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企業家精神及創新力在經濟發展中所扮演的角色,愛爾蘭與台灣的面貌

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科技管理研究所碩士班

企業家精神以及創新力在經濟發展中所扮演的角

色,愛爾蘭與台灣的面貌

The Role of Entrepreneurship and Innovation in

Economic Development, A look at Ireland and Taiwan

研 究 生 :歐瑞秋

指導教授:袁建中 教授

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企業家精神以及創新力在經濟發展中所扮演的角色,愛

爾蘭與台灣的面貌

The Role of Entrepreneurship and Innovation in

Economic Development, A look at Ireland and Taiwan

研 究 生:

歐瑞秋

Student

:Rachel O’Brien

指導教授:

袁建中 教授

Advisor

:Dr. Benjamin J.C. Yuan

國 立 交 通 大 學

科技管理研究所碩士班

碩 士 論 文

A Thesis Submitted to the Institute of Management of Technology College of Management

National Chiao Tung University In Partial Fulfillment of the Requirements

For the Degree of

Master of Business Administration In

Management of Technology May 2008

Hsinchu, Taiwan, Republic of China

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The Role of Entrepreneurship and Innovation in Economic Development, A look at Ireland and Taiwan

Student: Rachel O’Brien Advisor: Dr. Benjamin Y.C. Yuan

Institute of Management of Technology National Chiao Tung University Abstract:

Entrepreneurship involves mobilizing resources in pursuit of opportunities in the founding of new businesses (Aldrich, 1990). Entrepreneurs and small business owners add to the innovation of an economy therefore initiating entrepreneurship is key to the level of economic growth in terms of productivity and per capita incomes (Acs, Carlsson and Karlsson, 1999). This paper aims to look at two successful economies Ireland and Taiwan, and analyze the driving forces behind the success of each economy by looking at the entrepreneurial behavior and innovation in society using modified elements of Porter’s Diamond.

Entrepreneurship is well accepted as an important contributor to economic growth, employment, innovation and competitiveness. Studies have attempted to explain the creation of new ventures from a number of different theoretical perspectives such as economics (Brenner, 1987), psychology (Katz, 1992; Bird; 1992) and population ecology (Aldrich, 1990) while these perspectives are different they share some common characteristics. Such as agreeing that a business opportunity will result in some value focused on the individual entrepreneur, secondly the circumstances or environment that supports business venturing and the timing of the events involved in the process is

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important, thirdly that the venture creation process differs depending on the types of ventures, i.e., technology-based or non-technology-based.

Wennekers and Thurik (1999) attribute economic growth through entrepreneurship to three main processes or entrepreneurial activities, enhanced competition, innovations, and employment growth through firm start-ups. Knowledge and flexibility are also described as key factors in entrepreneurship, knowledge is a factor of production characterized by uncertainty and the flexibility of the entrepreneur becomes the ability to adapt to changes in the economy.

Policy makers on the island of Ireland and the island of Taiwan have increasingly focused on the importance of fostering innovation and an environment that is supportive to entrepreneurship. This report looks at the two successful innovative countries; Ireland and Taiwan and how they compare in different areas of innovation and entrepreneurship. In 2007 Ireland’s market growth reached 5% while Taiwan’s rose to 5.5%. This shows the opportunities that have been created and the effort the government is putting in to achieve the goal of moving into a more knowledge based economy. Both countries have shown immense competitiveness and forward thinking and continue to make provisions to evolve and improve.

Ireland aims to use its knowledge for economic and social progress within an innovation driven economy and is planning to become internationally renowned for the excellence of its research. Similarly Taiwan’s plan to become more innovative has been spurred on by its incredible levels of competitiveness and forward thinking. Both countries can attribute much of their success to the strength of their education, research, innovation, strength of human capital and positive attitude to strive for success.

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Contents

1. Introduction... 1 1.1 Aims of Study ... 2 1.2 Problem Statement ... 2 1.3 Methodology... 3 2 Background Information... 7

2.1 Background Information - Ireland ... 7

2.1.1 Ireland’s economic progression ... 8

2.1.2 Ireland’s Industry... 9

2.2 Background Information - Taiwan... 12

2.2.1 Taiwan’s economic progression ... 13

2.2.2 Taiwan’s Industry ... 14

2.3 Definition of Innovation ... 17

2.4 Definition of Entrepreneurship ... 18

2.4.1 Other views of Entrepreneurship ... 19

2.5 Definition of Economy ... 22

2.5.1 Taiwan and Ireland’s Economy ... 22

3 Literature Review ... 25

3.1 Michael Porter’s Diamond... 25

3.1.1 Factor Conditions... 26

3.2 Defining International Entrepreneurship ... 29

3.2.1 Entrepreneurial Internationalization ... 30

3.3 Information and Technology Transfer ... 31

3.3.1 Risk Taking... 33

3.4 National Innovation Systems ... 34

3.4.1 The national innovation systems approach... 35

3.5 The definition and Measurement of Innovation... 37

3.5.1 Measuring Innovation ... 37

3.6 The Global Entrepreneurship Monitor 2005 The Irish Report ... 40

3.6.1 Characteristics... 41

3.6.2 Starting an entrepreneurial venture... 43

3.7 Ranking National Innovative Capacity... 48

3.7.1 The Determinants of National Innovative Capacity ... 49

3.8 The Competitive Advantage of Taiwan... 53

3.8.1 Resource driven economy... 54

3.8.2 Investment driven economy... 54

3.8.3 Innovation driven economy ... 55

3.8.4 Taiwan’s current position ... 55

3.8.5 Limits of the current strategy... 55

3.9 Key Findings of Literature Review... 58

3.9.1 Measuring Innovativeness ... 60

3.9.2 Entrepreneurship in Ireland... 61

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3.9.4 Taiwan’s focus ... 64

4 Study Findings... 66

4.1 Factor Conditions... 66

4.1.1 Growing a Knowledge Economy... 67

4.1.2 Creating Value through Innovation ... 69

4.1.3 What makes an Entrepreneur? ... 71

4.2 Demand Conditions ... 74

4.2.1 How Society Influences demand and Creates Entrepreneurs ... 75

4.3 Related Supported Industries ... 78

4.4 Strategy, Structure and Rivalry... 84

4.4.1 Strategy ... 86

4.4.1 Strategy ... 86

4.4.2 Market Structure ... 88

4.5 Role of the Government in Creating an Entrepreneurial Society ... 90

4.5.1 Competition Law ... 95 4.5.2 Tax Policies... 96 5 Statistical Analysis ... 98 5.1 Questionnaire Design... 98 5.2 Analysis of Results ... 99 5.2.1 Irish Results ... 99 5.2.2 Taiwanese Results... 104

