High Technology Entrepreneurship: An Exploratory Study

Abstract
The author identifies six variables describing entrepreneurship in high technology content. Among ten propositions developed using these six variables, these propositions involve only two variables that seems significantly differ between the high and low technology entrepreneurship.

First, in term of education, the new high technology venture initiation has higher level of education comparing to the low technology entrepreneur, and moreover the high technology entrepreneur has engineering education background comparing to the nonengineering background in low technological entrepreneur.

Second, there is indication that inventors are likely to works individually, whereas entrepreneurs are more likely to work in teams. Further more, founders of the high technology ventures tend have more partner as compared to founders of the low technology ventures. Intensification of master and PhD program in may accelerate the high technology entrepreneurship.

I.    Introduction

Entrepreneurship research is mostly connected to the personal characteristics of the entrepreneurs, where the psychology is the closest discipline in this area. As the result, psychology becomes very dominant in the devel¬opment of the entrepreneurship theory. The most popular theory is from David Mc Clelland (1961).

According to Mc Clelland, the successful entrepreneurs have high achievement motives. In addition, Sexton (1987), focused his research in identifying the characteristics of entrepreneurs. Ratter also explains that entrepreneurs have high internal locus of control and Greenburger and Sexton (1987) argue that entrepreneurs have high personal control.

Based on research from Hornady and Churchill (1987), the highest number of papers in the Frontiers of Entrepreneurship Research Conference during 6 years, 1981-1986, is personal characteristics of entrepreneurs, which is 33% of 227 papers.

Due to this direction, the different angle of view of the entrepreneurship research is very difficult to be developed. On the other side, there are so many significant aspects influencing the entrepreneurship development, beside the internal factors, for example such as social & economy situation, technology etc.

Other different factors really can be seen from other different view. In government regulation, for instance, de¬regulation of communication monopoly in the US would have significant impact in entrepreneurship (Faul-haver, 1988). Development of technology is the key of the economy development in Japan, from the past and will continue to the future (Kashiwagi, 1987).

Hornady and Churchill show that one of the lowest number of papers in the Frontier of Entrepreneurship Research Conference during 6 years, 1981 -1986 is high technology ventures, however, the number of paper in high technology has been increasing since 1981 from that conference. That the technological aspect, especially in high technology entrepreneurship, is not very popular in entrepreneurship research is amazing in the technological decade. Even though we cannot generalize this result, this is an indication that research in this area should be done more than before.

In Indonesia, high technology area is also developed. For instance, priority in science development in the second period of the long term development is high technology such as biotechnology, microchip, aerospace etc (Bidramanto, 1992).

II. Definition

Badiru (1987) defines high technology as a concept of utilizing new developments in electronics, data processing and physical material innovatively to generate products or services.

In addition, Cooper (1986) mentions that high technology firms might be defined in different ways, but presumably they are characterized by substantial emphasis upon research and development, and participation in industries with high rates of technical change and some researchers have focused such products as electronic components, computers and pharmaceutical.

Shan-klin and Ryans (1984) define high technology as first, the business requires a strong scientific-technical basis, second, new technology can quickly make existing technology obsolete and third, as new technologies come on stream, their applications create or revolutionize markets and demand.

Methodology used in this research is comparing high technology entrepreneurship research within the low technology entrepreneurship. Therefore, high and low technology should be defined before. Slevin and Covin (1987) define that certain industries commonly regarded as “high-tech” industries: e.g, advanced electronic industries, while others are typically considered to be “low-tech” industries: e.g., construction, agriculture (Slevin & Covin, 1987).

There are many factors influencing high technology entrepreneurship, but in this study, it will be limited in some aspects only that can be clustered into variables below:
–   External aspects of the entrepreneurs that consists of:

  • Technological process
  • Incubator system
  • Research and development

–   Internal aspects of the entrepreneurs that consists of:

  • Work pattern
  • Experience
  • Education

Other factors such economical, social, motivation factors etc, may influence the high technology entrepreneurship, but that factors have not been found deeply yet in the literatures reviewed.

III. Propositions

Technology entrepreneurship sometimes is called as technopreneurship and technological process is an important factors in the technology entrepreneurship. People who involve in the technology process will follow certain work patterns. In order to accelerate the process of technology, incubator is created to simulate and replicate the real world to whom who does not have experience in the business before.

