An Analysis of Technological Capabilities and Business Eco-system through Radical Innovation for Sustainability of Start-up Companies

 

Dilip. N. S¹., Dr. G. Devakumar²

¹Marketing Management Student, Faculty of Management and Commerce,

Ramaiah University of Applied Sciences, Bengaluru

 

ABSTRACT:

The Aim of this study is to identify the critical factors influencing sustainability of the start-up companies.  Literature survey has been carried out from the scholarly journals and relevant factors have been identified which influences sustainability of Start-up Companies. Based on the literature survey the author suggested to build conceptual framework based on the factors such as Technological capabilities, Business eco-system and Radical innovation. In addition, the independent variables have been identified through literature gap and the new conceptual framework has been developed hypothetically to test the factors which influence Sustainability of Start-up Companies. Since the study is limited to critical literature review, the author has gone ahead with the study for the development of new conceptual framework.

 

 

 

 

INTRODUCTION:

India’s Silicon Valley Bangalore has seen a huge number of start-ups sprouting up in the last few years. Apart from Unicorns like Flipkart, Inmobi, Mu Sigma, Bangalore is also home for some of the most innovative companies. Several scientific studies have come to the conclusion that start-ups bring needed impulses for change and innovation and have a positive impact on economic growth and on labor markets (Gary S. Hansen, 1989). They are studied in courses about innovation and can even serve as role models for the biggest enterprises. A start-up company is an entrepreneurial venture which is typically a newly emerged, fast-growing business that aims to meet a marketplace need by developing a viable business model around an innovative product, service, process or a platform.  Startup will begin by building a first Minimum viable product (MVP), and develop the new ideas or business concepts.  Startups founders do research to deepen their understanding of the ideas, technologies or business concepts and their commercial potential (Antonio Davila, 2005).

Innovation considered as the application of better solutions that meet new requirements or existing market needs. The term "innovation" can be defined as something original and more effective which` "breaks into" the market or society.

 

Startups failure and success depend on a countless number of factors. Financing has been identified as a major factor in the success of most startups. Most startups fail not because they lack financing but because they do not have the foresight and good R&D team (George Foster, 2005). It has been identified that financing is highly correlated with good innovation. Many companies were not able to survive because they could not keep up with the innovation cap in the market. Innovation can be seen as a survival technique (Diane A. Isabelle, 2013).

 

Factors Influencing Sustainability of Startup Companies:

Business sustainability is often defined as managing the triple bottom line - a process by which companies manage their financial, social and environmental risks, obligations and opportunities. These three impacts are sometimes referred to as profits, people and planet (Graham Hubbard, 2009).

 

Technological Capability and Performance:

Teece et al (1997) describe a “technological capability” as “the ability to perform any relevant technical function or volume activity within the organization including the ability to develop new products and processes and to operate facilities effectively”.

 

The ability of technological capability to control the ability of the organization to perform should be a positive step for the organization to gain the competitive edge over others. This implies that technological capabilities will help the organization to efficiently produce more products at the lowest cost possible thereby enhancing its economies of scale (Nur Naha Abu Mansor, 2012).

 

Business Eco System:

A business ecosystem is the network of organizations — including suppliers, distributors, customers, competitors, government agencies, and so on — involved in the delivery of a specific product or service through both competition and cooperation. The idea is that each entity in the ecosystem affects and is affected by the others, creating a constantly evolving relationship in which each entity must be flexible and adaptable in order to survive, as in a biological ecosystem.

 

 

The business ecosystem consists of a network of interlinked companies that dynamically interact with each other through competition and cooperation to grow sales and survive, it means that the participants have developed patterns of behavior that streamline the flow of ideas, talent and capital throughout the system. Being a part of a business ecosystem provides mechanisms to leverage technology achieve excellence in research and business competence and compete effectively against other companies (Ananya Raka Chakraborty, 2012).

 

Radical Innovation:

Radical innovation is an invention that destroys or supplants an existing business model. Unlike architectural or incremental innovation, radical innovation blows up the existing system or process and replaces it with something entirely new (Frank de Langen, 2012)

 

A radical or disruptive innovation is an innovation that has a significant impact on a market and on the economic activity of firms in that market. This concept focuses on the impact of innovations as opposed to their novelty. The innovation could, for example, change the structure of the market, create new markets or render existing products obsolete.

 

SIGNIFICANCE OF THE STUDY:

Businesses are a vital component of every economy. It creates job and reduces the burden of many households. The number of launched Start-up is very high and the number of start-ups that don't survive due to various reasons also high. Factors such as environment, social, technological, and political factors are known to be the most common factors that cause the failure of most startups. Others such as knowledge in the said area of startup, leadership skills, financing, marketing, and promotion are also major factors which affect the performance of the startups. Lack of Technology, Innovations and digitalization are the main reasons for the failure of startup. Though there are many research scholars addressed on the individual components of startup performance. Hence this researcher is intended to few parameters like Technological capabilities, Business eco-system, Radical Innovations and their influencing factors so as to develop the conceptual framework for the sustainability of start-up companies.