6 Conclusions and Recommendations... 118

Appendix 1... 121

Appendix 2... 122

Appendix 3... 123

Appendix 4... 124

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List of Figures and Tables

Figure 1-1 Porter’s Diamond Model... 4

Figure 1-2 Porter’s Modified Diamond ... 5

Figure 5-1 Belief in innovativeness of Country... 108

Figure 5-2 Perception of the amount of entrepreneurs in society... 109

Figure 5-3 Belief that entrepreneurship is a good career choice ... 110

Figure 5-4 Belief they posses the skills to become an entrepreneur... 111

Figure 5-5 Belief that there is a stigma attached to entrepreneurs who fail ... 112

Figure 5-6 Belief that the government supports entrepreneurs... 113

Figure 5-7 Belief that there are many entrepreneurial opportunities... 114

Figure 5-8 Belief that the media does a good job highlighting entrepreneurs... 115

Figure 5-9 Are or personally know entrepreneurs in their society ... 116

Figure 5-10 Would consider becoming an entrepreneur... 117

Table 5.1 Results of Irish Females, under 30, educated to 3rd level. ... 101

Table 5.2 Results of Irish Females, over 30, educated to 3rd level. ... 101

Table 5.3 Results of Irish Males, under 30, educated to 3rd level... 102

Table 5.4 Results of Males Males over 30, educated to 3rd level ...………102

Table 5.5 Results of Taiwanese Females, under 30, educated to 3rd level. ... 105

Table 5.6 Results of Taiwanese Females, over 30, educated to 3rd level. ... 105

Table 5.7 Results of Taiwanese Males, under 30, educated to 3rd level ... 106

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1.

Introduction

Entrepreneurship has increasingly become more important and a key factor on the agenda for many policy makers around the world. Entrepreneurial potential can give an economy an innovative advantage and promote technological leadership and change throughout that economy. Entrepreneurship sometimes poses a degree of uncertainty and risk but also offers opportunities for technological progression in a society.

Ireland has a leading position in Europe regarding its entry-level entrepreneurial activity and Taiwan has made great strides over the last number of years and its entrepreneurial activity has been increasing. Factors which are believed to affect the participation in entrepreneurial activity relate in many ways to the perception of opportunities within the environment, a belief in the skills needed to be able to successfully start a new enterprise, having recent entrepreneurs as role models within personal networks and a reduced reluctance to become involved in entrepreneurial activity through a fear of failure.

This paper aims to look at the progress of the economy over the last number of years in areas surrounding entrepreneurship in Ireland and Taiwan and how innovation is perceived and encouraged. Taiwan and Ireland are similar in the fact that both rely heavily on their export markets and both countries have made pioneering economic developments recently. This paper will study the individual countries and the entrepreneurial environments while attempting to offer an insight into the views, obstacles and successes that have occurred. The strength of the economy is a key factor in creating opportunities for new enterprises as well as population, demographics, financing, migration, experience, economic issues, government regulations, educational factors and most importantly mindset. This paper aims to give an analysis of the current situation, the factors leading to this state and the possible lessons that can be learnt.

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1.1 Aims of Study

The aim of this study is to analyze the entrepreneurial environment and innovation in both Ireland and Taiwan and present a report of the trends and current situation as it stands in 2008 using the elements of Porters Diamond as a guideline. I plan to analyze the current state of innovation in both Ireland and Taiwan and the factors leading to and promoting entrepreneurship in both countries. There are many facets to the areas of entrepreneurship and innovation and many more elements that lead to a successful economy. Ireland and Taiwan have been compared to each other on many levels as both have experienced accelerated economic growth over the last few years. With this report I plan to look at each country on some of these levels and determine an overall deeper understanding of the state of entrepreneurship and innovation in both countries and the factors that have attributed to it.

1.2 Problem

Statement

It is important that Ireland and Taiwan’s Entrepreneurs continue to increase in numbers and that the economies can remain competitive in today’s global marketplace. The relatively new emphasis on entrepreneurs in Ireland and Taiwan has been the culmination of years of government policies and educational changes in both countries that has lifted the economies from decades of poverty to modern day prosperity. As has been proved in both these countries entrepreneurship and innovation incubated correctly can bring increased success to an economy. Initial investigation showed that both countries have relatively high levels of innovation as compared to other countries in their regions and that both economies have become more knowledge focused with an increased number of Small to Medium size Enterprises.

The following problem statement has been used to guide this research work:

What is the role of entrepreneurship and innovation in economic development and what are the comparisons between Taiwan and Ireland in this area?

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There are two components to this question; firstly the nature of the individual economies, histories and policies that have shaped society and secondly, the issue of how Ireland and Taiwan relate to each other in terms of their new prosperity.

1.3 Methodology

There are many explanations regarding the success or failure of entrepreneurship in a society. (Aldrich 1990) argues that the entrepreneur is treated as an agent who creates an organization to exploit the resources within a given opportunity structure.

This paper will focus on the macro economic environmental improvements of Ireland and Taiwan over the last few years, and the innovation and entrepreneurship that exists in both countries, which has helped fuel economic growth. (Porter 1990) Implies that “countries do not trade–companies do.” This suggests that the entrepreneurs in an economy are extremely important to help in building up that economy and accelerating its economic development. Porter’s diamond model refers to the comparative advantage of nations and offers a model that can help to understand the competitive position of a nation in global competition. Porter argues that sustained industrial growth results from clusters or groups of interconnected firms, suppliers, related industries and institutions that arise in particular locations. These elements influenced by the nations government as well as chance events come together to create an environment, which enables firms to compete.

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Figure 1-1 Porter’s Diamond Model

Entrepreneurship relies on innovation, foresight and a little risk, which are also key success factors for international success. As an economy an essential goal is to reach a level of international success, which will bring with it many benefits to the country and the society as a whole. This paper will analyze entrepreneurship and innovation in the economies of Ireland and Taiwan using modified elements of Porters diamond model as a guideline to understanding the level of successful entrepreneurship and innovation in each society. The new model will consist of four elements that will encompass more entrepreneurial focused factors in order to gain a better understanding of how important entrepreneurship is in the Economic development of a country.

