Distributing awards correctly:
“A case study on success factors of the winners of the Accenture
Innovation Awards”
Name student: Hiltje Conradi
Student number: 5818133
Msc. Business Administration – Innovation & Entrepreneurship track
Version: Final version
Date: 30-11-2014
First thesis supervisor: Dhr. T. Gruijters
Second thesis supervisor: Dhr. W. van der Aa
Index
Preface p. 5
Abstract p. 6
1. Introduction p. 8
1.1. Background p. 8
1.2. Accenture Innovation Awards p. 8
1.3. Financial services industry p. 9
1.4. Purpose of the study p. 10
1.5. Organization of the study p. 11
2. Literature review p. 12 2.1. Innovation p. 12 2.1.1 Definition of innovation p. 12 2.1.2. Service innovation p. 13 2.1.3. Process of innovation p. 14 2.2. Entrepreneurship p. 14 2.2.1. Definition of entrepreneurship p. 14
2.2.2. Relation between entrepreneurship and innovation p. 15
2.2.3. Process of entrepreneurship p. 15
2.3. Financial services industry p. 16
2.4. How to define performance/success p. 17
2.4.1. Measures performance/success of entrepreneurship p. 17 2.4.2. Measuring performance/success of innovations p. 18 2.5. Categories and factors that influence performance/success p. 20
2.5.1. Business model and strategy p. 20
2.5.2. Categories and factors that influence entrepreneurship performance p. 21
2.5.2.1. The entrepreneurial category p. 21
2.5.3. Categories and factors that influence innovation performance p. 23
2.6. Evaluation of the literature p. 24
2.6.1. Literature research question 1 p. 24
2.6.2. Literature research question 2 p. 26
3. Conceptual framework and research questions p. 28
3.1. Conceptual model 1 on empirical research question 1 p. 28
3.2. Conceptual model 2 on empirical research question 2 p. 28
3.3. Empirical research question 3 p. 31
4. Methodology p. 32
4.1. Research strategy p. 33
4.2. Sample selection p. 33
4.3. Data collection and data analysis p. 35
4.3.1. Quantitative method p. 36
4.3.1.2. Questionnaire: An explanation of the content p. 36
4.3.1.3. Quantitative data analysis p. 37
4.3.2. Qualitative method p. 38
4.3.2.1. Quantitative data collection p. 38
4.3.2.2. Interview: An explanation of the content p. 40
4.3.2.3. Qualitative data analysis p. 42
5. Results p. 45
5.1. Results on empirical research question 1 p. 45
5.2. Results on empirical research question 2 p. 47
5.2.1. Internal categories p. 48
5.2.2. External categories p. 56
5.3. Results on empirical research question 3 p. 62
6. Discussion p. 65
6.1. Discussion of results p. 65
6.1.1. Results and their connection to the financial services industry p. 65
6.1.2. New factors/ categories p. 66
6.1.3. Surprising result p. 67
6.2. Ranking process p. 67
6.2.1. Ranking process 2010, 2011 and 2012 p. 68
6.2.2. Ranking process 2014 p. 68
6.3. Recommendations p. 69
6.3.1. Overall ranking process p. 69
6.3.2. Recommendations per pillar p. 71
6.4. Innovative start-ups and innovative concepts of existing companies p. 74
6.5. Quality of the research p. 76
6.5.1. Validity p. 76
6.5.2. Reliability p. 77
6.5.3. Triangulation p. 78
7. Conclusion p. 79
7.1. Findings and practical use for Accenture p. 79
7.2. Future research p. 81
7.2.1. Future research by limitations p. 81
7.2.2. Future research by new insights p. 82
Bibliography p. 84
Appendix 1 Definitions of innovation p. 89
Appendix 2 Definitions of entrepreneurship and entrepreneurs p. 90
Appendix 3 Core measures of Griffin and Page (1993) p. 91
Appendix 4 Performance measures in Cooper et al. (1994) p. 92
Appendix 5 Framework for describing new venture creations p. 93
Appendix 6 Entrepreneurial variables affecting new venture performance p. 94
Appendix 7 Critical factors for successful innovation p. 95
Appendix 9 Example email p. 97
Appendix 10 Questionnaire protocol p. 98
Appendix 11 Interview protocol p. 99
Appendix 12 Coding scheme p. 103
Appendix 13 Example of a summary, participant E p. 104
Preface
This master thesis was written during an internship at the global company, Accenture. Studying the master Business Administration track Entrepreneurship & Innovation at the University of Amsterdam, the Accenture Innovation Awards is a great case study for my master thesis.
I found it very interesting to see where the award winners are today. Are they successful or not? What factors are important for innovations to become successful and what does the ranking process look like? By conducting research, I could discover if the process of selecting the winning innovations needs to be changed. And in doing so, I could possibly help Accenture with the distribution of the Innovation Awards. There are six different industries at the Accenture Innovation Awards to intern. The financial services industry is one of them. I chose to research within this industry because it aligns with my interests and background having completed my bachelor degree in this area. Combining my thesis and internship was very challenging but I am very happy to have completed it and am proud of the result. Various people played an important role in the fulfilment of the thesis. Without their participation and support, this thesis could not have been made.
Firstly, I would like to thank all the participants who sacrificed their scarce time in order to
participate in both an interview and questionnaire. The interviews were very inspiring and I enjoyed taking a closer look at the companies.
Secondly, I would like to thank my supervisor, Ton Gruijters, for his supervision during the period of writing the thesis. He offered me a lot of his time and knowledge on qualitative research. I enjoyed the conversations during the feedback sessions. The guidance and patience has been a great support. Furthermore I would like to thank Accenture letting me use the data in order to conduct my
research. In particular, I would like to thank Luc Hengst and Stefan van Alen for their trust in hiring me for the internship. In addition, I would like to thank Stefan van der Leeden and Bas Smeijers for their understanding whilst I wrote this thesis and for making the internship awesome.
Last but not least, I would like to thank my family who supported me during all the hard times. It was not always easy but I could always count on them.
Thank you all! Concluding I hope everyone will enjoy reading my master thesis, Hiltje Conradi
Abstract
Innovation is seen as a major driver of economic growth for a country. It is essential to the recovery from an economic downturn, to generate employment and increase the productivity. New and young firms are especially important for innovation because they exploit technological and commercial opportunities which are often neglected by existing companies. (OECD, 2010). To encourage
innovations, companies and governments provide rewards such as money, publicity and jury-awards. The Accenture Innovation Awards are an example of how a company encourages innovations. Since 2007, the Dutch competition gives innovative concepts of start-ups and existing companies younger than three years, the opportunity to share their innovation with a larger audience. The goal of the competition is to honor, unite and stimulate innovation in The Netherlands. It is not always possible to distribute the awards or rank individuals/companies correctly. An example of this is the list of the top 50 most excellent companies by Peter and Waterman (1982) which was incorrect.
