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The JGM Blog

Sep 10

Written by: Professor Teck Yong Eng, Professor Caleb Kwong, Professor Piers Thompson
10/09/2014 08:45 

Introduction



In the aftermath of the 2008 financial collapse and subsequent global economic slowdown, it is timely for policy makers and businesses to reflect on ways to better cope with future economic uncertainties. This issue focuses on the role of entrepreneurship as an interdisciplinary field of study in reviving business through innovation. Studies on entrepreneurship pertain to general management through the cross-functional roles of different organisational units, and through entrepreneurship’s role in strategy development and corporate direction. Managers need to take a holistic view of their business as opposed to a silo mindset, especially during uncertain times such as during an economic crisis. General management and entrepreneurship share and embrace several key concepts in the business and management literature. Specifically, the articles in this issue highlight how the role of entrepreneurship in fostering innovation in times of greater uncertainty is intertwined with general management:



Managerial competence – it may be necessary for managers to change an organisation’s business model during uncertain times. This includes bold and radical actions across organisational activities to acquire new knowledge for innovation allowing diversification or consolidation of key business areas. Managers must be adaptable and vigilant to thrive in adverse economic conditions.

Exploring and exploiting networks through various channels and relationships for new opportunities beyond firm and industry boundaries. General managers with an encompassing view of their organisation and broad knowledge of innovative activities would be in a good position to embrace the notion of open innovation and identify key players in the network (e.g., the Triple Helix framework) for joint innovation projects. Managers need to realise the potential of different functional units so as to develop complementary and/or synergistic strengths, which could be co-created with other firms, as well as being unconventional in the industry.

General managers must facilitate the capture and delivery of value to business stakeholders and customers in times of greater uncertainty.While a competent manager may have specialised expertise in one organisational function such as accounting and finance, general managers must be able to combine and harness different sources of value within an organisation. Thus, creating and capturing value for innovation depends on managers’ skills to combine a wide range of activities and resources (e.g., the notion of entrepreneurial bricolage).

Major environmental shocks may spur innovation or lead to organisational failure. In this issue, a sudden economic slowdown has had major impacts on firm economic performance. Today’s global managers must be alert to weak market signals and act before inertia sets in. While managers may be tempted to capitalise on short-term performance, an organisation’s capacity to innovate requires foresight and resource investment. This requires managers to accommodate organisational slack, creative solutions, disequilibrium between investment and short-term returns, and instability.

The above constitutes by no means an exhaustive list of general management implications. The articles in this issue have only covered some of the broad interdisciplinary areas of the role of entrepreneurship in fostering innovation. However, I hope that this issue will serve to provoke further research. The idea of this special issue was initially discussed with Professor Stephen Drew and Dr Caleb Kwong back in early Spring 2013. The guest coeditors of this issue drafted several versions of the call-for-papers in consultation with the editors and other entrepreneurship researchers. We announced the call-for-papers late Spring 2013 and attracted many submissions, though we also rejected quite a number of papers for poor fit and/or other quality issues. All the articles in this issue have gone through at least two rounds of revision and resubmission: our reviewers and the co-editors have therefore played a major part in shaping the contribution and direction of the articles. I would like to thank them for their constructive feedback, especially the guest co-editors for directly engaging in dialogue with the authors. Finally, I would like to thank our authors for their stimulating and engaging manuscripts.

Articles in this Special Issue

Periods of economic turbulence and lower aggregate demand can lead to some businesses undertaking a process of rationalisation and retrenchment in order to reduce over-capacity and exposure to market conditions (Kitch- ing et al., 2009). However, periods of economic uncertainty such as that associated with the Financial Crisis of 2008 can bring both threats and opportunities (Rae et al., 2012). This means that often businesses need to consider changing their business models and the previous assumptions upon which they have been based (Courvisanos, 2009; Draper, 2009). In order to adjust to the new economic reality it is therefore necessary for businesses to take an entrepreneurial approach in terms of being both adaptable and flexible, and also in acquiring access to knowledge which will allow them to innovate and to take advantage of these new conditions. Many firms will have rationalised and returned to their core competencies as market conditions became less benign in the years following the collapse of Lehman Brothers in 2008. However, authors such as Filippetti and Archibugi (2011) suggest that the models that worked prior to the crisis are unlikely to be optimal even as the global economy recovers. This means that rather than reducing efforts to innovate and diversify, other firms have looked to access the knowledge they require to innovate. Drawing from both entrepreneurship and innovation literature, the conceptual paper by Anderson and Li (in this issue) examines the network-based view of innovation from an entrepreneurship perspective. Consistent with the innovation literature, the article acknowledges the importance of networks as a great source of open innovation. The fundamental divergence of this article from the innovation literature is its position that knowledge is embedded in enterprising individuals. Therefore, innovation can be seen as the co-created outcome of entrepreneurs’ interactions with the surrounding environment and others within their network. Because of the embedded and often informal nature of this knowledge, the article proposes a synergised view to innovation, one that requires the entrepreneur to develop synergies with those around him, including universities and policy-makers as the other two legs of the Triple Helix, but also with business angels, suppliers, customers, and last but not least, other entrepreneurs.

