Fostering the Innovation and Entrepreneurship in Developing Countries

Fostering the Innovation and Entrepreneurship in Developing Countries Dr. Hanadi Mubarak AL-Mubaraki and Dr. Michael Busler College of Engineering & Petroleum, Kuwait University, P.O Box 39964 Nuzha, Kuwait Tel:+965 99750790, e-mail:pro5383526@yahoo.com Richard Stockton College, New Jersey, USA email: michael.busler@stockton.edu ABSTRACT The purpose of the paper is to identify the impact of innovation and entrepreneurship as a tool for dynamic economic model. The identification based on the successful practice of innovation program of case studies. Methodology/approach: The research methodologies adopted in this research study are desk-research and case study of 5 innovation program in the developing countries. Findings: The findings of this study indicate that adaptation of innovation programs lead 1) high rate of networking and outcomes, 2) high potential financing and strategic planning, 3) fostering the entrepreneurship and innovation, research commercialization and supporting technological entrepreneurship, 4) high number of jobs creation, and 5) successful start-ups companies with high survival rate. Practical implications: The empirical results highlight some successfully implications for practitioner such government and academic institution. Originality/value: This study makes a contribution to knowledge about the of innovation and entrepreneurship in developing countries. Keywords: Innovation, Entrepreneurship, Developing countries, Economic development. Corresponding Author: AL-Mubaraki, H. 1. INTRODUCTION World landscape change toward smart and sustainable growth to catching-up processes of 21 st century especially in developing countries. The catching up today can be accelerate via internationalization of science and technology and the globalization of innovation, following the emergence of new digital information, communication technologies and economic globalization implies to growing interdependence of locations and economic units across countries and regions (Narula and Zanfei, 2005). Moreover, the economic activities transformation required attention of knowledge flows where the knowledge can be shape in various forms, such as employee/labour relations, organizational practices, products, documents, routines, and information (Dosi, Coriat and Pavitt, 2000). Recently, the concept of innovation has been increasingly used in the recent literature to analyzing the Arab regional countries with meaning and significance of the concept of 67

innovation. The World Bank classification of economies for Arab countries based on the levels of income differs from the existing studies covering the Arab region and interesting to add new aspects such as structure of the economy, geographical location in Asia, Africa, Gulf and Mediterranean (Ali, 2004; ERF, 1998; UNESCO, 2004; Djeflat, 1999; Nour, 2003; 2005). The integration of innovation with the level of income can be presents a new approaches in developing countries such as Arab region. The innovation can be define as the processes of many factors interaction between institutional and organizational elements also, as useful tool for better understanding of innovation processes as well as the production and distribution of knowledge in the economy (Edquist, 1997). The objective of the paper is to identify the impact of innovation and entrepreneurship as tool for dynamic economic model. It will focus on many criteria namely, stakeholder, services provided by incubators and goals of each innovation program. This paper is organized as follows: Section 2 provides the short overview of the studies of innovation and entrepreneurship. In section 3, the research methodology included the evidence from the literature review and five successful case studies to illustrate different key variables of innovation program. In section 4, the authors briefly discuss the findings of the study drawn from quantitative approaches of incubators and section 5 concludes the paper. 2. RELATED LITERATURE REVIEW ON INNOVATION AND ENTREPRENEURSHIP Al-Mubaraki, H. and Busler, M. (2011a) discussed the research based on a mixed-method approach using both qualitative and quantitative methods. The research finding indicates the incubator or innovation program is a place where the incubation activities are carried out, and where the would be entrepreneurs and the existing SMEs find a suitable place, in terms of facilities and expertise, to address their needs and develop their business ideas, and transforms them into sustainable realities. Incubators program outcomes have been identified as a means of meeting a variety of benefits which may include: 1) Creating jobs and wealth as effective tools for creating self-employment opportunities, conventional product or service companies, and high-growth companies. Incubators are also used to develop innovation, transfer technology, and impart an entrepreneurial spirit. 2) Fostering a community's entrepreneurial climate flexibility and adaptability in a wide range of contexts and they are increasingly becoming centers for international interaction that help entrepreneurs get in contact with difficult to access overseas networks. 3) Business creation and retention to be used to develop international networks of small- and medium-sized companies and as a tool to gather and orchestrate existing forces to facilitate company creation. 4) Financial model used for economic development this measured by the number of job created per year and the number of companies in the market. Al-Mubaraki, H. and Busler, M. (2011b) present the conclusion as the innovation programs are an effective tool for technology transfer, innovation, new technology and research incentive. The findings of the studies included: 1)Technology commercialization from the innovation university leads to economic development based on the technology transfer license income and the high rate of total royalty income of $1.3B. 2) Innovation incubators increased the research incentive 68