This qualitative research is a case study on Accenture Innovation Awards winners of 2010, 2011 and 2012. The main goal of this research is: to find out if the process of distributing the awards within the
financial services industry needs to be changed, or is fine as it is.
Literature on the topics “innovation” and “entrepreneurship” are reviewed and two conceptual models were made which formed the basis of the empirical research. Empirical research was done to find out: 1. If the innovations in the case study are a success. 2. What factors influence the
performance/success of participating innovations and 3. Why some innovations are more or less successful than others. Semi-structured interviews were held and questionnaires were completed by 15 founders or employees from 14 different companies. Nvivo, qualitative analysis software, was used to analyze data collected via the interviews. In addition, interviews were summarized and compared. Innovations within the Accenture Innovation Awards are ranked based on the three pillars: 1. Innovativeness 2. Successful implementation 3. Potential. Based on experience gained during the Accenture internship, the ranking process and the results found by the empirical research, we were able to give recommendations to improve the distribution of the Accenture Innovation Awards. The five most important recommendations are: 1. The ranking process should be based more on innovativeness of the participating innovations because the Accenture Innovation Awards is an innovation award. 2. The ranking process should become more objective. 3. The innovations should be judged on their own definition of success instead of the definition of success of others. 4. To better judge the innovativeness of innovations, the financial services industry should be
categorized into insurance, capital markets and banking. 5. Besides the factors found during the literature review, the three new factors found in the empirical research should also be taken into account when judging the potential of the participating innovations. The three new factors are:
financial crisis, technological development and finance. Besides these factors it is important to look critical at the sub-factor possible partners.
1. Introduction
This is a study on the success factors of the Accenture Innovation Awards winners. We will first provide some background information about the definition of innovation. Then, an explanation will be provided on the Accenture Innovation Awards. Thereafter, the financial services industry will be briefly discussed. Lastly, the purpose of the study and the structure will be explained.
1.1. Background
At the end of 2013 The Netherlands dropped three places, from number 5 to number 8, on global competitiveness index 2013-2014 of the World Economic Forum (Schwab, 2013).
Innovation is seen as a critical source of competitive advantage in an increasingly changing environment (Crossan and Apaydin, 2010). It is seen as a major driver for economic growth of a country. It is essential to recover from an economic downturn, to generate employment and increase the productivity. (OECD, 2010). As Michael Porter (1980) said: “Innovation is the central issue in economic prosperity”. Innovation needs to be incorporated by entrepreneurs in their daily activities and long-term strategy. Entrepreneurs have to deal with globalization of the marketplace which leads to more competition, technological changes (internet and mobile), political changes, economic changes (economic crisis) and a shift in the nature of customer demand (new needs, new behavior and new expectations). Innovation takes a lot of time, effort and money.
To encourage innovations many companies and governmental institutions reward innovative behavior by stimulating them via publicity, money and jury-awards. The Accenture Innovation Awards is such an example.
1.2. Accenture Innovation Awards
Every year, Accenture organizes the Accenture Innovation Awards (AIA). Accenture is a global management consulting, technology services and outsourcing company. It has approximately
261,000 employees who work in more than 120 countries. The Accenture Innovation Awards is a Dutch competition which began in 2007. The AIA is a contest where “concepts” (this is how Accenture calls the participating innovations of the entrepreneurs, this can be innovative starting companies but also existing companies with innovative projects) younger than three years can show their innovation to a larger audience. The innovative concepts need to be out of beta and have launched in market. This way, it is more than just an idea. An expert jury will judge their innovation. The goal is to honor, unite and stimulate innovation in The Netherlands. Besides this AIA tries to link big companies to start-ups to see if they can collaborate.
all service their own companies which are customers of Accenture. These CSGs are used as industries. The different industries are: consumer goods & services(CGS), financial services (FS), communication, media & technology (CMT), energy & chemicals (E&C), public sector& health (HPS) and sustainability (green). Since 2014 most of the industries have been divided into categories except sustainability, energy & chemical and financial services. The participants can enroll their concepts in the relevant category. The categories are related to the different industries. The categories include communications, consumer products and services, energy & chemicals, (e)retail, financial services, health, high tech, media & entertainment, public services and sustainability. The Accenture Innovation Awards started in 2007 with only the communication, media & technology (CMT) industry.
The financial service industry was included in the competition in 2010. From this time on also financial concepts could subscribe themselves. This research will only focus on the financial services industry. The financial services award strives to give an overview and insight into the trends and development of successful new concepts within the Dutch financial sector. In 2010, 106 financial service concepts were submitted to compete in the Innovation awards. In 2011, over 150 financial service concepts were submitted for the awards. In 2012, 190 concepts participated in the
competition for the financial services.
The innovative concepts will be ranked based on three pillars. These are: (1) potential, (2) successful implementation and (3) innovativeness. The potential is seen as the ability of an innovative concept to grow, breakthrough and become a success. The success of an innovative concept is seen in the achieved results thus far, the value it created. The innovativeness means the newness of the concept.
1.3. Financial services industry
The financial sector has traditionally been known for its tight institutional control and high entry barriers. In many European countries, however, the financial sector has changed from an almost closed sector, with conservative and slowly-operating companies to a dynamic one. Inside these dynamically growing companies, product innovation is slowly acquiring status as a separate activity (for instance the ABN Amro Innovation Centre) (Vermeulen, 2004).
However, the financial services industry faces some threats: customers become more
demanding, customer loyalty and trust are declining because of the economic downturn and financial crisis and there is a growing, international, competition of nontraditional service providers. Financial services companies need to react on this by building trust, reconnecting to their customers and renewing the service experience. (http://www.accenture.com/).
1.4. Purpose of the study
It is not always easy and possible to distribute awards or classify individuals/companies in a correct order. An example of this is the classification Peter and Waterman (1982) made in their book “In search of excellence: Lessons from America’s best run companies”. Peter and Waterman (1982) made a list of the top 50 most excellent companies by identifying characteristics of excellence. Many of the companies Peters and Waterman identified as excellent turned out to be unsuccessful after a couple of years. The companies they said that were excellent were not so excellent after all. (Byrne, 2011; Aupperle et al., 1986; Business History Fan, 2007) The categorization by Peter and Waterman did not work. Another example is the book “Build to last, successful habits of visionary companies” form Collins and Porras (1994). The book tells you how a company can be successful. The companies which Collins and Porras (1994) mentioned in their book as very successful turned out to be not that successful after all. (Reingold and Underwood, 2004; Nanninga, (2011). Having seen these two examples, it seems to be difficult to identify which companies are successful and which are not therefore the categorization is often wrong. This is why we would like to find out if the process of distributing the Accenture Innovation Awards to the winners needs to be adjusted or is good as it is. This master thesis will focus on start-up companies and not existing companies. New and young firms are particularly important for innovation because they often exploit technological and commercial opportunities which existing companies neglect. It is therefore important to create an environment that fosters start-ups. (OECD, 2010) The main research objective is:
“Does the process of distributing the awards of the Accenture Innovation Awards within the financial
services industry need to be changed, or is it fine as it is?”
