TECHNOLOGICAL ENTREPRENEURSHIP AND VENTURE CREATION (GNS 311)
By
Umar Usman, PhD(MGT), PhD(MKT), AMNIM, MIMC, FIBDFM
Department of Management and Information Technology FMS, ATBU, Bauchi.
Introduction, Technology Entrepreneurship: Overview, Definition, and Distinctive Aspects
Technological entrepreneurship is defined as a style of business leadership that involves
identifying high-potential, technology-intensive commercial opportunities, gathering resources
such as talent and capital, and managing rapid growth and significant risk using principled
decision-making skills.
Technology entrepreneurship lies at the heart of many important debates, including those
around launching and growing firms, regional economic development, selecting the appropriate
stakeholders to take ideas to markets, and educating managers, engineers, and scientists. Unless
a generally accepted definition of technology entrepreneurship is established, however, these
debates lose their focus. The purpose of this lecture is to identify the themes that dominate the
technology entrepreneurship literature, provide a working definition of technology
entrepreneurship, and identify its distinguishing aspects relative to economics,
entrepreneurship, and management.
The concept of technology entrepreneurship is an investment in a project that assembles and
deploys specialized individuals and heterogeneous assets to create and capture value for the
firm. What distinguishes technology entrepreneurship from other entrepreneurship types (e.g.,
social entrepreneurship, small business management, and self-employment) is the collaborative
experimentation and production of new products, assets, and their attributes, which are
intricately related to advances in scientific and technological knowledge and the firm’s asset
ownership rights.
Technology entrepreneurship is a vehicle that facilitates prosperity in individuals, firms, regions,
and nations. The study of technology entrepreneurship therefore, serves an important function
beyond satisfying intellectual curiosity. Previous definitions from the literature do not explore
and identify: the ultimate outcome of technology entrepreneurship; the target of the ultimate
outcomes; the mechanism used to deliver the ultimate outcomes; or the nature of the
interdependence between technology entrepreneurship and scientific and technological
advances. Moreover, a new definition should explicitly link technology entrepreneurship to the
theory of the firm, entrepreneurship theory, and management theory.
The definitions found in the literature suggest that technology entrepreneurship is about: i)
operating small businesses owned by engineers or scientists; ii) finding problems or applications
for a particular technology; iii) launching new ventures, introducing new applications, or
exploiting opportunities that rely on scientific and technical knowledge; and iv) working with
others to produce technology change.
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Defining Technology Entrepreneurship
The field of technology entrepreneurship is in its infancy when compared to other fields such as
economics, entrepreneurship, and management. However, we are at a point where we can
leverage the insights contributed by previous work to create a clearer working definition of
technology entrepreneurship. This article proposes a general definition that identifies the
distinctive characteristics of technology entrepreneurship and describes its links with the fields
of economics, entrepreneurship, and management. The proposed formal definition of
technology entrepreneurship should prove valuable in adding to our understanding of how
entrepreneurship functions in a firm that invests in projects that are interdependent with
advances in science and technology.
The following definition of technology entrepreneurship is proposed: Technology
entrepreneurship is an investment in a project that assembles and deploys specialized individuals
and heterogeneous assets that are intricately related to advances in scientific and technological
knowledge for the purpose of creating and capturing value for a firm.
The proposed definition of technology entrepreneurship is based on four elements:
1. Ultimate outcomes. Value creation and capture are identified as two outcomes of
technology entrepreneurship because the sources that create value and the sources that
capture value may not be the same over the long run.
2. Target of the ultimate outcomes. The firm is identified as the target organization for which
value is created and captured.
3. Mechanism used to deliver the ultimate outcomes. Investment in a project is the
mechanism mobilized to create and capture value. A project is a stock of resources (i.e.,
specialized individuals and heterogeneous assets) committed to deliver the two ultimate
outcome types for a period of time.
4. Interdependence of this mechanism with scientific and technological advances. The
individuals involved in a project influence and are influenced by advances in relevant
scientific and technology knowledge. The project exploits or explores scientific and
technology knowledge. External and internal individuals and organizations co-produce the
project’s outputs.
When compared to the definitions identified in the previous section, the definition proposed
above:
1. Emphasizes that technology entrepreneurship is about creating and capturing value for the
firm through projects that combine specialists and assets to produce and adopt technology
2. Highlights the collaborative experimentation and production of new products, new assets,
and their attributes, which are intricately linked to scientific and technology advances and
the firm’s asset ownership rights
3. Specifies that technology entrepreneurship may entail projects that search for problems or
applications for a particular technology, launch new ventures, introduce new applications,
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and exploit opportunities that rely on scientific and technical knowledge provided that their
ultimate outcome is to create and capture value for the firm
4. Clarifies that technology entrepreneurship is not about the general management practices
used to operate small businesses owned by engineers or scientists or just about small
businesses
Differentiating Aspects
There are at least five differentiating aspects of technology entrepreneurship in the definition
proposed above.
