CHAPTER 3: SECONDARY RESEARCH ON ENTREPRENEURSHIP
The focus of Chapter three is to discuss the theoretical foundation and secondary research related to entrepreneurship. The chapter highlights the relevant literature on entrepreneurship; creativity and innovation in entrepreneurship; entrepreneurial intent; entrepreneurial theories and models; and business (entrepreneurship) education.
This research study on entrepreneurial intentions focused on technical students in South Africa who acquire a skill set to produce a product or render a professional service. The technical students were Three-Dimensional Design (TDD) students at the two Universities of Technology (Cape Peninsula University of Technology [CPUT] and Tshwane University of Technology [TUT]), which offer the design programme mentioned. The researcher measured the entrepreneurial intent of the TDD students in this study. The TDD programme incorporates in its curriculum, components specifically designed to develop entrepreneurial capacity in the form of business skills and knowledge.
The researcher also discusses the different types of entrepreneurship theories and models, and the motivation for using the Theory of Planned Behaviour (TPB) as the basis for understanding entrepreneurship in the study. Business education is discussed and the curriculum in the business subject (business management and business studies) used for the TDD programmes at the two identified universities (CPUT and TUT) are described. Finally, the research model used to investigate entrepreneurial intentions amongst the industrial design students is, described.
In the next section, an entrepreneur and entrepreneurship will be discussed.
ENTREPRENEUR AND ENTREPRENEURSHIP: AN OVERVIEW
The word entrepreneur was initially used in the French economy during the 17th century (Davis, 2002:4). Entrepreneurs can be defined as persons that would venture new and improved ways of doing things, resulting in a positive impact on the economy (Schumpeter, 1942:132; Davis, 2002:4). Katz and Green (2011:4) define an entrepreneur as an individual who starts or owns an organisation, which could be a business. Entrepreneurship is defined by Rankhumise (2013:6) as entrepreneurs pursuing perceived gaps in the market and do not limit themselves to available resources; they will look at the opportunity at hand and will not be limited by circumstances.
Entrepreneurship is described by Schumpeter (1961) as the main vehicle by which to move an economy forward, based on the combined capabilities of entrepreneurial individuals. The capabilities which the entrepreneur introduces into the society are a) new qualities, b) new methods/processes, c) development of new markets, d) new sources of supply, and e) new ways of organising the business/production (Davis, 2002:4; Braunerhjelm, 2011:166). Entrepreneurship is described as a progression that develops over time (Gartner, Shaver, Gatewood & Katz, 1994:5; Kyro & Carrier, 2005:14). It also involves obtaining required funds to create economic value for the entrepreneur and satisfaction to the consumer or client (Leach & Melicher, 2012:5).
Entrepreneurship is an innovative process to generate wealth with current assets (Huarng & Ribeiro-Soriano, 2014:659). The Commission of the European Communities (United Kingdom. House of Lords, 2003:5) describes entrepreneurship as “the mind set and process to create and develop economic activity by blending risk-taking and creativity and/or innovation with sound management within a new or an existing organisation”. The process of becoming an entrepreneur starts with the decision to be an entrepreneur; the development of ideas to create a business; selection of the best idea to start a business and then to actually start the business (Guclu, Dees & Anderson, 2002:1; Barringer & Ireland, 2012:49). Baron (2012:25) explains entrepreneurship as the process that drives ideas from conceivable to real. Entrepreneurship generally starts with an innovative idea that advances into a business. Household brands and corporate businesses, were started as ideas by entrepreneurs. According to Hills and Singh (2004:266) in a study of 480 entrepreneurs in the United States of America (USA), 42% indicated that the choice to start a business was most important; 37% indicated that the business idea came first in starting a new business; and 21% indicated that the decision and idea were equally important. Entrepreneurs continuously carry out new combinations and ideas and develop new products (Bull & Willard, 1993:184; Fayolle & Todorov, 2011:14).
Entrepreneurship creates new businesses, jobs, new products, new technologies, a positive influence on individuals, and contributes positively to economic development. The focus in policy making and government incentives to support economic growth has, in recent years, moved from large businesses to small businesses and entrepreneurship (Lazonick, 2011:19).
