The Role of Innovation in Entrepreneurship
The primary aim of this paper is to enumerate an essay discussing the fact that entrepreneurship is all about opportunity recognition and exploitation. The essay also discusses the need for Innovation to flourish and enter prospective markets. The essay further divulges into the various key environmental and contextual factors that are vital and influence the promotion or constrain of entrepreneurial practices, with valid appropriate examples. In today’s world, entrepreneurship is the key to building a sustainable and robust business environment that is capable of advancing and flourishing. Entrepreneurship is the key to building businesses and developing ideas that are key to the business process (Alsafadi et al. 2020). To complement entrepreneurship, one of the key components and premises of business building is Innovation. According to historical evidence, entrepreneurship without Innovation is like a ship without its radar. It’s practically redundant. While it can be said that entrepreneurship is all about opportunity recognition and exploitation, Innovation is the backbone of opportunity exploitation. Without Innovation, businesses start losing their market value and structural integrity. Innovation is the key to entering prospective markets and economies in order to expand business operations and facilitate market penetration. The use of relevant business models and strategies ensures a healthy combination of entrepreneurship and Innovation (Anjum et al. 2021). Many environmental and contextual factors can either influence or constrain entrepreneurship practices. For entrepreneurs, adequate Innovation is required to combat such constraining factors and/or to harness such influential factors (Audretsch and Moog 2022).
The recognition and exploitation of entrepreneurial opportunities are critical in the development of new-age businesses that are robust and fundamentally sound. Entrepreneurial Opportunities (EO) can be defined as any situation in which new goods and services, organizational methods, raw materials can be introduced into the Market and can be sold at greater prices than their initial cost of production. Entrepreneurs need to identify opportunities and introduce relevant services and products into the Market in order to fill the gap and need of the Market with limited and available resources. These businesses are much more successful as they are fulfilling a need that is evident in the Market and have greater opportunities to grow and expand the business operations over time to better fit into the Market (Ballor and Claar 2019). For example, Facebook, Amazon, Uber are all examples of corporate giants who recognized an opportunity in the Market and fulfilled it. Hence, without any doubt, the identification of target markets and opportunities are the cornerstone for businesses’ success. Recognition of entrepreneurial opportunities is nothing if entrepreneurs cannot find ways to exploit the situation to their own advantage. Hence, entrepreneurial exploitation (EE) is the fundamental key to leveraging the recognized entrepreneurial opportunity. The market opportunity allows entrepreneurs to recognize new market needs and gaps. However, in order to deliver upon the gap and need, exploitation of the existing situation is fundamentally critical (Barnard and Herbst 2018). For example, the rise in the demand for socialization and the advent of the digital age was the opportunity that Mark Zuckerberg recognized. However, the introduction of Facebook to the people showed his ability to exploit the situation by leveraging and harnessing on the market need via his social media platform offering. Hence, by the example, it can be concluded that entrepreneurial opportunity identification has zero impact without entrepreneurial opportunity exploitation (Carayannis 2020). For the success of New Ventures, entrepreneurs require to not only identify an opportunity in the Market but also require to act upon it to make the most out of the situation. It is important to note that there are several entrepreneurial opportunities in the Market. However, exploiting every opportunity is not viable for businesses at any given point in time or situation. The key is the identification of fundamentally lacking and prospective business opportunities that can be exploited via successful implementation of new ventures and via the introduction of relevant products and services into the market that can be made available via the utilization of available and limited resources (Doern, Williams and Vorley 2019). Opportunity exploitation is a necessary step in the creation of relevant and successful business ventures; however, there is no fundamentally linear or proposed methodology to do so. The identification of opportunities depends upon the analytical and practical mentality of entrepreneurs with a keen eye for problems and limitations. On the other hand, the development and nurturing of recognized key entrepreneurial opportunities fall under exploitation. Every entrepreneur possesses different ways to approach a problem situation and different ideas on how to mitigate such situations. Hence, a linear and systemic process of opportunity recognition, identification, and exploitation are not feasible and fundamentally improbable. Different problems require different approaches, and no single chain of procedures can apply to every situation alike (Drobyazko et al. 2019). However, it is also true that entrepreneurs can identify new opportunities and gaps in the Market a long time after the initiation and incubation of businesses. For example, Jeff Bezos identified the need for an online marketplace and fulfilled the gap via his offering through Amazon. The very first and only product of Amazon was books, and basically, the Company was a digital bookstore marketplace. However, with time Jeff Bezos recognized the potential of offering a wide variety of products via E-commerce channels and hence expanded Amazon to fulfil the various needs of the people of America, ranging from household items to electronics and further. This proves that recognition and exploitation of business opportunities can be experienced midway through a business venture and is not necessarily constricted to the beginning of the incubation or initiation stage of the venture (Kraus, Breier and Rodríguez 2020). It is evident from the above enumeration that for every entrepreneur, opportunity identification and recognition is fundamentally crucial to induct and incorporate a new venture. However, it is the successful exploitation, planning, organizing and implementation of relevant solutions to the problems in the form of products and services that truly determines the success and continuity of the new venture. Additionally, the findings also reveal that opportunity recognition and exploitation can happen at any stage of a business and is not necessarily constricted to the incubation and initiation period of a new business venture. Hence, opportunity identification and exploitation is the cornerstone for modern age entrepreneurship (Freund 2020).
