The Role of Innovation in Entrepreneurship

Introduction
Every entrepreneurial venture is associated with an idea and innovation to meet the needs,
wants and desires of customers and other stakeholders. Therefore, it is imperative for
entrepreneurs to seek, generate and research new ideas and innovations for their businesses.
To become a successful entrepreneurial enterprise, the firm must reduce the dangerous
repercussions of various hazards. Risks might occur as a result of a startup's incapacity to
respond to change and the uncertainties that come with it. Rapid change is the norm in the
twenty-first century; as a result, entrepreneurs must constantly learn to adapt to these changes
in order to keep their business from going bankrupt.
The example of millions of entrepreneurs around the world eloquently testifies to the fact that
there are many sources of new ideas. The most useful of these are consumer reviews,
competitor products, salespeople's opinions, federal government publications, and R&D.
But it is not easy to create and introduce an innovative product or service into the market.
Despite much research, there are risks of innovation. This report will focus on new entry,
consider entry strategy for new entry exploitation, and explore risk reduction strategy for new
entry exploitation.
Review of relevant literature
Entrepreneurship, according to Kumar et al. (20 1 5), is a collection of actions that stimulates
innovation, allowing society to gain from more efficient and efficient manufacturing
processes, new markets, new methods of utilising materials, and so on. Furthermore, as the
authors go on to say, entrepreneurship is a psychological attitude toward risks and
uncertainties, as well as a readiness to reap greater rewards from these components. However,
not all smaller firms can implement effective risk-mitigation techniques that would allow
them to overcome uncertainty and identify new opportunities.
According to Faulkner and Hiebi (20I 5), in order for risk management techniques to be
effective, a company must first elaborate on the numerous hazards that it may encounter.
 Risk associated with interest rates. Small start-up businesses rely heavily on bank
loans and other forms of external financing (Al tman et al., 2010). As a result, there is
more uncertainty regarding future interest rates.
 Raw material price risk. SMEs have encountered variable and unexpected buying
prices during the last decade (Moore et al., 2000). Manufacturing startups have the
biggest difficulties because their operations are entirely dependent on raw material
availability. Small firms can fail if they are unable to identify dependable suppliers
and negotiate mutually advantageous conditions.
 Cybersecurity and e-commerce issues Due to a lack of financial resources, startups
cannot always afford to purchase dependable software systems that secure their own
secret information as well as the confidential information of their clients. They can be
victims of identity theft, cyberattacks, and other Thursday risks (Sukum ar et al.,
2011).

According to Kagwathi et al. (2014), poor governance in small start-up organizations often
exposes firms to multiple dangers. If managers can adequately identify the risks their
organizations may face and implement risk mitigation strategies in time, negative
consequences can be significantly avoided, leading to increased profits and overall economic
prosperity. Hisrich et al. (2017) distinguishes two risk-control tactics used by startup
managers: market coverage strategies and imitation strategies.
Entrepreneurs must define and choose one approach that, in their opinion, is most suited to
their business objectives.
Exploitation of new entrants and risk assessment
You can look at the new entry from several sides. For example, a corporation may be the first
to introduce a new product to a non-standard stock market. Tesla, led by Elon Musk, first
entered the undeveloped EV market a few years ago. New entrants can also take the form of
introducing an existing product to a new market, as Yandex did when it introduced its
YandexTaxi app in Russia before any other company did.
Many organizations that take advantage of market leadership have been successful in
implementing the essential strategies to reduce the risk of innovation, demand uncertainty,
and environmental instability.
Liabilities of newness This is a regular risk for a newly created company. These businesses
lack a clear organizational structure and communication channels, which can result in internal
conflicts and misunderstandings. Furthermore, a startup's limited financial resources can
place it in a difficult position when it comes to enhancing staff skills and resolving a lack of
knowledge in a given professional field.
Demand is uncertain Pioneer firms, according to Hisrich et al. (2017), lack appropriate
knowledge of the market in which they aim to engage. As a result, small and medium-sized
enterprises (SMEs) may misread potential market development and increasing demand for
their products. Shyp was a startup that aimed to change the worldwide shipping industry.
Despite the fact that the company got off to a good start by collecting a sufficient number of
customers. However, when it first began to expand, the company did not effectively estimate
future demand, which was indeed dropping. As a result, it was shut down.
Environmental instability Businesses must assess their external environment. SMEs are not
always correct in assessing the potential of the industry in which they operate (Histrich et al.,
2017). Because of the volatility in demand, startups can fail to appropriately respond to these
developments as the market grows.
Risk reduction strategies
Market Scope Strategy
The entrepreneur decides which consumer groups to service and how to serve them. Market
reach strategies are designed to target a specific group of customers and give them with a
specific product. There are two sorts of market outreach methods: broad and restricted
outreach techniques (Hisrich et al., 20 I 7).