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Innovation & Entrepreneurship > Articles > Flashcards

Articles Flashcards

1
Q

Opportunities in factor markets (Shane & Venkatarn, 2000)

A
  1. Creation of new information (new technologies)
  2. Exploitation of market inefficiencies, information assymetry.
  3. Reaction to the shift in relative costs and benefits
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2
Q

Incorrect decision-making

A

Based on hunches, heuristics and (in)accurate information

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3
Q

Information corridor

A

The information necessary to recognize any given opportunity is not widely distributed across the popoulation because of the specialization of information in society

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4
Q

Skewed outcomes of opportunities/innovations

A
  1. Skewed distribution of returns
  2. Only small group will actually distribute the idea
  3. Risk-seeking is one of the reasons why many will try to distrbute idea without success
  4. Unrealistc optimism
  5. Skeweness lovers (high value, only happens once in a lifetime)
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5
Q

Pooled return

A

The return an investor pools which diversifies risk among inventions

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6
Q

Prequisitive for VCs

A

Want large information acquisition (high costs) which are not affordable for small inventions

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7
Q

Exogenous shocks

A

To preexisting market, discovered and exploited by entrepreneurs (discovery process)

  • Competitive imperfection (e.g., changes in technology)
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8
Q

Endogenous actions

A

Entrepreneurs that seek to exploit them (creation process)

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9
Q

Evolution of creation process (3)

A
  1. Social constructionism
  2. Evolution theory
  3. Evolution of the evolutionary realism
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10
Q

Macro level (Kerr et al., 2014)

A

Underlies the Schumperian notion of creatie distruction

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11
Q

Micro level (Kerr et al., 2014)

A

Continuous decisions, are not also made in competitive Darwinian contests.

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12
Q

Two types of entrepreneurship experimentation (Kerr et al., 2014)

A
  1. Exonomic experimentation (new ideas are continually tested and either displace existing technologies)
  2. Process of bringing new ideas to the market (less popular)
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13
Q

Darwinian sense

A

Ventures compete with existing products and technologies (survival of the fittest)

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14
Q

VCs will only invest if: (3)

A
  1. It is not too risky
  2. Own a large share of the firm
  3. Will try to make structure and contractual choices (staging approach)
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15
Q

Staging process (VCs)

A

Describes phases over time, changes in the functions

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16
Q

MVP-approach

A

Rapid rise of angel investors and crowd-funding platforms

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17
Q

Cost-experimentation

A
  1. Differences across industries in the ability and costs to learn about the final outcome of the experiment
  2. Pace of the technological process
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18
Q

Manner to feel less insecure in financial markets

A
  1. Go less often to the capital market by asking a bigger amount of money each time
  2. Not fund during hot markets (high failure rate)
  3. Legal factors reduce downsides of failure
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19
Q

Hot Market

A

Financing risk is low for all projects in that economy

20
Q

VCs interest in entrpreneurs is driven by (2)

A
  1. Sourve of productive commersialisation of ideas and technologies
  2. Providing angel investment is an important resource for future entrpreneurs
21
Q

Technology based ventures

A

Financial capital constraints are most visible here. Higher social capital will help to increase the chances of gaining VCs and improves the bargaining power

22
Q

New product success factors (NPS)

A

Are most determined by process and strategy characteritics
Dedicated human resources (especially in technology markets)
Culture (new product development, NPD)

23
Q

Idea-poor company

A

Lot of time and money in developing mediocre ideas (problem in idea generation, not execution)

24
Q

Conversion-poor company

A

Good ideas, but the managers do not screen and develop them properly (requires multichannel funding and safe havens)

25
Q

Diffusion poor company

A

Trouble with monetising the good idea in adequate networks (need an external network) –> idea evangelist

26
Q

Idea evangelist

A

Someone who preaches the good word about an emerging product or business

27
Q

Improve the weakest link in the innovation organisations

A
  1. Develop a solution network
  2. Build a descovery network
  3. Management must keep the innovation value chain in mind
28
Q

Pay-for-performance (P4P)

A

Can undermine performance, not explore new approaches.

Depends on the performance of the first period

29
Q

Standard performance pay

A

Works well for certain tupes of tasks (physical), not for others (creativity)
Should be willing to explore (no failing costs)

30
Q

Termination contract

A

Experiment will end after half of the periods have expired and income is below a certain threshold

31
Q

Golden parachute treatment

A

Similar rules as the termination contract, but the payment will still be received afterwards

32
Q

Agent-prinicpal theory

A

Agent minises costsly and time-consuming contemplation and deliberation efforts since payment does not depend on obtaining a better position in the experiment.

Sufficient intrinsic motivation could move some subjects under the fixed-wage contract to exert effort

33
Q

Consequences of the threat of termination

A

Adverse effect on innovation success and exploration activities (can be alleviated by the golden parachute) –> risk aversion

34
Q

Four levels of social contexts of legitimacy (only for start-ups)

A
  1. Organizational
  2. Intraindustry
  3. Interindustry
  4. Institutional
35
Q

Result o flack of instiutional support for knowledge difussion

A

Will undercut the industry’s efforts to secure socio-political approval

36
Q

External means of legitimacy

A

Association with successful and established external entities (gaining access to their internal legitimacy)

37
Q

Internal means of legitimacy

A
  1. Historical
  2. Scientific
  3. Market
  4. Location
38
Q

Consequences of alliances

A
  • May result in a los of decision-making control and flexibility

+ access to resources and capabilities which are needed for success
+ May attract attention of bigger firms

39
Q

Internal and external legitimacy in new firms

A

New ventures that acquire external legitimacy gain more from their products than new ventures who do not form alliances (these should invest more in historical, scientific and market legitimacy to compensate this)

40
Q

Historic success on legitimacy

A

Has the biggest effect on the gains from product introduction, just as the presence of executive (market) and respective academics (scientific)

41
Q

Bounded rationality

A

Inability of economic actors to write contracts that cover all posible contingencies

42
Q

Opportunism

A

Rational pursuit of economic actors of their own advantage

43
Q

Strategic alliances

A

Combine strengths and overcome weaknesses in a collaboration that is much broader and deeper than the typical marketing joint ventures and technology licensing as previously used

44
Q

3 failures plaguing vertically integrated firms

A
  1. Inability to respond quickly
  2. Resistance to process innovations
  3. System resistance to the introduction of new products
45
Q

Network

A

Should have a common background, which increases trust and sustain network-like arrangements.

Innovation & Entrepreneurship (2 decks)

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