 

METHODOLOGY OF THE SYSTEMATIC REVIEW:

It is indeed to analyze the various parameters which will bring out measurability of the sustainability of startups. Hence various Scopus indexed journals have been reviewed and the gaps identified are listed as below.

 

 

 

 

LITERATURE REVIEW:

Journal Details	Authors	Year	Research Findings	Scholar’s Comment about the research	Factors and Variables
Journal of Applied Economics and Business Research JAEBR, 2(3): 155-171 (2012)	Gerard Groenewegen   Frank de Langen	2012	Variables mean, standard deviation and correlations of the start-Ups with critical success factors.	According to author testing this model through a questionnaire can see a statistical relevance for each success  factor	Factor: Radical Innovation Variables: 1) R&D 2) Innovation process 3) New product
Journal of African Economies, Vol. 21, number 4, pp. 609–636	Gerrit Rooks Adam Szirmai Arthur serwanga	2012	This paper examined the relationship between social capital and entrepreneurial innovation in an African context	According to author rural entrepreneurs are more innovative than urban entrepreneurs. Female entrepreneurs are less innovative.	Factor: Innovative Performance Variables: 1) New Idea generation 2) Marketing Innovation
Wharton Faculty Research Of management 6-2001	Choonwoo Lee Kyungmook Lee	2001	This study examined the influence of internal capabilities and external networks on firm performance. This study (showed) the importance of financial capital invested and technological capabilities	According  to author this study provides several theoretical and practical implications for researchers and managers who are concerned with new business ventures	Factor: Technological capabilities Variables: 1) Logistics 2) Inventory management 3) Website
International Journal of Business Management and Leadership. ISSN 2231-122X Volume 8, Number 1 (2017), pp. 11-21	Okra, James and Nepp, Alexander	2017	Correlation Coefficient is found which affects the  Startup Innovations and Growth	According to author startup to be innovative, financial support is very relevant. Financing has been identified as a major factor in the success of most startups	Factor: Startup growth Variables: 1)leadership skills, 2)Financing 3) Marketing 4) Promotion
Technology Innovation Management Review February 2013 16-22	Diane A. Isabelle	February 2013	In this article, five key factors that entrepreneurs should take into consideration about incubators and accelerators are offered	According to author factors of this article help entrepreneurs turn their business ideas into profitable, sustainable new ventures	Factors: Business Eco system Variables: 1) Suppliers and stakeholders 2) Incubators 3) Accelerator 4) Employee relationship
The international journal of management science Omega 34 (2006) 107 – 124	Suhong Li, Bhanu Ragu-Nathan, T.S. Ragu-Nathan S. Subba Rao	2006	This paper provides empirical justification for a framework that identifies five key dimensions of supply chain management  practices	(SCM) has become a potentially valuable way of securing competitive advantage and improving organizational performance	Factor: Supply chain management Variables: 1) Competitive advantage 2) Product innovation 3) Quality 4) Market performance
Asia Pacific Business Innovation and Technology Management Social and Behavioral Sciences 40 ( 2012 ) 584 – 590	Nur Naha Abu Mansor, Ananya Raka Chakraborty, Tay Ke Yin, Zeynep Mahitapoglu	2012	The main purpose of this article is to identify the factors that are influencing the implementation of performance management system (PMS) in South East Asia	According to author this study specifically inspects organizational factors influencing PMS	Factor: Performance management system Variables: 1) Employee Involvement 2) Performance Oriented Culture 3) Management Commitment
Business Strategy and the Environment Bus. Strat. Env. 19, 177–191 (2009)	Graham Hubbard	2009	Study proposes a stakeholder-based, Sustainable Balanced Scorecard (SBSC) conceptual framework	According to author Measuring organizational performance is diffi cult, especially when what has to be measured keeps changing	Factor: Sustainability Variables: 1) Sales growth 2) Productivity 3) Market share 4) Innovation 5) R&D
Management and Marketing Challenges for the Knowledge Society (2011) Vol. 6, No. 2, pp. 285-300	Corina GAVREA, Liviu ILIES Roxana STEGEREAN	2011	Findings of this paper is to evaluate the Romanian manufacturing companies and to underline theirperformance	According to author this article offers the base to identify measures that can lead to an improvement in Organizational performance	Factor: Organizational Performance Variables: 1) Leadership 2) IT 3) Innovation and Development 4) Performance measurement

 

CONCEPTUAL FRAMEWORK:

Through Literature survey author found that factors like Technical capabilities, Business eco-system and Radical innovation influence as got significant impact on the organization sustainability. Sustainable growth encompasses a business model that creates value consistent with the long-term preservation and enhancement of financial, environmental and social capital. Hence through this review paper author would like to propose a conceptual framework as shown in figure no 1.

