Innovation & entrepreneurial performance in Oman
Innovation
Innovation plays a key role to contribute in the success of the entrepreneurs in the contemporary economic era. Loosmore M (2014) views innovation as the process of bringing new and creative ideas to reality. In fact, “Innovation allows organizations to better meet consumer needs, stay ahead of the competition, capitalize on strategic market opportunities, and align organizational strengths with market opportunities” (Rujirawanich, 2011). Therefore, innovation acts as a key element for the progression and promotion of an organization. With regards to the innovation theories, many researchers believe that such theories are created from general beliefs. The most contiguous theory of innovation where entrepreneurs have enhanced to be creative is Schumpeterian theory of innovation. Schumpeterian defines innovative as people who discover opportunities by introducing new products or new services (Bula, 2012). Therefore, innovation is the creation of new and intelligent ideas to modify the current conditions and to develop them through creative processes. As far as Oman is concerned, the question is: To what extent innovation exists in new firms in Oman? Do Omani universities prepare students to become innovative entrepreneurs (with reference to government supports, regulation, and policies, and other related factors)?
Government Support
With reference to the factors affecting the growth of innovations, government support is one of the major factors that assist to develop innovation and elevate a firm’s performance. Such financial strengths and support are essential to innovation success (Bayarçelika, Taşelb, Apakc, 2014). Moon & Bretschneider (1998) state that the government has a positive involvement in the innovation process as well as the development process. A study conducted by Jiannan, Liang, & Yuqian (2007) suggests that internal motive forces and external pressures on local government are the two major factors causing innovations. Hence, the policies and legislations established by the government have a considerable role to develop innovations at the national level.
Cultural and Social Beliefs
The cultural and social beliefs and principles that have an effect on people’s desire to innovate is yet another element for the innovation (Bayarçelika, Taşelb, Apakc, 2014). Berent, Uhlaner, Jeurissen, & Wit (2010) found in their study that “less innovative organizations are also less concerned about the environment”. In contrast, more innovative organizations are more concerned about the environment. According to Elenkov & Manev (2005), “sociocultural context directly influences leadership and moderates its relationship with organizational innovation”. Thus, the cultural and social system (refer to as the environmental fragment) have a significant role to shape a firm’s performance by bringing in innovative ideas.
Human Resource
Human resources (individuals) are another factor that influences the drive of innovation. Individuals’ management skills and institutional structure are imperative factors that affect the performance (Bayarçelika, Taşelb, Apakc, 2014). Pratoom & Savatsomboon (2012) investigated and concluded that a lot of studies show “that community product producer with high level of self-leadership” characters “are more likely to be successful innovative entrepreneurs”. Lee & Lee (2014) consider entrepreneur’s labor and hard work as the key elements to the successfulness of a firm, and not the human capital. Therefore, individual characters can turn out to be the motivational drivers for firms’ performance and success.
Harvard School of Business Theory
In the context of government support, cultural elements, and individuals characteristics that affect the driving of innovation in any firm, Harvard School of Business Theory refer successful entrepreneur as internal and external factors (Mohanty, 2005). Industrial elements such as development of new products or services, marketing orientations, usage of technologies and creative strategies are counted as significant industrial factors for the creation of innovations. Barbosa, Faria, & Eiriz, (2013) indicate that “industry context have power to shape the firm’s innovation choices”. Zakić, Jovanović, & Stamatović, (2008) point out that the “Empiric researches confirm the influence of industry maturity on type of innovation”. Vega‐Vázquez, Cossío‐Silva, & Martín‐Ruíz, (2012) found a positive relationship between market orientation and new product success and their influence in innovation. Schumpeter theory of innovation regards the success of entrepreneur to the product design and development (Piore, 2007).
