“Entrepreneurship and Innovation” - CBS input to the FORSK2025 process
Societal challenges/possibilities
Entrepreneurship and innovation are the keys to prosperity, for humanity as a whole, for nations, and for business. It is only by constantly developing new ways of satisfying known and as‐yet unknown demands, and improving the ways we create products and services, that we can experience a higher standard of living and mediate problems of expanding and aging populations, climate change and the exploitation of nature. By encouraging and rewarding entrepreneurship and innovation in all their aspects, the market economy has proven to be a powerful engine towards this goal. New companies challenge existing industry and force it to innovate, and innovation ‐ building on science and creativity ‐ has fostered entrepreneurship in all sectors of society.
Furthermore, beyond the for-profit approach to innovation and entrepreneurship, two notions are currently coming to the fore as major trends in our societies, namely ‘social innovation’ and ‘social entrepreneurship’. These refer to a wide variety of initiatives and projects developed by a diversity of actors and organizations, seeking to introduce fundamental transformations in the way in which collective and privately-enjoyed goods are being produced and consumed by specific communities. These initiatives are usually more locally-organized, do not seek explicit individual economic profit, and are mainly based on voluntary and/or community-based coordination. However, they might have an important transformative potential in specific issues of city or community life, and they can also operate in collaboration with public or for-profit private initiatives. Such social innovation is likely to be as important when it comes to tackling broad societal problems as more familiar notions of technological innovation.
Both for-profit and social entrepreneurship and innovation raise a range of possibilities for Denmark, but fully achieving Denmark’s potential in these areas also implies many challenges. For instance, what can be done to encourage entrepreneurship among university graduates and school leavers? How can firms effectively develop more open modes of innovation, including for instance making use of crowdsourcing? What can be done to increase the odds that inventions are successfully commercialized? How can innovation rates be maintained in larger firms, and how can such firms reinvent themselves? What is the role of policy-makers, philanthropic foundations, industrial associations and civil society organizations in creating framework conditions in Denmark that foster entrepreneurship and innovation? Why do some social enterprises and social innovations succeed while others fail, and what are even the right measures of success and failure? What can Denmark learn from other countries concerning the dynamics of social entrepreneurship and innovation? How does government innovate most effectively?
Need for research
Although these challenges of course eventually need to be tackled by various stakeholders, research into the above questions is an essential tool to increase the odds these stakeholders have in succeeding. Research produces both direct and indirect benefits for stakeholders. The stakeholder set for entrepreneurship and innovation research is very wide-ranging. One key group of stakeholders is clearly (would-be) entrepreneurs and social entrepreneurs who benefit from a more accurate understanding of their opportunities for success. A second group is employees of firms, who benefit economically if innovation leads to productivity improvements and increased revenues, or by an increased job satisfaction if firm practices are improved. A third set of stakeholders are consumers, who benefit from increased and improved product offerings. A fourth group are citizens, particularly in the case of innovations by government or social innovations. A fifth group of stakeholders are organizations, including government organizations, and their respective constituents. Continuing innovation is a key mechanism to ensure the longevity of such organizations. Research can generate insights both into how to make (social) innovation and (social) entrepreneurial success more likely and into how to maximize the impact of (social) innovation and (social) entrepreneurship.
Research can also help to better understand the many trade-offs that are involved in entrepreneurship and innovation. While entrepreneurship and innovation may produce positive outcomes, they are clearly also very costly activities. Such costs are clearly financial in nature, but can also involve human costs, for instance the impact that failure of a start-up has on entrepreneurs. Therefore not all entrepreneurial and innovation activity is necessarily good, the benefits have to outweigh the costs. Furthermore, trade-offs also come to the fore when decision-makers have to decide between what innovation to pursue: For instance, given the costliness of innovating is one social innovation better than another social innovation; but also, when should firms focus on product innovations, when are improvements in production processes (process innovations) more beneficial, and when are improvements in management practices (management innovations) the best route to pursue? In short, research insights can help us move away from the naïve idea that any and all entrepreneurship and innovation is useful.
