INNOVATION,

CREATIVITY AND Sat 29 August 2020

Lecture 1 – Introduction
to the Module

ENTREPRENEURS Lecturers: Gillian McCurdy

and Paul Atkins

HIP
OUTLINE FOR THIS
SESSION
•Summary of module and assessments
•Examine ‘Entrepreneur/ship’ and its importance to
the business economy
•Understand ‘Creativity’ and ‘Innovation’ and its
impact on Entrepreneurship
•Explore the Impact of ‘Globalisation’ on
‘Entrepreneurship’
•Determine the Size, Development and Growth of
the SME sector
WHAT IS
ENTREPRENEURSHIP?

Much research has been done, and it seems that the

concept is quite complex with varying definitions being
offered.

Task 1 - in groups can you write a quote to

describe entrepreneurship?
WHAT IS
ENTREPRENEURSHIP?

“Entrepreneurship is an activity which leads to

the creation and management of a new
organisation designed to pursue a unique,
innovative opportunity”.
(Hindle and Rushworth, 2000).
WHAT IS
ENTREPRENEURSHIP?
“Entrepreneurship is the process whereby an
individual or a group of individuals use
organised efforts and means to pursue
opportunities to create value and grow by
fulfilling wants and needs through innovation
and uniqueness, no matter what resources are
currently controlled”.
(Coulter, 2001)
“Entrepreneurship is a dynamic process of Vision,
Change & Creation”
(Kuratko & Hodgetts, 2004)
 SOME INTERESTING FACTS
ABOUT
ENTREPRENEURSHIP
•42% of working-age adults see good opportunities for starting a
business.
•110 million people between 18 - 64 years old were actively
engaged in starting a business in 2016.
•Another 140 million were running new businesses they started
less than 3½ years earlier.
•An estimated 63 million people expected to hire at least
five employees over the next five years, and 27 million of
these individuals anticipated hiring twenty or more employees in
five years.
The 2016/17 Global Entrepreneurship Monitor (GEM) survey
represents rates of entrepreneurship across 65 world economies
multiple phases of entrepreneurial activity:

Source: www.gemconsortium.org
THREE APPROACHES TO
DEFINE ENTREPRENEURSHIP
OPPORTUNITY IDENTIFICATION APPROACH
Opportunities are a prerequisite for entrepreneurship.
However it must be understood that the way in which
an entrepreneurship opportunity is perceived will
differ among individuals.
•The suggestion here is that opportunities exist in the
form of business ideas and individuals who are able to
see them, go onto the exploit them by creating new
ventures to pursue these ideas.

•(Bygrave, 1997)
THREE APPROACHES TO
DEFINE ENTREPRENEURSHIP

TRAITS APPROACH
•The entrepreneur is assumed to be a particular
personality type, have particular motives and
incentives.
•Based on personality traits with a key focus on the
need for achievement, focus of control and risk-taking
propensity.

(Kobia & Sikalieh, 2009)

THREE APPROACHES TO
DEFINE ENTREPRENEURSHIP
BEHAVOURIAL APPROACH
• This is where the focus is on what the entrepreneur
does and not who he/she is!
• Involves creating new organisations through a
dynamic process.
• Involves articulating a vision which supports growth.

(Kobia & Sikalieh, 2009)

WHAT IS AN
ENTREPRENEUR?
Essentially the word ‘entrepreneur’ originates from
the French word, ‘entreprendre’ which means “to
undertake.
Early Guru – Schumpeter 1930’s suggests:
“An entrepreneur is a person who is willing and
able to convert a new idea into a successful
innovation.”
He referred to “ the gale (hurricane) of creative
destruction” replacing inferior products, markets ,
industries with new products and new business
models.
WHAT IS AN
ENTREPRENEUR?
“An entrepreneur is one who creates a new
business in the face of risk and uncertainty for
the purpose of achieving profit and growth by
identifying opportunities and assembling the
necessary resources to capitalise on those
opportunities”.

Scarborough N M & Zimmerer T W (2006)

WHAT IS AN
ENTREPRENEUR?
“An entrepreneur is someone who habitually
creates and innovates to build something of
recognised value around perceived
opportunities”.