The university system is central to the concept of the Triple Helix as it holds a key role as the source of knowledge. Hugginset al.(this issue), drawing upon the concept of economic resilience (Martin, 2012), consider the impact that relationships with such knowledge providers may have not only for firms participating in the relationship, but for the local/regional economy as a whole. Using case studies from the US and UK, the authors examine the relationships developed between firms and universities. The benefits accruing to the local and regional economies from such relationships are suggested to be considerable, with these ties playing an important part in open innovation systems. The authors also find that the development and maintenance of such relationships faces considerable hurdles. In particular, the study finds that the endeavours of entrepreneurial firms may be undermined by the less nimble and bureaucratic processes within universities. It is also found that although geographical proximate knowledge might be sought, this is not necessarily that which is of greatest value for businesses. This means that, although the higher education system in many countries is often suggested to play a key part in developing the knowledge-based economies that are seen as necessary to stimulate future growth and resilience in periods of economic crisis (Canie¨ls and van den Bosch, 2011), the work here suggests that considerable challenges exist in achieving this.

In contrast to the managed and planned approach of businesses considered in Huggins et al., the article by Smith and Blundel (this issue) considers the role that improvisation and bricolage can play in periods of economic uncertainty. The innovation processes examined here are strongly associated with a process of making do and maximising the potential of the resources available. It can be argued that this is a greatly under-rated and underexamined phenomenon in small business and entrepreneurship literature. It has, of course, particular pertinence in periods of economic decline and uncertainty where access to resources of all types, in particular financial ones, will be squeezed (Cowling et al., 2012). Using the example of the UK brass musical instruments industry, Smith and Blundel (this issue) examine in detail how one entrepreneur’s improvisation provided their business with the opportunity to not only survive through the Great Depression, but similar approaches generated a thriving business as the economy recovered after the Second World War. Although largely ignored by the existing literature, this is an experience which is likely to be common to a large number of SMEs across the world that have used such entrepreneurial bricolage to survive the Financial Crisis associated with the 2008 Lehman Brothers collapse and are still restricted in their ability to raise capital from a banking system that is yet to fully recover.

Beyond supporting and assisting SMEs as discussed in Huggins et al., and Anderson and Li, universities also play a key role in producing entrepreneurial graduates who are ready for the challenges in a world that is full of uncertainties. The discussion paper by Rae (this issue) intends to open up a new dialogue on the future directions of enterprise education programmes and government supports for entrepreneurial graduates. The article begins by outlining the macroeconomic changes brought on by the economic crisis, and how a new model of entrepreneurship, one that pays considerable attention to the ethical and social wellbeing of society, emerges over the long-standing short-term profit maximisation model. The article then assesses the effectiveness of responses from policy-makers and universities in addressing the challenges using enterprise education as the medium since the beginning of the crisis. Finally, the article also offers practical suggestions for policies, universities as well as entrepreneurs and aspiring entrepreneurs. Although the context of the study is UK-specific, the recommendations can be equally applied to graduates in other countries.

We also have two pieces presenting practitioner’s viewpoints. First, there is an interview with Dr Gwyn Jones, the Director of Essex Business School, himself a seasoned entrepreneur, who discusses the challenges faced by universities to produce entrepreneurial graduates, but also how universities can develop a synergy with entrepreneurs and SMEs in general. To complete the Triple Helix framework of innovation, Cheung (this issue) examines the extent of government support available for business ventures. Written in a colloquial, myth-busting style, the article provides an account of the current institutional and legal frameworks in place to support entrepreneurial startups and their subsequent growth and development, particularly when entrepreneurs enter into an innovative industry such as the Clean Tech sector, and in doing so Cheung challenges and dispels some of the associated myths and misunderstandings.

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