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2642 results in Entrepreneurship and innovation

Page 53 of 133

On the Origin of Products
  • The Evolution of Product Innovation and Design
  • Arthur O. Eger, Huub Ehlhardt
  • Published online:
    21 December 2017
    Print publication:
    15 February 2018
  • In this new work, Arthur O. Eger and Huub Ehlhardt present a 'Theory of Product Evolution'. They challenge the popular notion that we owe the availability of products solely to genius inventors. Instead, they present arguments that show that a process of variation, selection, and accumulation of 'know-how' (to make) and 'know-what' (function to realize) provide an explanation for the emergence of new types of products and their subsequent development into families of advanced versions. This theory employs a product evolution diagram as an analytical framework to reconstruct the development history of a product family and picture it as a graphical narrative. The authors describe the relevant literature and case studies to place their theory in context. The 'Product Phases Theory' is used to create predictions on the most likely next step in the evolution of a product, offering practical tools for those involved in new product development.

  • Preface

  • Edited by Leszek Gracz
  • Book:
    Value of Failure
    Published by:
    Anthem Press
    Published online:
    10 May 2018
    Print publication:
    28 November 2017, pp ix-x

  • Summary

    Growing levels of education, the increasing availability of capital, the diversification and specialization of economic activities and the numerous soft and hard supports available to start new businesses have led to the creation of more and more micro and small businesses across Europe. But while the process of setting up a business is increasingly straightforward, keeping it going is much tougher. In normal times, business entry and business exit are natural processes, inherent to economic life. In fact, 50 percent of enterprises do not survive the first five years and, of all business closures, bankruptcies account in average for 15 percent (A Second Chance for Entrepreneurs, Expert Group Report 2011). Yet, the number of bankruptcies peaked during the recent financial crisis and even before that, the Lisbon Partnership had identified the key role of “overcoming the stigma of business failure” as a strategy for growth and jobs.

    There are clear economic and social rationales to promoting a second chance for failed entrepreneurs and deriving positive experience from negative situations. First and foremost, businesses set up by restarters grow faster than first- timers in terms of turnover and jobs created (Stam, Audretsch, Meijaard 2006), and approximately one- fifth of all successful business people failed the first time around. The case studies of Ford, Hershey and Disney are instructive for young entrepreneurs in this matter.

    Second, most of the time, business failure is not due to the incompetence of the entrepreneurs but due to external circumstances, such as a slump in demand, a financial crisis or the rise of a new competitor. However, this professional failure is often confused with personal failure, and low self- esteem causes individuals to withdraw and retreat to safer employment options.

    Third, it is accepted that a society does not generate innovation and productivity by steadfastly avoiding mistakes but, rather, by learning from them. Yet our culture and incentive system does not reflect this. There is much evidence to show that Europeans as a whole are relatively risk- averse, especially compared to countries such as the United States. In Germany, for example, only 1– 2 percent of new companies annually are founded by second- chance entrepreneurs (see KfW- Gründungsmonitor 2013), and the World Bank recently critiqued Poland for its failure to understand the value of secondchance entrepreneurs as manifested in its particularly onerous liquidation procedures (Devictor 2013).

  • 2 - Economic Failure in the Process of Small Business Growth in the Context of the Shadow Economy

  • Edited by Leszek Gracz
  • Book:
    Value of Failure
    Published by:
    Anthem Press
    Published online:
    10 May 2018
    Print publication:
    28 November 2017, pp 19-36

  • Summary

    Abstract

    This chapter discusses economic failure in the process of small business growth, using the example of Polish companies operating in the shadow economy. The discussion covers internal and external barriers contributing to economic failure in the process of company growth. The presence of companies in the shadow economy influences their operation and consequently the process of their growth. On the one hand, it stimulates the efficiency of businesses and, on the other, it boosts the risk of failure due to possible overestimated investment profitability, the confidential nature of internal activity in a company and problems in contacts with the surroundings. Such a risk is increasing with the increase of the shadow economy's financing of the company's growth.

    Introduction

    Small businesses have specific market, finance, location, organization and technology features that define their operational and strategic behavior, which are different than in large companies. Due to those features a small business is not merely a downscaled large company (Storey 1994). Differences in companies of various scale can be seen when it comes to development as well. Contrary to large companies, the majority of small businesses are in the early stages of their operations and only some of them succeed and grow to become a larger, stable and expandable company. With the growth of the scale of business, a company faces new problems and challenges in terms of management, finance and technology, and they contribute to various barriers and risk factors. According to the literature, we observe concentration of attention interchangeably on internal and external barriers and factors causing economic failure in the process of company growth (Ropęga and Stawasz 2014; Blackburn et al. 2013; Wiklund et al. 2009; Garnsey et al. 2006). One of the less examined factors is the share of companies in the shadow economy and the impact of the latter on the growth of small businesses (Stawasz and Głodek 2009; Caca 2010).