To answer this research objective, three empirical research questions need to be answered. These are:
Erq1: Are the innovative concepts of this research (which ended in the top 10 ) successful?
Erq2: What categories and factors influence the success/performance of the innovative concepts that
participated in the Accenture Innovation Awards- Financial Services industry?
Erq 3: Why are some concepts more or less successful than others?
To be able to give a recommendation to Accenture, the empirical research questions need to be answered. To find an answer to the first two empirical research questions first an extensive literature review needs to be completed first, followed by empirical research. To find an answer to the third empirical research question, the answers of empirical research questions one and two will be used.
For the empirical research semi-structured interviews are held with the top 10 winners of the
Accenture Innovation Awards of the years 2010, 2011 and 2012 and questionnaires were completed.
1.5. Organization of the study
This master thesis is written in combination with an internship at the Accenture Innovation Awards 2014. The remainder of this thesis is divided into 7 chapters. The next chapter, Chapter 2, contains a literature review. It contains background information on innovation, entrepreneurship, different methods to measure performance/success of innovations and new ventures, factors that influence performance/ success of innovation and new ventures and an evaluation of the discussed literature. Chapter 3 shows the conceptual models that will be used in this research. In Chapter 4, the methodology and data of this research will be discussed. In Chapter 5, the results will be presented. It gives an analysis of the interviews and the outcomes of it. Chapter 6 presents the discussion. Here, the results will be interpreted, the ranking process will be explained and recommendations will be given based on this. In this chapter, the research objective will be answered. The last chapter, Chapter 7, contains the conclusion. It gives a summary of the research that was done. Besides this, future research will be discussed.
2. Literature review
This chapter gives an overview of the existing literature. To find an answer to the first two empirical research questions one must first look at the literature. Based on the first two empirical research questions there are two literature research questions that need to be answered. These questions are:
Lrq1: How can the performance/success of a concept be measured?
Lrq2: What factors influence the performance/ success of an innovation within the financial services industry?
As we saw in the introduction, the ranking of the innovative concepts within the Accenture Innovation Awards – Financial Services is based on three pillars. One of these pillars is “potential” and another one is “successful implementation” of the innovation. It is not only the innovation itself that matters but also the potential of success of the implementation of the innovation in the market. This means that besides innovation, entrepreneurship is involved when choosing a winning
innovative concept. This is why we will review literature both on innovation and on entrepreneurship. As we will see, entrepreneurship and innovation are connected.
First, definitions of innovation and entrepreneurship will be explained with a focus on the services industry. Then, performance and success literature with regard to entrepreneurship and innovation will be discussed. The last section provides an evaluation of the discussed literature.
2.1. Innovation
There has been much literature written on innovations. This sections provides insights into the definition of innovations, different types of innovation, services innovation and the innovation process.
2.1.1. Definition of innovation
It is very difficult to define what innovation is exactly. After investigating some well-known definitions of innovation (see Appendix 1), it can be seen that innovation has to do something with “creating new “. The Latin word “innovare” means “to make something new”. Every definition of innovation focuses on newness. It refers to the degree of familiarity firms or users have with the product (Johannessen, Olsen and Lumpkin, 2001).
An innovation is different from an invention. A discovery that goes no further than the laboratory remains an invention. A discovery that moves from the laboratory into production and add some economic value to the firm is considered an innovation. An innovation provides economic
value and is diffused to other partier than only the discoverers. (Garcia and Calantone, 2002). There exist different types of innovations. A lot of authors have written about the different dimensions of innovations. Avolontis and Papastathopoulou (2001) give in their article an overview of all the different dimensions of innovations mentioned by different authors. They found out that there exist six different types of service innovations within the financial services industry. These are new-to-the-market, new-to-the-company, new delivery process, service modifications, service line extensions, service repositioning’s. On the one hand, there are really new services, radical
innovations, and on the other hand the incremental innovations.
The overview of Avolontis and Papastathopoulou (2001) can be compared to the different levels Garcia and Catalone (2002) use for the novelty of innovations. Garcia and Catalone (2002) use different levels of novelty each with different characteristics. It can be used to measure the level of newness of an innovation. The distinction for each level of novelty is based on two levels, macro level (market, industry and global) and micro level (firm and consumer).
2.1.2. Service innovation
Tidd and Bessant (2007) mentioned that innovation is translating ideas into new services, products and processes. When we look at service and product innovations we see that there is a difference. The difference between products and services is that services are intangible,
heterogeneous, simultaneously produced and consumed and perishable. Services are easier to imitate. Innovations in services often involve small and incremental changes in processes and procedures. (Jong de and Vermeulen, 2003; Edgett and Parkinson, 1994; Vermeulen, 2004). Service products according to Johne and Storey (1998) can be seen as intangible core attributes which customers purchase. It is what customers receive from the organization. It is the bundle of services and products that are offered to meet the requirements of the customer for a particular service (Storey and Easingwood, 1998). New product development (NPD) is the development of tangible products which are new to the supplier (Johne and Storey, 1998).
According to the article of Den Hartog, van der Aa and de Jong (2010): “A service innovation is a new (service) experience or service solution for a customer in one or several dimensions: service concept, customer interaction, value system/business partners, revenue model, organization or technology”. In literature the definitions new service development (NSD) and service innovation are often used interchangeably. New service development (NSD) comes from service management and marketing that focuses on the idea of service quality. Service innovation comes from economics and business and focuses on entrepreneurship and technological development. NSD focuses on the understanding of service development practice and service innovation focuses on abstract theories (Menor, 2002).
2.1.3. Process of innovation
We will now look at how innovations arise. According to Hansen and Birkenshaw (2007) there are three phases within the development of innovations. They call it the innovation value chain. The first phase is to generate ideas. Ideas can come from inside the company (internal), from outside (external) or from collaborations with other companies. The second phase is idea conversion. This means, selecting ideas, get them funded and convert them into products/services. The third phase is diffuse the products/ services. This means that there needs to be a market for the products and services. There needs to be people or other companies who want to buy the innovation. The innovation needs to be rolled out across geographic locations, distribution channels and customer groups. (Hansen and Birkenshaw, 2007).