Bill Bolton & John Thompson

Entrepreneurs – Talent, Temperament,
Technique.
WHAT IS AN
ENTREPRENEUR?
Task 2 - In groups brainstorm all the key
characteristics you consider to be associated with an
entrepreneur!

You have 5 mins!!

CHARACTERISTICS OF AN
ENTREPRENEUR
•Perseverance & determination and has a vision
•Willingness to take risks & optimistic
•Resource assembler
•Anticipates future needs (of consumers)
•Astute at identifying business opportunities
•Initiative & confident in using it
•Creative and imaginative
•Independent and tolerant of ambiguity
•Not frightened of failure
•Strong work ethic
SUCCESSFUL ENTREPRENEURS
ARE……
•Passionate about business: a belief that it will work
and make a difference to peoples lives; they live and
breath their business
•Product/cost focused: producing a product/service
that satisfies the needs of a group(s) of customers, or a
need they didn’t know they had! (iPad?)
•Tenacious despite failure: can cope with set backs,
losses, failure
•Can turn an idea into a business model: by raising
money & investors, know how to produce it, market it,
sell it, can communicate with customers and motivate
staff
(Barringer & Ireland 2010)
WHAT DO ENTREPRENEURS DO?

• They make a significant

difference
• They create and innovate
• Spot and exploit opportunities
• Find the necessary resources
• Network
• Show determination in the face
of adversity
• Manage risk
• Exercise control over the
enterprise
• Customer oriented
• Create capital & wealth
 SO BASICALLY
ENTREPRENEURS…..
Take Risks in order….

- To create
- Innovate

….. and
build
THE ‘ENTREPRENEUR’
PROCESS DIAGRAM
Bill Bolton &
John Thompson
Entrepreneurs – 4. Finding 5. Using
Talent, the required networks
Temperament, resources extensively
Technique

3. Spotting and Overcoming

8. Controlling 10. Capital
1. Motivation the business
to make a 2. Creativity and Innovation
9. Putting the
difference customer first
Exploting Obstacles
opportunities
Recognition
6. Showing Of Value
determinatio 7. Managing
n in the face risk
of adversity
WHICH TYPE OF FIRMS ARE
THE MOST ENTREPRENEURIAL?
…
Small to Medium sized firms (SMES) in the UK for
example (less than 500 staff) :
Are twice as innovative than large firms - and have 13
times more patents per employee than large firms, which
makes a significant impact on a country’s economic success.
Employ half of all private sector employees - and create
two thirds of all new job’s.
The current UK Government hopes of economic growth
are based on the expected expansion of private sector
enterprises - and job creation as they downsize the public
sector and employees by 1m over the next 4 years and will
facilitate private businesses to pick up contracts to provide
public services (increased privatisation).
AND HONG KONG?
As of March 2020
•There about 320,000 SME’s in Hong Kong
•They account for over 98% of the total business units
and provided job opportunities to nearly 1.3 million
people, about 46% of total employment (excluding the
civil service).
•Most of the SMEs are in the import/export trade and
wholesales industry followed by the professional and
business services industry.
Source: Trade and Industry Department, Support
and Consultation Centre for SMEs, The
Government of Hong Kong
DEVELOPING AN IDEA –
BEING INNOVATIVE!
•Opportunity in other words an IDEA! and particularly,
entrepreneurial opportunity is considered a
prerequisite for entrepreneurship.
•Entrepreneurial opportunities take on different forms
and come into existence in different ways.
•In other words, developing an idea, assessing it for its
attractiveness, using the most appropriate strategies
in implementing it and in managing and growing it are
core for successful entrepreneurship.

