link together entrepreneurship and innovation

Part II shows you how to grow your venture and make it profitable, looking at the early development of academic spin-outs and how to adapt your technology to the customers' needs.

Part III takes you through the day-to-day running on your business; whether to adopt a contingency or contextual approach, how to develop new products and services and alternative options for growth.

With a wide range of practical steps, lists of things to consider and guidelines on how to turn your technology based ideas into a successful business, this text will be essential for all non-business students who need to understand entrepreneurship, management and innovation. It will also prove a useful introduction to all Masters-level students taking these subjects in business schools.

Part I Creating the venture

DOI: 10.4324/9781315713502-1

The purpose of creating a start-up business is the intent of profiting financially. Although there are many laudable organizations established for other reasons, this book deals with turning technology into businesses. Chapter 1 sets the scene for this book and links together entrepreneurship and innovation. The cyclic model of innovation provides a useful framework for viewing technology-based small businesses. The second chapter examines how we can develop useful knowledge about the future to help improve the chances of success for our start-up. We can predict, analyse and explore the future by applying methods of futures research and taking into account certain principles and concepts. Chapter 3 illustrates how the starting place for many technology-based businesses is the development of a solution. So this chapter looks at problem-solving techniques. The final chapter in Part I of this book shows how start-ups need to frame their opportunity in terms of a venture that will make money.

Chapter 1 How entrepreneurship and technological innovation are bound together

Chapter 2 Visioning the future for a new venture

Chapter 3 Inventive problem-solving and brainstorming

Chapter 4 The opportunity and the entrepreneur

1 How entrepreneurship and technological innovation are bound together

DOI: 10.4324/9781315713502-2

• Entrepreneurship and innovation
• Defining entrepreneurship
• Overview of studies of entrepreneurship
• Innovation management
• Why the funnel model of innovation is unhelpful
• Innovation as a management process
• The management of innovation requires a new set of skills
• Technological entrepreneurship: A question of context
• A framework for technological entrepreneurship
• Chapter summary
• Study questions
• Notes
• References
• Further reading

Entrepreneurship is all about stepping into the unknown and breaking away from the familiar. For some people, this is less of a challenge than for others. This can be for a wide variety of reasons, including background and parental influence. Across Europe, unlike in the USA, it remains true that more graduates would sooner work for Siemens, Shell or Nokia than start their own business. This picture, however, is changing, and the number of people interested in starting their own business is rising rapidly. Furthermore, an injection of entrepreneurship, by which creative people are encouraged to strike out and develop new products or services, is important to the financial health of all organizations. Yet, fundamental questions appear as major obstacles: Where is the opportunity? How do I capitalize on it? What resources do I need? How do I gain control over them?

For many, the entrepreneur and entrepreneurship are best captured by George Bernard Shaw’s famous quote (today, ‘man’ would be replaced with ‘person’ to include men and women): ‘The reasonable man adapts himself to the world. The unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on unreasonable men’ (1903).¹ This captures the essence of entrepreneurship – that it is about change, about doing something different. Often, this change will be met with resistance, and it is the entrepreneur who will persist and get things done. Without such people, improvements are less likely.

But what does entrepreneurial mean? Managers describe entrepreneurship using such terms as innovative, flexible, dynamic, risk-taking, creative, and growth oriented. The popular press, on the other hand, often defines the term as starting and operating new ventures. That view is reinforced by the alluring success of such upstarts as SAP, Dyson and TomTom. Neither approach to a definition of entrepreneurship is precise or prescriptive enough for managers who wish to be more entrepreneurial. Everybody wants to be innovative, flexible and creative. But, for every SAP, Dyson and TomTom, there are thousands of new restaurants, clothing stores, and consulting firms that presumably have tried to be innovative, to grow, and to show other characteristics that are entrepreneurial – but have failed.

In this book, we want to reinforce the idea that entrepreneurship is not just about starting a new business. Our focus on innovation management underscores this point. We are all aware of many medium and small businesses that consistently develop new products and markets and also grow at rates far exceeding national averages. For example, Subocean Group grew an incredible 237 per cent in 2009, increasing its turnover from €1.9 million to €77 million. Subocean runs power cables along the sea floor, from offshore wind farms to substations on land (Fast Track 100, 2010). Moreover, we’re all aware of many of the largest corporations – BMW, AstraZeneca and Ericsson are just a few of the best known – that make a practice of innovating, taking risks and showing creativity. And they continue to expand.

Entrepreneurship and innovation

In the US, the subject of entrepreneurship has been taught in business schools for more than 50 years. The content of these courses clearly varies, but many of them study growing a small business into a large one. When it comes to innovation management, this has not been generally studied, and, until recently, there were far fewer courses available. This is changing. Yet, in Europe, we have a long history of teaching innovation management but not entrepreneurship (Tidd et al., 1997; Trott, 1998). This is changing, and entrepreneurship is a rapidly growing subject in universities across Europe. As an academic field, entrepreneurship has flourished. In 1983, Babson held the first research conference on entrepreneurship, with thirty-seven papers presented. In 2014, there were over 1,000 papers presented. Entrepreneurship now has its own division within the academy of management.

