Nowadays science has become one of the most important tools of consistent economic development. New knowledge produces 80-90% of GDP growth in the industrialized countries. Entrepreneurial firms, pioneered efficient innovations, are able to reduce production costs and therefore the cost of goods. So, innovation facilitates competition.
It should be mentioned, that there are some constraints and conductive factors in the innovation sphere. Constraints for entrepreneurial innovation are the lack of financial resources for investment projects, outdated technology, the lack of spare production capacity, the dominance of the interests of the current production, the lack of scientific and technological base, a preference of current interests. Conducive factors are the advanced technology, the developed economic and scientific infrastructure, financial incentives for a staff, a reserve of financial, material and technical resources.
There are the best progressive innovations, which are easily commercializing on the market. It is modern systemic innovations. The rapid development of information technology has changed innovations from mainly technological to primarily systemic. It means that the main focus is placed not on the process of turning technology to innovation, but on the process of turning every person to the innovator. Discussing in cross-functional teams is one of the effective ways to collect ideas about innovations. In contrast to the technological entrepreneurial innovation these innovations have a significant impact on social change, as they involve the human resource to business. Systemic innovation is a social innovation, a social phenomenon. This is the most cost-effective way, as practice shows (Systemic approach to innovation, 2012).Want an expert to write a paper for you Talk to an operator now
One of the most profitable enterprises with the social entrepreneurial innovations is a business-coach Ten3 (Ten3 = Technology e-ncubate, e-nnovate, e-nvest). After orientation on a social innovation the demand increased among nearly all the leading innovative companies in the world. In ? year after the beginning of commercial operations Ten3 has it's own buyers in 80 countries all over the world. A few months later the leading firms and small companies and consultants around the world have become buyers Ten3 Business e-Coach. This company has put a man as a creative innovator to the center of activity, it has become fully focused on the person (Ten3 Business e-Coach - the global market champion, 2012).
In 2010, a lot of American companies that implement innovation had average annual earnings higher than the others on 13-18%. General Electric has applied the systemic innovations, and this increased the capitalization of the company in 40 times. Jack Welch, the new CEO, has made it even strongly reducing the number of business units of the company. He turned all the employees to innovators. It had a great impact on the social changes, because many companies had started to use the systemic innovations on the basis of staff (Imagination = innovation, 2012).
Smart ValueTM gives an example of using a novel idea as an innovation with a huge financial potential. American company Value, Time, Speed, Risk, Management (VTSR Management) made an innovation in rebranding. It replaced the unpronounceable name on easily remembered by a simple rearrangement of words. VTSR Management changed in Smart Value - acronym for Speed, MAnagement, Risk, Time, Value. After that, the company has acquired new investors and has received venture capital funding (Entrepreneurship and innovation, 2012).
Entrepreneurship is related with the uncertainty of economic conditions, because the supply and the demand for goods, money, and many of the factors of production are erratic. Innovation activity is associated with a risk rather than other areas of business activity. Only one or two out of ten venture enterprises achieve success. In innovative entrepreneurship risk can be defined as the probability of losses arising from any innovative investments. Innovative risk arises in the following situations: launching a cheaper method of production or assisting services, creating a new product or a services on the basis of old equipment (Entrepreneurship and innovation, 2012).
In general, a technological risk arising in the innovation business, includes the following main types of risks:
- risk of choosing the wrong-innovation project,
- failure of innovation project because of the lack of sufficient funding,
- marketing risks concerning the implementation of the innovative project,
- marketing risks of distribution of innovation project results,
- failure of economic agreements (contracts),
- increasing competition,
- insufficient level of staffing.
There are the main risks in the entrepreneurial innovations. Innovative enterprises should analyze innovative projects carefully in order to avoid possible errors during the early-stage of selection.
So, business innovation is a factor of increasing the competitiveness of enterprises. A systemic social innovations are the most profitable innovations on the market, but even the performance of socially focused companies relates with different risks.