1. How technology entrepreneurship differentiates from other entrepreneurship types
The interdependence between scientific and technological change, as well as the selection and
development of new products, assets, and their attributes, differentiate technological
entrepreneurship from other entrepreneurship types.
Technology entrepreneurship has more to do with collaborative production based on a shared
vision of future changes in technology. The existing entrepreneurship literature, however,
describes an entrepreneur as: i) “an alert individual discovering an existing opportunity” (Shane,
2003; Shane and Venkataraman, 2000); ii) “an innovative individual who shakes the economy out
of its previous equilibrium” (Schumpeter, 1939); iii) “an experienced individual making judgments
about an unknowable future” (Foss and Klein, 2005); iv) “an individual who believes she has lower
information costs than others” (Casson and Wadeson, 2007); vi) “an individual with certain
personality traits” (Hood and Young, 1993); and vi) “a charismatic leader” (Witt, 1998).
A shared vision of change in technology influences why, when, and how a firm creates and
captures value. Technology change can be represented in various ways. Therefore, it is important
to develop a shared view of change in technology.
2. Eliminating the existing biases in the entrepreneurship literature
The proposed definition eliminates three biases of entrepreneurship research: i) concentration
on new firm formation; ii) focus on individual entrepreneurs; and iii) over-attention to
opportunity discovery (Foss, 2011).
Technology entrepreneurship, as defined above, applies equally well to newly formed or
established firms as well as small or large firms. Established and large firms can engage in
technology entrepreneurship just as well as startups do.
Technology entrepreneurship is about collaborative production decisions, not about a single
individual making or delegating decisions. The firm’s top management team jointly decides to
invest in a project and a team of specialized individuals who create and capture value for the
firm. The specialized individuals and assets can be held by a single entrepreneur-manager or can
be distributed.
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Technology entrepreneurship involves specialized human resources, tapping into their skills and
ability to collaboratively explore and exploit scientific and technological change to benefit the
firm. Technology entrepreneurship is best understood therefore, as a joint-production
phenomenon that draws from a team of specialized individuals from multiple domains, some or
all of whom become embedded in the technology path they try to shape in real time (Garud and
Karnøe, 2003). Technology entrepreneurship is not about a single individual or the inventions
they introduce. It is about managing joint exploration and exploitation, where each individual has
roles and responsibilities in collaboratively and cooperatively moving forward toward
accomplishing shared goals (Lindenberg and Foss, 2011). Technology entrepreneurship is about
investing in and executing the firms’ projects, not just recognizing technology or market
opportunities.
3. A more theoretically rigorous and practical definition
Considering technology entrepreneurship as an investment in a project rather than a subjective
opportunity allows it to be assessed in more theoretically rigorous and practical terms. It
transforms the subjective view of technology or market ideas to the objective reality of project
definition, financing, and execution. The proposed definition links technology entrepreneurship
to an amount of money (i.e., investment in the project). Ideas are mere parlour games until
money is part of a project (Rothbard, 1985).
4. Linking technology entrepreneurship to the theory of sustainable competitive advantage
Technology entrepreneurship and the resource-based view of sustainable competitive
advantage are interdependent because they are both concerned with how to create and capture
value. Both pay explicit attention to how resources that embody technology and scientific
advances create and capture value. While technology entrepreneurship applies to any firm with
projects that rely on advances of science and technology, the resource-based view applies to
those few firms that are continuously successful.
The resource-based theory of sustainable competitive advantage is the dominant view in
strategic management. It links firm performance to firm resources and includes concepts such as
capabilities, dynamic capabilities, and core competences. Scholars working in this field seek to
clarify how a firm can create and capture more value than its competitors on a sustained basis.
For value-creation activities to endure over the long term, the amount customers pay the firm
must be: i) greater than the firm’s cost of production and ii) a function of the difference between
the satisfaction customers receive from consuming the firm’s goods or services and the
satisfaction customers would receive from consuming the closest alternative goods or services.
For the firm to capture the value it creates, “use value” (i.e., utility of consuming a good) and
“exchange value” (i.e., price paid for the good) should be similar. If use value is high and exchange
value is low, other agents (e.g., intermediaries, competitors) are capturing the value created for
customers.