Entrepreneurship
Entrepreneurship is also a critical key in developing countries within the economic engine. For the same reason, it has become a significant topic for researchers and policy makers. However, there is no specific definition to explain it because companies demonstrate differences in terms of employment, profitability, resources, sales, and other aspects. Therefore, these variables have been the basis of definition. Doepfer (2012) refers to entrepreneurship as the process of pursuing new opportunities by individuals to create market innovations.
Relationship between Innovation and Entrepreneurship
The relationship between innovation and entrepreneurship has been observed by many researchers and economists. Many studies show that firms’ performance is strongly linked to innovations. Hatzikian (2012) cited from European commission 2004 and concluded that innovation plays a central role in business achievement. It needs to be mentioned that innovations and entrepreneurship in Oman are still infant topics due to the lack of applied studies and the scarcity of qualified experts. Therefore, it is anticipated that this study will contribute to determine the future direction and assist decision makers in building effective strategies.
Problem Statement
Innovation and entrepreneurship are major concepts in the modern-day economic world. It has become a great concern in Innovation and Entrepreneurship for different reasons among researchers and businesses. Such reasons are epitomized in positive results, employment creation, and economic growth (Naudé, Szirmai, & Goedhuys, 2011), scientific fields, and the increased role of innovation in achieving entrepreneurship in the context of the knowledge economy (Ali, 2011). Meanwhile, the process of entrepreneurship is also considered as an essential requirement for stability in the business world. Therefore, a vital need to merge these concepts and applications in business along with the global development is extremely important. Since the achievement of entrepreneurship is a vital demand of the organizations, it must cope with the variables to compete with other organizations (Papulova, & Papulova, 2009). Furthermore, it is also necessary to avoid the reaction of being far from the edge of pursuing contemporary organizations. In Oman, numerous steps are being taken by the government, private sector, local communities, and individuals in this regard. However, these initiatives pose a real challenge because of the lack of coherence with the standardized system. It is imperative to note that the governmental contribution is certainly an innovation driver as “innovation depicts a role for policy makers, less as innovators in their own right, and more as orchestrators or enablers of innovation” (Social Innovation Europe, 2014). The mentioned are considered as obstacles of driving innovation in new firms in Oman. Thus, the performance of the firms is affected by them.
Research Questions
This study attempts to answer the following question:
What are the individual, cultural, governmental, and industrial factors related to innovation creation & entrepreneurial performance in Oman? Is there a momentous relationship between these factors and innovation creation & entrepreneurial performance?
Among the four independent variables, which variable(s) will be the most significant in relation to the innovation creation & entrepreneurial performance in Oman?
Research Objectives
To determine innovation creation dimensions related to entrepreneurial performance
To introduce the concept of creation innovation and entrepreneurship performance as a basic concept to manage modern firms in Oman
To determine the factors affecting the creation of innovations & entrepreneurial performance in Oman
To determine the nature of relationship between each independent variables (individual variables, cultural variables, industrial variables, and government variables) and dependent variable (creation of innovation & entrepreneurial performance in Oman)
To determine the most independent variable that has significant relationship to the innovation creation & entrepreneurial performance in Oman
Significance of the Research
Entrepreneurship is considered as one of the hot topics in the context of knowledge of economics as well as technological and scientific development. Since business world has become more competitive and more challenging, managers, leaders and governments must be more aware concerning the importance of related topics (Storey, 2003).
Entrepreneurship and innovation needs more researches for more studies. Meanwhile, Oman is still in its initial phase in the areas of innovation and entrepreneurship. Due to the lack of research and application of the research in the country, this research will have a crucial role to clarify some major concepts and facts related to the development of best strategies.
Theoretical Framework
The study will rely on two theories; innovation theory by Schumpeter and Harvard Business School’s Theory of Entrepreneurship. According to Schumpeter, “innovation reduces the competition” (Soriano, 2013) and lead to increasing opportunities for success attainment by introducing unique products or processes. On the other hand, Harvard Business School’s theory introduces entrepreneurial functions and environmental functions as internal and external factors respectively influencing the entrepreneurial performance (Mohanty, 2005).
