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Innovation & Entrepreneurship > Lectures > Flashcards

Lectures Flashcards

1
Q

Advantages of start-up

A
  1. Resources: Flexible, inventive ability, novel knowledge
  2. Legitimacy: Novelty as an asset
  3. Organizational form: Flexible structure, new structure
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2
Q

Advantages of incubent innovation

A
  1. Resources: Deep pockets, manufacturing capabilities, internal knowledge, recombined and incremental innovation
  2. Legitimacy: Established reputation and network
  3. Organizational form: Ambidextrous, consolidated form

–> Competitive advantage, but! Burden of knowledge

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3
Q

Burden of knowledge

A

Harder to find new ideas, more resources required and therefore the age of entrepreneurs is increasing

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4
Q

Entrepreneurial process (5 steps)

A
  1. Opportunity
  2. New information
  3. Customer need identification
  4. Generation of the idea
  5. Resources
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5
Q

Challenges of entrepreneurial process

A

The ROI is widespread, some get a lot, some lose a lot.

No idea on what will be sufficient, even professionals have no idea.

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6
Q

Knighterian uncertainty

A

No information on potential alternative outcomes (trial-and-error)

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7
Q

3 Manners to tackle Knighterian uncertainty

A
  1. Calibration of judgement (market experience, knowledge, past experience)
  2. Risk-based data collection (i.e., customer focusgroups)
  3. Risk-based decision-making (i.e., discounted present value techniques)
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8
Q

3 Phases of innovation

A
  1. Pre-formation (alternatives, unconstrained)
  2. Formation (dominant patterns seem to rise, not predictable)
  3. Lock-in (clear pattern, bound to path)
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9
Q

Resources

A

Barney: Human (opportunity), physical, and organizational capital
Grant: Adds financial and technological capital & reputation
Morris (profit): Adds relational capital

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10
Q

Valley of death (5 steps)

A
  1. Research (NSF/Research): Patent/prototype
  2. Concept/invention
  3. ESTD (angel investers): Business validation
  4. Product development (VCs/commercial debt): New firm/viable business
  5. Production/marketing –> profit
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11
Q

Legitimacy (challenges)

A

Can be perceived as asset, but is dependent on social evaluation

  1. Few assets, often intangible
  2. Hard to evaluate projects ex-ante (technical complexity)
  3. Hard to monitor entrepreneurs

Moral Hazard & Adverse Selection

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12
Q

Signaling strategy (legitimacy)

A
  1. Increasing personal wealth
  2. Social investments
  3. Alliances

–> Product certification + prominent customer OR social proof

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13
Q

Mark-up

A

Ratio of the unit price over marginal costs, must be higher than the unity when the profit is not perfectly competitive

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14
Q

MECE

A

Mutually exclusive, collectively exhaustive

Choosing one of the options, but at least consider all of them (e.g., set of dice)

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15
Q

Exploration contract

A

Tolerate early failure and reward long-term success

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16
Q

Coginitive legitimacy

A

Knowledge about the new activity?

17
Q

Sociopolitical legitimacy

A

Does the general public accept this as appropriate and right?

18
Q

Venture uncertainty is captured by: (4 types of characteristics)

A
  1. Product service
  2. Market
  3. Management team
  4. Investment
19
Q

Traits valued by VCs

A
  • Founding experience
  • Recruitment of executives from own social networks
  • Recruitment of persion with doctoral degree
20
Q

Experiment-based strategy (legitimacy)

A
  • Evaluate intermediate results (real option value)
  • Explore out of reach options
  • Improve the prototype, reduce costs and constraints before showing prototype
21
Q

5 dimensions of product innvoation success (Hulting & Roben, 1995)

A
  1. Product char. (advantages, demand)
  2. Strategy char. (market synergy, dedicated HR/R&D)
  3. Process char. (launch, market orientation)
  4. Marketplace char. (competitive response, market potential)
  5. Organizational char. (organizational design, centralization/formalization)
22
Q

Levels of product innovation success

A

Product level
Customer acceptance
Financial performance

23
Q

Innovation value chain (3 steps)

A
  1. Idea generation (inhouse, cross-pollination or external)
  2. Conversion (selection, development)
  3. Diffusion (spread)
24
Q

4 types of innovation

A
  1. Product innovation
  2. Process innovation
  3. Organizational innovation
  4. Business model innovation
25
Q

Gaining legitimacy (Rao et al., 2008)

A
  1. External (alliances) –> increase rewards

2. Internal (market, scientific, historical) –> needed when external is low; & location

26
Q

Coginitive legitimacy (4 types)

A
  • Organizational (symbols; tradition vs. visual)
  • Intra-organizational (convergence of design)
  • Inter-organizational (third party actors)
  • Institutional (linkages via education)
27
Q

Sociopolicitcal legitimacy (4 types)

A
  • Organizational: Trust by internal stories
  • Intra-organizational: Reliability via collaborative actions
  • Inter-organizational: Reputation via negotiations
  • Institutional: Legitimacy via collaborative marketing
28
Q

4 Decisions for entrepreneurs

A
  1. Number of founders (solo vs. team)
  2. Split of shares
  3. Joint CEO position/decision-making approach
  4. Founders on board
29
Q

Egalitarian

A

+ trust/equal

- time consuming

30
Q

Hierarchical

A

+ quick/accountable

- less specialized decisions

31
Q

Powell’s (1990) transactions (3)

A
  1. Market (contracts & price) + flexible, - learning
  2. Network (resources & relation) + learning, - complex
  3. Hierarchy (relation & routines) + control, - inflexible

Innovation & Entrepreneurship (2 decks)

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