In addition, to explore and develop technology entrepreneurship, research and development will be applied and the success rate of the research usually is related to the level of education of researchers involved.

A.  Technological Process

Technological process, an external factors of the entrepreneurs, consists of three steps, namely invention, innovation and diffusion. Invention and innovation are usually used in discovering new thing. Invention is a process by which a new idea is discovered or created (Rogers, 1983).

An invention is simply the new idea and it is application of this new idea that leads to an innovation (Tansik and Wolf, 1986). Furthermore, an invention, when applied for the first time, is called an in¬novation (Mansfield, 1968).

An innovation is knowledge that has been applied for the first time, in the form of a productive process or product (Koch, 1980). Martin (1984) makes similar statements that an invention only becomes to innovation when it is transformed into a socially usable product (Martin, 1984).

Jewkes, Sawers and Stillerman (1980) say that invention is best defined as the first confidence that something should work, and the first rough test that it will, in fact, work. In addition, Schmookler (1980) defines that innovation is the first commercial application of an invention.

The fact that invention has been translated into an innovation does not guarantee that innovation will be immediately adopted. Koch (1980) explains that the process of adoption of innovations is referred to as diffusion; the rate of diffusion is often slow and the process of diffusion is appropriately viewed as a learning process.

Are there any differences in duration of time between invention to innovation and between innovation to diffusion?

Substantial lags in time often exist between invention of new knowledge and the actual appearance of that knowledge in the form of a process or product innovation. The average of time span for the ten innovations studied by Battelle (1973) was 19,2 years. Heart pacemaker (32 years), hybrid corn (25 years), hybrid small grains (19 years), green revolution wheat (16 years), electra photography (22 years), input-output economic analysis (28 years), organophosphorus insecticides (13 years), oral contraceptics (9 years), magnetic ferrites (22 years) and video tape recorder (6 years).

It can be considered to the high technology products are: heart pacemaker, electra photography, input-output economic analysis, oral contraceptics, magnetic ferrite and video tape recorder. Whereas, hybrid corn, hybrid small grains, green revolution wheat and organo phosphorus insecticides can be considered as low technology product.

Moreover considering the high technology products, Koch (1980) mentions inventions in nylon (11 years), jet engine (14 years), television (22 years) and electronics (79 years lapsed between the invention on the fluorescent lamp by becquerel in 1895 and the subsequent innovation by General Electric and Westinghouse in 1938).

In addition, Enos (1973) using a sample of thirty-five innovations, found a mean of 13,6 years between earliest conception of the product in substantially its com¬mercial from and first commercial application or sale. Furthermore, The National Commission on Technology, Automation and Economic Progress reports a 14 year interval between invention and commercial application (Battelle, 1973).

In term of diffusion, Mansfield (1968) has examined the diffusion process in detail with respect to twelve major innovations in four markets; bituminous coal, iron & steel, brewing and rail roading. The number of years that elapsed before one half of all the firms in the appropriate market adapted an innovation ranged from 0.9 to 15 and the average being 7.8.

According to Koch (1980), the length of duration between invention-innovation and innovation-diffusion is a function of factors such as expected profitability, demand conditions, capital costs, the state of existing technology, marketing sophistication and the willingness to bear risk and uncertainty.

Lack of expected profitability, for example, was the reason that transfer equipment was not used in the production of automobiles until the 1950’s, even though it had been potentially available for over 30 years (Koch, 1980).

From above information, it can be seen that the duration of invention to innovation and innovation to diffusion vary greatly both for high technology and low technology products.

Proposition 1
There is likely no significant differences in duration between invention to innovation, for both high technology and low technology products.

Proposition 2
There is likely no significant dif¬ferences in duration between innovation to diffusion, for both high tech¬nology and low technology products.

B. Work Pattern

The role of people in invention can be seen in some cases. Hamberg (1963) states that 12 of the 18 inventions he had examined resulted from the work of independent individuals and relatively small companies. Furthermore, Jewkes, Sawers and Stillerman (1963) show that 40 of 61 important inventions made since 1900 were the product of independent innovators, working alone, unaffiliated with any industrial laboratory.

