In his autobiography, the Irish entrepreneur Billy Cullen (2003) tells the story of how, as an eight- year-old boy, he demonstrated sharp entrepreneurial skills. In a poverty-stricken area of Dublin, young Billy would buy wooden crates of apples for a shilling and then sell the apples on a Saturday afternoon to the hundreds of local people who would flock to watch their local football team play. This provided Billy with a healthy profit
of a shilling, if he could sell all the apples. But, his entrepreneurial skills did not stop there. He would then take the wooden apple boxes to the football ground and sell them for a penny to people at the back of the crowds, so that they could stand on the box for a better view. And, finally, when the match had finished, Billy would collect up the wooden boxes, break them up and sell them in bundles for firewood.
Innovation in action
Source: Pearson Education Ltd/Westend 61
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 numerous activities involved in conception, creation and running 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 vari- ety of definitions for an entrepreneur – economists view him as a fourth factor of production along with land labour and capital. Sociologists feel that certain com- munities and cultures promote entrepreneurship. The USA often is cited as having a culture that supports entrepreneurs. Still others feel that entrepreneurs are innova- tors who come up with new ideas for products and markets. To put it very simply, an entrepreneur is someone who perceives opportunity, organises resources needed for exploiting that opportunity and exploits it.
Peter Drucker’s classic book Innovation and Entrepreneurship was first published in 1985 and it was the first book to present innovation and entrepreneurship as a purposeful and systematic activity. According to Drucker, ‘Innovation is the specific function of entrepreneurship’ and entrepreneurship, ‘is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth’.
In his book, Drucker focuses on large-scale entrepreneurship, rather than small business management. Drucker’s recurring theme is that good entrepreneurship is usually market-focused and market-driven. Contrary to the belief of many, Drucker says that innovation is not inspired by a bright idea, rather it ‘is organised, system- atic, rational work’. Innovation can be mastered and integrated into a company or non-profit organisation.
In a study of past and future research on the subject of entrepreneurship, Low and MacMillan (1988) define it as ‘the process of planning, organising, operating, and assuming the risk of a business venture’. Risk and the willingness to take a risk with one’s time and money is surely a key feature of entrepreneurship. It is the analysis of the role of the individual entrepreneur that distinguishes the study of entrepreneurship from that of innovation management. Howard Stevenson, who developed entrepreneurship teaching at Harvard Business School, defines entrepre- neurship as follows:
Entrepreneurship is the pursuit of opportunity beyond the resources you currently control.
(Stevenson 1983, 1985, 1990) This definition takes into account both the individual and the society in which the individual is embedded. The individual identifies an opportunity to be pursued, then, as an entrepreneur, must seek the resources from the broader society. Stevenson argues that entrepreneurship activities can be identified as distinct from that of the administrator (see Table 2.2 below). This is significant, for it recognises that entre- preneurship can be viewed as a mode of management within a corporation.
According to Howard Aldrich (2012), the academic field of entrepreneurship research has grown from groups of isolated scholars doing research on small busi- nesses to an international community of departments, institutes and foundations pro- moting research on new and high-growth firms. The field is increasingly formalised
Technological entrepreneurship: a question of context
and anchored in a small set of intellectual bases. Significantly, however, major foun- dations and many other smaller funding sources have changed the scale and scope of entrepreneurship research today. Virtually all business schools now engage in entre- preneurship research.
Technological entrepreneurship: a question of context
Like so many things in life, our perception of something depends upon our vantage point. For those of us considering entrepreneurship, this is particularly relevant. Do we wish to consider the individual entrepreneur, the organisation, an industry, an economy or even the wider society? Hence, the level of analysis needs to be specified.