The first element of Porter’s strategy is Firm Strategy, Structure and Rivalry, if this is adopted for entrepreneurship it becomes clear that it is important to explore entrepreneurial strategy and how the country encourages entrepreneurship, aswell as economic structure such as how the economy makes provisions for the entrepreneurs, and the rivalry that exists in the economy. The next of Porter’s conditions is Demand

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Conditions, in this section the model has been adapted to analyze the sophistication of customers and how that stimulates innovation in the economy and secondly what effects society has on the levels of entrepreneurship and innovation. The third element of Porter’s diamond is Related and Supporting Industries, in this section it has been modified to determine how each economy has utilized clusters and networks in building up their economy and promoting new start ups. The fourth element on the diamond for Porter was Factor Conditions, this has been modified to discover the factors in society that effect entrepreneurs, how each country has grown their economy, the efforts each country has made to move to a more knowledge based economy, and what the general characteristics of an entrepreneur are? Porter acknowledges that all of this is affected by government and chance events, chance events are a part of everyday life and this area is too broad to include in this study of entrepreneurship as for almost every entrepreneur, successful or not there has been some chance event that has occurred. Therefore I have analyzed the effects the government has had through their policies, regulations, laws and incentives to encourage entrepreneurship.

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Research will come from a number of academic and scholarly articles written over the last decade, related to this subject. Special focus will be placed on the current situation and information from the recent past. National and international reports will be used as the most up to date information retrieval sources as well as published articles, books, news reports, government websites, organizational websites and studies.

To get a more complete understanding of the feelings towards entrepreneurship and innovation a questionnaire will be conducted to analyze the different attitudes, feelings and the perception of entrepreneurship and innovation in both societies. The questionnaire will gather information from ordinary Taiwanese and Irish people of different ages, educational backgrounds and careers to get an unofficial perspective about their feelings towards the innovativeness of their country and the entrepreneurs in each society. The questionnaire will be analyzed using all the respondents from a particular country. The analysis will be completed using statistical analysis tools. (See Appendix 4 for Questionnaire)

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2 Background

Information

2.1 Background Information - Ireland

Ireland has had a reputation over the past few hundred years as being a county with hardships. People throughout Europe enjoyed a reasonable standard of living while the people in Ireland lagged behind. The Introduction of the Single European Act in 1987 gave Ireland hope in economic terms as times before that had been hard for most. Ireland lacked confidence in competing at an international level and so growth in this area was slow. Business had access to a much larger market and the country no longer had to depend on the UK. In 1987 Ireland’s economy was having real problems and was close to economic disaster. Ireland needed to attract foreign investment and become a location for international companies as a low cost manufacturing base. The EU really helped Ireland to recover from its economic bleakness as it offered an opportunity for Ireland to position itself as a feasible base for large manufacturers exporting to Europe. The EU was trying to create a single market by removing bureaucratic obstacles, non-tariff barriers, state aid and financial assistance from a national government to a domestic industry or company. The EU further promised to deepen integration between the EU which assisted Ireland as it attracted higher levels of foreign investments from countries such as Japan and the US. Ireland became more commercially aware as it was faced with the challenge of competing with the leaders of Europe. Many Irish exporters expanded abroad and the single market gave the guarantee and protection of common technological standards and protection through EU legislation. This new challenging opportunity brought about an increase in productivity and efficiency from Irish firms. Due to the safety net of the single market, Ireland was able to reduce its reliance on the UK and open itself up to a new trading scenario.1

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2.1.1 Ireland’s economic progression

Ireland has had a problem in the past with persistent emigration, and since the emergence of the Celtic Tiger, emigration has slowed down and almost reversed with a huge amount of highly skilled natives returning to the island to take advantage of the thriving economy. Ireland can now boast one of the highest standards of living after Luxembourg in the EU and has achieved exceptional growth over the past few years.2 Employment is one key area that has seen the most exceptional levels of growth relative to other EU countries. From the years between 1990 and 2005 employment levels went from 1.1 million to 1.9 million.3 The population increased almost 15% between 1996 and 2005

which throughout the past had seen successive decreases.4 The population of Ireland as of July 2007 figures was estimated to be 4,109,086.5 After the 1996 census it was revealed that 40% of the population was under the age of 25. This young workforce coupled with the concentration of people in urban areas has spurred the growth in the population over the last ten years.

Economic openness to global markets became key in shaping the policies and structures that still exist today. The core of these policies was to try to sustain low tax rates in order to attract investment. Open the country up to investment and make the island seem more attractive to investors. The thinking was to constantly develop and keep innovation at the forefront of thinking, and to build on what was already starting to take shape. The thinking was shared by the whole country who wanted a better future for themselves and their children without the previous trend of emigration. Government policies and decisions were driven by the public’s willingness to succeed.

Industry predominantly consists of agricultural industries, forestry and fishing, high tech manufacturing, textiles, clothing and footwear, food, drink and tobacco, construction,

2,3,4 How Ireland became the Celtic Tiger by Sean Dorgan, June 23, 2006

http://www.heritage.org/Research/WorldwideFreedom/bg1945.cfm

5 Country Reports, Ireland, Stastics, November 13, 2007

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financial services, tourism and retail.6 Government policy usually favors private enterprises. In areas where private investment was lacking the state established firms to operate these essential services in the hope that it would encourage industrial development. The areas this happened most notably was in the sugar, peat, electricity, steel, fertilizers, industrial alcohol, and transportation sectors. The annual growth rate of industry was in the region of about 5% from 1968-1981 and it reached 12% in 1984. The high tech sector such as the electronics and pharmaceuticals industry saw the most substantial growth, they also saw a huge increase in labor productivity so the increase in employment didn’t follow the same trend. In 2000 industry employed 28% of the labor force and accounted for 36% of GDP in 2001 a 12.3% rise from the previous year. The dramatic increase in productivity at this time came mainly from foreign owned computer and pharmaceutical enterprises.7

2.1.2 Ireland’s Industry

Industry predominantly consists of agricultural industries, forestry and fishing, high tech manufacturing, textiles, clothing and footwear, food, drink and tobacco, construction, financial services, tourism and retail.8

Agriculture is centered mainly on the export of beef and livestock which made up 50% of output value in 1998. In 1999 the EU agreed to reduce beef prices, this was followed by the BSE (Bovine Spongi-form Encephalopathy) crisis which hit the industry hard causing a 27% drop in beef consumption from the European market. This was followed in 2001 by an outbreak of foot and mouth disease in Britain. This brought about a heightened level of fear in consuming animal products and challenged the industry as the export markets in the EU reduced their intake of animal produce. Livestock products also suffered throughout this time with the most dramatic decline being seen in the dairy industry where output decreased from IEP1,132 to IEP1,113 million. Crop output also

6 Encyclopedia of the Nations, Europe, Ireland, by Catherine Lynch and Eoin O’Mally

http://www.nationsencyclopedia.com/economies/Europe/Ireland.html

7 Encyclopedia of the Nations, Europe, Ireland, by Catherine Lynch and Eoin O’Mally

http://www.nationsencyclopedia.com/economies/Europe/Ireland.html

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saw a marginal decrease at the same time. The most important products during this period were milk, eggs and fresh vegetables with the highest commercial value coming from sugar beet, wheat and barley.

