Previous Chapter - Thesis Index - Next Chapter
This section presents summaries of the appended studies. Since the methods were described in some detail above, the summaries will focus mainly on the research question, empirical results and general conclusions.
Study I: Enacting risk in independent technological innovation
Berglund, H. and Hellström, T. (2002). Enacting Risk in Independent Technological Innovation,
International Journal of Risk Assessment and Management. 3(2/3/4): 205-221.
This study examines how risk is perceived and enacted from the perspective of twelve technology entrepreneurs. Risk and innovation are conceptually related in the sense that both are forward-looking, action-oriented concepts that are closely linked with uncertainty and change. Furthermore, general uncertainty is transformed to more specific risks in so far as innovative action is based on a particular stake such as opportunity costs or waged real capital.
In the entrepreneurship and innovation literatures, the specific relationship between risk and innovation is commonly examined from either a cognitive or a social perspective. The cognitive literature shows how entrepreneurs judge, assume and convert risk into action on a purely individual level. The more socially oriented literature shows how risks affect actions via the social and cultural frameworks in which risks receive their meaning.
The present investigation bridges these individual and social conceptions of risk and instead examines the local experience of risk and innovation. Such an investigation may provide novel insights into how entrepreneurs view and enact risk as part of the process of venture development.
The findings indicate that entrepreneurs employ a series of practical and cognitive strategies to create, manage and avoid risks. The results are divided into two main categories: innovation ‘risks encountered’ and innovation ‘risks affected’.
The first category recalls risks traditionally treated in the risk management literature, i.e. more or less given risks available for management or intervention. Human capital describes the dilemma of attracting and keeping competent and motivated employees, something that can be especially important in technologically sophisticated settings. Pace and priority illustrates the common dilemma in new ventures of being pressed for time and uncertain about what to do, as well as the first-mover risks inherent in developing radically new innovations. The category the world moves symbolizes how the unruliness and relentlessness of the venture environment give rise to risks that are beyond any form of convenient control, including unpredictable market responses and the decisions of large key players.
The second category contains five broad strategies that describe how entrepreneurs engage risk in different ways. These categories are not simply responses to the more traditional risks described in the first category. Instead they represent risk enactment practices which not only react to, but also actively create and transform, risk as a natural part of the venture development process. These include Activating social networks where the entrepreneur can use parts of his or her business and professional network to share and affect risks, and Risk learning which refers to how entrepreneurs internalize various experiences to improve confidence and knowledge of how the innovation process works. Risk incrementalism depicts how the entrepreneur maintains control in uncertain conditions by developing the venture in small controllable steps, whereas Maintaining venture agility describes a strategy of maintaining a high energy level in the venture. By simultaneously managing and exploring a range of possible ways forward, the innovation process is kept energized and on its toes, thereby giving the entrepreneur leverage toward the future. By Creating and sustaining autonomy in different ways, the venture is afforded a certain level of independence from outside pressures. Such autonomy can be financial, existential, or based on the high potential of the technology. The important point is that the autonomy gives the entrepreneur or venture team a measure of control vis-à-vis external pressures and constraints.
The results indicate that risk is not primarily perceived in the form of direct or objective risks. Instead the two main categories, innovation risk encountered and innovation risk affected, describe how more ‘objective’ risks become relevant through different sense-making conceptualizations and strategies that help develop the venture. As such the results show the potential of examining the micro-dynamics of innovation as a means of understanding what guides and motivates entrepreneurial action.
Study II: The innovating self: exploring self among a group of technological innovators
Hellström, T., Hellström, C. and Berglund, H. (2002). The Innovating Self: Exploring Self Among a Group of Technological Innovators,
Journal of Managerial Psychology, 17(4): 267-286.
In entrepreneurship research there is a long-standing and entrenched stand-off between individual and structural (social) explanations of entrepreneurship. This study approaches this duality by re-examining the role of the individual through the lens of psychological and especially sociological perspectives on the concept of self. In this treatment the entrepreneur is more than either a bundle of traits and abilities, or the product of structural or social pressures. Instead the self-concept allows for a balanced infusion of social influences by seeing the self as a historically developed amalgam of reflected and un-reflected identity and also of the interactive processes of social identification and intentional action through which identity evolves. The notion of self thus includes both subjective and reflexively social aspects. This makes it a pertinent construct for understanding the intentional and adaptive qualities that are at the heart of entrepreneurial action.
