Research Paper

Technology, Innovation, Entrepreneurship and The Small Business—Technology and Innovation in Small Business* by Jonathan D. Linton and George T. Solomon

This is the second of a pair of special issues in Technovation (Volume 57–58 November- December, 2016) and the Journal of Small Busi- ness Management that explore the interface between Technology Innovation Management and Small Business Management. No longer are scholars and researchers looking at only one field of scholarship in examining issues and offering solutions but in fact, are adopting a more holistic, interdisciplinary approach. Uni- versities are struggling with how to successfully integrating the hard sciences—physics, biology, and engineering with the technological break- throughs that their faculty members create and transforming them into viable commercial prod- ucts and services. Though the earlier issue in Technovation focused on how policy impacts Technology in Small Businesses (Apanasovich et al. 2016; Ho et al. 2016; Hong et al. 2016; Maresch, Fink, and Harms 2016; Nordman and Tolstoy 2016), this issue in the Journal of Small Business Management considers technology- intensive small business activity. Such activity

may involve technology intensive start-ups or small businesses. Common but less frequently considered, are small business that change their product offering or underlying process through the adaption of new technology. In some cases, this change is part of a drive to grow sales and/ or profitability, whereas in other cases the suc- cessful adoption and integration of technology is needed for the survival and sustainability of the firm.

As the interface between technology and small business is a critical issue that sits on the edge of the mission of Technovation and Journal of Small Business Management, a joint decision was made to tackle this together. It is natural for small businesses to go through a series of transi- tions or shocks that can result in a rapid increase in growth and value or a sudden and sharp decline. For example, the restructuring a small business faces when it receives its first large order. Whether the change involves information communication technology (ICT), such as e- commerce or materials requirements planning

*Our thanks to the following people for their invaluable services as guest reviewers: Yazid Abubakar, Kingston University; Virgina Acha, Association of the British Pharmaceutical Association; Angelina Akgun, Cukorova Uni- versity; Naveed Akhter, ESSCA; Daniel Arias Aranda, University of Granada; Rachelle Bosua, University of Mel- bourne; L Bozic, Institute of Economics; Dilek Cetindamar, Sabanci University; Wenshin Chen, Northumbria University; Chih-Lung Chou, Hwa Hsia University of Technology; Regis Coeurderoy, ESCP Europe; Elizabeth Dan- iel, Open University; Roberto Fillippini, University of Padova; Gregory Fleet, University of New Brunswick – St. John’s; Xavier Gellynck, University of Gent; Rainer Harms, University of Twente; Paul Harrigan, University of Western Australia; Jarna Heinonen, University of Turku; C Lin, National Cheng Kung University; Spyridonas Liou- kas, Athens University of Economics and Business; Tuija Mainela, University of Oulu; Michael Morris, Universiy of Florida; Michael Ngoasong, Open University; Emilia Nordman, Stockholm School of Economics; Robert Phaal, University of Cambridge; C Quintana Garcia, University of Malaga; Lluis Sanatamaria, Universidad Carlos III de la Madrid; C Scharff, Pace University; Eleanor Shaw, University of Strathclyde; Josh Shirikova; Pekka Stenholm, Uni- versity of Turku; Thomas Thurner, Higher School of Economics; Maria Vernuccio, Sapienza University of Rome. We look forward to your comments and suggestions on our attempt to lend a fresh and unique perspective to the multi-dimensional problems facing today’s organizations both big and small. We hope other editors will consider this integrative approach to looking at the world.

Jonathan D. Linton is Editor-in Chief of Technovation. He is the Chair in Operations and Technology Manage- ment at the School of Management, University of Sheffield, Sheffield, UK and Foreign Head, Science Technology Studies Laboratory, Higher School of Economics, Moscow, Russia.

George T. Solomon is Editor-in-Chief of the Journal of Small Business Management and Director of the Center for Entrepreneurial Excellence (CFEE) at George Washington University, Washington, DC.

Address correspondence to: Jonathan D. Linton, University of Sheffield, B067 Conduit Road, Sheffield S10 1LF. E-mail: [email protected].