Environmental and Contextual Factors in Entrepreneurship
Innovation can be termed as the commercial application and the successful exploitation of key ideas. Innovation acts as a facilitator to entrepreneurship and provides ways of empowering people towards economic prosperity and leveraging their lives. Innovation and entrepreneurship go hand in hand and is the answer to growth, development, expansion and overall benefits to the organizational front. Innovation is crucial for new business ventures to improve their processes, bring improved and newer services and products into the target market, increase operational efficiency and business acumen, and significantly contribute to the organization’s profitability. Due to the rise in competition in regional, local and international markets, it is important to effectively leverage Innovation and creativity to successfully enter and disrupt new markets and gain a competitive edge by market capitalization and penetration (Mahmood, Uddin and Fan 2019). The increase in competition is due to the rapid advancements in technology and the ready availability and incorporation of newer technologies and operational modes by businesses due to rapid knowledge and process sharing via the internet. In such scenarios, Innovation can be made into a key business process and gain substantial entrepreneurial clout. The fundamental key is to plan for Innovation and create the right business approach to be undertaken. Innovation often means something new for the business. This can be in the form of improving the business processes to increase efficiency and productivity, enabling businesses to improve their existing product and service offerings, or Innovation can prove instrumental in the development o entirely new products and services to meet the new market trends, tastes and preferences, or Innovation can help organizations to add value to existing services and products to create differentiation and USP from its competitors and gain substantial market share and brand value (Olanrewaju et al. 2020). It is important to note that Innovation can either be a single and major breakthrough and advancement or a small, minute and continuous process. Innovation is a creative process and, without any doubt, adds value to a business entity. Innovation is the cornerstone to flourishing and entering new potential business markets. For example, the primary offerings of McDonald’s were items heavy in beef and pork. However, when they entered India, they had to introduce an extensive veg menu and chicken-based items to fit into the Indian Market. This is an example of active Innovation and business practice to enter a new prospective market and leverage its position within the economy (Popescue, 2020). Innovation can benefit businesses by improving productivity, reducing operational costs, improving the business’s competitive edge, building accredited brand value for the business, establishing new strategic partnerships and relationships, and increasing the business turnover and substantially improving its profitability. Businesses lacking Innovation can lose their market share to competitors, face an existential crisis, witness failing efficiency and productivity, lose key staff can get out of business, experience rapidly declining margins and profits of the venture. Innovation can act as the only tool to solve problems and difficulties within society. With the rapidly changing business paradigm, Innovation is much more rapidly critical and crucial today than it was a decade ago. With increasing competition, problems, partners and changing needs and trends of the people, it is only through constant Innovation that businesses can stay relevant and grow and develop within the aggressive business environment and market fragment. For example, Amazon is the largest E-commerce platform in the world, and it has achieved its mammoth height via constant Innovation and excellence by staying two steps ahead of the competition and expanding at an impressive rate. Today, Amazon is trillion dollars globally recognized brand with operations in more than 190 countries. Innovation and creativity have been the cornerstone for Amazon’s massive growth, relevance, survival, existence and success (Pradhan et al. 2020). Hence, it is evident that Innovation enhances creativity, nature, and a brand’s thinking process. Innovation and entrepreneurship go hand in hand and are crucial to entering new aggressive and highly competitive markets, establishing operational ventures, and gaining much-needed market share and brand equity. Any business can attain the heights of success by harnessing the power, planning, process and key fundamentals of Innovation and creativity (Syam et al. 2018).