Towards a Search for the Meaning of

Entrepreneurship
TASK 3

So…..What is
Innovation?
Discuss
CONCEPT OF
INNOVATION
Innovation can be defined as…..
“ the process of creating or modifying an idea
and developing it to products, services or
processes that are new to the organisation”.
(Read, 2000 p1.)
“the application of ideas that are new to the form
and create added value for its customers” .
(Weerawardens, 2003)
“The creation or improvements of products,
services, operation, processes and people”.
Baregheh et al, 2009)
TASK 4
In pairs, discuss an
innovative product,
service, or ‘way of
doing business’ that
you have experienced in
the last few
weeks/months.
In particular, identify
how innovative
technology and
‘disruptive’ business
models are changing
the way consumers
buy/rent products and
services….
WHY INNOVATE?
‘Our ability as a country to innovate will
determine our success in building profitable
businesses, creating new jobs and supporting
more effective public services. In particular, we
need a dynamic infrastructure for innovation that
enables us to compete in those industries set to
drive the global economy.
 Lord Drayson, Minister for Science and Innovation, UK
(2009)
WHY INNOVATE?
Four out of five senior http://www.bing.com/
executives have identified videos/search?
creativity and innovation q=why+study+innovation
as a ‘top three’ priority for &&view=detail&mid=663
business strategy’ 29E36AD00B3341113663
29E36AD00B3341113&FO
 The Work Foundation RM=VRDGAR
(2003)

‘Now more than ever

innovation should be a
company wide priority’
 Kucmarski (2003)
TYPES OF INNOVATION
(4 P’S)

•Product Innovation
•Process Innovation
•Position Innovation
•Paradigm Innovation
•Examples……?
PRODUCT
INNOVATION
Changes in the ‘things’
(good and services)
that an organisation
offers.
Example: Self driving
autonomous cars, taxis,
buses, trains, trams
…..bikes
PROCESS
INNOVATION
Changes in the ways in
which the goods and
services are created
and delivered.
Example: automobile
produced by robots
compared to that
produced by human
workers
POSITION
INNOVATION
Changes in the context in
which the goods and
services are offered.
For example an old
established product in the UK
is Lucozade – originally
developed as a glucose based
drink to help children and
invalids in convalescence.
These associations with
sickness were abandoned by
the brand owners. Smith Kline
Beecham, when they re-
launched the product as a
health drink aimed at the
growing fitness market where
it is now presented as a
performance enhancing aid to
healthy exercise. This shift is a
good example of position
innovation.
PARADIGM
INNOVATION
Changes in the
underlying mental
models which frame
what an organisation
does.
Example: the evolution of
the music from vynal to
Cassette, CD, digital files
in MP3…..
Now music and videos
can be downloaded and
streamed to many
devices via the internet…
ACCORDING TO
FORBES……NEW
INNOVATIONS FOR 2020
https://www.forbes.com/
sites/bernardmarr/
2020/02/26/mit-names-
top-10-breakthrough-
technologies-for-2020/
#17c4fd37d482
CREATIVITY
Creativity underpins our ability to innovate, to
create and exploit new economic opportunities and to
compete more effectively.
Innovation and creativity have become the key drivers
of wealth creation and it is widely accepted that a high
value-added innovation economy is built on the skills
base of its workforce, the quality of its R&D and a
thriving culture of Innovation.

Department of Culture, Arts and Leisure, Dept of

Education
ACTIVITY - HOW CREATIVE
ARE YOU??
https://
www.youtube.com/watch?
v=aTicPwh0BdA

The Circle Challenge!!

 BARRIERS TO
CREATIVITY &
INNOVATION
•Institutional constraints
CAN
•INCLUDE:
Human resources
•Organisational culture
•Flow of information and government policy
•High cost of innovation
•Lack of finance
•High economic risk
•Lack of skilled personnel
•Lack of information about technology and market,
•lack of customer responsiveness and government
regulations.
(Silva et al, 2007; Lim and Shyamala 2007;
Mohen and Roller 2005: Baldwin and Lin 2002).
AN IDEA INTO A BUSINESS
OPPORTUNITY….
Ideas must meet the criteria of an opportunity:
Predicting trends:
•Observing trends; fashions, life styles, economic booms or
downturns, peoples earnings & disposable incomes; increasing
in the Far East, decreasing in the West….
•Social trends; life expectancy, health & fitness, leisure time
activities, work life balance, ecological concerns and search for
alternative lifestyles, new energy sources etc, can present
many business opportunities
•Political & regulatory changes; country’s debt issues,
reduced public spending, increasing privatisation, reducing ‘red
tape’ to facilitate greater innovation and business creation.
AN IDEA INTO A BUSINESS
OPPORTUNITY….
•Solving a problem; finding a solution of a simple
problem can create a successful business e.g. the java
jacket in which we carry hot coffee in a paper cup to
stop people burning their hands (1 billion+ sold so far)
•Finding a gap; finding what is missing from current
provision that could succeed e.g. female only taxis;
‘healthy’ fast food outlets; create online greetings
cards (Moonpig), social network sites (there’s now one
for dog owners!)
 THE IMPACT OF WHAT IS
GLOBALISATION ON GLOBALISATI
ENTREPRENEURSHIP ON?
THE IMPACTS OF
GLOBALISATION - THE
GOOD AND THE BAD
https://www.bing.com/
videos/search?
q=Impact+of+Globalisati
on+on+entrepreneurship
&&view=detail&mid=072
6BA767A220B951178072
6BA767A220B951178&FO
RM=VRDGAR