In Europe, there is recognition of the need, and a considerable emphasis, especially within the technical universities, on trying, to understand how entrepreneurship and innovation can help create the new technology-intensive businesses of tomorrow. Moreover, it is the recognition of the entrepreneur’s desire to change things that is so important within innovation. We will see later that the role of an entrepreneur is central to innovation management.

Trying to uncover separate definitions for innovation and entrepreneurship is increasingly a purely academic exercise. The main traits associated with entrepreneurship such as growth, flexibility and creativity are also desirable traits for innovation. Theorists and practioners alike recognize that these constructs are close relatives, or two sides of the same coin. We will now briefly outline the roots of these terms and their linkage.

Traditionally, it is Jean-Baptiste Say who is credited for having coined the word and advanced the concept of the entrepreneur, but in fact it was Richard Cantillon who first introduced the term in Essai, written in 1730. Cantillon divided society into two principal classes – fixed-income wage earners and non-fixed-income earners. Entrepreneurs, according to Cantillon, are non-fixed-income earners who pay known costs of production, but earn uncertain incomes; hence, it was Cantillon who saw the entrepreneur as a risk-taker, whereas Say predominately considered the entrepreneur to be a planner (1730/1952).

A few years later, in the 1776 thought-provoking book The Wealth of Nations, Adam Smith explained clearly that it was not the benevolence of the baker but self-interest that motivated him to provide bread (1776/2005). From Smith’s standpoint, entrepreneurs were the economic agents who transformed demand into supply for profits. In 1848, the famous philosopher and economist John Stuart Mill described entrepreneurship as the founding of a private enterprise. This encompassed the risk-takers, the decision-makers and the individuals who desire wealth by managing limited resources to create new business ventures.

Although entrepreneurship may have a long history, the term entrepreneur continued to be used to define a businessman until the arrival of Joseph Schumpeter. It was his work in the 1930s that made the clear linkage between the terms innovation and entrepreneurship. He considered entrepreneurship as influencing growth in the economy. It is something that disrupts the market equilibrium, or ‘circular flow’. Its essence is ‘innovation’. He writes that: ‘the carrying out of new combinations we call enterprise; the individuals whose function is to carry them out we call entrepreneurs’ (1934, p. 74). After Schumpter’s work, most economists (and many others) have accepted his identification of entrepreneurship with innovation (see Kilby, 1971 for a summary of the term ‘entrepreneur’).

According to Schumpeter, economic development is the result of three types of factor (Schumpeter, 1939/1964, p. 61):

1. external factors, such as demand by government (changes in legislation, defence orders);
2. factors of growth or gradual changes in economic life that are accomplished through day-to-day activities and adjustments;
3. ‘the outstanding fact in the economic history of capitalist society’, innovation.

For Schumpeter, entrepreneurs are galvanized into action under the following conditions (Schumpeter, 1961, p. 214):

1. the existence of new possibilities more advantageous from the private standpoint – a necessary condition;
2. limited access to these possibilities because of personal qualifications and external circumstances;
3. an economic situation that allows tolerably reliable calculations.

For Schumpeter and his direct disciples (Duijn, 1977; Mandel, 1978, 1980, 1981; Freeman, 1979; Mensch and West Internationales Institut für Management und Verwaltung, 1979; Kleinknecht, 1981), innovation is the chief force in what he calls ‘economic evolution’. It is worthy of note that, for Schumpeter, his concept of innovation is broader than some innovation theorists have since argued. For Schumpeter, innovation is not simply the patenting of new inventions; it includes new combinations in organizations, commerce and the market, as well as the creation of new business organizations (Schumpeter, 1961, p. 66, 1939/1964, p. 59). This then may be helpful as we try to consider together the concepts of entrepreneurship and innovation. We also need to recognize a wider definition of innovation that includes more than the hard physical outputs from a traditional science-led institution, such as a technical university (TU), and consider new ‘service offerings’ as well.

Defining entrepreneurship

For many people, Box 1.1 captures what it is to be an entrepreneur.

Entrepreneurship can be described as a process of action that an entrepreneur undertakes to establish an enterprise. Entrepreneurship is a creative activity. It is the ability to create and build something from practically nothing. It is an ability to see an opportunity where others see chaos, contradiction and confusion. Entrepreneurship is an attitude of mind to seek opportunities, take calculated risks and derive benefits by setting up a venture. It comprises the numerous activities involved in the conception, creation and running of an enterprise. Similarly, an entrepreneur is a person who starts such an enterprise. He searches for change and responds to it. There are a wide variety of definitions for an entrepreneur: Economists view him as a fourth factor of production, along with land, labour and capital. Sociologists feel that certain communities and cultures promote entrepreneurship. The US is often cited as having a culture that supports entrepreneurs. Still others feel that entrepreneurs are inno...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of images
• List of tables
• Preface
• PART I Creating the venture
• PART II Developing the venture
• PART III Managing the entrepreneurial firm
• 12 Expectations of entrepreneurs and patterns of growth
• Index