Forestry cover within the country is among the lowest levels in Europe at just 8%, against a 25% European average. Ireland has been working on reforestation programs since 1922 when only 1% of the country was under forested. Current EU policy encourages reforestation programs and timber based agriculture. Fishing on the other hand is an extremely important economic activity for the island especially in rural coastal areas where the concentration of industry is low. The fishing industry includes fish farming and employment in this area has increased 40% since 1980. The EU supports the industry by offering grants and government spending to encourage expansion, in 1997 exports were reported to reach IRE240 million.

High tech manufacturing consists of more than 1000 foreign-owned firms mainly concentrated in the areas of chemical production, metals, electrical engineering and computer hardware. Foreign owned manufacturing accounts for more than half the country’s total manufacturing output. In 1998 foreign owned firms employed around 45% of the manufacturing sector’s workforce or 28% of the total workforce. In the years between 1993 and 1997 engineering accounted for an increase in employment of 49% and an increase in output of metals and engineering of 96%. The chemical sector experienced similar levels of growth, while during the same time employment in the sector increased by 38% and output by 116%. Ireland’s indigenous high-tech sector has also experienced impressive growth. The sector saw a growth in volume from 1987-1995 by 37%. Due to the links between the foreign owned firms and the indigenous market Ireland has emerged a world class competitor with world class management and manufacturing standards. There have been great movements made with the quality and reputation of local firms as many are now sought out by the foreign firms as their preferred source of supplies. This results in an impressive total expenditure of foreign companies in the Irish economy of IRE6.9 billion in 2000 which has risen from IRE2.9 billion in 1990. Foreign Investment has been encouraged by the government body, IDA (Industrial Development Authority). The IDA attracts foreign investment mainly in the

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pharmaceutical and computer software industry’s, the number of high tech industries they have encouraged has created a cluster that will further sustain the growth in these sectors. In the clothing, textiles and footwear industry’s indigenous companies have usually been the majority players in this sector. There was no significant growth throughout the 1990s and as a result the industry has suffered due to cheaper foreign imports. The production of textiles remained stagnant during the 1990s while employment in this industry fell by 20%. From 1993 to 1997 the clothing and footwear industry saw their output fall by 20% and it has remained at a similar level ever since.

In the traditional indigenous manufacturing sector, food, drink and tobacco production recorded the strongest growth with a 6.1% increase in 1997. This sector not only concentrated on the home market but it also worked on the export markets too. The food industry mainly sees the largest revenues coming from beef, milk, eggs, fresh vegetables, barley, sugar-beets and wheat.

The construction industry benefited from the increased business investment, the infrastructure development and the housing shortage which saw construction output go from IEP13.7 billion in 1993 to IEP16.1 billion in 1996. The abundance of quarried stone in Ireland gives a ready supply to the construction industry.

There are four main clearing banks in Ireland – Bank of Ireland, Allied Irish Banks, Ulster Bank, and National Irish Banks. Employment in this sector has grown significantly increasing from 25,200 in 1994 to just under 30,000 in 1998 with banks now offering more financial services. In 1987 Ireland introduced an incentive to foreign financial institutions by setting corporation taxes at a low rate of 10%. This encouraged more than 300 banks mainly from North America and Europe to make a presence in the Irish Financial Services Center (IFSC) in Dublin, the IFSC employs somewhere in the region of 7,000 employees. These banks offer services such as investment banking, fund management, capital markets, leasing and re-insurance.

Ireland has long attracted tourists due to its small landmass, its culture, its beautiful scenery, beaches and friendly people. Tourism over the last few years has grown due to the government’s overseas promotion programs and the easy access for Europeans as a popular weekend break destination. Revenue from tourism reached IRE2.8 billion in 1997, but dropped slightly in 1999 with figures of IRE2.5 billion. In 2000 at least

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120,000 jobs were estimated to depend on tourism with the biggest threat coming from poor quality services, the shortage of skilled labor and transportation disruptions, terrorism hadn’t begun to make its impact on this industry yet.

The retail industry was aided by the economic expansion which facilitated a more diverse retailing industry. Retail sales in 1997 reached a total value of 53% which, resulted in attracting large groups of retailers from the UK, this brought about competition which helped to control consumer price inflation.9

2.2 Background Information - Taiwan

Taiwan is a sub-tropical island, roughly 180 miles long, located less than 100 miles from China’s Fujian province. Most of Taiwan’s people live on the western coastal plain as most of the island is covered by rugged mountains. Taiwan has had a rich and varied history and if we go back to 1895 when the Japanese gained control of the country the economy was mainly agriculturally orientated with sugarcane being the most significant export. After the 1930s the government began encouraging investment in non-agricultural industry in Taiwan. The war that followed caused a lot of destruction and an economic collapse. In 1945 the Chinese Nationalist government took control of the country which resulted in hyperinflation as soldiers and refugees flooded onto the island and thus increased the population by about twenty percent. In the 1950s Taiwan depended on American aid, and the agricultural economy was in ruins after the events in the 1940s. In the late 1950s the economy experienced high speed growth and industrialization. This growth happened quite quickly and has been dubbed the “Taiwan Miracle” but the changes that have occurred have been completely based on the hard work and determination of the people of Taiwan. From the 1980s until the mid 1990s there were still dramatic changes occurring with drastic economic, social, and political changes taking place. In the 1980s the government announced plans for liberalization and globalization of the economy and the privatization of government-run enterprises. Interest rate controls were abolished and tariff rates were slashed, and the central

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exchange rate was abandoned. To aid with the industrial development the government created the Hsinchu Science-based Industrial Park in 1981. In the years that followed a strategic scheme for industrial development was promoted and in the early 1990s the Statutes for the encouragement of investment were allowed to expire and the Statutes for industrial upgrading were adopted. The Taiwanese needed to compete on the world stage so they developed their labor-intensive industries to take advantage of the cheap labor costs and this caused many industries to upgrade their technical standards at a faster pace than maybe they originally foresaw. This acceleration of economic growth was also fueled by enticing many highly skilled overseas Chinese into returning to Taiwan by offering opportunities in the form of the Hsinchu Science-based Industrial Park. This saw their technological expertise being used to develop the electronics and information industries, and helped to change Taiwan’s industrial structure.10

2.2.1 Taiwan’s economic progression

This competitiveness and forward thinking is still very much apparent and Taiwan ranked 14th out of 131 countries in the 2007 Global Competitiveness Report.

