Concepts of Entrepreneurship and Innovation Management
Nowadays, it remains evident that the business world tends to evolve, and its growth is accompanied by an extended variety of concepts and their development. It seems that they are highly similar, but the presence of differences makes them applicable in different spheres. For example, it is of paramount importance to differentiate entrepreneurship and innovation, as these ideas contribute to sufficient business growth and development.
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Confusion between these terms exists since their concepts overlap, but the main differences pertain to the definitions of these models. For example, innovation is the idea-generation that aims at refining or creating entirely novel business models, products, services, or mechanisms (Vyas, 2014). In turn, entrepreneurship is a process of developing new business, so-called start-up that will deliver a new product or service to the market (Moran, 2015).
These definitions show the interdependence between these concepts, but the main differences are linked to the fact that entrepreneurship is a more complicated process that implies using a unique set of skills and practices, as it is required to deliver innovative ideas to the target audience.
Nonetheless, as it was mentioned earlier, innovation and entrepreneurship have a tendency to overlap and co-exist. In the first place, both of them discover the opportunities of the market including internal and external barriers, take advantage of risks and challenges, and design interesting and innovative solutions to cater to the unsatisfied needs. Simultaneously, these ideas assist in developing dynamic competitive advantages that help companies become future-oriented and customer-centered (Moran, 2015).
Overall, it could be said that innovation can be viewed as a key entrepreneurship’s trigger and vice versa since only seeing this interdependence helps deliver exceptional ideas to the target audience.
Nevertheless, apart from a clear theoretical description of these concepts, it is of high significance to illustrate these phenomena with examples. For instance, Hewlett Packard (HP) could be viewed as one of the bright examples, as it aimed at creating new personal computers and other devices with the help of innovation and entrepreneurship. In turn, these ideas can not only contribute to the product or service design but also an attempt to enhance internal procedures.
Other examples were just in time (JIT) or total quality management (TQM) that required restructuring supply chain and manufacturing activities to speed the delivery and maximize quality (Moran, 2015). Based on the examples depicted above, it could be said that innovation and entrepreneurship are interdependent concepts of successful business practice, as the absence of either one of them would question the subsequent idea-delivery to the market and its implementation.
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Main Challenges Would Be for the Adoption and Diffusion of a New, Radical Innovation
It is widely known that the adoption and diffusion of radical innovation are associated with a number of challenges, and the primary goal of this essay prompt is to discuss some of them. In this instance, the obstacles tend to be present at different levels of the organization and external and internal factors. In the first place, diffusion and adoption of radical innovation are affected by the changes in the business environment.
In this case, the actions of the government and current legislation strongly influence the speed of adoption (Wisdom, Chor, Hoagwood, & Horwitz, 2014). For example, the Health Information Technology on Economic and Clinical Health Act supported the implementation of electronic medical records (EMR) system, as, otherwise, it would not be possible to change this sphere in the desired way (Nambisan, Kreps, & Polit, 2013).
In turn, other factors were linked to social networks and intersystem, as only working together as a team with suppliers and other service providers enabled the implementation of EMR (Wisdom et al., 2014). In the context of other industries, Ford and General Motors also had to overcome the challenges of implementation, and they were connected to the economic cycle and its fluctuations, business environment, actions of the rivalry and their responsiveness to the changes in the market (Baily et al., 2005). For example, the market continued to restructure since the competitors were quickly adapting to changes by focusing on improvement of design, efficiency, and discounts and enlarged their customer bases.
In addition, some theories of innovation adoption claim that a pivotal role of internal aspects also cannot be underestimated. One of them is absorptive capacity, and this matter implies that the organization should have all the necessary skills to make the required changes (Wisdom et al., 2014). When referring to the automotive sector and discussion of diffusion of radical innovation, Ford could be considered as the only frontrunner of the car segment in the US that focused on the production efficiency (Baily et al., 2005).
With the help of this feature, he was able to successfully adapt lean manufacturing and leave its competitors such as GM behind. In turn, scholars identify that other potential challenges may pertain to inappropriate leadership style, lack of flexibility in structure and culture, interpersonal and intercultural issues, and the absence of a centralized system of decision-making (Wisdom et al., 2014). For example, the inability to find compromises between different levels of suppliers, nurses, and physicians decreased the speed of adoption and diffusion of EMR systems in some hospitals (Nambisan et al., 2013). Overall, focusing on these risks can help avoid issues mentioned above and implement change successfully.
Characteristics of the Open Innovation Model
Nowadays, the business world continues to evolve, and the open innovation model is one of the new concepts that change the mechanism of idea sharing and its development. Many scholars describe innovation as “on-going processes of learning, searching, and exploring, which result in new products”, as its outcomes have an immense impact on services, products, information flows, and internal organization and culture (Marques, 2014, p. 197).
