Innovation Entrepreneurship & Born Global Flashcards
Innovation:
the establishment of new methods of production, supply & distribution;
the introduction of changes in management, work organisation, working conditions & skills of workforce
Entrepreneurship:
Capability and motivation to pursue innovative commercial opportunities that are riskier & more radical than normal
Resource-Based View:
The firm’s competitive advantage comes from its set of idiosyncratic & immobile strategic resources & capabilities
Resources
are what a firm draws upon to create value; not necessarily firm-specific i.e. CSAs or FSAs (tangible – e.g. financial assets, human capital, land, etc. or intangible Intellectual Property, knowledge, reputation, culture).
Firm-specific resources should be:
Valuable (add value sustainably)
Rare (not unique, but comparatively dissimilar to competitors)
Imperfectly imitable (hard to copy)
Organization-based (can firm be organised to exploit benefits?)
Capabilities
come from bundling resources together in ways which modify, reconfigure and leverage them to create competitive advantage; always firm-specific (FSAs) e.g. R&D skills, process efficiency, marketing knowledge & responsiveness
Dynamic capability:
The firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments
- Quick/incremental learning
- Integration of new assets/radical learning
- Modification & transformation of new assets
Lifecycle models
show lack of capital, people & expertise mean growth, diversification, economies of scale, & R&D difficult for SMEs
SMEs may need
agility, sensing & adapting quickly to new or temporary opportunities to maintain competitive advantage (e.g. New technology or consumer fads)
core dynamic capability of the innovative/ entrepreneurial firm
may be creating, developing & leveraging personal networks & clusters
-Consist of critical mass of entrepreneurs, venture capitalists, specialist suppliers & contractors; plus risk-embracing trial-&-error culture = self-reinforcing local growth cycle
Systems of Innovation
are based on interactions between the various components of inventions, research, technical change, learning and innovation
National Systems of Innovation (NSI):
firms & their home country environment interact & function as a ‘system’. Countries provide firms with CSAs through the ‘glue’ of formal (e.g. Intellectual property rights laws, relationships between firms, universities & government researchers) & informal (e.g. local scientific, technological, design & creative expertise & networks) institutions
Asset-augmenting:
Exploiting cheaper/better Inputs (e.g. materials, labour, technology, knowledge, R&D) to cut costs or improve products & services
Asset-exploiting:
Adapting Outputs (products, processes & services) for new markets to increase sales
Three generic forms of innovation activities:
- Sensing opportunities for innovation (e.g. new drugs to cure diseases; faster computer chips)
- Responding (e.g. allocating investment, establishing project teams)
- Implementing the innovation (new or changed products & services)
Four Basic MNE Structural Archetypes
- Center-for-global
- Local-for-local
- Local-for-global
- Global-for-global
Centre-for-global:
New technology developed in central R&D units (e.g. Standardised telecoms switching components)
Local-for-local:
Local subsidiaries totally responsible for new or customised products & services for local markets (e.g. Sanitarium’s NZ Marmite factory)
Local-for-global:
New product or service developed by local subsidiary then sold through many other country units (e.g. Unilever river handwashing soap bar)
Global-for-global:
Transnational/differentiated network creates ambidexterity – meeting needs & adapting to environmental changes (e.g. Sony’s consumer electronics division; IBM’s innovation networks)
What is an SME
SMEs < 250 employees in Europe, but < 500 in US. Indian manufacturers are SMEs if invest < US$2 million in plant & equipment
US Small Business Administration (US-SBA) claims SMEs:
- Hire 40 percent of hi-tech workers such as scientists, engineers & computer programmers
- Produce 13 times more patents per employee than large patenting firms & patents twice as likely to be in the 1 percent most cited
Born Global firms:
Business organizations that, from inception, seek to derive significant competitive advantage from the use of resources & sale of outputs in multiple countries
What are the three ,ain debates
- How quickly must firm become global?
- Is a firm born global (or global at all) if it simply exports and imports & has no FDI?
- Is firm really regional rather than global?
Uppsala model (Johanson & Vahlne, 1977) implies
gradual, step-by-step internationalisation:
- MNEs develop home markets first, then nearby countries, then more remote over many years
- Low commitment modes first (e.g. license, exports, IJVs & alliances) & higher ones later (Mergers & Acquisitions; Wholly-owned)
Advantages of SMEs with globalisation
- SMEs (<500 employees) have fewer financial & human resources, but globalisation & technology make internationalisation less expensive
- SMEs more flexible , quicker to respond to opportunities, less bureaucratic & more adaptable, entrepreneurial & innovative than large MNEs
- Since 1980s Born Global firms have internationalised near their founding with borderless view of world
