Paper Readings #1

Paper Readings #1

Posted on by Dilara Tunca

Paper Readings #1

“Knowledge-intensive innovative entrepreneurship integrating Schumpeter, evolutionary economics, and innovation systems” by Malerva and McKelvey

According to himself, Joseph Schumpeter was a man who could realise two of his three wishes; being  the best economist of the world, the best rider of Australia and the best lover of Vienna. Many entrepreneurs are familiar (maybe without even recognising) some of his economic insights  from his “creative destruction” or “disruptive innovation” concepts: Being innovative enough to change the rules of the game after having destructed old ways of doing things. This is almost an imperative for entrepreneurial firms in the new paradigm because cutting down the costs has reached its limits and price competition is no longer an option even for larger firms. The only way out of competition is to innovate.

Precisely as Schumpeter foresaw, policy makers are after those “disruptive products” that can overcome capitalism’s inherent tendency for creating crises by being high risk-high gain,being able to create undiscovered markets, satisfying unmet demands, being as unique as possible to avoid the ruthless of competition of red ocean markets and respectful to environment and all life. The mechanisms generating these products are the most effective ways of creating ever changing (growing) and dynamic markets. The most popular one of these mechanisms is innovative firms questioning every incumbent solution available in the market. Another one is the public funds closing the R&D&I investment gap of these high risk projects. Technology transfer agents or technology intensive ecosystems can be other examples.

One can easily observe the increasing share and diversity of sub-programs devoted to high-risk, unbankable R&D&I projects within the framework programs of European Commission in the search for problem solving, market focused disruptive endeavors.

While “disruptive innovation” becomes more popular in theory and in practice, it is as much as important to measure the impact all of this mobilization especially considering the public sources allocated. Malerva and McKelvey’s paper[1] aims to conceptually understand, define, and measure knowledge-intensive innovative entrepreneurship (KIE), the realm of the most disruptive innovators.

Theoretical backbone of the study relies on and integrates three economic concepts:

  • Schumpeterian tradition giving insight about the entrepreneurial  dynamics and the entrepreneur’s   functions on transforming the economy
  • Evolutionary economics on the underlying processes of the interactions between innovation, technology institutions and economic dynamics and
  • Innovation systems approach dealing with ecosystems in which the entrepreneurs operate, their access to knowledge, innovativeness, institutions (suppliers, universities, public institutions, financial institutions etc.) that can affect their interactions with other agents in diverse ways

Metrics of the analytical part of the study are derived from the definitions based on these approaches. Those definitions and key characteristics are given in the boxes.

The research behind the paper (EC 7th Framework Program, AEGIS Research Project 2013) is a project conducted in 10 European countries with 4004 firms younger than 8 years. Firms were chosen according to the KIE definition. In order to analyze key characteristics and examine the relevance of KIE in the economic system, researchers used a large scale database based on survey questions.

Definition of KIE

KIE entrepreneurial firms are new learning organizations that use and transform existing knowledge and generate new knowledge in order to innovate within innovation systems or

KIE ventures are new firms that are innovative, have significant knowledge intensity in their activity, are embedded in innovation systems and exploit innovative opportunities in diverse evolving sectors and contexts

Entrepreneurship

– Is a process with emergent properties

– Involves actors searching for opportunities and generating new knowledge

– Is affected by of the learning, technological and knowledge context

– Involves the co-evolution of knowledge, firms, industrial structure and institutions

– Is affected by the complementarities in knowledge and capabilities of actors linked within innovation systems

– Relies upon existing and new networks and channels through which knowledge is communicated, shared or generated

The key functions of the entrepreneur in the economy

– Acting as a disruptive, disequilibrium force, which arises endogenously in the economy

– Driving wider processes of economic dynamism, which in turn lead to economic growth and societal well-being

Entrepreneurs

– Take risks and reaps profits

– Turn technology and ideas into innovations in the market

– Enable new knowledge combinations

– Face uncertainty about current choices in relation to future outcomes

– Create opportunities, by both driving and adapting to change in the external environment

– Are involved with others in the diffusion, use and creation of knowledge

– Engage in learning and problem-solving activities

– Use knowledge into new combinations for innovation

– Are affected by education, knowledge and experience in their innovative activities

– Are highly dependent upon the knowledge infrastructure, the supporting actors and the institutional context

– Create opportunities but are also bounded by the geographical and sectoral dimensions in which they operate and innovate

This is it for this first part. In the second part we will be telling you about the findings of this research.

