Incubating Technology-Based Firms: Innovation Ambidexterity

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Incubating Technology-Based Firms: Innovation Ambidexterity

Introduction

In the introduction, the authors argue that at present the formation of innovation policy is the most important condition for developing the foundations of sustainable development of new firms. Among the many common problems of innovation, special importance should be given to measures to balance them. Real production and production relations are two interrelated aspects of the economy that require renewal. This two-way nature of the innovation process leads to the existence of two types of innovation production and management. As a solution to the two main problems of young firms associated with its establishment, the concept of innovation ambidexterity is introduced. For ambidextrous companies, organizational design makes it possible to profit equally successfully from current economic activities (operational activities) and explore opportunities for creating new types of activities through the production of consistent and radical innovations (research activities). Such companies use various strategies for producing innovations both internally and through the use of external developments.

Innovation Ambidexterity and Young Technology-Based Firms in Incubators

In this section of the work, it is indicated that the ancestor of the concept was March. Classification criteria for evaluating the effectiveness of innovations are given. For example, operational innovations are a special type of user-defined innovations, since the main consumer properties of products do not directly, but indirectly depend on them. Further, scientists argue that in the conditions of the increasing role of theoretical knowledge as a source of innovation, there is a change in production markets. Firms that implement innovations with the help of material goods, and create the right conditions for management to work for this, are more successful than those who qualitatively perform only one side of the process. Therefore, the authors emphasize the importance of strategic planning for young organizations that have certain limitations due to inexperience.

Strategic Entrepreneurship and Innovation in Incubating Technology-Based Firms

Further, such variations of strategic planning as focusing on the search for advantages or on the search for opportunities are considered. The innovative development trajectory is designated by the authors as the EO of start-up firms associated with the search for innovations, the vision of a new, significantly different future, which may lead to a revision of the companys key strategies. However, most often the main incentive for innovation is to obtain financial advantages, although for young companies the most urgent is the improvement of the production process. In this regard, the authors highlight the features of the strategic behavior of firms that are at the incubation stage; they are associated with the establishment and strengthening of a network of resource links. However, such behavior, according to researchers, can lead to problems in the process of innovation implementation, since it ignores the managerial side of the issue, focusing on the material side.

Hypotheses

This section presents 7 hypotheses formed by scientists based on the analysis of theoretical material. The first two assumptions are related to entrepreneurial orientation; researchers claim that with the use of exploratory innovations, organizational processes, practices and procedures will allow the firm to create more value through intra-company entrepreneurial activity. The third and fourth hypotheses imply that the appeal of young firms to innovation can result in the improvement and expansion of the base of material resources used as objects or means of labor. The fifth and sixth hypotheses aim to establish the relationship between the appeal to innovation and relational rootedness, which consists in the interdependence of socio-economic ties between the members of the organization and their production environment. The last, seventh, hypothesis sets the goal for scientists to prove the benefits of balanced two-party innovations for the profit growth of a young firm.

Sample

The sample in this study consisted of incubating firms that opened shortly before the start of the study; it is they who have the greatest incentive to apply strategic planning. It was very important to use exclusively the data of young firms; organizations opened more than a year ago were rejected. From the initial selection of 196 candidates, only 143 were selected, since 53 did not have a technological description. Since this is too small a sample for the scale of the study, it was filled up to 1000 participants by arbitrary young firms. When compiling the sample, the organizations found by the United Kingdom Business Incubation (UKBI) directory, as well as archival data, were used. To avoid discrepancies between the characteristics of the sample and the general population, all candidates were carefully rechecked.

Data Collection

Data collection was carried out by means of a survey of leading entrepreneurs of each of the selected young firms. The questions presented in the survey were previously tested in practice by specialists with knowledge and skills in the field of innovation, as a result of which the wording and content of the questions were slightly corrected. Thus, the questions were changed to more concise ones, which made it easier for respondents to understand them. Next, 211 responses were selected that were sufficiently complete to be used as research material. The rest of the questionnaires were filled out abruptly, so the information provided in them turned out to be unusable. To assess how reliable the data obtained were, the respondents assessed their knowledge in the field of innovation, and most of them rated their knowledge quite highly.

Measures

Choosing the criteria for evaluating the information used in the study, the authors turned to existing works on this topic. They have compiled statements concerning exploitative and exploratory innovations, the degree of risk and other qualities and factors implemented in the framework of strategic planning. Next, it was necessary to assess the availability of a particular resource from the respondent, for which it was proposed to evaluate the assumption on a scale from 1 to 7 (from complete disagreement to complete agreement with the submitted statement). The profitability of the young firm, namely its average annual profit, was also used as variables. These data were applied in order to correlate each of the respondents with the park in which their company is located; thus, organizations were classified according to some criteria, including the primary or secondary nature of technology generators. In general, the division by classifications was carried out in order to highlight the percentage coefficient of ambidextrous innovativeness.