    Shadow economy activity complements the legal sphere of business limited to certain areas only. In 2010– 15, the scale of the shadow economy was about 19.7– 18.5 percent of businesses in EU member states, whereas in Poland it was 23– 24 percent (Schneider 2015). Retail, construction and property and business services have the largest influence on the scale of the shadow economy.

  • 1 - From Losers to Heroes: How to Change the Perception of Business Failure and Recognize Its Value for the Economy

  • Edited by Leszek Gracz
  • Book:
    Value of Failure
    Published by:
    Anthem Press
    Published online:
    10 May 2018
    Print publication:
    28 November 2017, pp 1-18

  • Summary

    Abstract

    This chapter sets out to explore the issue of the perception of business failure from the perspective of institutional theory. The statistics show that only 50 percent of businesses survive 5 years after they were created (Credireform 2002– 06). Even though business deaths are normal for dynamic economic processes, the perception of failure is negative, especially on the European continent. While in the United States it is worthwhile, during a job interview, to admit to failure in business as it increases the value of potential employee, Europeans would rather remain silent about any lack of success in business. What can bring about a change related to a negative perception of business failure? To answer this question, institutional theory is used in the present study, especially the model of phases of institutional change. The chapter presents theoretical considerations as well as empirical evidence based on the research conducted during the realization of the Value of Failure project and in- depth interviews with entrepreneurs. As numerous scholars have shown that business failure is good for the economy and for society overall— due to the release of knowledge and resources from defunct businesses— the changed perception of failure will have a positive impact on the economy. The findings of the research show that lack of discussion about business failure in social life is one of the obstacles to recognizing its value. Media hype, engaging universities, business advisors and regional and local authorities in such discourses could be first steps in destabilization negative approaches.

    Introduction

    As the chapter investigates how to change the perception of business failure, the use of institutional theory, especially institutional change, seems to be a reasonable approach. Associated with incompetence and often hidden, such an approach to business failure does not encourage starting over. Greenwood's (Greenwood et al. 2002) theoretical concept of the process of institutional change is used in the study to propose change in the perception of business failure which, in fact, which, in fact, increased the knowledge and experience of entrepreneurs.

    There is considerable business churn in the European Union and in the world. Many new enterprises are born and many vanish from the market. In the United States more than 80 percent of new firms end up failing, and about 10 percent of all American companies fold each year (DeGroat 2006).

  • 4 - Business and Sustainability: Key Drivers for Business Success and Business Failure from the Perspective of Sustainable Development

  • Edited by Leszek Gracz
  • Book:
    Value of Failure
    Published by:
    Anthem Press
    Published online:
    10 May 2018
    Print publication:
    28 November 2017, pp 55-74

  • Summary

    Introduction

    Recently, the nature of firms has changed from traditional to sustainable, along with multi- attribute optimizers (profit, people and planet), thus generating financial, social and environmental returns (Emerson, 2003; Soppe, 2004). Sustainable investment funds are allocated to firms according to their attitude towards the environment and their implementation of social sustainability. An increasing number of corporate clients are interested in sustainable financial products. Sustainable building and sustainable energy are two rapidly growing markets. The new energy infrastructure requires the investment of large sums of money. Following multilateral funds for sustainability, such as Global Environment Facility (GEF), Renewable Energy and Energy Efficiency Fund (REEF), SDG (Solar Development Group) and Prototype Carbon Fund (PCF) were established to address global environmental issues in developing countries (Jeucken, 2001).

    The decline of the housing, equity, and debt markets prompted the need for accrued regulation, transparency and proper governance. Therefore, the debt sector, as well as the sector of socially responsible investment, and that of venture capital have all begun to pressure businesses to factor social, environmental, corporate governance and climate issues into their financial statements, policies, disclosures, credit assessments and lending guidelines. The proper guides for best practices for financial institutions that are dealing with the environment are Equator Principles and the United Nations (UN) Principles for Responsible Investment. Borrowers who want loans from these signatories need to classify and reveal all risks associated with social and environmental performance; they should also provide an alleviation strategy for the management of these risks. The UN Principles for Responsible Investment is another voluntary set of guidelines that provides investors with a range of options for honoring their fiduciary obligations, as well as being aware of the Environmental, Social and Corporate Governance (ESG) issues of the companies of their choice (Wilhelm 2013).

    The chapter's objective is to highlight the role of sustainability in business management and pinpoint key factors that determine business success or failure in a sustainable environment. There is a close relation between sustainability and business success. Moreover, problems encountered by companies are important, whether they are economic, social or environmental, and they are crucial for establishing a competitive advantage.

    In order to verify the hypotheses and to display the fulfillment of the research's objectives, the following research methods were used: a critical analysis of the literature (related works), observations, case studies and logical reasoning.