The study draws on deep interviews with 15 technological entrepreneurs to develop five conceptions of the innovative process that take the social and subjective self as its point of departure. Innovators’ reflexive self-conception describes how the entrepreneur’s view of himself or herself as an entrepreneur and innovator in different ways influences entrepreneurial actions. This includes perceived abilities and limitations as well as a more dynamic ‘testing’ of different roles as a way of developing the venture. Innovator ego-involvement generally relates to the way the entrepreneur identifies with the venture. Partly this is a good thing, and all entrepreneurs were genuinely committed and dedicated to what they were doing. It is however important to be mindful of one’s ego-involvement and reflexively try to balance engagement with a more instrumental relationship to the venture. Commitment and control reminds of innovator ego-involvement, but here the tension is between maintaining control over the internal processes in the face of external influences and potentially paralyzing uncertainty. Focus is on strategies to retain control over the venture, including talking action to overcome uncertainty and trading off ‘wants’ and ‘shoulds’ to envision realistic goals. Innovator’s personal stakes are to some extent material. These economic stakes were however seen as secondary to the existential and social stakes, including the risk of losing one’s personal freedom or envisioned and actual status in certain social contexts. Cognitive strategies of the self describes how the entrepreneurs used particular cognitive strategies to cope with certain stressful aspects of the venture. These include making use of certain conflicting roles to cope with specific situations or similarly, on the level of time, envisioning a glorious future in order to emotionally authorize a stressful present.
Traditionally, entrepreneurial action has been seen as the result of the interaction between subjective traits and contextual pressures. The notion of an innovating self instead allows for a view of the entrepreneur as a reflexive actor who is able to re-negotiate priorities, situations and personal identity as part of the innovation process. The results thus indicate that the self may fill a void in entrepreneurship research by providing a conceptual basis for comprehending the entrepreneur that balances subjective intentions and social/structural pressures.
Study III: Opportunities as Existing and
Created: A Study of Entrepreneurs in the Swedish
Berglund, H. (forthcoming). Opportunities as Existing and Created: A Study of Entrepreneurs in the Swedish Mobile Internet Industry,
Journal of Enterprising Culture.
The concept of opportunities has emerged as central to the field of entrepreneurship studies. Among the many ways in which opportunities have been defined and integrated into theory, two main perspectives can be discerned: opportunities as existing prior to being discovered by alert and sometimes fortunate entrepreneurs, and opportunities as created in social processes.
Both perspectives are grounded in established economic traditions. The discovery perspective draws on Austrian and to some extent neoclassical economics, whereas the creation perspective is inspired by radical subjectivist economics. Both perspectives have also been elaborated by a number of entrepreneurship scholars, notably Scott Shane and Saras Sarasvathy. Shane focuses on the sources of opportunities in combination with what distinguishes enterprising individuals and the different activities undertaken to exploit and protect opportunities. Sarasvathy discusses how entrepreneurs depart from their local conditions, emphasize social collaboration rather than individual initiative, and seek to control rather than predict the future.
After reviewing these perspectives, they were contrasted with the experiences of 19 entrepreneurs who started operations in the Swedish Mobile Internet industry between 1998 and 2000. The ambition was to see how these theoretical perspectives resonate with the perceptions and actions of this group of entrepreneurs.
Based on semi-structured interviews, the entrepreneurs’ experiences were captured in six categories. Different ways of Exploiting knowledge are common in entrepreneurship theories. This category confirms the importance of knowledge for identifying and exploiting opportunities. It also complicates the picture somewhat by describing how expertise was sometimes exploited in a rather passive sense, e.g. when external actors pulled expert entrepreneurs in different directions. Filling the gap comprises the notion of existing arbitrage opportunities. Opportunities were in this sense discovered as gaps in larger systems or structures, e.g. a given market, value chain, or a system of complementary products and services to be rolled out. These gaps were however always accompanied by more or less creative ideas of how to exploit them. Opportunity in timing is similar to filling the gap, but here opportunities as well as risks are seen to reside in shared and private timeframes of different kinds. The existence of such temporal dissonance can be interpreted either as mistakes, i.e. under- or overestimation of development tempos, or as an inevitable consequence of the socially created nature of opportunities. Enacting the Zeitgeist describes how entrepreneurs in different ways sought to capitalize on the excitement and uncertainties of the mobile Internet industry hype. This was done by projecting an image of mastery to attract resources, self-reflexibly relying on one’s ability to interpret the Zeitgeist, or framing the business case against the backdrop of pervasive but vague megatrends. Stability as strategy reflects a general approach of seeking out a place which one believes to be secure. Such stability can be found in many different dimensions of a venture such as reliable personnel, a clear business idea, or an extreme focus on customer value. Such a strategy can be interpreted both as intentional management of uncertainties and risks and as a proactive but incremental development strategy. Sequential entry process is similar to the preceding category but describes different ways of strategically positioning oneself to reap the benefits of what is perceived as an uncertain but very lucrative future. Such positioning can again be given both a realistic and a creative interpretation, using the lens of real-options theory or seeing the strategic positioning as the development of generative relationships.
