How Innovation Effects Small Business Development Commerce Essay

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Young people of today are not only entrepreneurs of the future, but in some cases are also real entrepreneurs in action: young and successful entrepreneurs, who develop new technologies, adopt new business models and drive the development of new industries. Despite these statements are very impressive, Mr. Dorgham also point out that academic research does not offer clear and comprehensive empirical evidence and theories explaining the specificities of young and innovative entrepreneurship. As a matter of fact, academic literature focuses mainly on four themes concerning young entrepreneurs (Dr. Mohammed A Dorgham, 2002):

Entrepreneurial intentions among populations of students or young people.

Policies and initiatives for fostering and stimulating young entrepreneurship.

Young firms (but young firms are not necessarily run by young people).

Nascent entrepreneurs (but nascent entrepreneurs are not necessarily young).

Thus, this paper intends to focus on theoretical research in innovation and combines case study from Jack Ma, the founder of e-commerce giant Alibaba. The purpose of this paper is to give people better understanding of Entrepreneurship and innovation and examines them roles in small business development in general and E-commerce in particular.


In the entrepreneurship context, innovation is considered to be indissociable with entrepreneurship, which is interacted in the act of starting up and running an enterprise. Many scholars think that "innovation is clearly part and parcel of the entrepreneurial skills required to successfully start a venture" (Pretorius, Millard and Kruger, 2005).

On the other hand, people use the terms "entrepreneur" and "entrepreneurship" frequently, many definitions of entrepreneurship and entrepreneur can be found in the literature interpreting business process. One common definition of an entrepreneur is "a person who undertakes to start and conduct an enterprise or business" (Brockaus, 1982). However, Nayab(2011) point out that the definition of entrepreneurship still remains a vague concept, though various entrepreneurship theories have defined the concept. One modern definition of entrepreneurship is "the process by which individuals pursues opportunities without regard to resources they currently control" (Stevenson and Jarillo, 1990). From the economic perspective, for entrepreneurship the words like initiative, innovation, leadership, planning, risk-taking, motivation etc are used widely in describing the attributes of entrepreneurship and entrepreneur (Hitesh S. Viramgami, 2007).

Overview of the contents

This paper will research the innovation attribute of entrepreneurship and the theory of innovation in literature review section, and selected entrepreneur Jack Ma will be tests and examines in practical evidence section. In the final section, this paper will focus on analysis and synthesis of the material on the selected entrepreneur and the review of the literature.

Literature Review

• Innovation conceptual argument - different perspective in defining innovation

According to American Heritage Dictionary(2000),The term 'innovation' has its roots from the Latin word 'novus' which means new and is derived into the verb 'in+novare' that includes the meaning 'to make new'. So, in the broadest context, to innovate is to start or introduce something new for the first time, and innovation has the meaning of 'the act of introducing something new'. Notice that this definition doesn't emphasize something that never existed before, suggesting that a modification of a current service or product is not an innovation. Nor does it say that every idea is innovative. If we limit the broad context into the organisational context, please pay attention to the words, introducing (Risk Taking) and the word new (creative). These concepts, risk taking and conception, in some extents, can convert to :

Innovation= Risk Taking X Creativity.

And relevant keywords have been covered more than once. Robin lowe and Sue Marriott (2006) defined innovation is the process by which the opportunities that have been identified through individual and organizational creativity are exploited.

On the other hands, meaning of innovation depends on the context in which it takes place, it is broadly understood as a change in ideas, methods, processes, products or services (lenonard and swap,1999).

• Types of innovation

By reviewing Robin lowe and Sue Marriott perspective, we can find that most innovations result from a conscious, purposeful search for new opportunities. Drucker has noted that because innovation is both conceptual and perceptual, would-be innovators must go out and look, ask, and listen. Therefore, have a clearly understanding of classification of innovation is very important to entrepreneur/innovator

Categorizing by innovation types,

1.Product innovation 2.Process innovation.3.Service innovation

Categorizing by innovation methods

1.Invention 2.Extension 3.Duplication4.Synthesis

Categorizing by innovation Trajectories

1.Radical innovation 2. Incremental Innovation 3.Disruptive Innovation.

• Innovation impact on business growth

The Influence of Organizational Innovation on Firm Performance

The diffusion of innovation literature confirms the view that innovation is the most important determinant of firm performance as a result of the evolution of the competitive environment (Wheelwright and Clark, 1992; Bueno and Ordoñez, 2004). Innovation can lead to increased market share, greater production efficiency, higher productivity growth, and increased revenue (Shefer & Frenkel, 2005). According to Zahra, Ireland & Hitt (2000), innovation enables firms to offer greater variety of differentiated products that can improve financial performance. Despite the positive relationship between innovation and performance reported in the previous studies, the link between firm's innovation capability and performance has no conclusive finding. For example, Kemp et al. (2003) found that innovation was associated with turnover and employment growth, but not profit and productivity among Dutch firms. Similarly, Zhou, Tan and Uhlaner (2007) found no positive effect of innovation (new products and new service) on Dutch firms. Therefore, to further explore the link between firm's innovation capability and performance, we hypothesize that:

H2. Organizational innovation is significantly related to organizational performance

In business

• Innovation and creativity

• Innovation approaches

• Factors motivating an entrepreneur to innovate