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The Pressure to Maintain Revenue Growth

Discuss About The Nexus Entrepreneurship And Innovation.

Entrepreneurs are known for taking risks and using technological innovations. This is also why they are called with that specific name. However, this is not entirely true as entrepreneurs tend to lose the recognized guts at the later stage of their ventures. This also happens with the startup entrepreneurs as due to no experience of whatever they do, they tend to struggle to keep it up with innovation. This is an interesting discussion as such facts are rarely known to a mass people (Decker et al. 2014).

According to an article posted in Forbes, companies become lesser fascinating for risks the bigger it gets. They might be recognized as to have innovation wired into its DNA. However, they tend to become weaker in this regard with the ventures get older. There can be ample of reasons for it; however, it can also be due to the over-confidence. An overly confident startup thinks as if it has read the market appropriately and also that they can never fail because they have already proved their credentials and have become successful (Forbes.com 2018). The executive team feels like being under pressure to maintain a progressive trend for annual revenue. The fear does not let them be motivated for taking up risks by using the technological innovation. Startup entrepreneurs also struggle to avoid the pressure from investors. They are under continued pressure for a progressive revenue growth (Forbes.com 2018).  

Therefore, the study is aimed at understanding why innovation is a challenge to entrepreneurs especially to startups and the bigger entrepreneurs.

According to Terjesen, Hessels and Li (2016), companies that get bigger in business it, on the other side, becomes less fascinating for taking risks as well. There could be many risks for such behavior. Interestingly, the market behavior such as the stock market performance has now become a key factor for the board of members and for shareholders also. Business has to live up to the expectation in every quarter of a fiscal year. A slight deficit in the figure as stated in the forecast for the very next quarter will certainly trigger lawsuits of shareholders. It means businesses are surrounded by a list of pressures with its reputation being mounted up. This is one of the reasons which the article has identified for entrepreneurs as struggling to innovation in a long time.  

The Fear of Taking Risks

As opined by Suddaby, Bruton and Si (2015), there are misconceptions about the leadership sustenance which means that certain leaders are good for only a certain range of revenues attaining which they must be replaced with better leaders. This must be done to attain the next slab of target revenues and the concept of replacing the existing leaders with a better one will keep on going with the attainment of every target slab for revenues. Most companies do follow the very same rule. The process is true to some extent that attaining a different set of revenue requires a more skilled and experienced personnel. The existing leaders may struggle to take it to a new height. However, this is not at all true. For example, Apple had followed the very same path by replacing its founder Steve Jobs with John Sculley who himself belonged to a very reputed company. However, the idea did not work and Apple had to recall Steve Jobs back again years after he was being replaced. Since that recall, Apple was able to innovate again the way it used to do (Khan, Alam and Alam 2015). The idea of change in leadership is rarely successful with just a very few examples of successful companies. Google is one of them which instead of replacing its founders Larry Page and Sergey Brin, they were being retained and asked to work under a reputed company guy, Eric Schmidt. They were retained until the new guy was trained enough to take up the leadership position and innovate the way Google is known for (Forbes.com 2018).   

As viewed by Terjesen, Hessels and Li (2016), a shift normally happens to the human resource department, the more it gets bigger. It means that A-type personalities do exist in startups. Such professionals used to have courage in them for innovative approaches. The moment it gets bigger, the whole structure of the human resource department gets changed. A-type professional is replaced by a more professional group of HR executives who are very resistive to innovation. They are not encouraged by incentives for thinking out of the box. They rather tend to be in a similar state during their course of participation and maintain a very high standard of professionalism. This may not be true in every single entrepreneurial business. However, the chosen article has found exactly the very similar kind of findings.

As according to Rauch and Hulsink (2015), managing to a middle path is another issue which prevents entrepreneurs from reaching to innovative ideas and extreme thinking. As the business gets bigger, it gets more of such managers who are not the extreme thinker. Hence, the innovative ideas that float across the organization get the mixed responses. Some managers being the extreme thinker and have the appetite in them for going outside of the box, struggle to find the extreme support that had once helped the ventures to stand. As a result, such businesses end up as settling towards the middle way. However, such claims are not always true as few bigger companies have proved that innovation is possible even when one has become a bigger company. One of such examples is of GE which has successfully maintained the culture for innovation. In a span of 136 years, the company had moved in an unorthodox way to prove them as an innovative business. The company uses computers and equipment to establish the communication in real time over the internet, exchange information, prevent plant shutdowns and ensure a top-rated product quality (Home.sandvik 2018).

The Misconception of Leadership Sustenance


As opined by Zahra, Wright and Abdelgawad (2014), companies on most occasions prefer to promote professionals from within the company’s bench strength, they have rare courage to look for external resources. This is good from a perspective that employee’s loyalty level will increase. They will feel valued and will consequently have an enlarged interest for commitment. However, internal promotion in most times is not a healthy strategy as well because it does not allow employers getting fresh and skilled talents who could have comparatively more desires for innovation. In fact, one should look to get the best-skilled professionals who all can add values to the innovation in organizations. It means different options must be tried while ignoring to rely on a single most strategy. In particular, those who are experienced and have worked before with reputed companies, such employees may certainly be a good boost to the organizational productivity. Therefore, the fear for not to go outside for skilled professionals is an issue from a point that it closes the doors which were the virtual paths to opportunities and were attainable also with skilled and experienced external resources.