Flynn et al. (2003) try to better understand and manage the idea generation phase of the innovation value chain. The idea generation management can be divided into four phases. These are: 1. Strategic direction 2. Environmental scanning (business analysis) 3. Opportunity identification 4. Idea generation. The first phase means that the new ideas must be in accordance with the aims and objectives of the company. Strategy should be a key guiding factor in looking at new ideas. The second phase means that the environment, internal and external, needs to be scanned to initiate the idea generation. To facilitate this, communication networks need to be strengthened internally and externally. Scan for consumer information, competition information, industry and sector information, technology and process, economic climate, socio-cultural factors. This phase means opening up the company/employees. The third phase means that the information gathered in the second phase is used as input for this phase to look at potential opportunities. In this phase organizational culture, employee background and motivation influence the potential stimuli for organizational opportunity. The last phase, idea generation, means developing the idea from the opportunities discovered in the third phase into a concept for exploitation by the company (Flynn et al., 2003).
2.2. Entrepreneurship
In this research, start-up concepts are studied. This section discusses literature written on entrepreneurship. We will first discuss the definition of entrepreneurship. Then, we will explain the process of entrepreneurship and the relationship between entrepreneurship and innovations.
2.2.1. Definition of entrepreneurship
There is no generally accepted definition of entrepreneurship. Appendix 2 shows different definitions of entrepreneurship in the literature. Having seen the different definitions of
entrepreneur is the prime mover of the entrepreneurial process (Bhave, 1993).When an
entrepreneur wants to exploit an opportunity he/she must believe that the value of the resources in the way he/she wants to use them are higher than when they are exploited in their current form. One creates new markets by letting entrepreneurs buy resources, use these resources for different purposes and sell the outputs. When the ideas of the entrepreneurs about the resources are correct, they can make profit. (Eckhardt and Shane, 2003). Entrepreneurship can be practiced at any level of the organization. This means that it can be practiced within a company but also by individual(s) who starts a new venture.
2.2.2. Relationship between entrepreneurship and innovation
Entrepreneurship and innovation are not the same. Entrepreneurship is about the
commercialization of new ideas or innovations. Innovation is a key component to entrepreneurship and a key element in business success (Schumpeter, 1982). Innovative entrepreneurs exploit new opportunities for value (Schumpter (1934) in: Amitt and Zott (2001)). According to Drucker (1985), innovation is a specific element in entrepreneurship. Schumpeter (1934) says that innovation is essential to entrepreneurship. Entrepreneurial activity has an important role in the conversion of technological and organizational innovation into new and more efficient products/services. It leads to transformation of markets and economic development, thus value creation (Schumpter,1934 in: Amit and Zott, 2001). As we will see in the three phase model of Bhave (1994) entrepreneurs include different amounts of novelty at each core value (business concept, production technology and product). This means that they include different degrees of innovations in creating a venture. Zhao (2005) found out that entrepreneurship and innovation are positively related and help an
organization flourish.
2.2.3. Process of entrepreneurship
We will now describe two models on the process of entrepreneurship of a new venture. The first model is the one of Bhave (1994) who came up with an integrative framework to bring some cohesion in the existing literature. Bhave (1994) came up with a three phase model of
entrepreneurial venture creation. Venture creation begins with an idea for a business and ends with selling products/ services to customers in a market. The model consists of the opportunity stage (internally and externally opportunity recognition), technology set up and organization-creation stage; and the exchange stage (linking with market and feedback or customers). There are a couple of core variables which represent the three stages. These core variables are business concept, production technology and product. During this venture creation, entrepreneurs include different amounts of novelty at each core value. These different kinds of novelty means a different kind of
entrepreneurship (Bhave (1994).
The second model is the one of Baron and Shane (2003) who describe the entrepreneurial process as a five phase process: 1. Idea for a new product or service/opportunity recognition. 2. Initial decision to proceed. 3. Assembling the required resources. 4. Actual launch of the new
venture. 5. Building a successful business and harvesting the rewards. The outcomes at each level are affected by individual level (skills, motives and characteristics of the entrepreneurs), group-level (ideas, inputs from others, effectiveness of interactions with venture capitalists, customers, potential employees) and societal level factors (government policies, economic conditions, technology) (Baron and Shane (2004).
We see that both models can be compared with each other. The first stage of Bhave (1994) is the same as the first two stages of Baron and Shane (2003). The second stage of Bhave (1994) can be compared to the third stage of Baron and Shane (2003). The third stage of Bhave (1994) can be compared to the fourth and fifth stage of Baron and Shane (2003).
2.3. Financial services industry
The article of Edgett and Parkinson (1994) tells us that it is necessary for empirical studies on the determinants of success and failure to focus on a specific service industry rather than to take a cross-sectional approach. This study will focus on the financial services industry.
Financial services are economic services provided by the finance industry. The industry classification benchmark is a classification of the different types of industries that exists. Financials in one of the industry sectors. The financial industry sector can be divided, among others, into the financial services. The financial services can further be divided into asset management, consumer finance, specialty finance, investment services and mortgage finance. According to the Thomson Reuter business classification financial contains the banking and investment services, insurance, real estate and investment trusts. According to the Global Industry Classification Standard, financial includes banks, diversified financials, insurance and real estate. The financial services includes banks, insurance firms, trust companies and other financial institutions. According to Accenture, the
financial services consist of banking (payment services, core banking, credit services), capital market (trading services, wealth and asset management services) and insurance (life insurances, property and casualty insurance services) (http://www.accenture.com/).
The financial services industry is traditionally known for its tight control and high entry barriers. However in many European countries it has changed from a closed sector with conservative and slowly operating companies to a more dynamic one (Vermeulen, 2004). Driving forces for innovation in financial services are new technology, changing customer needs and increasing competition due to globalization (Drew, 1995). The customer loyalty and trust are declining because
of the economic downturn and financial fallout. (http://www.accenture.com/ ). Financial services companies need to react to this by building trust, reconnecting to the customers and renewing the service experience. (http://www.accenture.com/ )
Today, most new concepts introduced in the market are technology based. New technologies lower the barrier for new entrants which requires traditional financial institutions to act faster and innovate more to stay ahead (Cooper et al., 2004). Another trend seen is that financial services have become more consumer focused. Changes in business models have been seen because of regulatory changes and new revenue pools because of the financial crisis (http://www.accenture.com/ ).
2.4. How to define performance/ success
There is much literature written on success. What does success actually mean? When is something considered a success? According to Cooper et al. (2004) performance can be seen as the degree of success. This section includes entrepreneurial literature written on measuring
performance/success and the ways to measure performance/ success in the innovation literature.
