Home Computer Science Technological Entrepreneurship: Technology-Driven vs Market-Driven Innovation
The key managerial issue facing a small technology start-up is usually that of ensuring access to resources, especially financial, as the project progresses from idea generation through to successful market launch (Chaston 2014). In large organisations, resource acquisition is a relatively unimportant matter. Instead, the primary focus is upon achieving an equitable balance between sustaining ongoing operations whilst concurrently providing adequate support for entrepreneurial activities. Sharma (1999) posited that this balancing act resulted in large firms facing the following dilemmas:
1. Managing Ideas: The number of entrepreneurial ideas is likely to be quite significant and the dilemma is the degree to which projects involving such ideas should be approved whilst avoiding an excessive diversification of resources away from ongoing operations. Senior management in most large firms tends to be risk adverse and favour a disciplined, structured, sequential linear process with regular milestone decision points to assess whether the project should be permitted
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I. Chaston, Technological Entrepreneurship,
to progress to the next stage. The drawback is this philosophy may stifle creativity but the alternative of permitting employees to engage in experimental exploration is perceived as too risky in terms of the utilisation of key resources. Risk avoidance can sometimes result in a Catch 22 situation where an idea cannot moved forward without evidence of a financial return, but a financial return can be validated only by allowing a project to progress from idea generation through to actual product development (Kantner et al. 1997).
5. Launch Strategy: The final phase of actually launching a new product can be very expensive and may result in a very adverse cash flow situation. One way of managing this problem is to restrict the launch to a small proportion of the market and to use the revenue generated to over time support an ongoing market expansion. Although there is appeal in terms of the financial implications of this approach, the firm’s senior management must weigh this benefit against the risk that a competitor may copy the new product and enter areas of the market not yet served by the firm (Robinson and Stern 1997).
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