Academic journal article Entrepreneurship: Theory and Practice

Technology Entrepreneurs' Human Capital and Its Effects on Innovation Radicalness

Academic journal article Entrepreneurship: Theory and Practice

Technology Entrepreneurs' Human Capital and Its Effects on Innovation Radicalness

Article excerpt

Radical innovations transform existing markets, create new markets, and stimulate economic growth. This study investigates how the experience, education, and prior knowledge of technology entrepreneurs relate to innovation radicalness. Findings from a sample of 145 technology entrepreneurs operating within university-affiliated incubators suggest that general and specific human capital are both vital to innovation outcomes. Innovation radicalness was positively associated with formal education and prior knowledge of technology, but negatively associated with prior knowledge of ways to serve markets. This suggests a counterintuitive conclusion--the less technology entrepreneurs know about ways to serve a market, the greater their chances of using technology knowledge to create breakthrough innovations within it. Finally, we discuss configurations of human capital that are likely to bestow unique advantages in the construction of radical innovations.

Introduction

Innovation is of central importance to entrepreneurship (Covin & Miles, 1999; Schumpeter, 1942) and of immense interest, given that it is the primary instrument of competition for many firms (Baumol, 2002). Arguably, the most common way of defining innovation involves using an incremental versus radical framework. Pavitt (1991) describes radical innovations as revolutionary or discontinuous changes, while incremental innovations are conventional or simple extensions in a line of historical improvements. In economic terms, the impact of radical innovation is considerably more dramatic. They can transform existing markets, create new ones, and make an enormous economic contribution (Leifer et al., 2000). Although radical innovation outcomes have been empirically linked to entrepreneurship at a macro level (e.g., Baumol, 2002), how this is accomplished at a micro level of analysis is poorly understood.

Understanding how individuals create breakthrough innovations has rich theoretical and practical implications for entrepreneurship. Entrepreneurship, as a scholarly field, seeks to understand how, by whom, and with what effects opportunities to create future goods and services are discovered and exploited (Shane & Venkataraman, 2000). A number of studies provide evidence that aspects of an individual' s human capital facilitate the recognition or development of an opportunity (Davidsson & Honig, 2003; Shane, 2000; Shepherd & DeTienne, 2005). Human capital theory posits that individuals with more or higher quality human capital will reap more desirable outcomes (Becker, 1964). However, the question of how human capital contributes to the process of enacting radical innovation has eluded most scholars. This research endeavors to fill that void by investigating how aspects of individual human capital are linked to the recognition of opportunities bearing radical innovation outcomes.

To investigate human capital and its relationship to radical innovation, we draw on prior entrepreneurship research that examines both general and specific human capital (e.g., Corbett, 2007; Dimov & Shepherd, 2005). In doing so, this article makes a number of contributions. First, we increase our understanding of the characteristics of technology entrepreneurs by examining three types of general human capital that are associated with innovation radicalness--experience depth, experience breadth, and formal education. Second, we examine specific human capital by investigating technology entrepreneurs' prior knowledge. We demonstrate how differences in prior knowledge of markets, customer problems, ways to serve markets, and technology at opportunity recognition systematically influence the radicalness of subsequent products and services.

We then explore which combinations of general and specific human capital are associated with radical innovation. By examining the configurations of technology entrepreneurs' human capital associated with high innovation versus low innovation, we hope to increase understanding about which characteristics are associated with radicalness. …

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