It is important to recognise the role and contribution of entrepreneurship to economies. Small businesses are perceived to be job creators. An example is Malaysia, where the growth in the small business sector in its contribution to Malaysia’s Gross Domestic Product (GDP) has surpassed overall GDP growth since 2004 (Independent Contractors Australia, 2012). Small businesses contributed 46% of the private non-farm GDP in the USA in 2008 (Small Business Administration [SBA], 2011). In the USA, the gross job gains of small businesses outpaced large businesses by approximately 3 to 1 in 2010 (SBA, 2011).
South Africa has similar trends where small, medium and micro businesses contribute more than 45% of the GDP, and 50% of employment opportunities (Graduate School of Business University of Cape Town, 2012). A study by FinScope (2010:15) found that small businesses created 11 605 million employment opportunities in 2010. The National Planning Commission (NPC) in the Presidency in South Africa envisages that small and expanding businesses will be responsible for 90% of job creation in South Africa by 2030 (South Africa. The Precidency. NPC, 2012a:119). The government recognises the important role that is played by small businesses and entrepreneurship towards job creation and economic growth, as specified in the National Development Plan (NDP) (South Africa. The Prescidency. NPC, 2012b:29; South Africa. The Prescidency. NPC, 2015:4, 23).
The above highlights the significant role that entrepreneurs play in developing economies through entrepreneurship, and suggests that support for these activities by the government contribute positively towards economic development.
CREATIVITY AND INNOVATION IN ENTREPRENEURSHIP
According to Penaluna and Penaluna (2011:51), creativity and innovation are positive descriptors of an effective business. It is important to distinguish between innovation and creativity because they are sometimes used as synonyms. Radipere (2012:20) describes creativity as the creation of new ideas and innovation as the implementation of successful ideas. It is important for an entrepreneur to create an innovative and creative culture in a business (Katz & Green, 2011:97).
Creativity leads to new ideas and products (Lamb, Hair, McDaniel, Boshoff, Terblanche, Elloitt & Klopper, 2011:273). Creativity evolved from the Latin word “creare” which means: to make, and the Greek word “krainein” which means: to fulfil (Young, 1985:77). A creative person takes problems and finds efficient solutions for them. In a business, one needs creativity, as it assists the business to create new products or new uses for existing products. Kim, Kim and Wilde (2008:45) describe creativity as the development of worthwhile unique designs. According to Kuratko, Morris and Covin (2011:215), creativity is the soul of entrepreneurship; people are born creative, yet, some people suppress their creativity. Children are taught to conform to rules and regulations when growing up which can oppress the individuals’ creative thinking. Creativity has become more important globally in businesses because of change in competition, while technology and creative individuals in the business world find solutions for problems (Batchelor & Burch, 2013:29; Gundry, Ofstein & Kickul, 2014:529). Creativity also strengthen organisational innovation (Amabile & Pratt, 2016:161).
Innovation is defined as new processes that are interrelated, and is not limited to a mechanism, idea or invention. Innovation in business is more than an idea; it is the process of developing an idea into a product or service that can be commercially marketed (Conway & Steward, 2009:10). Innovation is described by several authors as a key element to the economic development and progression of a country (Drucker, 1999:79; Moses, Sithole, Blankley, Labadarios, Makelane & Nkobole, 2012:1; Zsusanna & Herman, 2012:268; Fulvio & Miguel, 2013:579; Hisrich, Peters & Shepherd, 2013:99; Soriano & Huarng, 2013:1964; Williams, Smith, Yasin & Pitchford, 2013:851).
There is a shift in business towards creativity and innovation. Central to the entrepreneurial process is innovation, which is the development of the product or service. According to Thompson (1965:2), innovation is defined as “the generation, acceptance and implementation of new ideas, processes or services”. Innovation involves the transformation of an idea into a viable product, process or service. Economists identify innovation as crucial for economic development (Galunic & Rodan, 1998:1193; Yemini & Haddad, 2010:1220; Mazzarol & Reboud, 2011:2).