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Journal of Small Business Management 2017 55(2), pp. 196–199

doi: 10.1111/jsbm.12311

(MRP) or something of a more traditional physi- cal nature, the introduction of a new technology requires the business and technology to mutually adapt to each other. If this adaptation goes well, the business profitability and survivability quickly increases. However, in the case of a poor fit, a small business can quickly collapse under the strain of these changes. Consequently, it is critical for this journal to focus on the contributing to an understanding of the challenges and the underly- ing theory and drivers for small businesses to better manager technology adoption, implemen- tation, adaptation and routinization. Both Tech- novation (Barge-Gil 2010; Kim and Vonortas 2014; Rubin, Aas, and Stead 2015) and the Jour- nal of Small Business Management (Cragg, Mills, and Suraweera 2013; Liberman-Yaconi et al. 2010; Parida and Orqtvist 2015; Sohn and Jeon 2010) have contributed to the important interac- tion of the management of technology and small business in the past. In this issue, new insights are obtained through a series of papers:

Tornikoski, Rannikko, and Heimonen (2017, this issue) considers the competitive advantage of 107 young Finnish firms. It was found that the technological distinctiveness of the firms coupled with managerial tolerance of uncer- tainty led to competitive advantage in firms. This demonstrates the need for a combination of technological competencies and managerial capabilities for managers in smaller businesses to succeed in a technologically intensive envi- ronment. Further work is needed to better understand and catalog the relevant managerial capabilities and technological competencies and how they interact. Having considered, how cer- tain skill sets are helpful to the small business, the use of alliances to obtain missing—but needed—skills is now considered.

Dutta and Hora (2017, this issue) takes an important step by examining the impact of 1,000 alliance partnerships in the biotechnology industry. They identify small businesses as entering into two different types of alliances— upstream and downstream. Upstream alliances involve a research partner such as a university working on product development. These alli- ances are useful for the development of innova- tion, but have no impact on ability to commercialize. Downstream alliances typically involve working with a pharmaceutical firm as a partner for the purpose of commercializing a product. These findings suggest that one model for success for a small firm is to take a position in the value chain between either a university or

research institute that focuses on technology- push and a large firm that has a market-pull per- spective. Though this research is specifically focused on the biotechnology industry, these implications appear generalizable to other technology-intense industries and products.

Hogan, Huston, and Drnevich (2017, this issue) considers the manner in which 117 small Irish software development firms go about rais- ing capital for their operations. It was found that in contradiction to the traditional approach of small businesses accumulating needed capital through retained earnings, debt and finally external equity funding; technology-intensive small firms prefer external equity funding. The relative indifference of technology-intensive small business to giving up or sharing control may be related to either the debt markets being uncomfortable with making loans to technology-based businesses or a fundamental difference in the personalities of founding teams of technology-oriented entrepreneurs. Further research is needed to understand the underlying reasons for these differences and what changes to policy and regulation may best support the seed and later funding rounds for technology- intensive small business that has the desire and ability to grow beyond being a small business.

Next, Alderete (2017, this issue) considers the impact of mobile broadband on entrepre- neurship in 59 countries. Though information communication technologies (ICT) have been linked in the past to the creation of new small businesses and the development of existing small businesses, this is the first consideration of the role of mobile telephony’s impact on small business. Through the consideration of economies at different stages of development it is clear that the results are just as relevant to developing economies as they are to more developed economies. As access to mobile broadband becomes widespread and less expen- sive, it is potential as an enabler for the creation and development of small business increases. For the policy maker, this suggests that develop- ment of mobile telephony infrastructure has a positive impact not only on consumer choice, but also economic development. Mobile teleph- ony is just one example of an enabling technol- ogy that can either be the basis of creation of new small business or the development and expansion of existing businesses. Consideration of other enabling technologies is something that is needed both in the small business and tech- nology innovation management literature.

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Eggers et al. (2017, this issue) consider the impact of social network usage on the growth of small firms. While social network technology does not appear to result in firm growth directly, the use of social networks and other forms of technology is necessary for growing firms. As entrepreneurial orientation is related to the adoption and use of social networks, it is clear that additional consideration is needed in the future to sort out the relations and prece- dents between entrepreneurship, technology, and firm growth.

Finally, Kim, Jang, and Yang (2017, this issue) consider the drivers of willingness to adopt software as a service for 198 firms that had received support from the Small and Medium Business Association. The concerns of small firms with software-as-a-service are issues of security and reliability, whereas the major advantage noted was business process improve- ment. It is important to note that the major driv- ers (for or against) are not economic—as one may expect. How security and reliability con- cerns relating to technology are addressed in small business is a major ongoing concern as small businesses do not have high levels of slack resources with which problems can, if needed, be absorbed. This is an area that requires greater consideration in relation to the interaction between small business and technol- ogy innovation management.

There is much room for further work in this area in terms of better understanding the under- lying phenomena to better prepare small busi- ness management for the recurring changes that accompany the downside and upside risk pro- vided by technology. A number of these issues have been developed in the issue and raise questions for further consideration.

References Alderete, M. (2017). “Mobile Broadband: A Key

Enabling Technology for Entrepreneurship?,” Journal of Small Business Management. DOI: 10.1111/jsbm.12314, this issue.