Taiwan ranked fifth among Asian countries. Taiwan can put most of its success down to the strength that comes from education and innovation. Some of the areas of concern however were in the sophistication of its financial market and other institutions.

Taiwan has been doing business with the US and Europe for many years. Taiwan is establishing themselves as a major player in world business but this success has come relatively quickly and so some other areas need the time to catch up. Attitude change is progressing and Taiwan’s economy is becoming more established with impressive progress being made in areas such as biotechnology, electronics and high-end production. The economy in Taiwan is mainly export oriented. In January 1995, Taiwan approved the Asia-Pacific Regional Operations Center (APROC), which is a project that would transform the island into a center of business and investment in the Asia-Pacific region. This is to promote the establishment of new local as well as foreign companies to

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Taiwan. Part of Taiwan’s appeal is that it is well placed for investors to base here with access to China and other Southeast Asian markets. For local entrepreneurs the problem of experience can prove a hindrance for many looking to start their own venture.

To continue to endear itself to world trade Taiwan has had to modernize much of its infrastructure. In 2002 a six-year challenge was started to try to achieve a competitive edge with a package of reform and investment concentrating on economic growth and environmental protection. The main areas of focus were on government, banking and finance. Investment is directed toward four broad goals of nurturing human resources, encouraging research, development and innovation, improving international logistics and creating a high- quality living environment. The fact that Taiwan’s financial institutions aren’t as mature as others offers an entrepreneurial opportunity for many companies. The ability of some entrepreneurs to get funding has been an issue in the past as financial institutions have been a little underdeveloped.

Taiwan needs to achieve the status of a financial hub and in order to do this they need to continue making improvements to its domestic regulatory system so it can enhance the quality of their listed stocks.

Taiwan boasts a very healthy venture capital culture and many entrepreneurial success stories. There is strong institutional support for entrepreneurship within Taiwan and policy to support it.

2.2.2 Taiwan’s Industry

In 2006, 36.6% of the workforce was employed in industry which included manufacturing, construction, electricity, gas, water supply, mining and quarrying contributing a total of 26.8% to Taiwan’s GDP. In the same year 86% of industrial output was accounted for by manufacturing. The main industry is no longer consumer goods and textiles, electronics and information technology have now taken over and account for about 35% of total production value. In terms of production value, the

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chemical industry accounts for 28.6%, information and communications technologies industries accounted for 34%, metal and machinery 36.9% and consumer goods 9.9%.11 Taiwan is very prominent in the area of information technology, and can boast to be the largest suppliers of notebook PCs, motherboards, and LCD monitors. The figure for global IT hardware exports in 2006 totaled US$88.6 billion. The products fall into eight major categories, notebook PCs, desktop PCs, motherboards, servers, digital still cameras, optical disk drives, color display tube monitors, and LCD monitors. The software industry totaled US$5.34 billion in 2006 a 6% increase from the previous year. The software market can be divided into two main segments, software products and software services, the software products market increased by 10.7% and the services market increased by 5.5%. The semiconductor industry has been extremely successful for Taiwan. The industry has worked hard to distinguish itself from other countries by creating a complete supply chain with significant clustering, and top class capabilities in wafer manufacturing with an estimated production value of US$37.15 billion in 2006. Another major industry for Taiwan is the optoelectronics industry, which includes areas such as optical information, optical displays, optical communications, and optoelectronic components. The output for 2006 was US$42.6 billion, which saw a 46% growth from the previous year. Flat panel displays is another major market in Taiwan with value created in 2006 of US$39.4 billion with almost 60% of the accounted for by exports. Communications equipment, mobile and network services have accounted for a huge contribution to the economy. Communications services reached up to US$11.4 billion and the equipment production accounted for US$21 billion. The value of Taiwan’s textile industries has been on the decline with the output in 2006 being US$11.76 billion this represented 5.3% of total manufacturing output. At the same time the petrochemical industry produced a value of US$39.06 billion not including textile and plastic product businesses. The vehicle industry recorded a growth of 17.6% from 2005 to 2006, which accounts for a production value of about US$14.5 billion. More than half of the motorcycles produced on the island were sold in the local market the rest were exported

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to the US, China and Japan. The bicycle industry has suffered a loss due to lower production costs in developing countries but still managed to export 4.7 million at an average unit price US$192. The biotechnology and pharmaceuticals industries have made excellent progress and the firms are mostly focused in areas of genomics, pharmaceuticals, diagnostics, agricultural and environmental biotechnologies, biochips and bioinformatics. The total revenue in 2006 was around US$5.5 billion. While biotech-related industries attracted investment of US$646 million in 2006.12

12 Major Industries in Taiwan, Composed by the Government Information Office in Taiwan,

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2.3 Definition of Innovation

The classic definitions of innovation include:

1. the act of introducing something new: something newly introduced (The American Heritage Dictionary).

2. the introduction of something new. (Merriam-Webster Online) 3. a new idea, method or device. (Merriam-Webster Online)

4. the successful exploitation of new ideas (Department of Trade and Industry, UK). 5. change that creates a new dimension of performance Peter Drucker (Hesselbein,

2002)

Innovation refers to something new usually in the area of economics, business or government policies. It must be substantially different to what already exists and not an insignificant change. Change must bring about some form of value with regards to economics. Be it customer value or producer value therefore innovations are intended to make someone better off and the increased amount of innovation within a nation will promote growth and development of that nation. Innovation may refer not only to radical change but also to incremental change of products, processes or services. Innovation more often than not stems from solving a problem therefore innovation is an important role in the study of business, economics, technology and engineering. Innovation is considered to be a major progression tool to any economy therefore the factors that lead to innovation are critical when governments are forming country policies.

Innovation can be linked to improvements in efficiency, productivity, quality, competitive positioning, market share etc. Every industry and organization is capable of innovation. While innovation can be seen as having a positive effect or adding value it can also cause problems in the form of changing old organizational forms and practices. This can result in destroying some organizations and others could encounter problems if the innovation is not carried out logically and strategically. Therefore innovation can be categorized as involving risk. Issues to consider when getting involved in innovation are trying to maintain a balance between process and product innovation. Process

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innovations tend to involve a business model that may develop shareholder satisfaction through improved efficiencies whereas product innovations develop customer support but with it comes the risk of costly research and development that may affect shareholder returns.