The innovation process in a business is driven by economic value (Raasch & von Hippel, 2013:33). In design, the innovation process starts with an idea, building a prototype and testing the product (Norman & Verganti, 2014:78). The innovation process can start with a problem for which a solution should be found or changing an existing product or service. The human capital component of innovation is the inventor, who must have a large skill set in order to drive the innovation process (Melero & Palomeras, 2015:154). Innovation is imperative when a business strives to be sustainable and profitable (Davis, 2010:6532; Arlbjørn & Paulraj, 2013:3). Entrepreneurs need to innovate to ensure profit and survival because every product has a life cycle and will not be profitable indefinitely (Envick & Wall-Mullen, 2009:1). New products create sustainability and growth for the entrepreneur, and innovation in entrepreneurship can give emerging economies a competitive benefit to become important players because they have new products and services (Urban, 2010b:1; Ahmed, 2013:191). The entrepreneur ensures commercialisation of new products or services through the application of knowledge in strategic management, investment, marketing and other business aspects of the product or service.
Innovation helps with the increase of efficiency of processes and products. The USA sees innovation as very important as evidenced by spending of 2.5% to 3% of GDP on research and development (R&D) (Innovation, 2011). R&D is not always successful in creating a new product, but the development of a new product can transpire out of the knowledge of research. Innovation in this sense is the link between R&D and new products (Mujumdar, 2014:1). Innovation can also be process or product orientated (Lind, 2012:131-132). Process innovation streamlines the process of production and happens on the factory floor to deal with bottlenecks or to save money in production. A business can innovate by changing and streamlining the production processes in the factory or even administration procedures in, for example, the finance department. Product innovation is about enhancing an existing product or developing a new product in order to add value to the business (Envick & Wall-Mullen, 2009:1). Innovation creates new methods to resolve problems. It is therefore imperative to teach individuals to proactively perceive opportunities in their milieu in order to exploit them (Wilson, 2011:11).
Creativity and innovation in the small business
Creativity and innovation are easier executed in small businesses than in large businesses. In small businesses, there are fewer employees, which leads to less bureaucracy, and easier communication as the chain of command is shorter and the small business normally has a flat leadership style. The small business can act quickly to respond to changing technology and market changes (Bos-Brouwers, 2010:420; Bocken, Farracho, Bosworth & Kemp, 2014:46). There is also a proven link between innovation and the start-up of new businesses (Moutray, 2011:81). Another advantage of a small business is that, in general, small business owners have a propensity for risk-taking.
Large businesses have a formalised organisational structure in place and are bureaucratic where top management is sometimes isolated from customers and workers on lower levels in the business (Bos-Brouwers, 2010:420). Hewlett Packard Big, for example, rejected Wozniak’s computer, which led to the start-up of Apple (Stokes & Wilson, 2017:120).
According to Braunerhjelm (2011:161), there is still a lack of understanding of the relationship between growth, innovation and entrepreneurship. To attain economic growth, there must be an increase in production as this may lead to employment creation.
Several studies, as summarised in Table 3.1, has been executed globally, on the role of innovation in the small business. It can be observed from Table 3.1 that small businesses are highly innovative globally and are innovators of note, except in France. Table 3.1 indicates that in the study by Nauwelaerts, Van Assche and Van Beveren (2011) in Belgium, and Gough and Olson (2011) in the USA, access to finance hindered small businesses’ innovation. Nauwelaerts, et al; (2011) found that large businesses were favoured by government policies. Clark (2011:153) concludes that innovation is market driven in New Zealand and Canada’s small business innovations are mainly in the product and service industry.
In the next section, creativity and innovation in South Africa will be discussed, followed by discussions on creative industries.
Creativity and innovation in South Africa
Examples of some South African innovators and innovations are (Nsehe, 2012; Brand South Africa, 2013):
a. The “Cat Scan”, developed by Cormack, a South African physicist at Tufts University in the United Kingdom (UK) (Awarded the 1979 Nobel prize for this development for physiology or medicine);
b. Sasol innovative energy-related technologies, initially with coal as a feedstock, then with gas, and today, with renewable energy sources;
c. Pratley Putty epoxy developed in South Africa by Pratley was used to hold bits of the Apollo XI mission Eagle’s landing craft together in 1969;
d. MTN with InternetOnTV, which is a device that allows web browsing from a television.