The literature review section has provided a few issues that potentially prevents the organization from being innovative. Those few issues are quite common with most established and starter entrepreneurs. However, there are a few entrepreneurs that have never threatened of taking risks and have always been innovative throughout their ventures. Few of such entrepreneurs are Apple, Google and Amazon (Forbes.com 2018). These companies are never satisfied with their success and had continued to experiment from day one to become the multi-billion dollar companies. They are clear exceptions to a rule which suggest that entrepreneurs become restrictive in nature once they are the established entrepreneurs. Those most organizations tend to play safely while also ignoring their risk-taking capabilities which had once benefitted them in becoming the entrepreneurs. Apple, Amazon and Google have been the exceptions and that to an extent that they have made long-term commitments to innovation. Innovation has actually remained as a driving force for such firms in their decision-making processes. Those rare companies have another thing common in them which is that the CEOs of each of the company founded the respective businesses and they all remained together and worked with the senior management while during the company’s growth. Steve Jobs, Larry Page and Jeff Bezos, they all have entrepreneurship wired into their DNA. Such entrepreneurs would never bring worries to their investors as they know how to attain the success. They would also not allow the company’s culture becoming too comfortable to employees that they start taking things for guaranteed. They would not also be conservative in their thought-process, so that, innovation is resisted or hampered (Forbes.com 2018).     

The Lack of Emphasis on External Resources

According to Autio and Fu (2015), a general theoretical framework of entrepreneurship suggests that there are two approaches involved in every entrepreneurial action. The one is the minimum approach while other being the maximum approach. A minimum approach has its orientation in the entrepreneurs themselves who constructs the entrepreneurial process or plans the project. A maximum approach is constituted of elements such as the organization that includes creating the process by encouraging or motivating the individuals (Siegel and Wright 2015). It is the implementation of the execution process which requires a collective effort from every member of organizations. Unless and until the members are not convinced of the concept or are unsure of the process, they will fall short and will not be able to contribute to the process. Hence, in accordance with the theoretical framework of entrepreneurship, it is necessary that entrepreneurs are able to work with their senior managers and also their employees. An integrated approach is mostly required to implement the innovative decisions or processes at the organizational level.

In the light of the chosen entrepreneurship framework, it is evident that the contribution from individuals is of utter importance for taking or implementing the innovative processes. Hence, individuals must necessarily have capabilities in them to contribute to the innovation process. The existing employees may or may not necessarily possess the required skills. This is then important to realize the importance to look for external resources and also the actual time for it. Hence, it is a clear indication that innovation skills are utterly required for the entrepreneurial companies to sustain its reputation as the innovating firms. It is the responsibility of entrepreneurs to identify whether they have the required skilled professionals. They need to focus on one thing which is to have the skilled professionals. The need must be fulfilled at any cost. If it asks for going outside to get the required talents, it must be accomplished and this is what makes the difference between entrepreneurs. There are a very few entrepreneurs as stated earlier in this study who have the courage in them to look beyond the limit and go to any extent to get the required talents (Kerr, Nanda and Rhodes-Kropf 2014).

The chosen theoretical framework for entrepreneurship has actually helped to get two variables such as the courage in entrepreneurs for innovation and their ability to accumulate the required resources. Most entrepreneurs have struggled to attain or fulfill the identified variables. Entrepreneurs at their startup and also when they are established have fears for innovative decisions. They become quite restive in nature and also tend to play safe. As opined by Estrin, Mickiewicz and Stephan (2016), the framework, on the other hand, demands a much different approach that includes innovative entrepreneurs and their capabilities to identify the required resources. They must be able to work with their senior managers and identify the area of improvement. They also have the capability to identify whether there is a need for additional recruitment of fresh professionals from external resources. This may be the case as sometimes the available workforce may not have the extra quality which is required to flourish the innovative venture. Hence, entrepreneurs must have the never-ending desires for innovation and also that entrepreneurs are capable of accumulating the best workforce which they can get.

The Shift in Human Resources with Organizational Growth

Judgments can be suspended; however, it should not be for an indefinite course of time (Castaño, Méndez and Galindo 2015). Judgment can be understood as to have its link with the contemporary issue highlighted in this study. The contemporary issue highlighted in this study is the fear of entrepreneurs for taking the innovative ideas. Such fears can end up throwing entrepreneurs out of the existing list of top companies in the world. Judgment is related to fear to experiment with entrepreneurs as they tend to resist their inherited judgment making capabilities. According to the stated facts in the first line of this section, judgments can take little time to happen; however, it should never be stretched to an indefinite span of time. The judgment can be delayed because it takes time to process the innovative strategies. The process is delayed because strategies are developed with the help of trial and error process. This also means that the process will continue for a long duration of time. There are many other factors which actually affect a venture, among which are nature of technological progress, confirmed orders, customer eagerness, financial performance, competitor’s success and so on. However, the most critical of all is the senior manager’s willingness to move or not-move decisions. Unless and until the senior managers are unwilling to think out of the box, innovation cannot happen (Galindo and Méndez 2014).

