Business size innovative potential
The innovative potential of an entrepreneurial business depends on its size.Chesbrough (2006, P. 2) states that ‘there exists a direct relationship between the amount and type of innovation a company achieves to the way it approaches, fosters, selects, and funds innovation efforts’.Innovation potential is essential, but it is often an assumed component in the debate on innovation. A concise knowledge of innovation potential is helpful because it forms the building blocks of innovation within the enterprise. An entrepreneurs’ innovative ability depends on the following,
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- Human capital – An enterprise with a high number of employees divided across the major functional units of the business like finance and accounting, information technology, sales, and marketing have a better chance of developing its innovativeness. The human capital brings their desires, goals, and interests and this is a key driver of innovation in the enterprise.
- Financial –The availability of finances enables an entrepreneur invest in innovative technology and install modern equipment in the business. An entrepreneur with enough finances engages in innovative ideas.
- Market – An entrepreneur with a big business commands a big market share. There are increased sales that bring revenue and goodwill to the entrepreneur. The company rides on its revenue streams and goodwill to test and get responses on its innovations.
- Physical – An entrepreneur with a well-developed distribution channel can try out its innovations over a wide range of geographic location.
Entrepreneurial failure refers to the discontinuation or exit from a business which includes closure for any reason or change in ownership, bankruptcy, and persistent losses.
- Individual characteristics -The failure of the entrepreneurship depends on the individual’s education background, industry-specific knowledge, experience, and family ties.Welsch (2004, p. 136) argues that ‘human capital of the founding teams, the scale of the start-up business, and broad strategies decrease the odds of the firm discontinuance’.
- Initial business resources – This refers to investment, start-up experience, teams involved, gender of the owner and the number of staff.Welsch (2004, p. 136) observed that ‘Women owned businesses have higher odds of discontinuance as women owners are more likely to have less experience and they start their entrepreneurship on small scale’.
- Inadequate finances – All entrepreneurial business use money for their daily operations. Inadequate finances lead the business into borrowing, which makes it indebted by creditors.
- Competition – there exists competition in every business venture for available distribution channels, ease of reach to customers, sales, and firms’ ability against its competitors. The inability of an entrepreneur to compete favorably, obtain a market niche, and control the available resources in the market leads to failure.
- Legislation – when government sets out changes in law, they push entrepreneurs out of business.
- Technological changes – the technological environment is the fastest changing environment. A new technological advancement makes old technology obsolete. New technology is expensive and replacing it is difficult.
Debates on the concept of entrepreneur
An entrepreneur is a person who takes the initiative of running a business and takes all the risks associated with the business. The debate surrounding entrepreneurs is whether they are born or made. The qualities of a successful entrepreneur are innate rather and not learned. Most of the successful entrepreneurs dropped out of school at a tender age to pursue business interests. Entrepreneurs have unique characteristics and individual traits, they are risk takers, and they do business cautiously exhibiting their entrepreneurial prowess.
Entrepreneurs align their skills towards possible business opportunities and maximize on this opportunity. Schendel (2010, p. 56) states that ‘entrepreneurs have similar character traits difficult background, minority or from a disadvantaged group, disability, risk-lover and optimist, independence and social distinction, and need for achievement and power’.The successful entrepreneurs follow a systematic logic of problem solving. They start with the end in mind and their actions justify the means of achieving their goals. The debate ends with the fact that entrepreneurs are born.
The impact of socialization and culture on entrepreneurs
Socialization refers to the process by which people acquire and learn the culture of their society. Socialization is a continuous process that starts from birth and continues throughout an individual’s life. The factors influencing socialization are culture, parents, media, parents, legal system, and peer groups. People build their entrepreneurial businesses through various cultural processes. Entrepreneurial parents want their children to take up jobs like them. A parent who earns salary will shape their children’s minds towards employment. Socialization imparts the preference of parents to their children.
Welsch (2004, p. 81) states that ‘the child of an entrepreneurial parent picks up the parent’s posterior beliefs about technologies as his own priors and a child of a wage-working parent acquires parental aversion to risk’. A person brought up in poor background is less likely to be a successful entrepreneur since he has no role models to look up to for advice. Socialization has made it hard for women to be successful entrepreneurs as culture views women as incapable of running businesses. According to culture, women work at homes and take care of their male counterparts. This inhibits the ability of women to run businesses effectively as they do not have the experience and knowledge to run businesses.
Schendel (2010, p. 2) states, ‘Corporate Entrepreneurship is the birth of new businesses within a running businesses, and the transformation of stagnant businesses in need of revival or transformation’.Corporate entrepreneurship issues;
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- Sustained regeneration –firms already in business exhibit and develop new entrepreneurial characteristics. Jacobson (2010, p. 28) states that ‘this includes new product development wherethe introduction of new products is ongoing and firm’s creativities have important implications for its performance’.
- Organizational rejuvenation refers to the process where organizations seek innovativeness and enhance the performance of employees by altering their existing internal processes and structures. This includes reforming the staff into self-managed teams and circles. An organization with a self-managed team performs better since the team members take ownership of their duties and take higher risks for the team.
- Strategic renewal –Schendel (2010, p. 5) observes, ‘The firm seeks to define its relationship with its markets or industry competitors by altering how it competes with the focus on the firms’ strategy’. The organization positions itself strategically against its competitors and develops new products distinct from the normal industry practice.
Clayfield (2014, p. 109) states that the ‘Social network sites are web-based services that allow individuals to construct a public profile within a bounded system and articulate a list of other users with whom they share a connection’. The nature of the social sites is that they are open to everybody and people can connect with everyone around the world. Jacobson (2010, p. 75) state that entrepreneurs drive their businesses using social sites.
Benefits of social sites to employee
- Ability to access institution information faster.
- It helps minimize communication costs..
- Enhancement in new employee recruitment.
Benefits of social sites to customers
- Enhanced customer service and product delivery.
- Increased customer satisfaction.
- Enhanced product development as customers participate in an online survey.
Benefits of social sites to external partners
- Less external communication costs.
- Exploiting new external markets.
- Enhanced collaboration and product innovation opportunities.
Chesbrough, H 2006, Technology, Open Innovation: The New Imperative for Creating and Profiting from, Harvard Business Press,New York.
Clayfield, A 2014, Importance of Social Networking: Social Networking promotes globalization,Hardbody Publishing, Texas.
Jacobson, J 2009, 42 Rules of Social Media for Small Business, Happy About Publishers, London.
Schendel, D 2010, Introduction to the Special Issue on Corporate Entrepreneurship,Oxford University Press, Oxford.
Welsch, H. P 2004, Entrepreneurship: The Way Ahead,Psychology Press, New York.