Implementation
Research on entrepreneurship and innovation can find its way into practice through many mechanisms that have already been proven to work in Denmark and beyond, including the following:
- Collaborative research projects involving researchers and various stakeholders with joint knowledge creation / direct knowledge transfer.
- Dissemination of research findings through a variety of (online) media.
- Education and training of (social) entrepreneurs and would-be (social) entrepreneurs in schools, universities and so on that is based on research insights.
- Support programs for (social) entrepreneurs and would-be (social) entrepreneurs set up by one or more of government agencies, larger firms, and various foundations with input from research institutions.
The Danish context
Denmark is already a highly innovative country. This innovativeness is an important pillar behind Denmark’s economic success. For instance while Denmark ranks 12th overall in the 2015-2016 global competitiveness rankings of the World Economic Forum, lowest among the Scandinavian countries, it is ranked 10th on the sub index for Innovation, helping it to overcome lower scores on other aspects, some of which are structural in nature (such as its market size). In other words, maintaining a high level of innovation, and having a continuous pipeline of new entrepreneurial firms is absolutely essential for Denmark.
As noted above, innovation and entrepreneurship can take many forms and show up in many places, and this is certainly the case for Denmark. Outside observers would for instance notice that Denmark is home to many new entrepreneurial technology firms such as Falcon Social, a successful social media startup, as well as much more established innovators in industries like pharmaceuticals and healthcare such as Novo Nordisk. They would also take note of exciting social enterprises like WeFood, the supermarket that sells products “nobody else wants to sell”, i.e. those nearing their expiration dates, which have been wrongly labeled, or may have damaged packaging. Or they might point to the New Nordic trend in food or one of many innovative solutions used by government, for instance how the NemId system provides access to a wide range of services. While all that entrepreneurship and all those innovations are cause for celebration, they also make the question “how can Denmark continue to achieve such success” all the more urgent, particularly in light of key trends like globalization, climate change and the emergence of highly disruptive new technologies such as nano-technology, 3D printing, driverless cars, and so on.
Denmark is also well suited to undertaking research on entrepreneurship and innovation for several reasons. It has a good mix of research institutions that can deliver the different insights needed, such as DTU (where technology is concerned) and CBS (which produces a steady stream of new knowledge about how firms innovate as well as on the dynamics of social innovation). Because Denmark has a relatively tightly knit social fabric, there is more trust between potential research partners than in many other countries. And it seems fair to say that the innovative mindset is fairly ingrained in modern Denmark.
Stakeholder support
CBS has held ongoing discussions with a wide variety of stakeholders on the theme of Entrepreneurship and Innovation. The following stakeholders can be expected to take an interest in developing a research focus area on Entrepreneurship and Innovation:
- Dansk Byggeri
- Dansk Erhverv
- Dansk Industri
- Danske Erhvervsakademier
- Danske Fagbevægelser
- Danske Innovationsnetværk (støttet af FI)
- Danske Regioner
- Kommunernes Landsforening
- Tænketanken DEA
- De regionale Væksthuse
Goals and perspectives
An increased focus on research into entrepreneurship and innovation, through a FORSK2025 theme, could produce some or all of the following direct and (very) indirect benefits:
- A significantly increased research output on entrepreneurship and innovation by Denmark-based researchers, relative to the historical output and the output in other countries.
- More interest among young people in starting up a new (social) enterprise.
- More entrepreneurship and innovation education and training of (young) people in relevant institutions.
- A larger number of (social) entrepreneurial start-ups, a higher success rate of such start-ups, and more impact of such start-ups. The latter can for instance be measured through job creation.
- A higher innovation rate, as measures for instances through satisfaction of citizens and consumers.
- An improved position of Denmark on relevant innovation rankings, for instance that of the World Economic Forum.