2.4.1. Measures of performance/ success of entrepreneurship
According to Rauch et al. (2009) and Stuart and Abetti (1987) there are a lot of different indicators to measure performance in empirical literature. These measures can be divided in three groups:
* Group 1: Financial measures. This is the most common used to measure firm performance.
Financial measures are easily identifiable and therefore very popular to measure performance. Covin and Slevin (1991) use two different dimensions to measure firm performance. These are growth and profitability. These two dimensions are related but there are important differences between them. For instance, a business can invest in long-term growth which means that short-term profitability is negative. These type of measures are quantitative which makes it very easy to identify.
*Group 2: Meeting the expectations and goals: While financial return is one of the most easily quantifiable industrial parameters, it is far from the only one (Stuart and Abetti, 1987). Not all entrepreneurs want to grow their business (Walker and Brown, 2004). Success can also be defined as meeting or not meeting expectations. Maidique and Zirger (1985) stated: “Success is defined as the achievement of something desired, planned or attempted” . Maidique and Zirger (1985) said that many products that are financially not successful could be non-financially successful. Examples of non-financial measurement are image, goodwill and commitment, task involvement and satisfaction of employees and owners (Lumpkin and Dess, 1996; Rauch et al, 2009; Zahra, 1993). But they also include increasing in employment contribution to the society, learning process of the firm (Stuart and Abetti, 1987); and autonomy and the ability to balance work responsibilities and family (Walker and
brown, 2004). The definitions of the non-financial measures are very extensive, not well explained and not easily quantifiable which makes it very difficult to identify these types of measures. *Group 3: Survival: According to Stuart and Abetti (1987) survival is another way to measure the success of a firm. Survival is the opposite of failure. A firm can fail because of unmet objectives of the entrepreneur or unable to satisfy financial obligations to creditors. It is an absolute measure of performance (Chrisman et al., 2005). This type of measure is very easy to identify. When a company does not exist anymore you know that it did not survive.
These three groups are the most used measures for success. Walker and Brown (2004) did research on what small business owners see as a success. Small business owners use both financial and non-financial criteria to judge their business success. The non-financial lifestyle criteria are more important than the financial criteria. They found out that personal satisfaction and achievement, pride in the job and flexible lifestyle are most of the time valued higher than wealth creation.
2.4.2. Measuring performance/success of innovations
Besides the literature on the definition of success with an entrepreneurship point of view, there is also literature with an innovation point of view. There are two different methods used within the literature on innovation to measure performance. First, asking those involved to assess the innovation. Detailed questions are asked to the participants concerning types of success and failure and the inputs (Cooper and DeBrentani, 1991). In the article of Edgett and Parkinson (1994), on identifying determinants of success and failure in the financial services industry, success was defined by each respondent in terms of their own company’s interpretation in whether or not the service met their success criteria. This type of measure can be easily used. The questions asked to the participants in the article of Cooper and DeBrentani (1991) can be looked at and can be used in another research on the success /performance of companies. The method which Edgett and Parkinson (1994) used in their article can easily be repeated, by asking the opinions of the participants. Second, there are different types of benefits of innovations which measures the successes/ performances. Griffin and Page (1993) tried to identify all currently used measures of performance until then. They compared the measures used in over 75 studies of companies and organized them into five categories. They found out that most of the firms use four measures from two different categories in determining success. Most of these measures are based on financial criteria. The five categories Griffin and Page (1993) came up with are: overall firm benefit, program level benefit, product level benefit, financial benefit, customer acceptance benefit. There are 16 measures they discovered that everyone uses of wants to use. These are the core success/failure measures. Appendix 3 shows the 16 core measures.
company. They used the results of a large survey of new financial services and mentioned two different types of benefits within the financial services industry: 1. Company benefits (enhanced opportunities) 2 Product benefits (sales performance, profitability). When doing research they also kept the research of Griffin and Page (1993) in mind.
Cooper et al. (1994) looked in the research data from 173 new financial services and
identified three performance dimensions: 1. Financial performance, (product benefit) 2. Relationship enhancement (companies benefit) 3. Market development (product benefit). Within this research they used the research of Griffin and Page (1993).
Besides the research on how to measure performance/success of products/services and companies itself we can also look at what methods other researchers used in their research on topics where measuring performance/success is necessary. In 1996, Storey and Easingwood studied the determinants of new product performance within the financial services sector. The aim was to find out what factors managers need to pay attention to when introducing new offers in a competitive marketplace like the financial services sector. Part of the study was to measure the performance of the new service of the participating companies. Storey and Easingwood (1996) mention that the performance of new services cannot be assessed on a single item, but rather a number of measures. It involves more than the traditional financial benefits. This was based, among others, on the article of Griffin and Page (1993) about measuring product development success and failure. Storey and Easingwood (1996) used 13 statements to measure the performance of the new services of the participating companies. These could be divided into three independent factors namely, sales performance, enhanced opportunities and profitability. Cooper and DeBrentani (1991) used in their research on what distinguishes the winner within the financial services industry, both methods noted earlier to measure the performance/success of the innovations. They did an assessment of the company itself on success and also used the method of the company and product benefits as a measure of performance. They asked four questions: 1. If the project met the companies minimum criteria for success (yes/ no categorization), 2. If the product performance exceeded the companies minimum acceptable criteria for success (-6 to +6 scale), 3. If the project met the sales objectives, (1-7 Likert scale) 4. If the companies met the profit objectives (1-(1-7 Likert scale). They used these measures separately to show that the factors on success they found really related to performance. Cooper and Kleinschmidt (1995) looked at their research for benchmarking the firm critical success factors in new product development only at the companies benefit to see if a product was a success or not. They identified 10 performance measures of a company’s new product program (success rate, percent of sales, profitability relative to spending, technical success rating, sales impact, profit impact, success in meeting sales objective, success in meeting profit objective, profitability relative to competitors, overall success). This study was mainly focused on NPD in an existing company. The
study of Avolontis et al. (2001), to test how different types of innovations may be associated with different patterns and performance outcomes, used both financial and non-financial outcomes to measure performance. Overall performance was measured by a Likert-type scale including eleven elements drawn from Cooper et al. (1994). Avolontis et al. (2001) averaged the original scores of the items to be able to look at the performance of the different companies involved in the research. Cooper et al. (1994) used in their research 14 gauges of new product performance. They ranged from financial gauges to measures of customer relationships enhancement. Appendix 4 shows the 14 different gauges.
2.5. Categories and factors that influence performance/success
There are a lot of different factors seen in literature that could explain the success of an innovative concept. These factors can be grouped into categories. We will first discuss the business model and strategy and the influence of it on performance/success. As seen before, the literature about the influence on performance/success is divided into entrepreneurship and innovation literature.