 

Fig 1: Conceptual Framework for Sustainability of Startup Companies

 

RESEARCH IMPLICATIONS:

This study delivers three important repercussions for research. Firstly, this study amplifies the literature of entrepreneurship by providing comprehensive and a methodical information about the parameters influencing the startup sustainability. The literature review reveals the relationship between the various parameters responsible for the startup sustainability. Among those parameters, three important parameters such as Technological Capabilities, Business Eco-System and Radical Innovations were identified.

 

Second, this study has helped to develop a conceptual framework taking into consideration the independent parameters such as Technological Capabilities, Business Eco-System and Radical Innovations for business sustainability.

 

Third, survey questionnaire would be developed for the primary data collection from the proposed targeted audience in Bengaluru.

 

CONCLUSION:

A methodical and significant review was conducted to give an in-depth analysis of the parameters influencing the startup sustainability. Various Scopus indexed journal articles from the year 2009 to 2017 were considered for literature review. Based on the gaps identified from the literature review, the independent parameters such as Technological capabilities, Business Eco-system, Radical Innovations were derived. A Conceptual framework for startup sustainability has been developed.

 

LIMITATIONS OF THE STUDY:

This is study is limited to the review of literature from Scopus indexed journals. As this is an ongoing research, the researcher might explore the additional related journals with the identification of factors would be taken forward for the next level.

 

ACKNOWLEDGEMENT:

The author would like to thank Ramaiah University of Applied Sciences, Bengaluru for having permitted to carry out the research and their unflagging support during the tenure of my research.

 

REFERENCES:

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3.      B.E.A. Oghojafor, Owolabi Lateef Kuye, Ogunkoya Olufemi A, Shobayo Peter B, (2014). Competitve strategies, technological capabilities and organizational performance: evidence from nigerian manufacturing industry. Arabian Journal of Business and Management Review (Nigerian Chapter) Vol. 2, No. 1.

4.      Bat Batjargal, (2003). Social Capital and Entrepreneurial Performance in Russia: A Longitudinal Study. Organization Studies 24(4): 535–556.

5.      Corina Gavrea, Liviu Ilies, Roxana Stegerean, (2011). Determinants of Organizational Performance: The case of Romania. Management & Marketing Challenges for the Knowledge Society Vol. 6, No. 2, pp. 285-300.

6.      Diane A. Isabelle, (2013). Key Factors Affecting a Technology Entrepreneur's Choice of Incubator or Accelerator. Technology Innovation Management Review Vol. 2, No. 1.

7.      Graham Hubbard, (2006). Measuring Organizational Performance: Beyond the Triple Bottom Line. Business Strategy and the Environment Bus. Strat. Env. 19, 177–191.

8.      Gary S. Hansen, Birger Wernerfelt, (1989). Determinants Of Firm Performance: The Relative Importance Of Economic And / Organizational Factors. Strategic Management Journal, Vol. 10, 399-41.

9.      Gerard Groenewegen, Frank de Langen, (2012). Critical Success Factors of the Survival of Start-Ups with a Radical Innovation. Journal of Applied Economics and Business Research JAEBR, 2(3): 155-171.

10.   Gerrit Rooks, Adam Szirmai, Arthur Sserwanga, (2012). Network Structure and Innovative Performance of African Entrepreneurs: The Case of Uganda. Journal of African Economies, Vol. 21, number 4, pp. 609–636.

11.   Ismail Sila, (2007). Examining the effects of contextual factors on TQM and performance through the lens of organizational theories: An empirical study. Journal of Operations Management 25, 83–109.

12.   Jo Rhodes, Richard Hung, Peter Lok, Bella Ya-Hui Lien and Chi-Min Wu, (2008). Factors influencing organizational knowledge transfer: implication for corporate performance. Journal of Knowledge Management  Vol. 12 No. 3 2008, pp. 84-100.

13.   Li-An Ho, (2008). What affects organizational performance? Industrial Management & Data Systems Vol. 108 No. 9, pp. 1234-1254.

14.   Nur Naha Abu Mansor, Ananya Raka Chakraborty, Tay Ke Yin, Zeynep Mahitapoglu, (2012). Organizational Factors Influencing Performance Management System in Higher Educational Institution of South East Asia.  Social and Behavioral Sciences 40 ( 2012 ) 584 – 590.

15.   Okrah, James and Nepp, Alexander, (2017). Factors Affecting Startup Innovations and Growth. International Journal of Business Management and Leadership ISSN 2231-122X Volume 8, Number 1, pp. 11-21.

16.   Suhong Li, Bhanu Ragu-Nathan,  T.S. Ragu-Nathan, S. Subba Rao, (2006). The impact of supply chain management practices on competitive advantage and organizational performance. The International Journal of Management Science Omega 34, 107 – 124.

 

 

Received on 27.04.2019            Modified on 12.05.2019

Accepted on 19.05.2019           ©A&V Publications All right reserved