https://hbr.org/2020/05/
will-covid-19-have-a-
lasting-impact-on-
globalization
IMPACT OF
GLOBALISATION ON
ENTREPRENEURSHIP –THE
BENEFITS
Globalisation works hand in hand with entrepreneurship in
many important ways:
1. Globalisation facilities technology entrepreneurship by
fostering the rise of innovation ecosystems. This might include
engagement between new venture, and large multinational
enterprises.
2. Globalisation facilitates transnational entrepreneurship -
diasporas (movement of the population from its original homeland)
and emigres (an émigré is a person who has "migrated out) take
what they learn in corporation and use it to create their own
businesses in the same or similar sectors.
3. Globalisation facilitates social entrepreneurship. This
involves creating wealth while simultaneously addressing vexing
societal problems such as environmental degradation, poverty and
poor health.
Source: Huffington Post, Shameen Prashantham -Associate Professor of
International Business and Strategy, China Europe International Business
School, September 16, 2016
IMPACT OF
GLOBALISATION ON
ENTREPRENEURSHIP –THE
BENEFITS
4. Globalisation benefits local neighbourhoods –
International chains may set up shop in a neighbourhood and
capture the market with low prices. Often they do this by
using cheap labour overseas and selling products at low profit
margins. Locally owned stores can fight back by offering
products that large chains do not. For example, a restaurant
can offer local foods that large restaurant chains cannot offer.
A boutique clothing shop can sell garments designed and
made locally. small businesses can compete locally because
then can sell locally made products through the internet.
5. Globalisation creates a demand for more diversified
services - through cross cultural exposures and for higher
end good and services through increased prosperity – this
change in demand may help form new market niches and
create new entrepreneurial opportunities for SMES.
IMPACT OF
GLOBALISATION ON
ENTREPRENEURSHIP – THE
BENEFITS
6. Small businesses benefit from globalisation
due to their speed of adaptability/flexibility - The
new metric for measuring business potential is no
longer size, because small companies can access
global markets as easily as large companies.
What matters now is speed.
Small businesses can adapt quickly to local and global
trends because they have less bureaucracy than larger
corporations.
A single entrepreneur can spot a trend, order products
or create services, and exploit that trend before larger
companies complete their meetings on a topic.
TO SURVIVE GLOBALISATION
ENTREPRENEURS MUST
THEREFORE…….
•Think globally to survive.
•Stay abreast of worldwide trends.
•Even the smallest local store can sell to customers in
other countries through the internet.
CONTRIBUTION OF
SMES TO THE
ECONOMY
CONTRIBUTION OF
SMES TO THE
ECONOMY
SMEs adversely affected by the global
financial crisis
•Some have continued to struggle, with revenues and
employment levels remaining subdued in the following
years. Others have recovered relatively fast, indicating
the resilience of the SME sector.
•Many have suffered from reduced access to finance
and increased costs of credit.
CONTRIBUTION OF
SMES TO THE
ECONOMY
How have Governments around the
world have responded?
To assist SMEs, policymakers’ attention has focused on
supporting working capital, easing access to
finance, implementing a better regulation
agenda, and encouraging SME investment in new
technologies or markets.
Evidence also shows that when SMEs become
internationalised, particularly when they start
exporting to foreign markets, their contribution to their
home economy increases.
CONTRIBUTION OF
SMES TO THE
ECONOMY
•More than 95% of enterprises across the world
are SMEs - accounting for approximately 60% of
private sector employment (Ayyagari et al. 2011).
•Japan has the highest proportion of SMEs among
the industrialised countries – accounting for more
than 99% of total enterprises (EIU 2010).
•India, according had 13 million SMEs in 2008,
equivalent to 80% of all the country’s businesses
(Ghatak 2010).
•South Africa - 91% of the formal business
entities are SMEs (Abor and Quartey 2010).
HOW DO SMES DRIVE
ECONOMIC GROWTH?