Also, do we wish to investigate the past or the future? For example, there are many studies that have tried to explain why some firms or individuals were successful – the growth (and fall) of Microsoft or Nokia. There are also historical studies of periods of time, such as the growth of the Roman Empire or the demise of the Ottoman Empire. So the time frame needs to be specified. Finally, do we wish to investigate or study a particular phenomenon or issue? For example, entrepreneurship education has received a great deal of attention from policy makers and politicians as they have tried to enhance their country’s economic growth. Nonetheless, this area of business management is problematic. In his book High-Technology Entrepreneurship, Professor Ray Oakey provides a comprehensive overview of all aspects of high- technology small firm formation and growth and illustrates that they have not been attractive assessment vehicles for those with money to invest (Oakey, 2012).
Research by Autio et al. (2014) illustrates the importance of context when they compare the attributes of national innovation systems, entrepreneurship and entrepre- neurial innovation and its influences on entrepreneurial innovation. The evidence is mounting up all over the world that innovation is key to competitiveness and growth and that entrepreneurial dynamism is key to economic renewal and growth. The focus Table 2.2 Definition of entrepreneurship
A process definition of entrepreneurship Key business
dimension Entrepreneur Administrator
Strategic
orientation Driven by perception of opportunity Driven by resources currently controlled
Commitment to
opportunity Quick commitment Evolutionary with long duration Commitment
process Multistage with minimal exposure at
each stage Single-stage with complete
commitment upon decision Control of
resources Episodic use of rent of required
resources Ownership or employment of
required resources Management
structure Flat with multiple informal networks Formalised hierarchy
Reward system Value-based and team-based Resource-based individual and promotion oriented
Source: Stevenson (2000).
is, therefore, provided by a combination of several areas of policy. One of the major weaknesses of the effectiveness of policies to develop technological entrepreneurship is insufficient recognition of the overlaps and linkages between these four areas:
1 Science and technology.
2 Small and medium-sized enterprise.
3 Innovation.
4 Entrepreneurship.
Science and technology policy
Science and technology policy is an area of public policy concerned with the govern- ment decisions that affect the conduct of the science and research enterprise, includ- ing the funding of science, often in pursuance of other national policy goals, such as technological innovation to promote commercial product development, weapons development, health care and environmental monitoring. Indeed, innovation policy has evolved from S&T policy.
Small and medium-sized enterprise
There has been recognition for a long time that small firms require support and help if they are to grow into larger firms and help develop and grow the economy. Many economies embraced the concept of ‘acorn to oak tree’ as they put in place numer- ous measures to help SMEs grow. Entrepreneurship policy has evolved from SME policy. Yet, it has been recognised for many years now that most small businesses are not investment-ready. Their owners are unwilling to seek external equity finance and those who are willing do not understand what equity investors are looking for or how to ‘sell’ themselves and their businesses to potential investors. These weak- nesses, in turn, compromise the effectiveness of supply-side interventions, such as initiatives to stimulate business angels or which create public sector venture capital funds (Oakey, 2007b).
Within this area, we find business incubators. Business incubators can offer start-ups various forms of assistance from economies related to shared business services, to expert advice, and access to venture funding opportunities. Incubator facilities vary widely in size, as measured by the square footage or total start-up costs and the number of tenants resident in the facilities. Technology-oriented incubators are increasingly locating near research parks, universities or research labs to offer technology entrepre- neurs access to a wider range of facilities, individuals and opportunities within their field. Tenant firms can have access to the research facilities and personnel of established firms, universities and research institutes. Additionally, they are able to network more easily with experienced and successful entrepreneurs and may even engage in strategic alliances to exploit business opportunities either as a subcontractor or a supplier.
University spin-outs
University spin-outs have received considerable positive publicity. Yahoo and Google often are cited as examples. Yet research comparing non-university spin-outs with university spin-outs reveals a different picture (Ortín-Ángel and
Technological entrepreneurship: a question of context
Vendrell-Herrero, 2014). A close examination of the literature on university spin- outs reveals surprising evidence:
● The average number of spin-outs from American universities in 2012 was a measly three (AUTM, 2015).
