Research Seminar Archive
Dr Mathew Hughes (Nottingham University Business School): How Does Strategic Entrepreneurship Affect Product Innovation in Young and New Venture Firms? A Model and Test
Abstract: Few can argue against innovation as a fundamental business strategy that firms should adopt to successfully compete and perform in today's complex business environment.
Yet the pursuit of innovation calls for multiple factors to be accounted for, in particular the type of innovation, the sourcing of resources and their allocation, and the entrepreneurship of the firm. We contend that these factors introduce complex, competing, and sometimes contradictory forces that warrant greater attention.
Recent developments in entrepreneurship and strategic management research can shed light on this problem. Drawing on the notion of strategic entrepreneurship, creating innovation is seen as a product of two diametrically-opposed activities: opportunity-seeking behaviour and advantage-seeking behaviour.
Opportunity-seeking behaviour is a function of the entrepreneurial orientation of the firm. Advantage-seeking behaviour captures the efforts of firms to generate and establish advantages by reformulating its resource and knowledge base. We see this as a function of a firm managing relational resources strategically and its relational embeddedness in a network of ties.
While the logic underpinning this is deceptively simple, its implementation is deceptively difficult owing to the complexity of managing entrepreneurial and strategic actions at the same time within one firm and mitigating any dangers of bimodal effects on innovation. We study a sample of 1000 young and new venture technology-based firms to examine how strategic entrepreneurship might affect explorative and exploitative innovation activities.
Our empirical analysis reveals complex interrelationships among the strategic entrepreneurship endeavours of the firm and its innovation outcomes. While entrepreneurial orientation positively affects both explorative and exploitative innovation, we find that managing relational resources positively affects explorative innovation but relational embeddedness has a negative effect. But the results for exploitative innovation show the direct opposite of these two results. We also find that the degree of internal cooperation changes the effect of entrepreneurial orientation on both forms of innovation, positively moderating the effect of entrepreneurial orientation on exploitative innovation but operating as a pure moderator to negatively alter the relationship between entrepreneurial orientation and explorative innovation.
Our contributions to theory and practice are four-fold:
- we are the first to test the principles of strategic entrepreneurship as it applies to innovation management;
- we are the first to examine the dyad between strategic entrepreneurship and innovation management and integrate both into a cohesive model of innovation;
- we are the first to do so using a non-competing model; and
- our study provides an important new theoretical base on which to build further scholarly research and managerial insights into innovation management.
Mathew Hughes is an Associate Professor in Entrepreneurship and Innovation at Nottingham University Business School. Mat is also Director of the MSc Entrepreneurship programme and Deputy Director if the Doctoral Programme at NUBS. His work focuses largely on entrepreneurial orientation, social capital and organisational learning, innovation ambidexterity, and the short and long term performance of managers. He has published in such journals as British Journal of Management, Journal of International Marketing, Journal of Business Research, and Journal of Small Business Management. Mat is also a member of the Editorial Board of Journal of Management Studies.