What’s The Role Of Innovation In Entrepreneurial Success?

Entrepreneurship, in its narrowest definition, is a creative human activity and is the process of establishing an organization and putting this organization into operation. According to Miller, the main elements of entrepreneurship are taking risks, acting proactively, and innovating. 

According to another definition, entrepreneurship is the process of recognizing business opportunities, performing appropriate risk management to evaluate these opportunities, and ultimately creating value by using communication and management skills.

In this case, the entrepreneurial is the person who reveals his creativity in designing new things, acts as a catalyst in creating new ideas, putting them into practice, and carrying them to the future, both in his society and everywhere he can reach in the world.

Especially in the growth stages of fast-growing businesses, the innovativeness of the entrepreneurs of these businesses and their activation of innovations at the idea level play a major role. The fact that the entrepreneur’s ability to solve problems that arise in unexpected situations is related to his innovativeness makes innovation a critical feature in the definitions of entrepreneur and entrepreneurship.

Because innovation is an important element in the successful completion of not only entrepreneurship but also all business risks. The main reason for this is that today, “the market is accepted as a whole world” and the conditions of competition have become much more severe compared to closed economic systems.

How Does Innovation Drive Competitive Advantage For Entrepreneurs?

While it is essential to maintain competitive power in markets that envisage competition with others, in markets that envisage being above competition, the driving force is for businesses to compete with themselves and try to exceed previous values.

Innovation, defined by businesses surpassing not only other businesses but even themselves, has become a necessity as a process in today’s markets. Higgins defines the concept of innovation as “the process of creating organizational processes, improving existing products or services, or creating new products and services that have a significant impact on an individual, group, organization, industry, or society.”

In today’s world, the globalization of financial resources, production, and distribution has resulted in innovation also becoming international. The main driver of this is the existence of transnational companies that increase their R&D investments.

Along with these companies, geographically dispersed innovation groups have joined the global networks of production, engineering, development, and research. Since the late 1990s, the internationalization of innovation has been expanding to new locations in emerging economies, especially in South, East, and Southeast Asia.

What Are The Strategies For Fostering A Culture Of Innovation In Startups?

Local and national companies are the source of innovation with their R&D activities and creativity in new products and processes. This situation arises, on the one hand, from the desire of companies in the southern and eastern regions of the world, which are called emerging new economies, and in Southeast Asia to compete in the global market by developing their products with innovation and creativity, and on the other hand, a significant part of the companies in these regions are from developed economies. 

This is due to subcontracting production to companies in the regions. With contract manufacturing, less developed country enterprises within the global production network are forced to make the desired innovations themselves in the products they produce for the developed country enterprises that give them production orders.

Moreover, since developed country companies make less developed country companies compete among themselves in ordering different and newer ones and having the innovations they want, innovation cannot be adopted as a philosophy and culture in underdeveloped country companies, on the contrary, it is seen as the demands and impositions of developed country companies that place orders. is being done.

Thus, developed country enterprises, without bearing too much R&D costs and innovation risks, offer the products they produce with the innovations made by less developed country enterprises, which engage in subcontract production for their enterprises and brands, for sale in the global market as final products on their behalf. Another perspective on innovation being international is the transfer of innovation within the networks involved.

Can You Share Case Studies Of Innovative Entrepreneurs Who Disrupted Industries?

There are many examples of successful startups in the modern world that were developed with innovative ideas and solutions. We can remember the most popular among them.

Many startups that make modern life easier, such as Airbnb, Netflix, and Uber, have become great sources of inspiration for innovation and enterprise by proposing a mechanism that did not exist before. And all of them led to radical changes in their fields.

Technology develops and changes in a short period, the market changes rapidly both in terms of the number of competitors, their shares, mergers and divisions, and customer demands, and products become obsolete before the end of the year.

Change is happening so rapidly that it is no longer considered enough for businesses and their entrepreneurs to retain their competitive edge. Because maintaining competitiveness only ensures that the business survives for a while longer. It is only possible for a business to surpass itself and achieve success by being above the competition.

What Are The Risks Of Not Embracing Innovation In Entrepreneurship?

For businesses to gain competitive power and even be superior to the ever-changing environmental conditions, it is not enough to just solve their current problems, they also need to change and develop quickly and systematically. 

This change and development occur through businesses introducing new production methods, new management and organization techniques, new processes, new markets, new products, and improving existing products, methods, and processes.

Thus, businesses can keep up with changes in the market, industry, or changes in the general economic and social structure and compete with other businesses or even surpass themselves.

For innovation activity to gain strength in competition in the long term, it must become an organizational culture and take place within a system and process. The most important way to achieve this is R&D investments and activities. In the research conducted by Shefer and Frenkel, a positive relationship was found between the level of R&D investments and innovation.

For a business, the effectiveness of innovation, especially product innovation, is thought to depend on the R&D capability of this business and the cooperation of R&D activities or units with other units in the company.

How Do Entrepreneurs Stay Ahead Of Technological And Market Changes?

Entrepreneurs and businesses of developing countries transfer innovations and especially new technology from developed Western countries to produce better and newer products.

This causes, within the subcontracted production chain, developed country enterprises to direct developing country enterprises to produce newer and more advanced ones and to compete among themselves, while at the same time transferring technology and techniques to them and providing them with a large amount of income. There is another point that should be emphasized here.

While developed countries, in most cases, keep the latest technology they produce, they transfer their previous technologies, which are old for them and new for developing countries, to developing country companies.

As a result, the fact that innovation and R&D in relatively underdeveloped countries are guided, directed, and left in narrow processes by developed countries and their enterprises prevents or restricts the economies of underdeveloped countries from carrying out R&D according to their own needs. This results in the gap between developed countries and underdeveloped countries not being closed and reinforces the one-way technological dependency relationship.

See you in the next post,

Anil UZUN