2.5.1. Business model and strategy
The essence of a business model according to Teece (2009) is “Defining the way the firm delivers value to customers, entices customers to pay for value, and converts those payments to profit”. The business model reflects what the customers want, how they want it and how the company can meet those needs, get paid and make profit. Without a good business model entrepreneurs/innovators will fail to deliver or capture value from their concept. A good business model is essential when the business is first created but to keep the model viable is a continuing task. But developing a successful business model is not enough for capturing a competitive advantage. In practice a business model often becomes shared with competitors eventually. A business model needs to be coupled to a business strategy in order to keep a competitive advantage. Designing a business model requires creativity, insight and a good deal of customer, competitor and supplier information and intelligence. Entrepreneurs need to find out what the future behavior of consumers and competitors are and what the future costs will be. It is often the case that the right business model is not apparent to learn and adjustment is necessary (Teece, 2009).
According to Morris et al. (2005) there are six components of a business model which are: factors related to the offering (how to create value), market factors (who to create value for), internal capability factors (sources of competence), competitive strategy factors (how to
competitively position), economic factors (how to make money), personal/ investor factors (what are time, space, scope, ambitions).
2.5.2. Categories and factors that influence entrepreneurship performance/ success
Gartner (1985) was one of the first who came up with a framework on the factors that influence new venture creation. He came up with four different categories that influence new venture creation. The four categories are: 1. the characteristics of the person who starts the venture (individual), 2. the organization they create, 3. the environment surrounding the new venture, 4. the process by which the new venture is started. Appendix 5 shows the framework for new venture creation (Gartner, 1985).
The first category (individual) entails the factors job satisfaction, previous work experience, entrepreneurial parents, age, education. The second category ( organization) mainly focuses on the strategies applied to gain competitive advantage. Such as differentiation, overall cost leadership and type of market entry. The third category (process) means that entrepreneurs locate a business opportunity, accumulate resources, market products and services, produce the products, build an organization and respond to the government and society. The fourth category (environment) entails factors like venture capital availability, presence of experienced entrepreneurs, technically skilled labor force, accessibility of suppliers, accessibility of customers and new markets, governmental influences, proximity of universities, availability of land or facilities, accessibility of transportation, attitude of the area population, availability of supporting services, living conditions (Gartner, 1985).) Sandberg and Hofer (1987) argues that new venture performance depends on the
entrepreneur, industry structure and strategy. Chrisman et al. (1998) reviewed a lot of literature on the influence on performance/success and extended the model of Sandberg by including resources, organizational structure, processes and systems. Chrisman et al. (1998) gives a summary of all the categories and related factors that influence performance/success.
2.5.2.1. The entrepreneurial category
To illustrate how complicated the categories of Chrisman et al. (1998) are, we will explore in more depth the entrepreneurial category. All categories consist of many factors which influence venture performance. They can all be explained in a similar way. Appendix 6 gives an overview of entrepreneurial category and the associated factors that influence the new venture performance. (Chrisman et al., 1998). We will now discuss the personality characteristics of the entrepreneurs in more detail. These characteristics seems to be important within this study.
Motivation
According to Gatewood et al. (2003) motivation serves as a mechanism for satisfying individual needs. In the motivation research, expectancy plays a big role in explaining human
that the effort results in a particular level of performance (effort-performance relationship). 2. People must believe that a particular performance level results in a desired outcome (instrumentality relationship). 3. The outcome must be attractive to be motivated to attain it (Gatewood et al., 2003). Shane et al. (2003) found out that when environmental factors are being held constant, human motivation plays a big role in the entrepreneurial process. Motivation influences entrepreneurship. The article of Shane et al. (2003) shows that in previous literature there are several motivational factors that affect entrepreneurship. These motivations are: need for achievement, risk-taking, tolerance for ambiguity, locus of control, self-efficacy, goals setting, independence, drive, passion. These motivational factors match with the personality characteristics of the entrepreneurial variable of Chrisman et al. (1998). See appendix 7.
According to the research of Baum and Locke (2004) at least three motivational factors influence firm performance. Vision, goals and self-efficacy. Vision means a mental image of what the entrepreneurs want to achieve. It reflects the values and outcomes to which a firm should aspire. Communication of the visions to employees is very important. Self-efficacy means how confident someone is in doing her/his task. Like starting a business. It not only reflects past experience but also what someone concludes from these experiences. The entrepreneurs who are more confident will sooner choose an entrepreneurial career. (Baum and Locke, 2004). Goals mean that challenging goals lead to higher performance than other types of goals. Baum and Locke (2004) see goals as important factors in venture growth of entrepreneurs and new venture survival. We can find these three different motivational factors also in the table of Chrisman et al. (1998) on the factors of the category entrepreneur that influence entrepreneurial performance.
The literature on motivation can be divided in push and pull motivation. Pull motivation means that the individual has a strong internal positive desire to start a business. Push motivation is based on external negative reasons. Example of pull motivations are: personal freedom,
independence gained, personal satisfaction, less rigid, more flexible lifestyle, greater job satisfaction, encounter new challenges, pursuing one’s own interest (Walker and Brown, 2004) but also being one’s own boss, creative expression, doing enjoyable work and profit motives (Watson et al., 1994). Push factors include redundancy, blocked promotion, recession, unemployment, frustration with previous employment, the need for creative expression and the need to earn a reasonable living (Watson et al., 1994). According to the article of Amit and Muller (1995) pull entrepreneurs are more successful than push entrepreneurs. The motivational factors mentioned above are pull motivation. Self-fulfilling prophecy
We will now look at the literature on self-efficacy and the relationship with self-fulfilling prophecy . Self-efficacy is an important motivational factor. It influences choices, goals, emotional
reactions, effort, coping and persistence on an individual. Self-efficacy can change because of learning, an experience and feedback cycle (Girst and Mitchel, 1992). Entrepreneurial self-efficacy (ESE) is focused on the entrepreneurial side of self-efficacy. It is the degree to which people see themselves as having the ability to successfully perform the roles and tasks of entrepreneurship. (Hmileski and Baron (2008).
