In our previous post, we gave our stand on the relationship between these two words: Entrepreneurship (Entrepreneur) and Innovation (Innovator) – which was that both words can be used interchangeably in respect to the purpose of each of these words and that anybody who says they are an entrepreneur, should also be able to boast of being an innovator. We also shared two interesting definitions of Innovation by Michael Porter and Peter Drucker – identifying a very thin line between the definitions of Innovation and Entrepreneurship. Hence, our claim that every Entrepreneur should be an Innovator. We mentioned the two main types / categories of innovation, which are: Disruptive and Incremental and shared a good framework of how these two categories work in practice. You can read the post here.
In today’s post, I want to share with you a work I did during my post-graduate studies on this topic of Innovation and Entrepreneurship, well, not the whole work but at least the necessary part. The research was done on the context of entrepreneurship innovations and innovations method. In summary, the research was aimed at creating a framework that shows the correlation between entrepreneurship innovation and innovation methods taking in context the organizational structure, industrial and technological, and opportunity cost and pre-venture managerial experience.
I felt, at the time of the research paper, and still feel the same way today, that if entrepreneurs could identify and understand where they are in these three contexts, that they would know which innovation methods would prove the most successful and, in effect, become the innovators they ought to be.
The organizational context of entrepreneurship innovation really affects those “intrapreneurs”. For those of us who do not know who an intrapreneur is, an intrapreneur is an employee of an organization that has been given a certain level of freedom to use the organization’s resources for innovative purposes that would benefit the organization. Basically, an intrapreneur is an entrepreneur working for an organization.
Find out what organizational culture you want in your organization; what norms and structure you either find yourself in as an intrapreneur or you want to begin to have as your business grows.
Organization cultures, norms, structure, experience and knowledge could be variables that make up the organizational context for entrepreneurship innovation. This context and its effects affect mostly entrepreneurs (intrapreneurs) who are ventured out of an established organization, organizations with years of experience and possibly years of positive turnovers that get lost in their psychic prison or paradigm of doing things a certain way and have become resistant to change.
Industrial and Technological Context
Find out which industry your business is in and the technological aspect of the industry and how consumers accept innovations.
Industry and technology plays a big part in affecting how much innovation the entrepreneur aims to accomplish. Different industries and technologies respectively vary widely in how their market perceives and accepts new innovations. Certain factors like how long the life cycle of products produced in a certain industry; what sort of technology is considered standard; regulatory and policy bodies governing the industry. These factors are highly effective in determining how much innovation an entrepreneur aims to achieve.
Opportunity Cost and Pre-Venture Managerial Experience
This is the most rational of all the contexts. In this context, the entrepreneur does a cost / benefit analysis and financial risks. This is a major factor in deciding which entrepreneur gets to become an innovator also.
Opportunity cost has been one of the most rational contexts for entrepreneurs. Opportunity cost is a perspective where individuals indulged in a cost and benefit analysis where the current opportunities and their returns are compared with alternate possibilities before making a decision. According to (BarNir 2014), pre-venture managerial experience (PVME) is arguably a major factor in the weighing of individuals’ opportunity costs. Pre-venture managerial experience can be defined somewhat as a previous personal experience an individual has gained from his/her years of working as an employee. The degree of each PVME is also measured by certain factors, factors like previous work promotion opportunities, salary earnings and status of that individual. (BarNir 2014) argues that the higher the PVME of an individual – this means higher status and income, etc. – the higher the expected returns on the new venture the entrepreneur plans to go into.
Having given the two main categories of innovation, identify what the organizational context is around you regarding the bureaucracy / flexibility dilemma surrounding you; then identify which industry your business is in and how often do consumers expect new inventions and finally, identify where you stand in terms of cost / benefit and basically the monetary context surrounding you. Below is the simple framework created for the context for entrepreneurship innovation and innovation method.
I really do hope this post will help as many entrepreneurs out there become the innovators they ought to be. If you’re interested in reading the full research paper, click here or copy this link and paste on your browser.
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