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5. Linking technology entrepreneurship to the theory of the firm
The technology entrepreneurship domain and the theory of the firm are interdependent through
the specialized individuals and heterogeneous assets committed to a project for the purpose of
creating and retaining value for the firm.
The specialized individuals and heterogeneous assets in the project’s stock of resources can be
considered reference points in the theory of the firm. The theory of the firm aims to explain why
firms exist, what determines their boundaries, what determines their structure, and what drives
their different actions and performances.
The proposed definition emphasizes the importance of technology entrepreneurship in enabling
specialized individuals to develop combinations of assets and their attributes in order to create
and capture value for the firm. An “asset” refers to an economic resource that is owned or
controlled by the firm and is used to create and capture value for the firm. An asset represents
value ownership that the firm may convert into cash. An asset can be thought of as a bundle of
attributes defined by their characteristics, functions, and potential uses. The term
“heterogeneous assets” refers to a set of assets that lack uniformity in composition or character.
The firm’s owners and employees have no way of knowing or predicting the relevant attributes
of all the assets. Asset attributes need to be discovered. Technological entrepreneurship
identifies, selects, and develops new attributes for the purpose of creating and capturing value
for the firm.
Technology entrepreneurship requires a firm for two reasons. First, the firm must control the
assets that specialized individuals use to experiment with new combinations of assets and their
attributes. Second, the requisite joint investment and production decisions cannot be purchased
on the market. The reasons that technology entrepreneurship needs a firm are similar to the
reasons why an entrepreneur needs a firm.
In conclusion therefore, over the last four decades, technology entrepreneurship has become an
increasingly important global phenomenon. It is perceived as necessary for growth,
differentiation, and competitive advantage at the firm, regional, and national levels. Technology
entrepreneurship appeals mainly to leaders and top management teams of small and large firms
who use technology to create, deliver, and capture value for their stakeholders. Technology
entrepreneurship also appeals to personnel of regional economic development agencies that
attract investments in productive technologies and talent to a particular geography.
The primary function of technology entrepreneurship is to assemble a combination of specialized
individuals and heterogeneous assets in order to create and capture value for the firm through
collaborative exploration and experimentation. The combination, some of the assets, or the
assets’ attributes may be unique and novel. The initial combination may change over time.
A better definition of technology entrepreneurship can help improve its performance, increase
its relevance, and establish it as a legitimate domain of inquiry in its own right. This definition
needs to identify and incorporate the various distinctive aspects of technology entrepreneurship
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and its links to the existing domains of economics, entrepreneurship, and management. The
definition, including the corresponding features and links, requires particular attention from
scholars and practitioners.
The aspects of technology entrepreneurship to which we need to pay particular attention are
identified. These aspects are: i) the interdependence between scientific and technological change
and the selection and development of new combinations, assets, and asset attributes; ii) biases
in the existing entrepreneurship literature; iii) conceptualization of technology entrepreneurship
as an investment in a project, rather than opportunity recognition or venture formation; and iv)
links among technology entrepreneurship, the theory of sustainable competitive advantage, and
the theory of the firm. Managers of development projects in large technology firms face a
dilemma. They operate under pressure to achieve predictable quality, cost, and schedule
objectives but are also expected to encourage their employees to act entrepreneurially.
Business Environmental and Technological factors
Basically an enterprise does not operate in a vacuum, but in an ever changing environment, which
consist of environmental and technological factors. Hence, these environmental and
technological factors pose a lot of influences on the operation of business venture. Therefore,
entrepreneurs are expected to monitor and critically study the environment constantly in
order to operate effectively and efficiently. Environment is an integral part of a business venture
that must be managed tactically because of its volatility in order to exploit opportunities and
minimize its threats.
The interaction of managers, their subordinates with the environment inside the organization.
Effective managers do not only concern with the internal environment alone, but he also deals
with the external environment that may also affect the organization in one way. Managers must
identify, evaluate, and react to forces outside the organization that may affect its operation.
Business environment refers to the totality of all factors that are external to the business
environment and beyond the control of individual venture and their management. Environment
is the totality of the external forces an individual, company or company or community, that is the
totality of interactions between business and the society. The environment is mainly divided into
two that is the internal and external environment and while, the external environment is
subdivided into macro and micro environment.