fund to $4.5M. 3) Innovation based on the university incubators produced over 8000 inventions. 4) The new technology adds value to the market with an accumulative total $878M. Al-Mubaraki, H. and Busler, M. (2012a) concluded the study that incubators or innovation programs are a vital tool for economic development, technology transfer, innovation and jobs creation. There are six key finding: 1) Strategic focus: economic development, technology transfer, jobs creation. 2) Entrepreneurship: very active in both the U.S. and Brazil. 3) Incubators funding: The stakeholders are mainly the government, businesses and universities. 4) Incubators services: both countries provide tangible and intangible services. 5) Culture: in U.S. is Risktaking whereas Brazil is Risk-averse. 6) Innovation: very active in both the U.S. and Brazil. Al-Mubaraki, H. and Hamad, E. (2012) concluded the study that incubators organization or innovation program are model accelerators tool for 21 st century. This study has clearly stated that business incubation programs are designed to accelerate the successful development of entrepreneurial companies through an array of business support resources and services, developed by incubator management. The evident for this in the United States of America, Europe and the developed countries is shown in section 4. In conclusion, the business incubators are model accelerators tool for 21 st century. Al-Mubaraki, H. and Busler, M. (2012b) indicate the innovation and entrepreneurship are critical drivers of social and economic development. With increasing awareness around the world, especially in developing countries such as Asian countries to promote innovation and 96% entrepreneurship, policymakers and other stakeholders increasingly view business incubation as an important create sustainable jobs 60%. In addition, the 90% target is youth with 82% technology sectors. Al-Mubaraki, H. and Wong, S.F. (2011) present four reasons for why some incubators or innovation program perform better than others. 1) incubators may differ in terms of their size, 2) the services provided by each incubator may not be the same, 3) incubators may differ in their focus of services, and 4) the source of sponsorship differs across different incubators 3. THE METHODOLOGY AND MODEL The research methodology that has been used in this research study is comprised of deskresearch and published case studies of 5 innovation organisations in the developing countries such as Turkey. Table 1 shows the analysis of the case studies based on the five key variable included organization main objectives, stakeholder, organization funded year, start-up companies and the services provided by the incubators in each country. 69

Name Table 1. The key variable of case studies (InfoDev, 2011) 1) No. of Startup Companies 2) Funded Year 1- Bilişim İnovasyon Trade and Industry Corp. Ltd. 2- Bilkent Cyberpark Inc. 0 2004 Private sector (techpark) 3- METUTECH 121 1992 Government 4- ODTU - KOSGEB Technology Development Center 5- Women Business Incubator Project OF TURKEY Total 220 Key variable 3) Stakeholder 4) Objectives 5) Services 0 2009 Private sector 1) Entrepreneurship 2) Income Generation 3) Policy Impact 4) Profitable Enterprises 99 1990 Government 5) Research Commercialization 6) Develop & 0 2008 Private sector supporting technological entrepreneurship 7) Job Creation Export Revenues 1) Facilities 2) Finance 3) Incubation and Business development 4) Networks and Synergy 5) Technology Transfer 4. THE FINDINGS Innovation and entrepreneurship are important elements in the smart growth in our life and its becomes importance in the context of business growth (Rogers, 2004) and economic development (Fagerberg and Srholec, 2008). Many studies in the literature concentrate on the impact of Innovation and entrepreneurship in developed and developing countries (Freitas, Clausen, Fontana, amd Verspagen, 2011; Evangelista and Mastrostefano, 2006; Ayyagari, Demirguç-Kunt, and Maksimovic, 2007). However, the outcomes of innovation-based incubators as active tools for local economic development (EURP, 2010; Al-Mubaraki and Busler, 2009). Although incubators are commonly linked with business support for technological innovation programs and aids in the growth of new ventures (Joseph and Eshun, 2009; Al-Mubaraki and Busler, 2010; Campbell, 1989; Petree, 1997). Furthermore, the incubators fosters technological innovation, industrial renewal and supporting regional development through job creation (Allen and Rahman, 1985; Similor and Gill, 1986; Allen and McCluskey, 1990; Mian, 1996; Allen and Levine, 1986; Mian, 1997; Thierstein and Wilhelm, 2001; Roper, 1999). Table 1 presents the key variable of innovation programs in Turkey as can be seen some program perform better than others. The reasons are based on the following: 1) Funded year, for example the oldest innovation program in ODTU - KOSGEB Technology Development Center funded 1990 which lead high outcomes with high rate of networking in different level in the market, but the newest innovation program funded in 2009 ODTU - KOSGEB Technology Development Center which lead less experience with low rate of networking in different level in the market. 2) Stakeholders in the case studies; there are two types of stakeholders presented in case studies such as two government programs, for example, METUTECH and ODTU-KOSGEB Technology Development Center, which lead high potential financing, strategic planning and international marketing and the 3 other program private sector for example Bilişim İnovasyon Trade and Industry Corp. Ltd., Bilkent Cyberpark Inc and Women Business Incubator Project of 70