Based on above theories, research questions, and objectives, the framework adopts four independent variables – Government supports (GV), Cultural factors (CF), Individual characteristics (IC), and Industrial factors (IF). These four variables hypothesize to affect two major dependent variables – Innovation Creation and Entrepreneurial Performance (IC & EP) in Oman’s new firms. The figure below illustrates these variables
Scope of the Study
The scope of the study expands to analyze almost 300 new firms with the utilization of mixed-method (interview and questionnaire). These firms will be determined by the General Authority for the Development of Small & Medium Enterprises. Four independent variables namely GS, CF, IC & IF will be hypothesized to dependent variables namely IC & EP in Oman’s new firms. All these variables will be tested and theoretically underpinned by two economic theories namely; Schumpeter’s theory of innovation and Harvard Business School’s theory of Entrepreneurship (Chetty, 2010).
Hypotheses
In order to resolve the problem at hand (and depending on the variables of the study), the following hypotheses is created:
H1: individual variables are significantly related to innovation creation & entrepreneurial performance in Oman
H2: cultural variables are significantly related to innovation creation & entrepreneurial performance in Oman
H3: industrial variables are significantly related to innovation creation & entrepreneurial performance in Oman
H4: government variables are significantly related to innovation creation & entrepreneurial performance in Oman.
Methodology
In this study, a mixed-method and multiple case studies will be applied to gain accurate results (for complementary purposes) (Sale, Lohfeld, & Brazil, 2002). Both quantitative and qualitative approaches will be designed for implementation in the group of innovative entrepreneurs. In addition, an in-depth analysis of at least 20 case studies of new firms (with 5 or less number of employees) in Oman will be conducted. These approaches will be used to collect and analyze data for a single study and among case studies to allow for more understanding and accuracy. The mixed-method and multiple case studies address these gaps between current available resources and factors related to the development of innovations as well as the outcome of innovation levels and enterprises’ excellence. These would ultimately assist for the development of best strategies and practices to drive innovation for the purpose of entrepreneurs’ accomplishments.
In the quantitative approach, the researcher relies on numerical data. The segments’ views are used for developing knowledge including linkage of causes and effects, theories’ investigation, and reduction of specific variables, hypothesis, and questions. Therefore, isolation of specific variables with regularity and accuracy of relationships will be done to deeply investigate and determine instruments. As a consequence, it will return highly reliable and valid scores. For the same reason, a questionnaire method will be utilized for collecting data from at least 300 new firms in Oman.
Alternatively, the qualitative approach provides advanced insight to understand the issues by underlying additional openings, views, and reasons. It links related theory and the empirical results (Kovalainen, & Eriksson, 2008). Moreover, it assists in generation of reliable variables, hypothesis, and questions. In this study, a semi-structure interviewing method will be employed for data collection from certain innovative entrepreneurs to elucidate in-depth views and concerns. The qualitative method will be used in the first stage to facilitate the development of the research hypotheses and questions and the modification of variables. It will also be helpful in the development of the quantitative approaches. It is intended that this approach will be applied to at least 20 new firms in Oman.
Case studies will be used for an all-encompassing analysis of 20 firms and innovative entrepreneurs in order to explore research questions (Devos, 2014). It will also allow a comprehensive analysis about the causes and effects of the phenomenon. Also, they will be utilized for application on 20 firms for supplementary analysis and accurate results. This method is useful to explore the conditions and causes behind the failures to drive innovation (Texas State Auditor’s Office).
