Transforming the Entrepreneurial Landscape: Emergent Innovative Behaviors in Internet Firms

Article excerpt

The electronic marketplace presents an extraordinarily challenging environment for product and service development, and will necessitate the development of alternative entrepreneurship models. Internet entrepreneurial teams can be characterized by their orientation toward values of rapid change and innovation. This article reports on a study of innovative behaviors in which 131 Internet entrepreneurs were engaged, and six distinct innovation activities emerged. Implications for opportunity identification, alliance formation, and strategic orientation of Internet entrepreneurs are presented as preliminary steps toward a new "netpreneurship" model of business formation.

Entrepreneurship has always been a vibrant force in the economy, and at the forefront of adaptation and growth of new markets. As the 20th century drew to its closure, it had been described as the "century of the entrepreneur" (Bangs and Pinson, 1999). The entrepreneurial landscape continues to transform, and as the 21st century unfolds, a new form of entrepreneurship is taking shape. With the rapid acceleration and availability of technology, electronic commerce is changing the nature of business. New forms of distribution, marketing, selling, and arranging work are observable. Attributes of this new economy, referred to as "netpreneurship," include:

* collapsing boundaries between firms, suppliers, customers, and competitors;

* new, expanding markets with increasing competition, choice, and lower prices;

* the presence of "'infomediaries" who provide production information and locate the best selection or price;

* and shifting consumer expectations as buyers' tolerance for poor service and quality decreases (Morino, 1999).

This phenomenon will play an increasingly important role in business. However, because it is so recent, there is very little information known about the attributes or innovative activities of Internet entrepreneurs. Research is needed to identify success factors, including opportunities and barriers confronting this emerging group of enterprises. This article examines the innovative orientations that Internet entrepreneurs have incorporated into their firms. It reports on a study which represents one of the first empirical investigations of Internet entrepreneurial behavior, contributing to the development of a research agenda in this area.

Netpreneurs: A New Breed of Business Ownership

Electronic commerce experienced dynamic and rapid growth in the late 1990s. By the end of 1998, it was estimated that there were 97 million web users worldwide (International Data Corporation, 1999). By the year 2002, this number is expected to jump to 320 million users (International Data Corporation, 1999). In the United States alone, 9 million households shopped on-line in 1998, yielding $7.8 billion in revenues for on-line businesses (Forrester Research, 1999). By 2003, 40 million U.S. households are expected to shop on the web, and revenues from this will approach $108 billion (Forrester Research, 1999). These statistics reflect the increasing numbers of ventures that will be launched on the Internet.

Prospective entrepreneurs who want to capitalize on this trend will need to identify the factors necessary to successfully found and sustain this type of business. Effective "e-businesses" will seek out and act on the demands of the market, differentiating themselves through customer management, relationship marketing, and community building (Shannon, 1999). Netpreneurs will need to build organizations that have several dimensions paramount to effective performance (Morino, 1999). According to Morino, these are:

* Speed-Advances in computing and globalization have changed stakeholders' expectations about the pace of change.

* Adaptability-The business must be much more flexible and able to identify and respond to changes in technology, competition, and buyer patterns. …