● The income generated from technology transfer as a proportion of research income is insignificant (at MIT, for example, in 2012 it was 2.4 per cent of their research income).
● Most US universities lose money on technology transfer activities because of their high running costs (the exceptions are the handful of universities that own pat- ents on blockbuster drugs).
Even the high profile business successes of Yahoo and Google are sometimes used to support the notion of university spin-outs, but even here the evidence cannot be found. Whilst both Yahoo and Google were founded by Stanford University students, Stanford did not claim intellectual property in the Yahoo technology because this was developed in the students’ own time. In the Google case, Stanford was able to generate income from ownership of the intellectual property, but most of its income comes from its venture capital (VC) investment made through local VC firms rather than from the licence. The definition of a university spin-out is critical here. In the survey above, a new business venture by university students is not classified as a spin-out. A university spin-out involves staff from the university starting a new business.
The devil is in the detail here. For, whilst university spin-outs cannot claim sig- nificant economic impact, the role of universities in supplying educated and trained personnel who can then exploit opportunities certainly can. What is clear, then, is that when we examine the business/university interface we see university graduates as a driver of economic growth, rather than university technology as the driver.
Established firms versus start-ups
Despite the widely acknowledged role of start-ups in economic development, little is known about their innovative activities compared with those of established firms. In a study of UK firms, research by Criscuolo et al. (2012) shows that start-ups differ significantly from established firms in their innovation activities. They find that in services, being a start-up increases the likelihood of product innovations. However, in manufacturing, they find no significant differences in the likelihood of product innovation between start-ups and established firms (Criscuolo et al., 2012). The performance of new firms is important for economic development, but research has produced limited knowledge about the key relationships amongst growth, profit- ability and survival for new firms. Delmar et al. (2013) has found that profitability enhances both survival and growth, and growth helps profitability but has a nega- tive effect on survival.
Innovation policy
Within the EU and in other countries too, such as South Korea, innovation policy has focused generally on four key objectives:
● The generation of new knowledge.
● Making government investment in innovation more effective.
● Enhancing diffusion of knowledge and technology (network interaction effects).
● Establishing the right incentives to stimulate private sector innovation to trans- form knowledge into commercial success.
Much of the policy assistance for high-technology small firms (HTSFs) over recent years has been directed at encouraging their research and development (R&D) collaboration through local networking and technology transfer, such as working with larger partners or universities. Research by Professor Ray Oakley has questioned the value of external collaborative R&D to internal R&D management, inside incubators, science parks or industry clusters. His research suggested that the extent of R&D collaboration with external partners is very limited and, moreover, much of the collaborative HTSF R&D is highly confidential, competitive and wholly internalised, thereby limiting the benefits to the wider economy (Oakey, 2007a).
Entrepreneurship policy
Entrepreneurship policies have attempted to concentrate on developing an environ- ment and support system to foster the emergence of new entrepreneurs and the start-up and early stage growth of new firms. Yet there has been limited recognition of the full integration of entrepreneurship and innovation. Indeed, there has been a disconnect between entrepreneurship and innovation policies. There needs to be a convergence between the two to ensure optimisation of complementarities.
Unfortunately, all too often, innovation policies do not incorporate entrepreneur- ship as a focus. Yet we know that entrepreneurship involves the act of innovation and that entrepreneurs are essential to convert knowledge into economic and social benefits.
Case study
In the summer of 2013, a Domino’s franchise in the United Kingdom posted a video showing an unmanned drone delivering pizzas in the company’s Heatwave bags. Was this genuine product testing by Domino’s of a novel way of getting takeaway food to customers or merely a stunt by Domino’s to raise its profile? The use of drone technology has, up to now, been associated mostly with war-like situations in a more benign manner. For example, drones are being used already to great effect in Afghanistan, where two K-MAX unmanned helicopters have carried more than three million pounds of cargo since December 2011. The widespread use of such drones, though, raises questions. Some are of safety: every extra craft
Pizza delivery with unmanned drones
Source: Chesky/Shutterstock.com
Case study
in the air adds to the risk of a crash or collision.