Apanasovich, N., H. Alcalde Heras, and M. D. Parrilli (2016). “The Impact of Innovation Modes on SME Innovation Performance in Post-Soviet Transition Economies: The Case of Belarus,” Technovation 57-58, 30–40.

Barge-Gil, A. (2010). “Cooperation-Based Inno- vators and Peripheral Cooperators: An Empirical Analysis of Their Characteristics and Behavior,” Technovation 30, 195–206.

Brunswicker, S., and W. Vanhaverbeke (2015). “Open Innovation in Small and Medium- Sized Enterprises (SMEs): External Knowl- edge Sourcing Strategies and Internal Organ- izational Facilitators,” Journal of Small Business Management 53(4), 1241–1263.

Cragg, P., A. Mills, and T. Suraweera (2013). “The Influence of IT Management Sophisti- cation and IT Support on IT Success in Small and Medium-Sized Enterprises,” Jour- nal of Small Business Management 51(4), 617–636.

Dutta, D. K. and M. Hora (2017). “From Inven- tion Success to Commercialization Success: Technology Ventures and the Benefits of Upstream and Downstream Supply-Chain Alliances,” Journal of Small Business Man- agement. DOI: 10.1111/jsbm.12334, this issue.

Eggers, F., I. Hatak, S. Kraus, and T. Niemand (2017). “Technologies That Support Marketing and Market Development in SMEs—Evidence from Social Networks,” Journal of Small Business Management. DOI: 10.1111/jsbm.12313, this issue.

Ho, Y. P., Y. Ruan, C. C. Hang, and P. K. Wong (2016). “Technology Upgrading of Small-and- Medium Sized Enterprises (SMEs) through a Manpower Secondment Strategy—A Mixed- Methods Study of Singapore’s T-up Pro- gram,” Technovation 57-58, 21–29.

Hogan, T., E. Huston, and P. Drnevich (2017). “Drivers of External Equity Funding in Small High-Tech Ventures,” Journal of Small Business Management. DOI: 10.1111/ jsbm.12270, this issue.

Hong, J., B. Feng, Y. Wu, and L. Wang (2016). “Do Government Grants Promote Innova- tion Efficiency China’s High-Tech Industri- es?” Technovation 57-58, 4–13.

Kim, S. H., S. Y. Jang, and K. H. Yang (2017). “Analysis of the Determinants of Software- as-a-Service Adoption in Small Business: Risk, Benefits, and Organizational and Envi- ronmental Factors,” Journal of Small Busi- ness Management. DOI: 10.1111/ jsbm.12304, this issue.

Kim, Y., and N. S. Vonortas (2014). “Managing Risk in the Formative Years: Evidence from Young Enterprises in Europe,” Technova- tion 34, 454–465.

Lasagni, A. (2012). “How Can External Rela- tionships Enhance Innovation in SMEs? New Evidence for Europe,” Journal of Small Business Management 50, 310–339.

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Liberman-Yaconi, L., T. Hooper, and K. Hutchings (2010). “Toward a Model of Understanding Strategic Decision-Making in Micro-Firms: Exploring the Australian Infor- mation Technology Sector,” Journal of Small Business Management 48, 70–95.

Maresch, D., M. Fink, and R. Harms (2016). “When Patents Matter: The Impact of Com- petition and Patent Age on the Performance Contribution of Intellectual Property Rights Protection,” Technovation 57–58, 14–20.

Nordman, E. R., and D. Tolstoy (2016). “The Impact of Opportunity Connectedness on Innovation in SMEs’ Foreign-Market Relationships,” Technovation 57–58, 47–57.

Parida, V., and D. €Ortqvist (2015). “Interactive Effects of Network Capability, ICT Capabil- ity, and Financial Slack on Technology- Based Small Firm Innovation Performance,”

Journal of Small Business Management 53, 278–298.

Rubin, T. H., T. H. Aas, and A. Stead (2015). “Knowledge Flow in Technological Business Incubators: Evidence from Australia and Israel,” Technovation 41, 11–24.

Sohn, S. Y., and H. Jeon (2010). “Competing Risk Model for Technology Credit Fund for Small and Medium-Sized Enterprises,” Jour- nal of Small Business Management 48, 378–394.

Tornikoski, E. T., H. Rannikko, and T. P. Heimonen (2017). “Technology-Based Com- petitive Advantages of Young Entrepreneur- ial Firms: Conceptual Development and Empirical Exploration,” Journal of Small Business Management. DOI: 10.1111/ jsbm.12315, this issue.

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