Turkey, which lead increase the rate of employment and self-sustainability. 3) Clear goal; most of the innovation program objectives focuses on the entrepreneurship, income generation, profitable enterprises, innovation and research commercialization, supporting technological entrepreneurship and job creation. 4) Startup companies; the total number of startup companies are 220-for all case studies this number created jobs for local market, which lead economic growth. 5) Advisory and Mentoring services; most of innovation program offered several services such as facilities, finance, business development, networking and technology transfer which lead successful startup companies with high survival rate. 5. SUMMARY AND CONCLUSIONS This study has clearly stated that innovation programs are designed to accelerate the successful development of entrepreneurial companies through an array of business support resources and services. The adaptation lead 1) the age of the innovation program old which lead high rate of networking and outcomes, 2) government as stakeholder lead high potential financing, strategic planning and international marketing, 3) clear program goal lead to fostering the entrepreneurship and innovation, research commercialization and supporting technological entrepreneurship, 4) high number of jobs creation which lead economic growth and, 5) advisory and mentoring services which lead successful startup companies with high survival rate. The evident for this is the United States of America, Europe and other developed countries. In conclusion, innovation and entrepreneurship are an essential tool for dynamic economic model. REFERENCES [1] Ali, A. A. G. (2004). Poverty in the Arab Region: A Selective Review. Arab Planning Institute. Working Paper Series 2004 WPS/0402-Kuwait. P. 11. Online available at: <http://www.arab-api.org/wps0402.pdf. [2] Allen, D.N. and Levine, V. (1986). Nurturing Advanced Technology Enterprises: Emerging Issues in State and Local Economic Development Policy. New York: Prager. [3] Allen, D.N. and McCluskey, R.. (1990). Structure, Policy, Services, and Performance in the Business Incubator Industry. Entrepreneurship Theory and Practice. 15(2):61 77. [4] Allen, D.N. and Rahman, S. (1985). Small Business Incubators: A Positive Environment for Entrepreneurship. Journal of Small Business Management, 23 (July): 12 22. [5] Al-Mubaraki, H. and Busler, M. (2009). Business incubators: findings from worldwide survey and guidance for the G.C.C states. World Sustainable Development Outlook, 83-91. [6] Al-Mubaraki, H. and Busler, M. (2010). Sustainable Development through the Inclusion of Business Incubators: A SWOT Analysis, World Sustainable Development Outlook 2010, pp 51-63. Online available at: <http://www.worldsustainable.org. [7] Al-Mubaraki, H. and Busler, M. (2011) Innovation, Entrepreneurship, and Job Creation, Based on Incubators: International Experience. The Ninth Biennial Conference on Entrepreneurship, Ahmedabad, India, February 16-18, 2011. [8] Al-Mubaraki, H. and Busler, M. (2011b). University technology transfer through Innovation Incubator: A Case Study, World Business, Economics and Finance Conference, Bangkok, Thailand, September 26 & 27, 2011. Online available at: <http://www.wbiconpro.com/408-hanadi.pdf. 71

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