In this case, it is vital to distinguish between open and closed innovation since understanding these differences will help discover the benefits of open innovation. The last one implies focusing on using internal resources solely (Marques, 2014). For example, it is assumed that the enterprise has all the necessary human resources to contribute to sufficient R&D to create new products and optimize processes while triggering radical or incremental innovation.
On the contrary, the concepts of open innovation state that it is necessary to use different external resources, as they can create additional value to the organization and its products and services. Overall, it could be said that open innovation is a scheme that underlines the importance of knowledge flows and uses both internal and external ideas and resources to create unique products, services, or processes.
Based on the factors indicated above, it could be said that knowledge management is highly linked to open innovation, and it can be defined as the ability of the organization to leverage different kinds of information from a diversity of internal and external sources (Zemaitis, 2014). In turn, its concepts actively contribute to knowledge sharing and development, as it is of paramount importance for every company to convert different types of data into valuable ideas and concepts (Zemaitis, 2014).
These principles entirely comply with the main idea of open innovation paradigm while being its essential element since only with the help of the knowledge management it will be possible to select the most appropriate sources of information and create new ideas and support the development and enhancement of R&D. For example, different global giants such as Coca-Cola, NASA, and Samsung employ the principles of open innovation, as they tend to rely on different external resources to create new designs, IT solutions, and systems.
Nevertheless, their successes will not be possible without the well-developed absorption systems, as only ensuring rapid knowledge transfer assists in creating innovative ideas, competitive advantage, and value proposition (Zemaitis, 2014). Overall, knowledge management can be considered as an irreplaceable component of open innovation due to its ability to prioritize certain knowledge.
Concept of Gazelles Companies
It could be said that innovation can be considered as the main enhancer of the industrial productivity since other participants of the market are required to adapt to the changes to generate more profits and improve efficiency (Baily et al., 2005). This modification took place in the automotive industry when companies such as Ford and GM started adopting the concepts of lean manufacturing (Baily et al., 2005).
The growing popularity of innovation and its critical impact on organizational growth and development contributed to the establishment of, so-called, Gazelles companies. The main characteristics of these firms are their rapid growth pace, flexibility, high absorption rates, and agility (Jolly, 2014). Thus, their sizes may vary, but all of them are characterized by quick growth and development. The most recognized examples pertain to high-tech sectors and include Microsoft, Google, and Yahoo (Jolly, 2014). These companies were able to take advantage of market risks, turn them into their competitive advantages, and create entirely new products and services for consumers.
The development of these corporations is recognized by the governments, as these organizations are expected to become large employers in the recent future while creating additional vacancies in the labor market and decreasing the unemployment rate (Jolly, 2014). It affects the economy in a positive way at both national and regional levels since unemployment is the central problem of many countries.
Thus, apart from that, the rapid growth and development of gazelle companies have a positive impact on the national economy while constantly increasing GDP. On the contrary, it intensifies competition and increases entry barriers as a consequence. It creates difficulties and may slow the development of certain industries. Nonetheless, it offers a diversity of products and expands customer choices. Apart from the negative aspects, a combination of these factors implies that the rapid growth of gazelle companies is the main innovation trigger, as the rest of the market has to adapt to the constant changes to remain competitive in the market and maintain the attention of investors and customers.
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For example, using JIT made Toyota one of the frontrunners of the automotive industry and required companies such as Ford to adapt to these changes (Baily et al., 2005). In the end, based on the findings indicated above, it could be said that the development of gazelle companies not only resolves different issues at national and regional levels but also contributes to continuous innovation and growth.
Baily, M., Farrell, D., Greenberg, E., Henrich, J., Jinjo, N., Jolles, M., & Remes, J. (2005). Increasing global competition and labor productivity: Lessons from the US automotive industry. Web.
Jolly, A. (2014). The growing business handbook: Inspiration and advice from successful entrepreneurs and fast-growing UK companies. London, UK: Kogan Page Publishers.
Marques, J. (2014). Closed versus open innovation: Evolution or combination? International Journal of Business and Management, 9(3), 196-203.
Moran, A. (2015). Managing agile: Strategy implementation, organization, and people. New York, NY: Springer.
Nambisan, P., Kreps, G., & Polit, S. (2013). Understanding electronic medical record adoption in the United States: Communication and sociocultural perspectives. Interactive Journal of Medical Research, 2(1), 5-13.
Vyas, V. (2014). Low-cost, low-tech innovation: New product development in the food industry. New York, NY: Routledge.
Wisdom, J., Chor, K., Hoagwood, K., & Horwitz, S. (2014). Innovation adoption: A review of theories and constructs. Administration and Policy in Mental Health, 41(4), 480-502.
Zemaitis, E. (2014). Knowledge management in open innovation paradigm context: High tech sector perspective. Procedia – Social and Behavioural Sciences, 110(1), 164-173.