These results suggest that entrepreneurs have a varied understanding of what opportunities are, which includes seeing them as both existing and created depending on the situations to which they are related. One way to make sense of the rich and varied ways in which opportunities are perceived is by relating them to entrepreneurial action. In this view, the wide range of opportunity perceptions may provide insight into how different opportunity perceptions act as drivers of entrepreneurial action. An opportunity may for instance be presented as open-ended and under constant creation when skilled and creative personnel are recruited. Attracting capital and long-term support may instead require that the business opportunity is presented as unambiguous and solid. A suitable way of conceiving opportunities is therefore not as either existing or non-existing per se, but as a bundle of more or less clear opportunity perceptions and opportunity projections that become relevant in a variety of situations and for a number of different reasons. It is in this multifaceted role that opportunities are truly relevant since acting as if opportunities are both existing and created provides important cognitive and practical drivers that more or less temporarily guide entrepreneurial actions.
Study IV: Risk Conceptions and Risk Management in Corporate Innovation: Lessons from two Swedish Cases
Berglund, H. (forthcoming). Risk Conception and Risk Management in Corporate Innovation: Lessons from two Swedish Cases,
International Journal of Innovation Management.
Risk is often defined as some combination of probability and hazard, but on closer examination the concept of risk receives much of its theoretical and practical meaning when related to specific situations, goals and overarching priorities. Based on this insight, the present study explores how risk is conceived and managed in two units that are part of the innovation process in large multinationals. The findings reveal a number of insights regarding the risk/innovation relationship.
The examined units come from radically different industries and differ widely in terms of corporate history and the work performed. They are also similar in many respects. Both are part of larger innovation processes that also include other parts of the parent organizations as well as external partners. They also share a clear need to develop innovative products and services.
Group interviews were conducted with selected individuals at each unit. These interviews yielded weighted risk/innovation categories that constitute group answers to the general interview question: “What are the major risks/threats hindering us from achieving our innovation objectives?”
The Service Development Unit (SDU)
Quality insurances (10)
Customer relations management (8)
Relations to partners (7)
Dated support systems (5)
Organizational efficiency (4)
Customer contracts (3)
Human capital risk (1)
Business culture (1)
The Technology Development Unit (TDU)
Overall economic conditions (10)
General attitudes toward new ideas (9)
Processes and method (9)
Quality structures (9)
Working environment and competence development (8)
Generally expensive industry (5)
External relations (3)
Business model and vision (1)
As seen above, the results differ substantially. This is not surprising given that the units are quite different. Despite the many differences, three common themes could be discerned that problematize the relationship between risk and corporate innovation in a more general way.
The first concerns perceived control over the innovation process. Both units associated risks and also potential for opportunities with relations to external actors such as suppliers, partners and customers. The view of these relations also seemed to relate to the perceived control and influence over such relationships. The Service Development Unit saw mostly threats, whereas the seemingly less constrained Technology Development Unit also emphasized the potential for improvement.
The second theme concerns whether attention is focused on innovation qua process or output. Research on managerial risk-taking suggests that risk behavior tends to be guided by attention rather than the axioms of classical decision theory. What is perceived as risky in corporate innovation is therefore liable to indicate innovative behavior. In both units there was a tendency to discuss risks mainly in relation to innovation processes instead of innovative outputs. While processes are important it is imperative that the attention to processes is not allowed to restrict the overarching goal of developing innovative outputs.
These two themes, the view of relations to external actors and the role of processes, were brought together in a discussion of how corporate innovation may benefit from a measure of interpretive and practical flexibility vis-à-vis business models. Active support of organizational flexibility will affect the real freedom to interact with others and may also widen the range of feasible innovations.
Previous Chapter - Thesis Index - Next Chapter