From the above, it is obvious that South Africa has the talent to design and innovate when given the opportunity. South Africa is an emerging market that creates great innovation opportunities, for example with health and energy.
Innovation, the search for changing new ideas into viable products, is extremely vital in emerging economies like South Africa where economic growth is of utmost importance (Kourilsky & Walstad, 2002:1). Innovation in developing countries is different from developed countries (Bradley, McMullen, Artz & Simiyu, 2012:710) and is needed to address problems like poverty in developing countries. South Africa is rated 54 out of 128 countries in the 2016 Global Innovation Index, conducted by the Johnson Cornell University, INSEAD, The Business School of the World (INSEAD) and the World Intellectual Property Organisation (WIPO) (Dutta, Lanvin & Wunsch-Vincent, 2016:20). South Africa’s position enhanced from 2013 when it was 58 out of 142 countries (Dutta, Lanvin & Wunsch-Vincent, 2014:257). The Global Competitiveness Report placed South Africa on position 47 out of 138 countries for innovation for the period 2016 to 2017, and 39 out of 137 countries for the period 2017 to 2018 (Schwab, 2016:25; Schwab, 2017:268). South Africa is therefore steadily improving towards innovation. A total of 85% of businesses in South Africa viewed innovation as vital and spend 1.7% of their turnover on innovation in 2007 (Moses, et al; 2012:2).
In the South African Innovation Survey 2008 conducted by the Human Sciences Research Council (HSRC) in 2008 for the period 2005-2007, 65.4% of businesses participated in innovative activities (HSRC, 2011:2). The results for the next survey by the HSRC for the period 2010-2012 are not available yet (HSRC, 2016).
Furthermore, it is argued, that South Africa is well positioned to innovate with the latest technology, capacity for innovation and protection of intellectual property (IP) rights. According to the World Economic Forum’s (WEF’s) Competitiveness Report in 2017, South Africa scored on a 1 to 7 scale, 5.2 on the availability of the latest technology; 4.9 on capacity for innovation; 5.8 on patents and applications, and 3.5 on the availability of scientists and engineers (Schwab, 2017:269).
The WEF identifies twelve pillars to determine a country’s stage of development (Schwab, 2014:4-10). Stage one is factor driven economies where institutions (pillar 1), infrastructure (pillar 2), the macro-economic environment (pillar 3) and health and primary education (pillar 4) are identified. In stage two, the efficiency driven economy, countries need to meet the criteria of higher education and training (pillar 5), good market efficiency (pillar 6), good labour efficiency (pillar 7), financial market development (pillar 8), technology readiness (pillar 9) and market size (pillar 10). Stage three is the innovation driven economy, where the pillars are business sophistication (pillar 11) and innovation (pillar 12).
South Africa is innovative and ranks 39th out of 137 countries for innovation for the period 2017 to 2018 in the Global Competitiveness Report, which could be observed as good performance given that South Africa has an efficiency driven (stage two) and not innovation driven economy (Schwab, 2017:268). The global economy changes rapidly and if countries are stagnant in development, for example with technology, the country will fall behind in competitiveness (Kressel & Lento, 2012:36). South Africa should be aware of developments on the African continent that could take its competitive advantage away.
Herrington and Kew (2016:39) found that new products offered from businesses increased from 15.9% to 39.5% over the period 2005 to 2013. Table 3.2 shows that 51.5% of all the products/services offered to customers in South Africa in 2014, and 51.9% in 2015 are considered new by the business owner. This is more than the 38% for Africa who believed that their products/services offered to the customer were new. A total of 55.7% in 2014 and 52.8% in 2015 reflected that no businesses offered the same product. It is observed that South African businesses believe that they have new products and/or services to offer to customers and that none or a few competitors have a similar product.
