Policy environments and institutional factors that shape the role of technology in entrepreneurial culture: an exploratory study in Mexico and Canada

Abstract

Presented at the GLOBELICS 6th International Conference 2008 22-24 September, Mexico City, Mexico.Entrepreneurship is, by necessity, a function of opportunities and constraints that a given environment presents, together with the vision and project of a new enterprise that the entrepreneur conceives of. His background, skills and motivation shape his ability to convert those opportunities into a new organization that creates value and captures a significant portion of it. Naturally, the first options that the entrepreneur will consider for the design of the new firm will be those successful enterprises and role models that he has had the opportunity to see around him. As a nation and its regions and sub-regions develop technological and innovation capabilities, and as successful technology-based firms proliferate in them, new entrepreneurs will attempt to imitate those successful firms that he may see operating in his environment. But many other elements from the environment can be taken advantage of by the entrepreneur, whether he realizes it or not. Social capital in many forms will represent opportunities for support and guidance for her project. Explicit economic policies can certainly influence her decisions, to the extent that those policies are implemented through effective and locally available programs. Venture capital networks as well as the proximity to university or public research labs will represent resources that will be readily available. More intangible factors, such as the presence of a mature intellectual property culture, or the overall disposition for joint learning among competing firms will also play a role. Even as the “business model” concept has been relatively little studied for firms in general, there is still even less attention given so far to technology-based firms (TBF’s). But important differences arise from the fact that TBF’s represent a significantly new way of wealth creation, with a specific set of decisions that need to be made from their very inception (Hindle and Yencken 2004, Chesbrough and Rosenbloom 2002), decisions that strongly determine their subsequent development paths and growth trajectories, which are different from those in traditional or non-innovative firms (Aspelund et al. 2005, Almus and Nerlinger 1999, Autio 1997, Bower 2003, Colombo and Grilli 2005). Their main asset is not capital or labour, for example, but knowledge and intellectual property. Their competitive advantage arises from the fact that they develop unprecedented innovations, and that they move quickly to carve out new market opportunities based on that advantage. As the entrepreneur comes to identify a knowledge-based opportunity and to conceive the project of a new firm, he will readily seek to take advantage of those resources and opportunities he finds in the environment (Crick and Spence 2005) by assigning them a role in the business model he is using to build his new firm. Whether explicitly sought after, or taken as granted, available resources and opportunities are likely to become building blocks for the new firm, assembled by the entrepreneur’s talent into a business model that seeks to create wealth and to capture a significant portion of that value. Thus, the role of technological innovation in entrepreneurial activity is shaped not only by the entrepreneur’s business and innovation talent, but by environmental factors, such as: a) the presence, abundance and relative success of technology-based business models; b) programs that implement industrial, and innovation policy; c) the presence and development level of innovation networks; d) the types and strength of social capital; e) the relative visibility of endogenously developed technology; f) experience in, and knowledge of international markets, for example. How do entrepreneurs perceive and incorporate environmental and policy signals in their business models? Can we identify specific factors that can be actively changed by industrial and technology policy, in order to increase the generation of technology-based startups, and to improve the innovative capacity of firms in traditional industries? In this paper we present a comparative study of entrepreneurship in Mexico and Canada, based on the study of the role of technology and innovation in entrepreneurial activity. The aim of the paper is to highlight similarities and differences in the perceptions of entrepreneurs about environmental and policy factors that affect their business opportunities, in order to better understand their role, and to derive policy implications that may be useful in advancing technological innovation in Mexico. With this aim, we structure and analyze the differences found in the two contexts in terms of the “business model” concept, as applied to TBF’s