[1] https://doi.org/10.1007/s11187-018-0060-2

Book Recommendation Series #1

Book Recommendation Series #1

Posted on by Anil

Book Recommendation Series #1

“Scrum: The Art of Doing Twice the Work in Half the Time” by Jeff Sutherland

If you ever find yourself questioning the way you work as much as what you work on, maybe it’s time to pause and take a look at your management methodology. This revelation occurred to me during the later days at my start-up. The waterfall method implemented in our engineering projects usually seemed to fall short and quickly diverge from the real situation on our hands. In all my naivety, I nearly convinced myself into believing that all the planning prior to implementation was a tool among many, to convey or present our project to others and just to be discarded once initiated.

Of course the world is not that simple. And neither the waterfall method is all but useless nor we are totally incapable of running a project all by ourselves. With a quick search you can easily conclude that pondering on better project management methodologies is not a new trend. Nowadays you can choose among more popular approaches such as Kanban, Agile, Scrum, PRINCE2 and PMP. They often are not a direct substitute for each other and differ in the way they perform within a project. I am sure you can easily find ample resources on the definitions and basic principles of the aforementioned methods and many more.

Today I want to talk more about Scrum and suggest an introductory level book. Mainly focusing on customer requirements, Scrum methodology is a variation of Agile philosophy. It is best suited for projects that consist of highly focused and skilled teams of less than seven people, where a flexible approach is needed to deliver a product or service. The idea behind this is to be adaptable to what comes up and work in the most efficient manner possible. The product is delivered incrementally and the features are added bit by bit, while incorporating feedback until all the customer requirements are met.

The book Scrum: The Art of Doing Twice the Work in Half the Time tells the story of Scrum that has been evolving at the hands of pioneer Jeff Sutherland since 1993. His simple motto sums up the driving motivation behind Scrum, “More can be done faster and cheaper”. Sutherland draws from his own 30+ years experience and provides many real-life examples where Scrum is used and led to success. Do not mistake it as another regular textbook on Scrum, as his narrative accentuates the backgrounds and reasons towards the creation of what we now know as Scrum.

The definition and theory of Scrum, as well as its fundamental elements, are thoroughly explained in the book, with detailed descriptions of team roles, events and artifacts in a basic application of Scrum. In the meantime, you will also follow general discussions such as the benefits of Plan-Do-Check-Act cycles or the problems with Gannt charts. The book ends with real-life cases where Scrum -even originally developed for software development- is used in a variety of different fields such as education, government and even in social communities. Read this book first and reflect on your current process to figure out what you may have been missing.

At the end of the day, I am not claiming that Scrum is the ultimate project management approach that we all should learn about and implement immediately. It’s only fair to point out that there also are some misgivings about it in the community. For instance, one of my former colleagues who is using Scrum in his company recently told me that some aspects of it fall short and needs improvement for the hardware development projects. However, one cannot be sure about which approach to use without comprehending its principles and testing its performance first. Also it’s better to keep in mind that all project management approaches can be modified towards our particular way of doing things, thus perfected by our particular preferences and unique conditions. So if you are into project management, it’s undoubtedly worthwhile to study different approaches and follow recent trends as much as you can.

One last thing to note; do yourself a favor and stay away from the Turkish edition of the book if you can access the original, English edition. Unfortunately, the translation is riddled with inconsistencies and generally lacks in the way the subject material is presented. I regularly stumble upon somewhat inconsistent phrases, often wondering how that certain part is written in the original form and what it actually means.

I am hoping to make this book recommendations a regular series where I will share my humble thoughts on books about any business-related subject. Until next time, keep reading.