In addition, Schon (1963) states that in his study, he assembled a list of inventions important for military uses, made within roughly the past 50 years. Individuals working without organizational support were either entirely responsible for these inventions or played a mayor role in their evolution; jet engine-Sir Frank Whittle, gyrocom-pass-H. Anschutz. Kaempfe, helicopter-Igor I Sikorsky, rockets-Robert H.Goddard, many varieties of automatic guns-Lewis, suspension tanks-George Christie, doron body armor-General Georges F. Doriot, noiseless and flash-less machine guns-Stanley Lovell, cryotron-Dudley Buck, automatic submarine-Admiral Hyman G. Rickover, sidewinder missile-William B. McLean, project astron-Nicholas C Chris-tofilos, stainless steel-Elwood Hay-ness, titanium-WJ. Kroll.

In high-tech venture initiation, Cooper describes that as in previous studies, many of these founders started with one or more partners. In ten studies, the median percentage of founders with partners was about 70 percent, whereas nontechnical entrepreneurs seem to be much less likely to have partners (Cooper, 1986).

Proposition 3
Inventors are more likely to work individually, whereas entrepreneurs are more likely to work in a teams.

Proposition 4
High technology innovators or high-tech venture initiators tend to have more partners than low technology venture initiators.

C.  Incubator

Incubator is the external of the entrepreneurs following the technological process. The source of spin offs, as an incubator of new venture initiation, can be from government, universities and private companies. Martin (1984) describes that the private companies are more effective incubators than the other institutions.

Whereas, Olken (1974) says that to achieve the utmost in spin offs of this kind, is a matter of getting the right government research and development contracts, a subject which has been treated extensively elsewhere. The successful growth of high technology companies in and around Cambridge, and their relationship with the University, has recently been documented as the Cambridge Phenomenon (Smith, Fleck, 1987).

Moreover, Smillor (1987) explains that the incubator idea is still new and experimental, consequently some incu¬bators will fail; others will be modi¬fied and still variations on the concept are likely to emerge.

Proposition 5
There are likely no significant differences in effectivity to initiate new venture among the incubators institutions namely company, government or university for high and low technology entrepreneurship.

D.  Experience

Roberts (1974) defines that the spin off label referring to the fact that the technical basis for the new company often spins out with the entrepreneur from some other existing organization. Technological spin off is also related to the development of technology. If company does not give enough room in innovation for the employees in the technology development, spin off may occur.

Arthur K. Watson has testified to the importance of the third condition at IBM: The disk memory unit, the heart of today’s random access computer, is not the logical outcome of a decision made by IBM management. It was developed in one of our laboratories as a bootleg project-over the stern warning from management that the project had to be dropped because of budget difficulties. A handful of men ignored the warning. They broke the rules. They risked their job on a project they believed in (Schon, 1963).

Cooper and Bruno (1977) that conducted research in successful high technology firms, explain that 80,0 percent of new firs were similar to the “parent” organization in both technology utilized and market served. In addition, Maidique (1986) also mentions that the first key success factor in high technology ventures is that founders have related technology and market experience.

On the other hand, Ray and Turpin (1987) mention that approximately 85 percent of the new firms in the US has initial products or services that drew on the founder’s previous technical experience, and in Japan, 83 percent of the founders acknowledged that their previous experience.

Proposition 6
In terms of experience, there is likely no significant difference in similarity of the kind of business during their past work and their new venture initiations for both, high technology ventures and general ventures.

E.  Research And Development

Cooper (1986) states that high technology firms are characterized by substantial emphasis upon research and development. In addition, Cooper and Bruno (1977) argue that in new high technology venture initiation emphasizes research and development and focus on the development and utilization of new technology.

In the developed country, R&D is emphasized, yet they developed not only in high technology but simultaneously in low technology. In term of the researchers per 10.000 people, in Indonesia only has 0,14 people.

Compared to the country having high and low technology developed, Indonesia seems in the lowest, Taiwan (10 people), Korea (13 people), Japan (44,8 people), U.S. (79 people), Germany (12,8 people), French (9,3 people) and Soviet (146,4 people) (Komarudin, 1989).