Research on entrepreneurs showed that the self-efficacy and success/performance of a business are related. Individuals who expect to perform well, do (Gatewood et al., 2003). However, when someone is doubting about its own capabilities it could result in a self-fulfilling prophecy because of reducing performance of the task. This is in accordance with the fact that entrepreneurs who are higher in self-efficacy lead their firms to higher levels of revenues and employment growth compared to entrepreneurs with lower self-efficacy. (Hmileski and Baron,2008)
The research of Boyd and Vozikis (1994) showed that feedback influences self-efficacy. When people get positive feedback they are more likely to perform greater effort. There is a possibility that positive feedback leads to unrealistic high levels of self-efficacy (Boyd and Vozikis, 1994). The type of feedback (positive or negative) that people received regarding their entrepreneurial ability changes expectancies on future business startups. Individuals with positive feedback had higher expectancies of their business than the ones with negative feedback (Gatewoord et al., 2003). Extreme levels of confidence of the entrepreneurs (arrogance, disproportionate pride) may negatively influence the performance. (Hmileski and Baron, 2008)
Concluding, feedback influences ESE (Gatewood et al., 2003). When awards are distributed to a winner, the winner gets positive feedback. This leads to higher ESE, which leads to higher
performance/success of the start-up (Gatewood et al., 2003). This means self-fulfilling prophecy. However, when the level of self-efficacy gets too high because of winning the awards, the performance of the start-up is influenced negatively (Hmileski 2008).
2.5.3. Categories and factors that influence innovation performance/success
Besides literature on categories and factors that influence the performance of
entrepreneurship there is also literature on categories and factors that influence the performance of innovations. We saw in the literature on innovation that new service development and service innovation are used interchangeable. When we talk about NSD we mean service innovation. There are two main types of NSD tasks, these are project tasks and program tasks. Project task means getting a single new service development right. Program task is concerned with getting a series of service product development right (Johne and Storey, 2002). Project success and failure can rarely be explained by one or two support activities. It is often multi-factored. Support activities can be divided into three broad subtasks, namely : opportunity analysis (which includes product synergy, managerial
synergy, market knowledge, market orientation, product of high importance, market attractiveness, market synergy), project development (which includes innovation orientation, effective NSD
management, speed of development, co-ordination, organizational support, extensive testing, launch preparation, formal and effective launch), offer formulation (which includes product advantage, customer knowledge, highly innovative, product quality, quality of service experience, effective communications, front-line expertise, extensive distribution systems, customer participation in delivery) (Johne and Storey, 1998).
The article of Panne et al. (2003) shows a literature review on success and failure of innovation. They distinguish four categories of factors that affect the viability of a new
product/service. The four categories of factors are: firm related factors, project related factors, product related factors and market related factors. The figure in appendix 7 shows the four
categories and their influence on success according to the literature. The four categories of Panne et al. (2003) can be related to the ones of Johne and Storey (1998).
2.6. Evaluation of the literature
This section contains an evaluation of the literature described in the literature review. It will explain which articles can be used for this study and why and what the quality of the research mentioned in the literature review is.
The literature can be divided in the two literature research questions. In the first section we will discuss the literature with regard to the first literature research question. In the second section we will discuss the literature on the second literature research question.
2.6.1 Literature research question 1
To be able to answer this research question we first needed to know when companies are seen as a success. We need to know how we can judge if companies are successful or not. The literature review looked at the definition of successful/performance within the literature on entrepreneurship as well as the literature on innovations. It showed that in the literature of
entrepreneurship there are many different indicators used to measure performance/success (Rauch et al., 2009; Stuart and Abetti, 1987). The three main categories to measure the
performance/success of a company are: 1. financial 2. meeting expectations/ goals (non-financial) 3. survival (non-financial). Most of these non-financial criteria are not quantifiable and very hard to measure they therefore cannot be used in this study. On the other hand, the financial measures are quantifiable and therefore easier to measure. However, Walker and Brown (2004) found out that small business owners use both financial as non-financial indicators to measure
criteria.
From the innovation literature we see that there are mainly two different methods used to find out if an innovation is a success or not. The first is asking the innovators to judge their innovation within the financial services industry and find out if they see themselves as a success (Cooper and DeBrentani, 1991; Edgett and Parkinson, 1994). This can be done reasonably easily. The second method is by looking at the different types of benefits . Griffin and Page (1993) reported on the existing literature on performance measures of NPD. They found five different categories of measures (customer acceptance, financial performance, product level, firm level, program level) containing 16 core measures to measure these categories. This report however is not specialized to the financial services industry. Storey and Easingwood (1996), Storey and Easingwood (1999) and Cooper et al. (1994) did research on the ways to measure performance/success of companies within the financial services industry. All three articles mentioned the research of Griffin and Page (1993) as an important one. Storey and Easingwood (1999) came up with two different types of benefits namely product and company benefits. However it not possible to find out how they exactly measured performance. This is not explained in the article. Therefore we cannot use this article. In the article of Cooper et al. (1994) obtained data from 173 new financial services. They identified three performance dimensions: 1. financial performance (product and company benefit) 2.
relationship enhancement (companies benefit) 3. market development (product benefit). They used 14 gauges of new product performance (see Appendix 4).
Storey and Easingwood (1996) studied the determinants of new product performance within the financial services sector. Part of this research was to measure the performance. Following the example of Griffin and Page (1993) they mentioned that the performance cannot be assessed based on one measure. There are multiple measures. They used 13 statements to measure the
performance of new services. Some of these statements are intended for projects of existing
companies. They are about the influence of the product on the company. The statements were rated on a 1-7 Likert scale.
Avolontis et al. (2001) did an extensive literature review to design the conceptual model of their research. In the research of Avolontis et al. (2001) performance was measured by a Likert-type scale including 11 elements drawn from Cooper et al. (1994). They averaged the scores to be able to compare the companies within their research. The research of Avolontis et al. (2001) was held within the financial services industry.
Cooper and Kleinschmidt (1995) identified 10 performance measures of a company’s new product program. (success rate, percent of sales, profitability relative to spending, technical success rating, sales impact, profit impact, success in meeting sales objective, success in meeting profit objective, profitability relative to competitors, overall success). Although this research was mainly
focused on NPD in an existing company and is not specified to the financial services industry we see some similarities with the researches specified to the financial services industry. It can serve as a benchmark to compare the other measures against.
2.6.2. Literature research question 2:
We will now evaluate the literature on the categories and factors that influence
performance/success. We need to know these categories and factors within the financial services industry in order answer to the second research question. The literature review made a distinction between literature on entrepreneurship and literature on innovation.
There are a couple of phases involved in the process of starting a new company and the creation of an innovation. Bhave (1994) and Baron and Shane (2003) came up with a couple of phases for new venture creations. According to Bhave (1994), these are opportunity stage, technology set-up/ venture creation, exchange stage. Baron and Shane (2003) identified the
opportunity recognition, decision to proceed, assembling required resources, launch of new venture and building a new venture. As described in the literature review, these two models are very similar. They are however only focused on entrepreneurship. Hansen and Birkenshaw (2007) came up with three phases for innovation creation. These are idea generation, idea conversion and diffuse
product/services. Flynn et al. (2003) tries to better understand the idea generation phase and divides it into another four phases: strategic direction, environmental scanning (business analysis),
opportunity identification and idea generation. This literature on innovation is focused on existing companies who create an innovation but also innovative new ventures. This master thesis focuses on the last. With this in mind we see that the phases of process of starting a new venture and
innovation creation can be compared and are almost the same.