Others are of privacy: are people’s activities to be monitored continuously when they are outdoors, even when they are on their own private property?
This case study explores the challenges that lie ahead for this innovation.
Introduction
There are a few other industries that are exploring the use of unmanned drone technology. For example, Shenzhen-based Chinese delivery company SF Express (a parcel delivery company) is in the early stages of putting drones in the skies that can deliver packages to remote areas, according to the South China Morning Post. SF has begun testing the drones in Guangdong Province’s Dongguan City, and can reach a flight altitude of about 100 metres. The ben- efits of this technology are simple to recognise. For example, farmers would no longer have to go out in all weathers to check on livestock and farmland. They could remain indoors and use a drone with a camera to patrol their land.
In some countries, most notably the United States, a major hurdle for getting drones into the air is ham- pered by the fact that the Federal Aviation Administration (FAA) does not currently allow drones for commercial use in US airspace. Because of its early stage of technology development and current US flight restrictions, UPS and FedEx may be at a disadvantage. If courier companies like SF Express can make significant inroads in development and implementation of package-delivering drones, then parcels-via-drone suddenly becomes much closer to reality, at least for smaller package transportation.
Whilst the SF Express drones are being developed with the intention of reaching difficult-to-get-to remote areas, it is hard not to imagine the potential benefits of having drone ‘deliverymen’. They can reach remote locations where there are no roads.
They can be pre-programmed with destination coor- dinates and can, effectively, fly in a straight line. This would cut down on fuel costs associated with deliv- ery. Why send a truck that takes fuel when you could send a drone and then simply recharge the battery?
Police forces around the world are also keen to lay their hands on small pilotless aircraft to help them catch fleeing criminals and monitor crime scenes from above. With price tags of a little more (and, in some cases, a good deal less) than the £30,000 of a
police patrol car, a new generation of micro- unmanned aerial vehicles (UAVs) is being recruited to replace police helicopters costing £1.5 million and up. It is possible to imagine standing out on your front porch, morning coffee in hand, looking up and watching as a whole buzzing network of drones go about their business catching criminals, delivering goods . . . and pizzas. Welcome to the world of drone technology.
Where technologies collide: toys and unmanned aircraft
Quadcopters – small, four-rotored helicopters – are popular toys. A few hundred pounds will buy you one that can be controlled remotely using a standard tablet computer. Parrot, a French firm that makes one such model, says it has sold more than half a million of them. But they are also a favourite of researchers looking into the possibilities offered by small, pilotless aircraft to do everything from deliver- ing packages to scouting and surveillance. Although they are pilotless, quadcoptors are not generally clever enough to be properly self-flying. Most have to be controlled from the ground. Parrot’s toy drones will stabilise themselves and hover if left unattended, but require a human to tell them what to do, if they are actually to go anywhere. Satellite-navigation sys- tems can give the craft the ability to get to roughly where they are needed, but do not work indoors and do not provide for fine manoeuvrability. More advanced laboratory-bound drones can perform impressive feats of agility, like zipping through small holes and perching, birdlike, on vantage points – but they require a ground-based computer to monitor them with high-speed cameras and tell them how to achieve all this.
Some more recent prototypes incorporate smart- phone technology to help the drones. They use image-recognition programs to find their way around.
They identify objects in the vicinity, remember their locations and thus build up a map of the area the drone is flying through. For now, the ‘objects’ are dis- tinctive patterns analogous to the two-dimensional
‘barcodes’ beloved of advertisers, which are designed to be scanned by mobile-phone cameras. But image- recognition algorithms are a hot area of research for everyone from governments to social-networking firms keen to identify pictures of their users – and smartphones, like other kinds of computer, are always
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