The higher the number of researchers is, the higher the development of high technology entrepreneurship will be, as well as the low technology entrepreneurship development in a country.

Concerning to the research budget, Indonesia has 0,2% of GDP, whereas UNESCO standard is 1% of GDP (Bi-dramanto, 1992). Comparing with GNP, Indonesia is considered to the lowest (less than 1 %), French (2,2%), British (2,6%) Germany (2,6%) Soviet (4%) (Herlianto, 1987).

The higher the amount of budget research is, the higher the development of high technology entrepreneurship will be, as well as the low technology entrepreneurship development in a country.

Proposition 7
The number of researchers are likely stimulating simultaneously the development of high technology and low technology entrepreneurship.

Proposition 8
The amount of budget are likely stimulating simultaneously the devel¬opment of high technology and low technology entrepreneurship.

F.   Education

There are two kinds of educations, level and discipline or major. In term of the level of education, Teach, Tapley, Schwartz and Brawley (1987) explains that in software industry, the educational level of entrepreneurs was extremely high, with almost half having an advanced degree.

More specifically, Goslin (1987) in his analysis from a sample of over 200 high technology start up firms from a directory Advanced Technology in the Pacific Nortwest, describes that the educational background of the respondents breaks down as Bachelors degrees (60 percent), Master degrees (19 percent), MBA’s (10 percent), PhD (10 percent) and no degree (16 percent).

The glance examples are given to draw the insight how high the education in high technology companies. According to Mary and Balbaky (1991) in America, Cetus company has 46 PhD/MD from 292 staffs with 5 Nobel holders. Genetech has 40 PhD from 112 workers, Biogen has 79 PhD from 250 workers, Molecular Genetics has 26 PhD from 67 workers and Integrated Genetics has 17 PhD from 69 workers. These business of the companies usually are in blood testing, insulin, hepatitis vaccine, herpes etc.

Furthermore, Cooper (1977) explains that technical entrepreneurs were found to have substantial formal education and they were discovered to have graduate degrees in 35 percent of the star ups in Pittsburgh, 50 percent in Canada, 55 percent in Massachusetts and 75 percent in Sweden.

These educational levels are of course much higher than for the population and also for nontechnical entrepreneurs have been found widely differing patterns, with one recent study discovering 36 percent with college degrees and 60 percent with education beyond high school.

The second factor of educations is the major. Because the high technology is very sophisticated area the founders need have special background. In new high technology venture initiation, Cooper and Bruno (1986) say that typically founded by scientists or engineers.

The interesting result is from Vesper and Crosswhite (1983), they examine a limited sample of 50 start ups by faculty in business and engineering schools across the US and Canada and find that the most of the high technology firms were started by engineering professor (89 percent) and most of the low technology firms were started by business professors (Hornaday, 1983).

Proposition 9
Entrepreneurs in the new high technology venture initiations generally
have high level Of education, compared with non technical venture and general population.

Proposition 10
Entrepreneurs in the new high technology venture generally have engineering background, on the other side, the low technology venture initiations have business or non technical education background.

IV. Conclusion

Among the ten propositions from six important variables, it seems that six propositions generally identify similar characteristics or patterns in both level of technology: high and low technology entrepreneurship. That propositions are related to the duration between invention and innovation, duration between innovation and dif¬fusion, incubators, experience of the entrepreneur, researchers and budget of R&D.

The other four important propositions from two variables significantly differ between the high and low technology entrepreneurship. First, in term of level of education, the new high technology venture initiation have high level of education comparing the low technology entrepreneur, and second, the high technology entrepreneur has engineering education background comparing the non engineering in low technological background.

Third, inventors are more likely to work individually, whereas the entrepreneurs are more likely to work in teams. Fourth, high technology venture initiators tend to have more partners than low technology venture initiators.

As a consequence, intensification of master and PhD program in engineering as the very important factors may accelerate the high technology entrepreneurship.

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*This article published on Journal of Manajemen Prasetiya Mulya, Vol. IV, No. 8 – October, 1997.

Yanto Sidik PratiknyoYanto Sidik Pratiknyo, PPM Business and Management School, Jakarta, Indonesia.
Founding Member of International CEFE Association for Entrepreneurship, Frankfurt Germany
yantosp@yahoo.com

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