TABLE OF CONTENTS
LIST OF ABBREVIATIONS
CHAPTER 1: INTRODUCTION AND BACKGROUND TO THE STUDY
1.2 RESEARCH BACKGROUND
1.3 AIM AND SIGNIFICANCE OF THE STUDY
1.4 THE IDENTIFIED RESEARCH GAP
1.5 PROBLEM STATEMENT
1.6 RESEARCH QUESTIONS
1.7 RESEARCH OBJECTIVES
1.8 RESEARCH MODEL
1.9 RESEARCH HYPOTHESES
1.10 RESEARCH METHODOLOGY
1.11 CONTRIBUTION OF THE STUDY
1.12 ETHICAL CONSIDERATIONS
1.13 LAYOUT OF CHAPTERS
CHAPTER 2: SECONDARY RESEARCH ON INDUSTRIAL DESIGN
2.2 BACKGROUND TO INDUSTRIAL DESIGN
2.3 INDUSTRIAL DESIGN DEFINED
2.4 FEATURES OF INDUSTRIAL DESIGNERS IN BUSINESS
2.5 INDUSTRIAL DESIGN AND POVERTY ALLEVIATION
2.6 DESIGN COUNCILS AND ORGANISATIONS
2.7 INDUSTRIAL DESIGN IN SOUTH AFRICA
2.8 THREE-DIMENSIONAL DESIGN EDUCATIONAL PROGRAMMES
CHAPTER 3: SECONDARY RESEARCH ON ENTREPRENEURSHIP
3.2 ENTREPRENEUR AND ENTREPRENEURSHIP: AN OVERVIEW
3.3 CREATIVITY AND INNOVATION IN ENTREPRENEURSHIP
3.4 ENTREPRENEURIAL THEORIES AND MODELS
3.5 ENTREPRENEURSHIP EDUCATION
3.6 TECHNICAL STUDENTS AND ENTREPRENEURSHIP
3.7 BUSINESS EDUCATION FOR THREE-DIMENSIONAL DESIGN STUDENTS AT CPUT AND TUT
3.8 THE RESEARCH MODEL
CHAPTER 4: RESEARCH METHODOLOGY
4.2 RESEARCH MODEL AND HYPOTHESES
4.3 RESEARCH PHILOSOPHY
4.4 RESEARCH APPROACH
4.5 GROUP 1 PARTICIPANTS (UNDERGRADUATE TDD STUDENTS 2015): QUANTITATIVE RESEARCH METHOD
4.6 GROUP 2 PARTICIPANTS (PAST GRADUATES 2011 TO 2014): QUALITATIVE RESEARCH METHOD
4.7 ETHICAL CONSIDERATIONS
CHAPTER 5: QUANTITATIVE DATA ANALYSIS
5.2 DEMOGRAPHIC AND OTHER DATA
5.3 DESCRIPTIVE ANALYSIS OF VARIABLES
5.4 TESTS FOR RELIABILITY AND VALIDITY
5.5 TESTING THE RESEARCH MODEL
5.6 RESEARCH HYPOTHESES
CHAPTER 6: QUALITATIVE DATA ANALYSIS
6.3 DEMOGRAPHICS AND OTHER DATA
6.4 GROUP 2 PARTICIPANTS: DESCRIPTIVE ANALYSIS
6.5 RESEARCH THEMES
6.6 RECOMMENDATIONS FOR THE INDUSTRIAL DESIGN PROGRAMME
CHAPTER 7: CONCLUSION AND RECOMMENDATIONS
7.2 SUMMARY OF RESEARCH
7.3 CONCLUSIONS ON THE RESEARCH QUESTIONS
7.4 CONCLUSIONS ON THE PRIMARY AND SECONDARY OBJECTIVES OF THE RESEARCH
7.5 CONCLUSIONS ON THE RESEARCH MODEL AND RESEARCH HYPOTHESES
7.6 IMPLICATIONS AND RECOMMENDATIONS OF THE STUDY
7.7 LIMITATIONS OF THE STUDY
7.8 AREAS FOR FURTHER RESEARCH
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