Entrepreneurs must have capabilities in them to make appropriate judgments. It is not advisable that they remain silent or unmoved on innovative ideas. It is rather suggested that they must have a never dying desire for innovative ideas. Additionally, they must also be able to figure out the role of every individual who is associated with the company serving the different purposes. Entrepreneurs must be able to influence its senior managers regarding a change or an implementation of a new strategy. This is necessary for a fact that senior managers will help to figure out whether there is a need for fresh recruitments or else (Block et al. 2015).

Conclusion:

Therefore, it was found in this study that entrepreneurs struggle to make innovative decisions in long-term. There are actually a very few entrepreneurs who have courage in them to look for the never-dying desires for innovation. Only very few entrepreneurs which also include Apple, Google and Amazon have been able to remain innovative in long-term. The theoretical approach or framework which was chosen in this study has helped to identify the two important elements such as minimum approach and maximum approach. A minimum approach is related to the entrepreneurs themselves while the maximum is related to how entrepreneurs implement their plans. It means organizing the organizational resource in a way that it contributes to the entrepreneurial process. As identified in this study, entrepreneurs must also have capabilities to make the justified judgments. It means the entrepreneurial process can be delayed but should not be stretched too long that it becomes out of reach.   

References

Autio, E. and Fu, K., 2015. Economic and political institutions and entry into formal and informal entrepreneurship. Asia Pacific Journal of Management, 32(1), pp.67-94.

Block, J.H., Kohn, K., Miller, D. and Ullrich, K., 2015. Necessity entrepreneurship and competitive strategy. Small Business Economics, 44(1), pp.37-54.

Castaño, M.S., Méndez, M.T. and Galindo, M.Á., 2015. The effect of social, cultural, and economic factors on entrepreneurship. Journal of Business Research, 68(7), pp.1496-1500.

Davidsson, P., 2015. Entrepreneurial opportunities and the entrepreneurship nexus: A re-conceptualization. Journal of Business Venturing, 30(5), pp.674-695.

Decker, R., Haltiwanger, J., Jarmin, R. and Miranda, J., 2014. The role of entrepreneurship in US job creation and economic dynamism. Journal of Economic Perspectives, 28(3), pp.3-24.

Estrin, S., Mickiewicz, T. and Stephan, U., 2016. Human capital in social and commercial entrepreneurship. Journal of Business Venturing, 31(4), pp.449-467.

Forbes.com. 2018. Forbes Welcome. Retrieved from https://www.forbes.com/sites/georgedeeb/2014/01/08/the-five-reasons-big-companies-struggle-with-innovation/#3bdcbe962958

Forbes.com. 2018. Forbes Welcome. Retrieved from https://www.forbes.com/sites/tjmccue/2013/01/10/apple-1-google-2/#54c493ea5287

Galindo, M.Á. and Méndez, M.T., 2014. Entrepreneurship, economic growth, and innovation: Are feedback effects at work?. Journal of Business Research, 67(5), pp.825-829.

Home.sandvik. 2018. GE embraces spirit of entrepreneurship — Sandvik Group. Retrieved from https://www.home.sandvik/en/news-and-media/newslist/news/2017/03/ge-embraces-spirit-of-entrepreneurship/

Kerr, W.R., Nanda, R. and Rhodes-Kropf, M., 2014. Entrepreneurship as experimentation. Journal of Economic Perspectives, 28(3), pp.25-48.

Khan, U.A., Alam, M.N. and Alam, S., 2015. A critical analysis of internal and external environment of Apple Inc. International Journal of Economics, Commerce and Management, 3(6), pp.955-961.

Rauch, A. and Hulsink, W., 2015. Putting entrepreneurship education where the intention to act lies: An investigation into the impact of entrepreneurship education on entrepreneurial behavior. Academy of Management Learning & Education, 14(2), pp.187-204.

Siegel, D.S. and Wright, M., 2015. Academic entrepreneurship: time for a rethink?. British Journal of Management, 26(4), pp.582-595.

Suddaby, R., Bruton, G.D. and Si, S.X., 2015. Entrepreneurship through a qualitative lens: Insights on the construction and/or discovery of entrepreneurial opportunity. Journal of Business venturing, 30(1), pp.1-10.

Terjesen, S., Hessels, J. and Li, D., 2016. Comparative international entrepreneurship: A review and research agenda. Journal of Management, 42(1), pp.299-344.

Zahra, S.A., Wright, M. and Abdelgawad, S.G., 2014. Contextualization and the advancement of entrepreneurship research. International small business journal, 32(5), pp.479-500.

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