Entrepreneurial Opportunities and Exploitation
Environmental and Contextual factors can have both an influential as well as a constricting effect on entrepreneurship. Entrepreneurship is the culmination of finding out a need in the Market and fulfilling it via innovative, needful and creative approaches. However, a lot depends upon the external environmental and contextual framework that has a direct impact on the business proceedings and the culmination of any new venture. The various environmental factors include Entrepreneurial Finance, Government Policies, Research and Development, Entrepreneurial Education, Internal Market Dynamics, Legal and Commercial Infrastructure, Entry Regulations, Cultural and Social Norms and Physical Infrastructure. The various contextual factors include political, legal, cultural and sociodemographic (Tantawy et al. 2021). These contextual and environmental factors are the ones that entrepreneurs need to take into consideration in order to create the maximum impact in the target market. Factors like the political framework determine the various considerations from the policies and procedures that entrepreneurs need to account for to operate with the Market, whereas the cultural and sociodemographic identifies the target audience and enables new ventures to curate their offerings in terms of products and services, to better suit the sociodemographic needs of the Market and at par with the cultural norms of the Market. Innovation and excellence allow entrepreneurs to achieve contextual as well as environmental harmony. However, depending upon the business venture and its offerings, the various contextual and environmental factors can have a negative impact on the business as well (Veiga et al. 2020). For example, very recently, Tesla decided to enter the Indian Market as the popularity and the growing need for Electric Vehicles has been increasing in the Indian Sub-Continent. However, Tesla has faced huge backlash and difficulties due to various environmental and contextual factors. The Indian Government wants Tesla to set up manufacturing units first in India, then only they can enter the Market. This provides barriers in the form of government policies, legal framework and political paradigm of the Country. The cost of importing Tesla cars to India is also high due to high export and import duty, and this discourages Tesla from even shipping their cars to India. Additionally, the cultural and sociodemographic pattern of India is not adequately feasible for Tesla, where almost 60% of the population belong to the middle-class background and cannot possibly afford Tesla’s cars. Also, the roadways and the infrastructure for electric vehicles in India is primarily rudimentary and underdeveloped. Hence, for Tesla, the various contextual and environmental factors have proven difficult for them to enter India, even though Tesla revolutionized the EV Sector and is a leading market player (Ballor and Claar 2019). The similar can be viewed in the case of Netflix, where a large number of global and international content is not available in India due to the cultural and social fragment of the Country. Hence, Netflix leveraged the situation to their opportunity and started releasing more regional and indigenous content for India to suit the needs of the Indian Market. Hence, it can be understood that environmental and contextual factors exist in all market segments. However, some organizations can harness the situation, while some face challenges due to the situation.
Conclusion
The above essay concludes the paper by enumerating and solidifying the statement, “entrepreneurship is all about opportunity recognition and exploitation.” The essay also provides adequate justification and reasoning to support the fact that Innovation is the key and backbone of entrepreneurship and is influential in the flourishing of businesses and entry into newer markets for expansion. The essay additionally highlights some of the key and fundamental environmental and contextual factors that can either prove advantageous or dangerous for entrepreneurship practises, backed by supporting evidence and appropriate instances. From the above essay, it is evident that entrepreneurship is the key facet of any successful business initiation, operation and continuity. Entrepreneurship practices, models, theories and frameworks are all critical within the operational framework of an organization and the framework for governance. The essay also successfully substantiates that entrepreneurship without Innovation cannot exist. Innovation is the ability to constantly rake in new ideas and business practices, providing the business with a competitive edge, market advantage and overall business acumen. Entrepreneurship without Innovation is a dying venture. Innovation holds the entire business paradigm in place and offers substantial leverage to the organizational front. The paper validates the fact that Innovation and creativity is not only the backbone of entrepreneurship but also the key facet in entering new markets and economies to expand business operations. The essay successfully identifies the various environmental and contextual factors that are critical in the promotion and/or constrain of entrepreneurial practices. The essay identifies the factors and substantiates the same in terms of entrepreneurship and business innovation via relevant examples and arguments.
References
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