Summary
The importance of innovation has become increasingly significant to business organizations over the last couple of years. Competition in the business world has also increased. The need for organizations to stay competitive has made organizations adopt a number of strategies. One of the strategies is innovation.
The article gives a description of how entrepreneurship can be important in ensuring sustained innovation among business organizations. An entrepreneur needs to have sufficient information regarding investments and business operations to succeed in business activities. Information and Communication Technology (ICT) is one of the major sources of information for entrepreneurs.
The article emphasizes on the importance of ICT in entrepreneurship and innovation. The article goes on to give the various definitions of the term entrepreneurship. The definition of entrepreneurship has changed over time as the business world continues to change.
According to the article, the general definition of the term entrepreneurship is identifying of opportunities and exploiting them in a pro- active, competitively aggressive, and innovative manner. The article emphasizes the importance of entrepreneurship in business by giving a discussion of dynamic capabilities. The author has given a case study of two SMEs in Taiwan; namely, Everest and Central.
Key Learning Points
There are some key learning points that emerge after reading and analyzing the article. The first point is that entrepreneurship is a vital factor to the success of a business organization in today’s business world. Entrepreneurship involves risk taking and speculation.
On the other hand, an entrepreneur is the person who identifies an emerging opportunity, exploits it, and creates a new market. An entrepreneur has to be highly innovative to succeed in his or her business activities. Managers and leaders of an organization should have the entrepreneurial spirit in order to lead their organizations to success (Audretsch, Heblich & Falck, 2011).
Managers should be in a position to identify emerging opportunities, explore them, and also create new markets. It is important to note that an entrepreneur has to be highly innovative. Therefore, entrepreneurship and innovation have to go hand in hand. In other words, entrepreneurship involves innovation, invention, and venturing into new opportunities (Lin, Miao & Nie, 2012).
Competition in the business has increased significantly. Exploring new business opportunities will increase the competitiveness of an organization since not many organizations, if any, will have explored the opportunities. An organization that comes up with new business opportunities will make high profits since it will face little or no competition.
Another key point of learning is the ability of the organizational leaders and managers to integrate both the internal and external resources to facilitate the firm’s innovation (Lin, Miao & Nie, 2012).
Organizations usually have limited resources that managers are required to manage effectively to ensure that the organization is competitive. The managers should therefore combine the available resources to give the organization a competitive advantage. This is according to the concept of dynamic capabilities. These capabilities are developed in three processes.
One, the resources in the organization should be coordinated and integrated. There are both tangible and intangible capabilities that need to be coordinated and integrated, as well as integrate the internal and external resources. Two, learning and experimenting should be embraced in executing dynamic capabilities.
The collective learning within the organization and the employees’ knowledge are important factors in improving the performance of the organization. Therefore, leaning is vital in realizing dynamic capabilities. Learning enables innovation in an organization. Finally, the process should involve reconfiguring and transformation. This should be adopted due to the rapid changes that occur in the environment.
The other key point of learning is the importance of innovation. As mentioned earlier, there are five categories of innovation. Innovation is said to have a very positive effect in the corporate growth of an organization, as well as its financial performance. It gives the organization a competitive advantage over its rivals. With innovation, the existing systems are usually changed and new ones are adopted.
Relevant statements
The following are some of the relevant statements from the reading: “With the increase in demands of customers and the rapid advancement of information and communication technologies (ICT), competition that business confronts in globalization, customization, and service transformation are intensified.” “Risk-taking, opportunity seeking, and speculation are usually considered as characteristics of entrepreneurship.”
“Dynamic capabilities create strategic advantages by integrating and recombining the external and internal resources” “….proposed five categories of “innovation,” including “new products,” “new methods of production,” “new source of supply,” “the exploitation of new markets,” and “new ways to organize business (Lin, Miao & Nie, 2012, p. 494).””
Critical Analysis
Entrepreneurship is important for the success of a business organization. As competition continues to increase in the business world, it is important that the managers and leaders of an organization be extra creative and innovative so that they can explore new opportunities that are yet to be explored by other organizations. Leaders should ensure that they meet the increasing demands of customers.
This helps them create a form of monopolistic status in that they offer services and products that are not offered by other organizations. This makes the firm competitive (Audretsch, Heblich & Falck, 2011). Innovation and the ability to combine internal and external resources are two other major factors. Resources are limited and they should be used and utilized to the maximum.
This reduces the costs incurred by the organization and improves the firm’s productivity and innovative abilities. For instance, the two organizations in the case study deal in technological textile manufacture. Technology is advancing rapidly. At the same time, many organizations are adopting technology.
Therefore, if these two organizations are to maintain their competitive status, they need to be in a position to explore new business opportunities in a manner that is innovative. At the same time, they should reduce their costs of production by integrating their available internal and external resources effectively. By doing so, they will be able to increase their level of profitability and their financial performance.
Practical implications
It is important to be able to apply the learned concepts in the real business world. Information technology is one of the factors that facilitate innovation and entrepreneurship. Therefore, in a real business world, the first step towards achieving a high level of innovation and entrepreneurship is implementing information systems in the organization.
This will ensure that managers are armed with unlimited information that would enable them make decisions that favor innovation. IT, on the other hand, helps to improve the nature of services and products offered to customers. As a manager, it is important to invest in innovation since this will facilitate entrepreneurship and give the organization a competitive advantage in the long run.
References
Audretsch, D. B., Heblich, S., & Falck, O. (2011). Handbook of research on innovation and entrepreneurship. Cheltenham: Edward Elgar Publishers.
Lin, S., Miao, Q. & Nie, K. (2012). A case study on entrepreneurship for sustained innovation. African Journal of Business Management, 6(2), 493-500