It’s believed that only people are capable of innovation and that systems and tools are there as a support for the process. Innovation is about something new, and all innovations develop from a new idea. Innovation must create value for its customers or for an organization. During the process of innovation it’s important to stop long enough to gather new information about the process or situation. It’s also critical to test the ideas and look at the possible outcomes from the innovation. Innovation therefore is how well a company or individual commercializes an invention. Bruce D. Merrifield’s definition of innovation states that there are three stages in the innovation process “the three stages of innovation: invention, translation and commercialization.”13

2.4 Definition of Entrepreneurship

Entrepreneurship and innovation are often concepts that overlap. Schumpeter (1934) defines entrepreneurs as individuals that carry out new combinations. He distinguishes four roles in the process of innovation, the inventor who invents a new idea; the entrepreneur who commercializes this new idea; the capitalist, who provides the financial resources to the entrepreneur; the manager, who takes care of the routing day-to-day corporate management. However the roles of entrepreneurs whatever they may be usually contain positive connotations.

A business entrepreneur is a person who operates a new enterprise or venture and assumes some accountability for the inherent risks (Casson M. 2005). Entrepreneurs are people that are not opposed to taking risks that are necessary to undertake a business venture. Often times the success is contributed to how well they utilize the factors of

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production available. Factors of production include land or natural resources, labor how well available resources can be utilized using human efforts, and capital including any type of equipment used in production.

Entrepreneurship is difficult and many new ventures fail, in order to find success a good entrepreneur is defined as the founder and involved in creating a for-profit enterprise. Usually the objective is for profit to be made and an entrepreneur’s role is to create value by offering a service or product to obtain profit.

Definitions of entrepreneurship:

Creation of new organizations (Garntner 1988)

The carrying out of new combinations (Schumpeter 1934) The exploration of opportunities (Kirzner 1973)

The bearing of uncertainty (Knight 1921)

The bringing together of factors of production (Say 1803)

2.4.1 Other views of Entrepreneurshipinclude:

Richard Cantillon (circa 1730); Entrepreneurship is defined as self-employment of any sort. Entrepreneurs buy at certain prices in the present and sell at uncertain prices in the future. The entrepreneur is a bearer of uncertainty.

Jean Baptiste Say (1816); The entrepreneur is the agent "who unites all means of production and who finds in the value of the products...the reestablishment of the entire capital he employs, and the value of the wages, the interest, and rent which he pays, as well as profits belonging to himself."

Frank Knight (1921); Entrepreneurs attempt to predict and act upon change within markets. Knight emphasizes the entrepreneur's role in bearing the uncertainty of market dynamics. Entrepreneurs are required to perform such fundamental managerial functions as direction and control.

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Joseph Schumpeter (1934); The entrepreneur is the innovator who implements change within markets through the carrying out of new combinations. The carrying out of new combinations can take several forms; 1) the introduction of a new good or quality thereof, 2) the introduction of a new method of production, 3) the opening of a new market, 4) the conquest of a new source of supply of new materials or parts, 5) the carrying out of the new organization of any industry. Schumpeter equated entrepreneurship with the concept of innovation applied to a business context. As such, the entrepreneur moves the market away from equilibrium. Schumpter's definition also emphasized the combination of resources. Yet, the managers of already established business are not entrepreneurs to Schumpeter.

Penrose (1963); Entrepreneurial activity involves identifying opportunities within the economic system. Managerial capacities are different from entrepreneurial capacities Harvey Leibenstein (1968, 1979); the entrepreneur fills market deficiencies through

input-completing activities. Entrepreneurship involves "activities necessary to create or carry on an enterprise where not all markets are well established or clearly defined and/or in which relevant parts of the production function are not completely known. Israel Kirzner (1979); The entrepreneur recognizes and acts upon market

opportunities. The entrepreneur is essentially an arbitrageur. In contrast to Schumpeter's viewpoint, the entrepreneur moves the market toward equilibrium. The Entrepreneurship Center at Miami University of Ohio: "Entrepreneurship is

the process of identifying, developing, and bringing a vision to life. The vision may be an innovative idea, an opportunity, or simply a better way to do something. The end result of this process is the creation of a new venture, formed under conditions of risk and considerable uncertainty."

Entrepreneurship can be viewed as the exploitation of opportunities that exist within a market. The exploitation of these opportunities can be most commonly associated with the combination of productive inputs. Entrepreneurs are usually seen as innovative or creative and are seen to be risk-takers, usually they must fulfill this perception in order to exploit the opportunities. Entrepreneurs are seen to be natural managers as they must manage the activities of an endeavor. An individual may act as an entrepreneur in

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creating an organization but later may step into a more managerial role. So because of this small business owners would not be considered entrepreneurs. Therefore individuals within an organization may be considered entrepreneurs, even if they are not the founders, as an entrepreneur is classified as someone who pursues the exploitation of opportunities.

In the context of this paper to narrow down the discussion of entrepreneurship, I will use the working definition of entrepreneurship as ‘the introduction of new economic activity by an individual that leads to change in the marketplace (Sarasvathy 2000; Davidsson 2004).

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2.5 Definition of Economy

1. a. Careful, thrifty management of resources, such as money, materials, or labor.

b. An example or result of such management; a saving. 2.

a. The system or range of economic activity in a country, region, or community.

b. A specific type of economic system.

3. An orderly, functional arrangement of parts, an organized system.14

There is no set definition for a small economy; there are many ways to define it, the most popular measures are population, geographic size or GDP. Economy usually implies some form of region. A region does not have a precise meaning although it does imply some sort of space limitation of the area in question and maybe some characteristics that are common to that area. Boundaries of an economy can be dynamic or static, as regions can grow or contract and the structure of economic activity can change.