According to research carried out by the Department

of Business, Innovation and Skills, SMEs drive
economic growth through three key aspects:
SMES – STIMULATE
INNOVATION
Through the established empirical relationship
between innovation and firm growth, the
contribution of SMES to innovation is important
to the economy.
Comparing the growth rates of innovative and non
innovative firms indicate growth rates were significantly
higher among innovative firms across three different
innovation measures: product innovation, process
innovation and wider innovation.
Product innovation & Process Innovation is directly
proportional to the growth of the organisation. For
every 10% increase in share of sales increases the
growth of SME by 0.7%
SMES – DRIVE ECONOMIC
GROWTH

In the current challenging economic environment,

SMEs have shown great resilience and have been
opportunity driven (especially in the UK). As the
economy recovers, it is crucial we make best use of
these businesses.
They were an estimate of 4.9 Million private
sector businesses in the UK at the start of 2013,
of which 99% were SME’s with a combined
turnover of £3,300bn.
SMES – SPUR JOB
CREATION
• SMEs tend to be more labour intensive at a macro level,
therefore, provide a substantial contribution to employment.
• A World Bank survey of 47,745 businesses across 99 countries
revealed that firms with between 5 and 250 employees accounted
for 67% of the total permanent, full-time employment (Ayyagari et
al. 2011).
• SMEs were also creating more jobs than large enterprises. Between
2002 and 2010, on average, 85% of total employment growth was
attributable to SMEs (de Kok et al. 2011).
• In 2015 SMEs in the UK accounted for 59.3% of private sector
employment and 48.1% of private sector turnover.
• According to the European Union Commission ‘SME’s contribute
greatly to the economy of Europe: 99% of all companies are SME’s
and they provide around 75 million jobs.
• In the US small businesses represent more than 99% of all
employees, engaging 52% of private sector employees
(www.sba.gov).
SMES – SPUR COMPETITION

•SMES spur competition which raises productivity and in

turn stimulates economic growth.
•As competition increases, there is churn in the market,
the least productive firms exit and the most productive
firms grow, resulting in an increase in aggregate
productivity.
SME CULTURE IN THE UK

•The current Governments’ economic growth

aspirations lies with the development of new
businesses and entrepreneurs. Plans to reduce
Bureaucracy and ‘red-tape’ to make it easier to set-up
business.
•TV series such as ‘Dragons Den’ etc. are encouraging
more people to become entrepreneurs
•UK has a strong culture of entrepreneurship,
innovation and pioneers
SME’S NUMBERS IN THE UK
WILL
CONTINUE TO RISE, DRIVEN UP
THROUGH:
•The economic climate and large numbers of job losses
in the Public sector, has seen and will continue to
result in individuals setting-up a small business, using
redundancy money.
•Graduates and students finding it harder to enter the
workforce will set up businesses.
• A growing population of experienced over-50s wanting
second careers
•People using their homes for business uses: making
cakes/food to sell elsewhere, internet based co.
SME’S NUMBERS IN THE UK
WILL
CONTINUE TO BE DRIVEN UP
THROUGH:

•E-economy favouring of fast-moving SMEs over large
inflexible firms
•Increased outsourcing by large corporations
•Outsourcing of the public sector; will increase in
2016/17 due to reduction in public sector budgets
•Growth in intellectual property-based ‘new economy’
start-ups
CTIVITY - WORKING IN GROUPS:

You are the Research and

Development Team for a
small micro-brewery in
Hong Kong.
Your task is to come up with a
brand new flavoured beer that
will be sold locally and to the
international market.
You need to come up with a
name, flavour, slogan and
identify the nations and profile
of customer you believe to be
the best destination for your
product.
Please explain your choices.