Key Findings of Literature Review

Systems and tools exist to support the process of innovation. Innovation is about something new and all innovations develop from a new idea. Innovation must in some way be able to create value for its customers or the organization. It’s important to constantly evaluate the innovation throughout the development stage so that new information can be assessed and existing work evaluated.

An entrepreneur is a person who operates a new enterprise of venture and assumes some accountability for the inherent risks. Entrepreneurs need to be people that are not opposed to taking the risk in order to undertake a business venture. Entrepreneurial success can be attributed to how well factors of production are utilized and the opportunities that are available or that exist within an economy.

Ireland invests heavily in education and research and the rate of constant innovation has been and will continue to be the driving force behind the success of the country. Over the last few years Ireland’s economy consisted of an effective business climate and stable economy. There has been major investment from foreign investors and a substantial amount of EU aid as well as a progressive social partnership agreement. The government has been a driving force in the progression that has been made in the economy, with heavy investment in education which has helped employers expand their operations by having a steady stream of capable employees. Even though the growth of the economy has slowed some what over the last couple of years the government still realizes the importance of putting huge investment into education and research and investing in a knowledge-based future. The government has realized that education is a key factor in attracting foreign investment so this is why they have made it such a high priority.

Increasing the number of universities and third level institutes became key because although companies were choosing to invest in Ireland they weren’t relying on Ireland for their research so this was essential to try to break this trend and embed some technology and innovation into companies here. Another focus to improve and develop indigenous industry and encourage companies to concentrate on innovation was identified.

Innovation is important but it isn’t so easy to encourage companies to be more innovative. Risk taking attitude hasn’t developed in Ireland at the same rate as innovation so some risk-taking and innovation policies have been developed and implemented to try to encourage more innovation. Some of the elements of the innovation process that have been given a lot of attention include a focus on research and development, leadership and actual innovation skills. Another element of improving innovation requires existing company to improve their innovation. The focus when trying to improve innovation is to concentrate on areas such as entrepreneurship, training, financial management, creativity, innovation management and long-term vision. The question remains, has Ireland managed to create an entrepreneurial culture? There are Irish entrepreneurs visible internationally but does this indicate that a successful climate has been established? The answer to this lies in an individual’s analysis of innovation.

Performance at an innovative level relies on many factors, some inputs include research and development expenditure and the number of people working in this area and outputs such as patents filed.

Starting a business is risky and many new ventures that are started fail. In Ireland however there isn’t a favorable attitude to failure and this can have a negative impact on people willing to take their innovations to the entrepreneurial level, more risk-taking needs to be encouraged.

3.9.1 Measuring Innovativeness

Measuring the innovativeness at a national level is difficult as there are limitations to the sources of information. The most important thing however is the web of interaction between different entities involved. Innovative performance of a country depends on the linkages among the entities involved in improving innovation and how they relate to each other as elements of a collective system of knowledge creation and the technology used.

The linkages can come in the form of joint research, personal exchanges, cross patenting, purchasing of equipments etc. Innovation can also be present at any stage of the research, development, marketing and diffusion process. It can take many forms including adaptations of products incremental improvements or processes. Therefore innovation is the result of complex interactions between various entities and institutions.

Technical change occurs through a series of feedback and processing loops in the system, examples of these include the availability of key technology, shared knowledge or skills or producer supplier relationships. Innovation doesn’t necessarily mean a new invention, an incremental improvement to an existing product also classifies itself as innovation.

Process innovation to a new industry or the exposure of a company to a new market constitutes innovation. Even a change in the supply chain for raw materials or the discovery of new sources of supplies or changes to the industrial organization of a company can mean innovativeness.

The overall level of growth in an economy may be contributed in part to incremental improvements or innovations. Another method of measuring innovations is by looking at the intellectual property statistics that an economy produces. Intellectual property includes patents, trade marks and designs. The existence of patents implies that the firm has a feeling that they have managed to create some new knowledge that they need to protect. The firm will perceive the intellectual property to have a real value as they will incur a cost in an effort to keep the knowledge protected. To get a clear understanding of the level of innovativeness, it isn’t enough to just analyze the various output and input methods by themselves because in many cases these outputs and inputs aren’t equal. One way to overcome this problem is to group the elements together to get a more comprehensive picture. Or alternatively relate the various innovation measures to the overall performance of the firm using econometric techniques. Companies will not only change how they perceive and measure innovation over time but also adapt new methods of innovation throughout its lifecycle. So in conclusion innovation is changes to a firm’s activities over time that will improve the overall performance of the firm.

3.9.2 Entrepreneurship in Ireland

Entrepreneurship in Ireland is quite high and those who are not actively participating in entrepreneurial activity are thinking about it in some way or know someone who is.

According to research almost one in ten adults living in Ireland is actively planning or has recently set up a new business. One in seven men and one in twenty women are early stage entrepreneurs. Entrepreneurship is looked favorably upon by many Irish people and one out of every two Irish adults perceives that there are good opportunities to establish a new business. One in every two Irish adults believes that they have the necessary skills to successfully run a new business. Over 2,600 individuals are involved in setting up new businesses every month. Over 3,800 new firm entrepreneurs who have set up approximately 2,600 new businesses already employ more than 20 people.