2.5.1 Taiwan and Ireland’s Economy

Ireland’s population as of July 2007 was 4,109,086. Taiwan’s population at the same time was 22,858,872. Ireland’s total geographic size is 70,280 sq km, comprising of 68,890 sq km of land and 1,390 sq km of water. Taiwan’s total geographic size is 35,980 sq km, comprising of 32,260 sq km of land and 3,720 sq km of water. 15,16

14 The Free Dictionary by Farlex, “economy”, http://www.thefreedictionary.com/economy 15 CIA - The World Factbook, Ireland,

https://www.cia.gov/library/publications/the-world-factbook/print/ei.html

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GDP is defined as the total market value of all final goods and services produced within a country usually during a yearly period. The most common approach to measuring GDP is GDP = consumption + gross investment + government spending + (exports –

imports)17

According to 2007 figures Ireland’s GDP was $253.3 billion.18 In the same year Taiwan’s GDP was $375.6 billion.19

Taiwan started off over fifty years ago as an underdeveloped, agricultural island, and has since emerged as a major economic power by transforming itself into a leader of high-technology goods. Taiwan’s economy is capitalist in nature, with the government taking a step back in the guidance of foreign trade in recent years. Privatization is the trend with many state-owned banks and industrial firms moving towards this. The economy is mainly export orientated, with the majority of exports going to China and the US. Taiwan depends on an open world trade regime and any downturn in the world economy will leave it vulnerable. Taiwan is a member of the Asian Development Band, the WTO and the Asia-Pacific Economic Cooperation (APEC) forum, and it is an observer at the OECD. Taiwan’s top three export partners are China, the US and Hong Kong with exports such as electrical, electronic and computer equipment. The main importers to the island are Japan, the US and China with imports such as mineral fuels, oils, electric and electronic components, and raw materials. China including Hong Kong accounts for 25% of Taiwan’s total trade and 40% of total exports. Trade with the EU is less than 15% of the total.20 China is Taiwan’s number one destination for foreign direct investment after

Japan.21 Taiwan has had a good year during 2007 where its GDP growth rate went above

5% and unemployment dropped below 4%.22 Agriculture contributes nearly 2% to the GDP of the island, with the main crops being rice, sugarcane, fruit and vegetables.

17 Central Stastics Office Ireland, Economy, IMF Summary Data Page for Ireland

http://www.cso.ie/statistics/imfsummaryire.htm

18 CIA – The World Factbook, Ireland,

https://www.cia.gov/library/publications/the-world-factbook/geos/ei.html#Econ

19 , 21, 22 CIA – The World Factbook, Taiwan,

https://www.cia.gov/library/publications/the-world-factbook/geos/tw.html

23, 24 The Federation of International Trade Associations, Taiwan,

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Taiwan’s natural resources are limited, but the manufacturing industry accounts for about 50% of total GDP. Taiwan still has very successful traditional industries such as iron, steel, chemical and mechanical which account for almost half the industrial production. Taiwan’s success in recent years has come from being one of the largest suppliers of semi-conductors, computers and mobile phones in the world, they can also boast to being the largest supplier of computer monitors and LCD screens.

Ireland’s economy is small, modern and very much trade-dependent, over the last twelve years the economy has seen growth averaging about 6%.23 Industry and services are now the biggest industries where once it was agriculture. The modern economy is now based on sectors like IT, electronics, and pharmaceuticals. The export sector is extremely important to the economy and is mostly dominated by foreign multinationals. Recent growth in the economy was fueled by the boom which hit the construction industry, recent business investment and consumer spending. GDP is the second highest in the EU behind Luxembourg.24 The government has tried to concentrate on putting an end to price and wage inflation. The beginning of 2008 has seen a slowdown in the property market, a slowdown in the construction industry, there has also been more intense global competition which leaves the forecast for 2008 a little lower than the success of recent years. The agricultural industry accounts for 3.5% of total GDP, with crops such as cereals, vegetables and the main area of bovine breeding.25 Fishing is another important industry, with Ireland being the fourth largest salmon producer in Europe. Ireland exports 60% of its meat production. Ireland’s service industry mainly the IT and electronics sectors accounts for 60% of total GDP and tourism contributes 5% to total GDP.26

Ireland’s top three export partners are the US, UK and Belgium with exports mainly comprising of organic chemicals, electronic and telecommunication equipment, and pharmaceutical products. Its main import partners are the UK, US and Germany,

25 CIA – The World Factbook, Ireland,

https://www.cia.gov/library/publications/the-world-factbook/geos/ei.html#Econ

26 UK Trade and Investment, Countries, Europe-Western Europe-Ireland,

https://www.uktradeinvest.gov.uk/ukti/appmanager/ukti/countrie

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comprising mainly of machinery, electronic components, vehicles, and mineral fuels and oils.27

3 Literature

Review

3.1 Michael

Porter’s

Diamond

The diamond model of Michael Porter for the Competitive Advantage of Nations offers a model that helps to understand the competitive position of a nation in global competition. Economic theory usually mentions some factors for comparative advantage for regions or countries which include land, location, natural resources, labor and local population size. These factor endowments can’t really be influenced, so they constitute a rather passive view towards national economic opportunities. Porter attributes sustained industrial growth to a concept of clusters or groups or interconnected firms, suppliers, related industries, and institutions that arise in particular locations and believes that an abundance of factor endowments actually undermines competitive advantage. Porter’s competitive advantage of nations has been the outcome of four interlinked advanced factors and activities that occur with these companies and clusters. Porter also believes that these factors can be influenced in a pro-active way by government.

Porter’s diamond framework consists of interlinked advanced factors for competitive advantage including:

• Factor Conditions • Demand Conditions

• Related and Supporting Industries • Firm Strategy, Structure and Rivalry All influenced by government and chance events.

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3.1.1 Factor Conditions

Factor conditions refers to inputs that are used as factors of production, such as labor, land, natural resources, capital and infrastructure. Porter argues however that key factors of production are created and not inherited. Specialized factors of production are capital, skilled labor and infrastructure. Specialized factors involve heavy, sustained investment which is difficult to duplicate and leads to a competitive advantage. Non key factors or more general factors which include unskilled labor and raw materials can be obtained by any company and therefore they do not constitute sustained competitive advantage. Porter believes a lack of resources can actually lead a society to become more competitive as an abundance generates waste and scarcity generates an innovative mindset.

Demand conditions according to Porter, argues that a sophisticated domestic market is an important element to producing competitiveness. Firms that are in a society with a sophisticated domestic market are likely to sell superior products because the market demands higher quality and the close proximity to such consumers enables the firm to better understand the needs and desires of the customers. If a nations discriminating values manages to spread to other countries then the local firms will become competitive in the global market.

Related and supporting industries are important to the competitiveness of firms, these include suppliers and related industries. This usually occurs at regional level as opposed to national level. Competitors that locate in the same area are known as clusters or agglomeration, there are advantages and disadvantages to locating in a cluster. Advantages include the potential technology knowledge spillovers, an association of a region on the part of consumers with a product and high quality and therefore some market power or an association of a region on the part of applicable labor force. Disadvantages include the potential poaching of your employees by rival companies and the increase in competition that may result in possibly decreasing profits or mark-ups.

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Strategy compromises of capital markets and individuals career choices. Capital markets affect the strategy of firms as some countries have capital markets that work on the basis of a long-run outlook, while others have a short-run outlook. Industries vary in how long they consider the long-run to be. However countries with a short-run outlook tend to be more competitive in industries where investment is short-term whereas countries with a long-run outlook will tend to be more competitive in industries where investment is long term. Individual’s career choices are based on their decisions regarding opportunities and prestige. A country will be competitive in an industry whose key personnel hold positions that are considered prestigious.

