Entrepreneurship and Innovation

Running Head: ENTREPRENEURSHIP AND INNOVATION
Entrepreneurship and Innovation
Name of Student
Name of University
Author’s Note

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ENTREPRENEURSHIP AND INNOVATION
Table of Contents
Introduction......................................................................................................................................2
Focus statement...............................................................................................................................2
Measuring Innovation......................................................................................................................2
Main Findings..................................................................................................................................5
Conclusion.......................................................................................................................................7
References:....................................................................................................................................11

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ENTREPRENEURSHIP AND INNOVATION
Introduction
Innovation in any organization basically refers to development of more effective
processes, services and products through ideas which are expected to lead to enhanced
performance and outcomes. It involves changing existing business models according to the needs
and preferences of the trending market, and is vital for any business for growth and market
adaptability. Innovation should be a, integral part of any business strategy in order to create a
culture of creative thinking and progressive ideas (Startup, 2018). The implementation and
impact of innovation is different for different scales of business organizations. While smaller
firms can adapt to change and innovation faster, larger firms can handle innovation risk better.
Focus statement
In this essay, we will be addressing the statement: “Small firms are more likely to
produce major innovations than large firms,” by analyzing the relative disadvantages and
advantages of big and small firms for producing innovations successfully. The validity of the
statement will also be assessed.
Measuring Innovation
In order to assess whether a smaller organization can innovate better than larger ones, we
need to consider the advantages and disadvantages of innovation production in the respective
organization fields. The correlation between steps of innovation and organisational volume needs
to be carefully understood to assess this comparison. According to Iorio and d’Amore (2017),
smaller business firms, on innovating and becoming larger, have greater resources to manage
innovative projects, and recruit personnel who are better qualified for management. This means
that larger the organization becomes the more options it has regarding planning and

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ENTREPRENEURSHIP AND INNOVATION
implementation on innovation. Around ten to fifteen years back, smaller organizations were
clearly perceived as better innovators, while large firms moved more slowly in planning and
implementing their innovations. Now, however, the growing importance of innovation has given
rise to new approaches and the larger companies are becoming more nimble in adopting change
(Cano-Kollmann et al. 2016).
Large-scale companies, having more staff, tend to have a greater number of people
devoting themselves to innovation. According to statistical research conducted by Iorio and
d’Amore (2017), larger firms in Italy have a distinct advantage over smaller firms with respect to
all forms of innovation. The research also suggested that the amount of this advantage has also
been observed in the other countries where the research had been conducted.
Larger firms also have the option of diversifying the risks brought about by innovation by
developing diverse research and development projects. Due to imperfections in the capital
market, it is easier for bigger firms to obtain the finance necessary for risky research and
development plans (Vossen, 1998).
Big firms have the provision to diversify the risks of research and development (R&D) by
creating a diversified R&D portfolio. Furthermore, as a result of imperfections in the capital
market, it is easier for big companies to acquire finance for risky R&D projects (Vossen, 1998).
Innovation cannot be complete without allocating sufficient resources for the necessary
changes. Bigger corporations have greater amount of resources to spare to accommodate an
innovation, whereas for small companies resources are far more scarce and are mostly allocated
on the basis of whether it will boost the prime business targets.