Common Method Variance

It was very important for the researchers to exclude the variance factor of the general sampling method, for which they took several steps before and after the survey. Before starting the survey, the rules were carefully explained to the participants to avoid ambiguity; in addition, respondents had the opportunity to ask clarifying questions. After the answers were received, the scientists used the one-factor Hirman test in order to completely eliminate the factors preventing the creation and transmission of scientific and technical results. To test the sensitivity of the model to the choice of a marker variable, the model was also evaluated using two other indicators as markers. The results of both tests demonstrated that the possibility of common method variation can be excluded. The indicators presented on the covariance matrix of the model error are consistent with the norm.

Reliability and Validity

The resulting scales were processed using a structural equation modeling program; the latest version of LISREL 8.8 was applied, which includes structural equation modeling with incomplete data. All the values obtained during the analysis served as indicators of the acceptability of the model, since they were within the normal range. However, one point of the questionnaire was identified (Exploitative innovations), where the indicator did not overcome the required minimum threshold of reliability. Nevertheless, these data were still used in the study, since the values of this position in the questionnaires of other studies were significantly lower. In this study, deviations from the norm were not only insignificant, but also did not violate the general principle of reliability. When working with the graph shown in Table 2, it can be seen that the statistics are reliable, since the square root of the Exploitative innovation indicator is greater than its non-diagonal coefficient.

Results

As a result, the researchers made two models of structural equations confirming or refuting 7 initial hypotheses: the first model concerned innovations of both types, the second profitability and duality of the process. Table 2 contains the values of the criteria obtained during the survey, which are used when working with formulas to calculate values. The first formula established a link between exploration and exploitation, the second was necessary to calculate the index of innovative ambidexterity. For each of them, the percentage components calculated at the previous stage of the study were summed up. The value obtained in the first equation (positive or negative) demonstrated which of the two strategic sides prevails in production. To calculate the ambiguity of innovations, both values were needed-the results of models of structural equations.

Discussion

The authors emphasize the importance of both types of innovation and establishing a balance between them for young firms, as this allows companies to use identified opportunities in a strategic way that significantly changes the profitability of the organization. In this regard, EO is of extreme importance as a universal means of maintaining a balance between exploitative and research innovations. However, the resources for finding these innovations lie outside the firm, and therefore the value obtained in the study of ambidexterity is useful. Thus, the results recorded by the authors contribute to the development strategy of young firms, bringing a new approach to the justification and features of the process of introducing innovations into production. The relationship of strategic management and entrepreneurship with innovations that are the object of research is formulated in the form of a clearly reasoned concept.

Managerial Implications

The results of this study are applicable for managers who carry out strategic planning through the introduction of various innovations into production. However, when implementing EO, a fairly wide range of problems may arise, in particular, due to the lack of balance in the types of innovations being introduced and non-compliance with the ambidextrous principle. Many managers choose to deal with the difficulties that have arisen in a way that can be harmful when applied to a young firm. Thus, managers often resort to using a large number of external resources and establishing connections outside the organization, which negatively affects the work of the company. The authors emphasize that it is also necessary to focus on the available internal resources, since an excess of knowledge sometimes has even more disastrous consequences than a lack. Thus, this chapter is a guide for managers of incubating firms, designed to prevent them from making common mistakes.

Limitations and Future Research

First of all, the limitations of the study are related to the limited period of time in which it was conducted; therefore, changes in the client sector and at the same time approaches to strategic planning are possible. Further limitations are related to the narrow specialization of the sample: the study used data exclusively from technological incubating firms, therefore, further research is needed in relation to other types of young firms. In addition, large firms did not participate in the study, therefore, the correlation between the applicability of the results and the size of production has not been established. Further prerequisites for the study are likely to be aimed at finding the relationship between ambidexterity and the theory of mandatory balance of innovations introduced through strategic management. Further, scientists hypothesize that the consequences of excessive use of one type of innovation in the presence of another are insufficiently investigated, which can also serve as material for further research.

Conclusion

In conclusion, the expediency of further application of this research in the introduction of innovations in the production of technological incubation firms is argued. In addition, footnotes are highlighted that define some concepts used in the text of the work (for example, EO). In addition, the footnotes record that there was no data leakage during the study, and all information about the respondent firms was acquired legally. Information is also provided that the study was not sponsored, therefore, the possibility of bias is excluded. At the end of the work, a list of the literature used in the study is presented; the sources presented in it are authoritative and trustworthy.

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