Essential when starting a venture is making a business model (Teece, 2009). The business model consists of market factors (who to create value for), internal capability factors (sources of competence), competitive strategy factors (how to competitively position), economic factors (how to make money) and personal/ investor factors (what are time, space, scope, ambitions). (Morris et al. 2005).
The literature on the process of starting a new venture and creating innovations can be related to the literature on the categories and factors that influence the performance/success of innovations and new ventures. The categories and factors that influence performance/success of innovation and new ventures are all part of the entrepreneurial and innovation process.
Gartner (1985) was one of the first who came up with four categories of factors that influences new venture creations. He came up with a framework to describe the phenomenon of
new venture creation. He made a description based on previous entrepreneurial literature. Process was one of the categories he mentioned. With this he meant that entrepreneurs locate a business opportunity, accumulate resources, market products and services, produce the products, build an organization and responds to the government and society. Besides the process also the environment, organization and environment are important categories of factors according to Gartner (1985). These categories of Gartner (1985) can all be seen in the components of what a business model consists of (Morris et al., 2005) and in the different phases of the process models (Bhave 1994; Flynn et al., 2003; Baron and Shane, 2003).
Gartner (1985) was not the only one who did research on the categories and factors that influence performance/success of companies. In 1987 the model of Gartner (1985) was extended by Sandberg and Hofer (1987) with industry structure and strategy. In 1998 Chrisman et al. (1998) extended it with the categories resources, organizational structure, processes and systems. The article of Chrisman et al. (1998) reviewed all previous literature on categories and factors which influence performance/ success. This means that much literature has been reviewed in order to present the determinants of Chrisman et al. (1998).
The literature review delved deeper into the entrepreneurial category because motivation to start a business and self-fulfilling prophecy of winning an award are probably important factors within this master thesis.
Categories of factors that influence the performance of innovations are opportunity analysis, project development and offer formulation (Johne and Storey, 1998). Johne and Storey (1998) did a critical review on the literature, written up to then, on new service development especially in the financial services sector (in Chapter 2.1.3 we saw that new service development and service innovation are used interchangeably). It builds on recent insights of other researchers. Panne et al. (2003) showed a literature review on success and failure of innovation. They examined 43 recent papers about categories and factors behind success and failure of innovative projects. They found a strong consensus about the most important categories. The important categories are firm, project, product and market related. The categories of Panne et al. (2003) and Johne and Storey (1998) can be related to each other.
3. Conceptual framework and research questions
This chapter contains the conceptual framework based on previous research findings mentioned in the literature review. In this qualitative research, we study the process of choosing awards winners during the Accenture Innovation Awards to see if it needs to be changed or is good as it is. The conceptual framework consists of two models, one model for each empirical research question. The first model identifies the most important measures of success/performance. The second model identifies and combines the important success categories and factors of innovations and entrepreneurship.
3.1. Conceptual model 1 on empirical research question 1
In this section we will make a conceptual model that can help find an answer to empirical research question 1. We will make use of the literature, which was based on the literature research questions, to make a conceptual model.
There is not a common definition of success. Success for one individual does not mean the same thing for another individual. The criteria for success are different for each individual. Having reviewed the literature, the following scheme has been made to find out if a concept is a success or not. It is a combination of both the entrepreneurial and innovation literature. It is based on the evaluation of the literature and the fact if it can be measured easily or not.
1. Find out if the concept survived (literature on entrepreneurship).
2. Find out if the concept is a success in the eyes of the founders (Cooper and DeBrentani, 1991; Edgett and Parkinson, 1994) (literature on innovation). This also involves the goals and expectations (literature on entrepreneurship) of the founder(s). It will provide a subjective view on success.
3. To get a more objective view on success we will look at the product benefits and financial and market development (Cooper et al., 1994; Avolontis et al., 2001; Cooper and
Kleinschmidt, 1995; Storey and Easingwood, 1996).
This scheme will help answering the first empirical research question:
***Are the innovative concepts of this research (which ended in the top 10 ) successful?***
3.2. Conceptual model 2 on empirical research question 2
In this section we will make a conceptual model that can help find an answer to empirical research question 2. We will make use of the discussed literature in the previous chapter, which was based on the literature research questions, to make a conceptual model.
We saw in section 2.1.4. and 2.2.3 the process of innovation and new venture creation. Section 2.5, Categories and factors that influence performance/success, can be related to this literature. Making a business model and find a strategy is part of the process described. Besides this, other categories and factors that influence innovation and entrepreneurship can be found in the process of innovation and new venture creation. With this in mind we can now combine all the categories and factors that influence innovation and entrepreneurship performance/success and come up with a conceptual model (see figure 1.). A distinction can be made between internal and external categories. By the internal category we mean the aspects of the innovation on which the start-up has a lot of influence. With the external category, environmental factors are involved. The innovative concepts have little to no control on these.
To start with the internal categories. There are four internal categories distinguished. The first category is called the “Individual’. According to Gartner (1985) the individual is an important category of performance/success of entrepreneurship. Sandberg and Hofer (1987) and later Chrisman et al. (1998) confirm this in their models. According to Morris et al. (2005) the personal category is an important component of the business model. Motivation and self-fulfilling prophecy are part of the individual category and are highlighted in the literature review. Baron and Shane (2004) described that the outcome at each level of the entrepreneurial process depends, among other things, on the individual level (motivation and characteristics are part of it).
The second internal category in the conceptual model is called “Firm”. The firm-related factors of Panne et al. (2003) entails among others organizational structure, culture of the firm and team. It can be compared to the internal capability category which is part of the business model (Morris et al., 2005). In the conceptual model it means what is involved in the firm internally. It can be compared with the category “organization” which Gartner (1985) mentions but this is not true. Gartner (1985) means with the term “organization”, an externally oriented organization. In the conceptual model the category “firm” is internally focused. It can be compared with the
organizational structure and is a part of the resources which Sandberg and Hofer (1987) include in the model of Gartner (1985).
The third category is the “Offer”. This is a combination of the offer formulation of Johne and Storey (1998), product related factors of Panne et al. (2003) and a part of the resources of Chrisman et al. (1998). The offering is an important component of the business model (Morris et al., 2005). The fourth category is “Offer development”. This is the same as project development of Johne and Storey (1998). In this research we call it offer development. Project development seems to indicate that it is about a project within an existing company, this research however focuses on start-ups.