  • 3 - Failure as a Barrier to Entrepreneurial New Venturing in Northern Ireland

  • Edited by Leszek Gracz
  • Book:
    Value of Failure
    Published by:
    Anthem Press
    Published online:
    10 May 2018
    Print publication:
    28 November 2017, pp 37-54

  • Summary

    Introduction

    Entrepreneurship is acknowledged as an established mechanism for reallocating resources in such a way that promising new, innovative activities replace obsolete activities. Failure is therefore recognized as part of a dynamic, healthy economy in the same way as are other stages in the business lifecycle, such as business creation. There is evidence that the most successful economies across the world play host to more failures— that economies with more churn have faster productivity and economic growth (Fogel et al. 2008). This supports Joseph Schumpeter's (1942) theory of “creative destruction,” where stagnant firms wither and die and are replaced by the innovators, who thrive and bloom. Failure is therefore an unavoidable part of economic growth.

    Despite this, in many European countries failure tends to be stigmatized, with the failed entrepreneur perceived— rightly or wrongly— as the primary cause of the failure and the demise of the business. Risk is seen as something that should be avoided rather than being an intrinsic element of enterprise. It is rarely the case that failed entrepreneurs are seen to have gained valuable information from their failure and that they may, at some stage, decide to reenter self- employment (Mueller and Niese 2007). This is certainly the case in Northern Ireland, a region GEM (Global Entrepreneurship Monitor) researchers have cited as historically having higher proportions of would- be entrepreneurs reporting fear of failure as a deterrent to starting a business than other UK regions, although rates have been showing improvement in more recent times (Hart et al. 2015). Despite improvements in Northern Ireland with regard to attitudes around fear of failure, differences most definitely remain between Northern Ireland, in particular, the United Kingdom in general and countries such as the United States, where failure is seen as a badge of honor or a rite of passage in order to learn lessons and achieve future success.

    In the UK's current economic climate, entrepreneurs are needed more than ever to innovate, create jobs and generate wealth, and a clear economic and social rationale exists for helping entrepreneurs with previous failure experiences to seek out positive experiences from their negative failure, as businesses set up by restarters grow faster than first- timers in terms of turnover and jobs created (Stam et al. 2006).

  • 5 - Implementation of the Enterprise Resource Planning Systems: Case Studies of Failures and Their Impact on the Enterprise Operation

  • Edited by Leszek Gracz
  • Book:
    Value of Failure
    Published by:
    Anthem Press
    Published online:
    10 May 2018
    Print publication:
    28 November 2017, pp 75-97

  • Summary

    Abstract

    In this chapter we discuss the problem of enterprise resource planning (ERP) system implementation failure. Presented here is a short description of the ERP system's complexity and the methodological background of implementation. The statistics concerning the implementations process and their results are gathered. Additionally, the lesson learned from the ERP implementation's failures and guidelines on how to prepare the proper implementation process are given.

    Complexity of ERP System— a Brief History

    ERP is software often perceived as a backbone for a whole business due to the integration, in one application, of the core aspects of the enterprise function— accounting, finance, HR/ payroll, production, sales, logistics, inventory and so forth. The development of ERP has almost a fifty- year history (Figure 5.1): the term was introduced by The Gartner Group in 1990 as a consequence of its application not only in industry but also in non- manufacturing enterprises (Antero, 2015; Jacobs and Weston, 2006).

    The origins of ERP date back to the 1970s, when the Materials Requirements Planning (MRP) systems began to be developed by ERP vendors and used to support production processes and inventory control systems (Jacobs and Weston, 2006; Abramek et al. 2014). The crucial element of MRP systems was integration of the inventory processes, material management and production on the basis of a prepared production schedule. In comparison with the previously known inventory control systems, the MRP was equipped with a module responsible for forecasting and determining the range of inventories as well as for tracking and quantitative settlement of production. Three main objectives were the background for developing the MRP system:

  • availability of materials, components and products for production and for client delivery;

  • maintaining the lowest possible materials, components and products in the company;

  • planning manufacturing activities, delivery schedules and purchasing activities.

    • MRP allowed companies to reduce inventories, define materials and components delivery time, analyze production costs, to make more effective use of the infrastructure, have faster response to changes observed in the environment, control the various production stages, collect the business data for analysis and do better planning.

    The progressive development of MRP systems was the background for extension of the concept of operational management for the whole manufacturing process, including such aspects as marketing, finance and sales.

Value of Failure
  • The Spectrum of Challenges for the Economy
  • Edited by Leszek Gracz
  • Published by:
    Anthem Press
    Published online:
    10 May 2018
    Print publication:
    28 November 2017
  • There is a clear economic and social rationale in providing a second chance to failed entrepreneurs and deriving positive experiences from negative situations. Value of Failure is a comprehensive attempt at understanding the various aspects of the phenomenon of business failure. The book covers various aspects of second-chance entrepreneurs (and economic failure in general) and opportunities for changing general perception toward the phenomenon. It enables readers to understand business failure from the perspective of institutional theory; economic failure in the process of small business growth in the context of the shadow economy; Schumpeter’s theory of ‘creative destruction’ and the fear of failure; sustainable economic growth and development; and system approach to failures and their impact on the enterprise operation.

Page 53 of 133