Structure is based on the best management styles among industries, some countries may be oriented toward a particular style of management and those countries will tend to be more competitive in industries where that style of management is suited.

Rivalry comes from the idea that intense competition encourages innovation. Competition is intense in regions where companies compete vigorously in most industries, while international competition is not as intense and motivating, international competition withholds enough differences between companies and their environments to provide excuses to managers who were outperformed by their competitors.

The government plays an important role in Porter’s diamond model and Porter argues that there are some things that governments do that they shouldn’t and other things that they do not do but should. Governments can influence all four of Porter’s determinants through a variety of actions such as subsidies to firms either directly through money or indirectly through infrastructure, tax codes applicable to corporations, business or property ownership, educational policies that affect the skill level of workers, the development of specialized factor creation and enforcing tough standards. This creates a clarity about which industries they are choosing to help innovate and what methods they will use, and which industries that they are not helping.

The diamond system as a whole creates a system where all elements are self-reinforcing. Strong domestic competition leads to more sophisticated consumers who come to expect upgrading and innovation and can create specialized intermediate goods in an industry or

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society. There is an element of chance in the model where random events can either benefit or harm a firms competitive position, these can be anything like major technological breakthroughs or inventions, acts of was or destruction or dramatic shifts in exchange rates.

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3.2 Defining International Entrepreneurship

International entrepreneurship is highlighted by changes in technological advances and cultural awareness and opens up foreign markets to new ventures. International entrepreneurship begins with an interest in new ventures and they seek to gain competitive advantage from the use of resources and the sale of outputs in multiple countries. Wright and Ricks (1994) defined international entrepreneurship as a newly emerging research arena, which included (a) comparisons of entrepreneurial behavior in multiple countries and cultures, as well as (b) organization behavior that extends across national borders and is entrepreneurial. This definition also excluded nonprofit and government organizations. International entrepreneurship is a combination of innovative, proactive, and risk seeking behavior that crosses national borders and is intended to create value in organizations.

Cross border entrepreneurial behavior focuses on how organizations, groups of individuals enact, evaluate, and exploit opportunities to create future goods and services. Based on the studies of Swedish manufacturing initial internationalization activities of many firms were targeted to psychically close markets and use less committed mode of entry such as exporting. Businesses increase their knowledge over time mainly through experience and then they can start to increase their foreign market commitments and later expand to more physically distant markets. Other views suggest that technological advances in transportation, communication and computers permit entrepreneurial actors to form new ventures that can internationalize quickly. International new ventures are said to own certain valuable assets, to use networks and alliances to control a large percentage of vital assets, this can help to provide a sustainable advantage that is transferable to a foreign location. Elements that affect the entrepreneurial venture are all open to perception, including environmental influences, industry conditions, and the mentality of the entrepreneurs. There is also an advantage seen to how quickly a firm can internationalize with earlier usually leading to an advantage. The influences on the speed of entrepreneurial internationalization is seen to have three aspects to it, the time between

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the discovery or enactment of an opportunity and its first foreign market entry, secondly the speed with which country scope is increased i.e. how rapidly do entries into foreign markets accumulate and how rapidly are countries entered that are psychically distant from the entrepreneur’s home country? And thirdly the speed of international commitment i.e. how quickly does the percentage of foreign revenue increase?

3.2.1 Entrepreneurial Internationalization

Entrepreneurial internationalization has four forces, (1) enabling, (2) motivating (3) mediating, and (4) moderating. First is the enabling force which makes accelerated internationalization feasible by utilizing faster and more efficient transportation, communication and digital technology among multiple foreign countries. Secondly motivation as a force of competition with many entrepreneurs taking preemptive action by utilizing technology opportunities in foreign countries before the competition takes advantage of it. Thirdly is the mediating force, which is enacted when the person or group that discovers or enacts an opportunity is central to the dynamics of international exploitation. Finally we have the moderating force which falls into two categories. The knowledge intensity of the opportunity combined with the know-how already available to the entrepreneur and the characteristics of the entrepreneur’s international network mainly determines the internationalization speed.

Networking is a powerful tool for entrepreneurs and network analysis has been a powerful framework for international entrepreneurship researchers. Networks help entrepreneurs identify international opportunities, establish credibility and often lead to strategic alliances and other cooperative strategies. Once an entrepreneur discovers or enacts an opportunity and perceives the technologies that enable internationalization and the competitors that motivate it, the entrepreneur uses established network links that cross national borders to explore where and how quickly they can exploit an opportunity in a foreign location. So there are three key aspects to networks that help in the facilitation of the speed of internationalization, (1) the strength of the networks relationships, (2) the size of the network and (3) the overall density of the network. The relationships with customers, suppliers and others represent weak and strong ties. Strong ties are an

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advantage but weak ties are more numerous. Larger entrepreneurial networks are usually associated with faster venture internationalization and more rapid increases in country scope. Therefore a large network in place will promote more venture capital from foreign sources and brings about commitment to internationalization. Finally the moderating aspect of entrepreneurial networks is density. Density brings about trust among networks. Successful international business operations are dependent upon reliable interaction among firms in multiple foreign countries, therefore dense cross-border networks provide relatively efficient support for internationalization.

Knowledge can also influence internationalization. Knowledge moderates the speed at which perceived opportunity is exploited internationally. A lack of foreign market knowledge can be an impediment to international expansion. Building on the behavioral view of the firm, the lack of foreign market knowledge can be seen as an impediment to international expansion as firms tended to confine their operations to the geographical area of their existing knowledge. The firm can be seen to progress to further stages of internationalization as they acquire more knowledge. International opportunity seeking can be seen as the key to international opportunity seeking. Results of a study show that the more knowledge-intensive a firm is, the more rapidly the firm grew in international sales, therefore the speed of commitment to internationalization increases.

International entrepreneurship has many possibilities and there are many opportunities for firms in this area.

3.3 Information and Technology Transfer

Ireland still 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. Ireland’s economy consisted of an effective business climate, a stable economy, major foreign direct investment, EU aid and a progressive social partnership agreement. The government invested heavily in education and the result was employers found it easier to

數據

Figure 1-1 Porter’s Diamond Model
Figure 1-2 Porter’s Modified Diamond
Table 5.1 Results of Irish Females, under 30, educated to 3 rd  level.   Strongly
Table 5.3 Results of Irish Males, under 30, educated to 3 rd  level  Strongly
+7

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