The internal environment is the group of individuals that are strictly part of an organization
environment, but for whom an individual managers remain responsible, such marketing unit,
finance units, Human Resource Management units, production units. While, the external
environment that is outside the control of the entrepreneurs. This aspect of the environment is
dynamic and changes at varying degrees. According to Stoner 1995 argues that the forces of the
external environment are dynamic, they often change often especially in a way the organization
cannot do anything to influence the change. Hence, this reflects that entrepreneurs need to
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identify the environmental changes, micro environment is the immediate environment such as
shareholders, customers, competitors, supplier and employees. Macro environment consists of
Political/legal environment, economical environment, sociocultural environment and
Technological environment (PEST).
1. Political/legal environment, this is aspect of regulations that instituted by government laws
and regulations that are instituted by government in order entrench peace, orderliness,
growth, ethnical conduct in the society. The people and subjects operating in the society are
expected to obey these laws and failure to do so must have an effect on the defaulters.
Therefore, the establishments of laws are considered as threats and opportunities to the
enterprises. This means that some of these laws have both positive and negative
consequences on the growth and development of business enterprises in Nigeria. For
example, the Nigerian Enterprise Promotion Decree of 1971 as amended in 1979 is a typical
example of the law that is instituted by government in order to promote the rapid
development entrepreneurial activities in Nigeria. On the other hand, the 1991 decree
promulgated in order to ban the cigarette smoking has a negative interest of the
manufactures since the decree oblige the manufactures to specify on the package of the
cigarette or at the end of every advertisement announce that ‘cigarette smoking is dangerous
to health and smokers are liable die young ‘ .
The political/legal environment system and structure operating in a country. This segments
of the general environment also exerts both positive and negative influences on the activities
of the entrepreneurs. The political/legal environment has to do with the system of
government operation, system, the rationale and philosophy of the system, structure of the
government etc. The persist change of government reflects the instability of the system and
pattern of government. For instance, when there is change in government of a particular
country, it shows that government laws and policies will virtually changes because of the
relative changes in the policies and objectives that will be pursued by the incoming
government.
2. Economic Environment; This is one of the strategic factors operating in the external
environment. The economic factor affects the wellbeing of entrepreneurial activities on a
measurable note. The economic factors include the following, economic policies in
operations, income level, wage level, extent of competition, level of inflation, level of
infrastructure.
It is the primary aims of government to operate formulate fiscal and monetary policies that
specifically directed to regulate the economy. The fiscal policies are put in place to influence
government expenditure and rate of taxation. The establishment of this policies have positive
impacts on the development of entrepreneurial activities and when the policies are
otherwise, it will affect entrepreneurial activity negatively. The implications of these policies
may be viewed from the following instances, when government has decided to reduce its
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expenditure at a particular fiscal period, it will virtually reduce the level of money in
circulation. The reduction in the level of money in circulation will consequently reduce the
demand for goods and services because the customer’s income in also affected. Another
similar example is that is a slight increase in the tax rate that is being charged on enterprise
will leads to an increase in the cost of operating these enterprises as well as the prices of
goods and services. Therefore, an increase in the prices of goods and services may leads to
low demand for goods and services.
The income levels of the customers are also another indicator that need to be taken into
cognizance because it affects the volume of goods and services they are going to consume at
a given period of time. For an increase in the income levels of customer in a particular country
will leads to a corresponding increase in the demand for goods and services when all things
are being equal. An example in the increase in the wages and salaries of workers in Nigeria in
2007 led to measurable increase in the demand of good and services in the market and
consequently an increase in the price of products in the market. Therefore, an increase in
wages have an impact on the consumers, while a negative impact on the entrepreneurs.
3. Socio-cultural Environment are factors that defined the social system, settings in a given
environment. The socio-cultural are factors that determine the belief, norms and action of a
given population and it is made up institutions and other forces that affect the society basic
values, perceptions, preferences and behaviors’. It also includes the life style of the people
within the environment, their career expectations, consumer activities, level of family
structure, growth of the population, age distribution, level of immigration. The level and
growth of the population also present both opportunity and threat to business. The size of
the population determines the size of the market, the larger the population of a particular
area the bigger the market size and vice versa.
The age structure of a particular economy also affects entrepreneurial activities measurably.
For instance, when there is increase in the number of dependent groups such as infants and
old age, the implication on the economy include low productivity as the working population
are really few to work on the productive resources. There is the tendency for underutilization
of resources and continue increase in the wages and salaries of workforce because the
demand for labour is more than its supply. The value and lifestyle of customers also changes
from time to time. The changing nature of these value also reflect new forms of opportunities
and threats in the environment. The entrepreneurs are expected to create goods services
that would match social changes.
4. Technological Environment, this is the environment that consists of factors that are geared
towards the development of goods and services. Technology does not only refer to tangible
materials alone, but also extends to immaterial items like skills and knowledge coordinated
in the distribution.
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