A provisional timetable for the project is as follows:
| Time Period | Anticipated Activities |
| Year One | |
|
September 2017 – December 2017 |
In-depth reading in areas such as,
|
| January 2018 – June 2018 | In-depth reading concerning:
|
| July 2018 – September 2018 |
|
| Year Two | |
| October 2018 – February 2019 |
|
| March 2019 – June 2019 |
|
| July 2019 – September 2019 |
|
| Year Three | |
| October 2019 – December 2019 |
|
| January 2020 – May 2020 |
|
| June 2020 – September 2020 |
|
| Year Four | |
| October 2020 – December 2020 |
|
| January 2021 – March 2021 |
|
| April 2021 – September 2021 |
|
References
Banerjee, P. (2002). Narration, discourse, and dialogue: Issues in the management of inter-cultural innovation. Springer-Verlag London Limited.
Bayarçelik, E. B., Taşel, F., & Apak, S. (2014). A Research on Determining Innovation Factors for SMEs. Procedia – Social and Behavioral Sciences,150, 202-211. doi:10.1016/j.sbspro.2014.09.032.
Bula, H. (2012). Evolution and Theories of Entrepreneurship: A Critical Review on the Kenyan Perspective. International Journal of Business and Commerce, 1 (11), 81-96.
Devos, J. (2014). Information Systems for Small and Medium-sized Enterprises State of Art of IS Research in SMEs. Berlin: Springer Berlin.
Doepfer, B. C. (2012). Co-innovation competence: a strategic approach to entrepreneurship in regional innovation structures. Wiesbaden: Springer Gabler.
Hatzikian, Y. (2013). Exploring the Link between Innovation and Firm Performance. Journal of the Knowledge Economy, 6(4), 749-768. doi:10.1007/s13132-012-0143-2
Günther, E., & Hüske, A. (2014). How stakeholder shape innovation in controversial industries: the biotechnology industry in Germany. Uwf UmweltWirtschaftsForum, 23(3), 77-86. doi:10.1007/s00550-014-0343-2
Jiannan, W, Liang, M. & Yuqian, Y. (2007). The Local Governments’ Impetus for Innovations, their Characteristics and the Related Performance: An Analysis of the Test of Cases Adopted from “The Awards for Innovation to China’s Local Governments”. Retrieved February 27, 2017 from http://en.cnki.com.cn/Article_en/CJFDTOTAL-GLSJ200708007.htm.
Kovalainen, A. & Eriksson, P (2008). Qualitative Methods in Business Research. SAGE.
Lee, S. M., & Lee, B. (2014). Entrepreneur characteristics and the success of venture exit: an analysis of single-founder start-ups in the U.S. International Entrepreneurship and Management Journal, 11(4), 891-905. doi:10.1007/s11365-014-0324-5
Loosemore, M. (2014). Innovation, strategy and risk in construction: turning serendipity into capability. Abingdon, Oxon: Routledge.
Mas-Tur, A., & Soriano, D. R. (2013). The level of innovation among young innovative companies: the impacts of knowledge-intensive services use, firm characteristics and the entrepreneur attributes. Service Business, 8(1), 51-63. doi:10.1007/s11628-013-0186-x
Naudé, W., Szirmai, A., & Goedhuys, M. (2011). Innovation & Entrepreneurship in Developing Countries. United Nations University, P.1.
Papulova, E. & Papulova, Z. (2009). COMPETITIVE STRATEGY AND COMPETITIVE ADVANTAGES OF SMALL AND MIDSIZED MANUFACTURING ENTERPRISES IN SLOVAKIA. E-Leader, Slovakia 2006.
Pratoom, K., & Savatsomboon, G. (2010). Explaining factors affecting individual innovation: The case of producer group members in Thailand. Asia Pacific Journal of Management, 29(4), 1063-1087. doi:10.1007/s10490-010-9246-0
Sale, J., Lohfeld, L. & Brazil, K. (2002). Revisiting the Quantitative-Qualitative Debate: Implications for Mixed-Methods Research. Netherlands : Kluwer Academic Publishers.
Texas State Auditor’s Office, Methodology Manual. Data Analysis: Analyzing Data – Case Studies. Retrieved February 27, 2017 from http://www.preciousheart.net/chaplaincy/Auditor_Manual/13casesd.pdf.