Informal investment plays a huge part in entrepreneurship but despite the fact that there wasn’t an increase in informal investors in 2005 there was an increase in entrepreneurial

Ireland’s entrepreneurial activity is dominated by men and this is more obvious when established entrepreneurs are analyzed. People’s motivation and involvement as an entrepreneur can be affected by the perception of opportunities within their environment, a belief in their own skills to be able to successfully start a new enterprise, having recent entrepreneurs as role models within their personal network and a reduced reluctance to become involved in entrepreneurial activities due to fear of failure. Demographic factors such as the increase in population, increased inward migration and relative youth of the population have played a part in the entrepreneurial activity. Irish culture and social norms play a part in the encouragement of entrepreneurship, in Ireland these are positively in favor of entrepreneurs and their new ventures. This translates into Ireland having strong opinions regarding entrepreneurship with most believing that entrepreneurs are held in high regard, entrepreneurship is a good career choice, and the media plays a positive role. In Ireland the most popular industry for early stage entrepreneurs is in the consumer services industry. Almost one third of early stage entrepreneurs in Ireland are focused on the consumer services sector.

3.9.3 Competitiveness

Competitiveness internationally is relying more and more on innovation and entrepreneurship. Producing standard products using standard methods no longer sustains competitiveness. In high-income countries the intensity of innovation is closely related to the differences in prosperity. In developing countries low cost inputs by themselves are not sufficient to maintain competitiveness. Companies need to have access to and develop global technology. Prosperity and enhanced prosperity comes from the ability of companies in a nation to create and globally commercialize products and processes, shifting the innovation frontier as fast as rivals can catch up. Innovation doesn’t necessarily rely on what other countries are doing. The rate of world economic growth can be improved by the improvements in productivity and improvements in consumer value. Innovation can also address social challenges such as near-term economic growth and health, safety and the environmental impact of development.

Innovation intensity varies across countries and is affected by the national environment.

Some countries are forced to record a decline in innovative capacity as sometime they have an inability to improve local conditions as quickly as other nations.

The foundation of an economy’s level of sophistication depends on the scientists and engineers that are involved in innovation. Government funding is one of the main factors in real frontier research. Policy makers have important areas to consider, such as the protection of intellectual property, the extent of tax-based incentives for innovation, the degree to which antitrust enforcement motivates and encourages innovation. The quality of the connections between a nation’s common innovation infrastructure and the individual clusters are important to innovation. If there aren’t strong linkages then scientific and technological advances can be exploited by other countries very quickly.

Some of the more important linkages include the universities of a country, universities can be responsible for bridging the gap between researchers and companies. So overall the competitiveness relies on their capacity to innovate and their prosperity level.

Competition is very important to improve innovativeness, as there are many conditions that affect the context for firm strategy and rivalry. A local context encourages efficiency, investment and the constant upgrading of equipment, machinery and inputs.

Competition among local based rivals is healthy as it allows the presence of capable and local based suppliers and operations in related firms. This can also be responsible for clusters instead of isolated industries. Clusters are important as they can improve the overall efficiency of a firm and make them more successful. A firm relies on factor conditions or inputs that are of high quality and specialized. These include human resources, capital resources, physical infrastructure, administrative infrastructure, information infrastructure, scientific and technological infrastructure and natural resources. The demand conditions of a firm include having sophisticated and demanding local customers, having unusual local demand in specialized segments that can be served globally and having customer needs that anticipate needs elsewhere. Competitive advantage can be gained from basic factor conditions such as low labor, natural resources and geographic situation or location. Gaining technology is important and this is usually done through imports, FDI and imitation. There is sometimes a lack of direct access to

customers and many companies compete on price. Companies can have a limited role to play on the value chain and mainly focus on the assembly of labor-intensive manufacturing and resource extraction.

An investment driven economy concentrates on producing standard products and services efficiently which may create a competitive advantage. Technology is assessed through licensing, FDI, joint ventures and imitation. The nation usually has the capacity to not only assimilate foreign technology but also has the capacity to improve on it. This economy typically supports heavy investment in efficient infrastructure and modern production processes. Companies are capable and many serve OEM customers and are therefore more capable of extending their capabilities in the value chain more. The economy can be more focused on outstanding and service exports.

On the other hand an innovation driven economy is the dominant source of competitive advantage and is based on the innovation of products and services at the global technology frontier. The economy is characterized by strengths in all areas as well as the presence of deep clusters. Companies often have unique strategies with a more global scope. The economy has a high service share and is resilient to shocks in the economy.

3.9.4 Taiwan’s focus

At the moment Taiwan’s primary focus is on manufacturing and as the country competes very strongly on price and efficiency. Taiwan has a strong strategy of serving OEM customers and there is a high rate of investment in modern production methods and assimilating technology. Strong capabilities to improve and enhance foreign technology have been the trend for many years. Taiwan has had mainly export led growth and the government has had a substantial role in steering and molding the economy. Taiwan is in an investment driven period of growth and there is an emergence in innovative capacity.

Taiwan’s domestic costs are rising as the economy gains momentum and as a result Taiwan is facing an increasing pressure in the export markets. In order to maintain the current strategies Taiwan is forced to explore other lower cost/wage locations. Taiwan can use its geographical position and proximity to China as an alternative location with the added benefit of access to the huge domestic market. In Taiwan some of the

weaknesses that need to be addressed include improvements in the physical infrastructure, the upgrading of domestic financial markets, the increase in transparency, openness and legal accountability, and improving efficiency of domestic industries.

So in conclusion a successful transition to the innovation driven stage makes a mutually beneficial relationship with China more likely, and the proximity of the island to China increases the pressure on Taiwan to move from an investment driven economy into a more innovation driven stage of development.