Openness to new ideas, freedom from investigation of operation, and promotion and pay based on merit encourage entrepreneurship.
Excessive regulation, rigid hierarchy, lack of freedom, and excess control discourage entrepreneurship.

1. Abdisalam Issa-Salwe, Taibah University
Lecture 3
Innovation and
Entrepreneurship
(Information Systems Innovation and Technologies IS313)
Abdisalam Issa-Salwe
Taibah University
College of Computer Science & Engineering
Information Systems Department
David Zilberman, Technology, Innovation, and Entrepreneurship, University of California, Berkeley
Topic list
Entrepreneurship and marketing
Innovation process
Intellectual property rights
Intellectual property rights and development
Technology adoption and diffusion
Marketing and adoption
2
1

2. About Entrepreneurship
Entrepreneurs make things happen.
They are individuals who take a concept and convert
it into a reality.
A product, policy or institution.
They become the champions of a new process, and
they are engines of change.
Entrepreneurship occurs in all areas of life.
Entrepreneurs are everywhere.
Entrepreneurship can be used for good and evil.
3
About Entrepreneurship (cont…)
Entrepreneurs can be encouraged and promoted
Openness to new ideas, freedom from investigation of
operation, and promotion and pay based on merit
encourage entrepreneurship.
Excessive regulation, rigid hierarchy, lack of freedom,
and excess control discourage entrepreneurship.
4
2

3. Requirements of Entrepreneurs
Entrepreneurs need a keen eye to understand
economic, social, and scientific realities and the
capacity to understand evolutionary processes in
the future.
They need to understand how institutions work, and
individuals react in order to introduce activities and
products that serve peoples’ need and that are
sustainable economically and politically.
Entrepreneurs also need dedication and
commitments and the capacity to overcome failure.
5
Technology Adaptation and
Appropriateness
Rarely is the same technological solution optimal everywhere.
The value of an innovation depends on socio-economic, climatic,
and ecological specifics.
Important innovative activities adapt technological solutions to
specific conditions.
Export of technologies across regions without adaptation may
lead to negative environmental side effects and waste.
A technology may have several versions to meet needs and
capabilities of various users in a region, e.g., large vs. small
farmers’ versions of a machinery.
The establishment of an innovative capability starts with a
buildup of capacity to support and adopt innovations and new
technologies.
6
3

4. Successful Entrepreneurship
The key to success with entrepreneurship
and innovation is moving from the
invention of ideas to effective
commercialization and acceptance in the
marketplace
Innovation and Competitive Advantage
Difficult for
competitors to imitate
Commercially exploitable
with present capabilities
Competitive
Advantage
Provides significant
value to customers
Timely
4

5. Internal Corporate Venturing
Corporate Intrapreneurship can occur as either a
bottom-up process or as a top-down process
Autonomous strategic behavior is a bottom-up
process through which Product Champions
pursue new product ideas to commercialization
Product Champions are individuals who have an
entrepreneurial vision for a new product and
seek support for its commercialization
Internal Corporate Venturing
Induced strategic behavior is a top-down process
in which the current strategy and structure foster
product innovations that are closely associated
with the current strategy
Environmental uncertainty makes developing
entrepreneurship strategy highly complex
Requires a decision on which corporate resources
to deploy for new technology development and
which innovative ideas to bring to market
5

6. Cooperating to Produce Innovation
Strategic alliances can help to foster innovation
by combining the knowledge and resources of
two or more partners
Firms must focus on building knowledge,
identifying core competencies and developing
strong human resources to manage these
projects
Firms can also give away their core
competencies by outsourcing to alliance
partners rather than developing their own
capabilities over time
The Innovation Process
Research
Discovery
Development
Patenting
Production
Marketing
Adoption
6

7. Induced Innovations
Innovations respond to need and economic
conditions.
Inventors, investors, and researchers put effort into
solving burning problems, and that leads to
innovations.
Labor shortages led to mechanized equipment.
Drought conditions led to improved irrigation.
Energy crises led to higher efficiency cars.
Farmers’ cooperatives were established during periods of
excessive low farm prices.
Environmental regulations trigger cleaner
technologies.
A tax on carbon will lead to improved stoves and power
plants. 13
Various Types of Innovators
In the past most innovations were introduced by
practitioners. Even now practitioners are important
innovators. They identify a way to meet needs.
The scientific discoveries of the late 19th century
gave rise to science-based innovations (Edison, Bell,
Marconi).
Major companies (IBM, Sony, Bell, Kodak, GM) built
their own research labs.
Public sector labs made important agricultural and
environmental discoveries.
Universities and start-up companies are becoming
major sources of new innovations. The ownership of
a technology and leadership in its applications move
between organizations over time.
14
7

8. Incentives for Innovations
Patents: Awards monopoly rights for 17-20 years.
Patent protection allows publication of research
findings that leads to innovations.
Patent rights (for certain applications) can be
transferred.
Patents are valid only where they are registered.
Copyright protection: Pertains to books, brand
names, and the media.
Trade secrets: Protects against thefts.
Plant breeders’ right: Allows exclusive sales of
varieties and allows farmers to reuse seeds.
Prizes: Awarded to winners of a contest for finding a
technical solution to a problem.
Indigenous knowledge is poorly protected.
15
Adoption and Diffusion
The use of new technologies spreads gradually.
There is a significant time lag between the time a new
innovation is introduced and when it becomes widely
used by producers or consumers.
Diffusion is the aggregate process of product
penetration.
It is measured by the percentage of potential users
who actually adopt a technology.
Diffusion curves measure aggregate adoption as a
function of time.
They tend to be S-shaped.
Adoption is a decision by a specific individual to use a
technology. Diffusion is aggregate adoption.
16
8

9. The S-Shaped Diffusion Curve
Diffusion
Rate
Saturation
Rate
Saturation
Takeoff
Early adoption
Time
17
Stages of Diffusion
This is distinguished among:
Early adopters: More educated, innovative
individuals who gain from technology.
Followers: The majority of adopters who
see its success and want to join in.
Laggards: Less-advanced individuals who
either do not adopt or adopt very late and
may lose because of the technology.
18
9

10. Threshold Model
The factors behind diffusion:
Heterogeneity of potential adopters.
The individual decision process aimed at improving well-
being.
Dynamic forces that make technology more attractive.
Source of heterogeneity (size, location, land quality, and
human capital).
Decision criteria (profitability, well-being, risk minimization).
Dynamic processes that drive adoption (learning by doing,
learning by using, network benefits).
19
Adoption, Credit, Location and Education
Lack of credit and high cost of credit are major
impediments for adoption.
Poorer consumers and farmers may be more constrained
by risk and credit constraints.
Adoption may be slower at far away locations because of
less access to information and sources of technology,
higher cost of inputs.
In some cases, however, early adopters are at distance locations(if
technology reduces transportation costs).
Adoption requires a high learning cost -more educated
individuals tend to be early adopters.
When the technology is simple, sometimes less sophisticated
individuals adopt first.
20
10

11. Reference
David Zilberman, Technology, Innovation,
and Entrepreneurship, University of
California, Berkeley
Abdisalam Issa-Salwe, Lecture Notes,
Taibah University, 2010.
21
11