An Entrepreneurial Development Framework for Institutions of Higher Education
With increased globalization people have seen the need to increase wealth creation especially within the underdeveloped Third World. It has also become evident that neither the government nor the formal sector can supply the necessary job creation without a sustained effort and partnerships between all sectors of the economy. One means of creating work opportunities will be the development of entrepreneurial and innovative skills within the country. The creation of such job opportunities by encouraging entrepreneurial innovation has been well illustrated by Dana, Korot and Tovstiga (2005:12) in Silicon Valley, Israel, Singapore and the Netherlands. These authors report that in the narrow 35 mile by 10 mile corridor within Silicon Valley 6,500 technology enterprises are located. Singapore is home to almost 100,000 entrepreneurs and had a per capita GDP of US$42,948.00 during 2004 and an annual growth rate of 8.8% (Singapore Statistics, 2006).
In addition higher education has become a prime export commodity of total world services trade, amounting to a staggering 3% (Grundling & Steynberg, 2006:5). With the increased interest in entrepreneurial innovation as an economic driver there is a need to develop expertise within this area. Thus there is a need to develop entrepreneurial innovation knowledge within higher education institutions to ensure the maintenance of a competitive edge in an under developed market. Dana, et al. (2005:10) define knowledge as “the integration of information, ideas, experience, intuition, skills and lessons learned that creates added value for a firm”. In addition Dana et el. (2005) define innovation as “the process by which knowledge is transformed into new or significantly modified products and/or services that establish the firm’s competitive edge”. It can thus be seen that it is imperative that higher education in South Africa actively pursue a policy to encourage entrepreneurial innovation to ensure the creation of expertise, the development of new industries and the empowering of students to establish themselves within an entrepreneurial innovative culture. Higher education will be required to become a key player in domesticating knowledge and diffusing it into the economy in order to serve as engines for community development and social renewal (Grundling & Steynberg, 2006:6).
The research question under discussion is formulated as What minimum requirements should be set in an entrepreneurial and innovation framework in order to support entrepreneurial and innovation knowledge creation at institutions of higher education?
This article attempts to develop a framework to encourage entrepreneurial thinking within a higher education environment, taking into account consideration policy and infrastructural requirements, knowledge creation fundamentals and institutional arrangements.
Policy initiatives within higher education institutions are essential to establish guidance for entrepreneurs, funding agencies, industry, labour in general and for students and institutions of higher education in particular. From a higher education perspective government as well as institutional policy requirements will be discussed in brief.
If this is to be accomplished it will require government intervention to construct policies which should include the reduction of taxation in the form of capital gains tax rate, providing incentives for increased spending on research and development, encouraging active venture capital markets, an alteration of the ‘hiring and firing’ labour regulations, and encouraging the spending on new technology shares (Da Rin, Nicodano & Sembenelli, 2005:8).
·The higher education institution policies
The higher education institution must provide a working atmosphere in which entrepreneurship can thrive. Venkataraman (2003:154) proposes that it is not merely the injection of capital that enhances the development of entrepreneurship. Rather, it is the tangible infrastructural essentials such as capital markets, advanced telecommunications, sound legal and transportation systems. In addition, intangible components must be in place. These intangibles are access to novel ideas, informal forums, role models, region specific opportunities, access to large markets, safety nets and executive leadership. As policy within the institution is developed it must consider and include a planning process to accommodate these essentials.
Policy must also augment the entrepreneurial culture within the higher education institution as a new mindset of students must be established from one of expecting to be employed, to one of providing work opportunities for others. Technology licensing offices (TLOs) must be established at the higher education institutions. Stanford University sponsored research expenditures of US$391 million generated 25 TLO start ups in 1997 (Gregorio & Shane, 2003:209). An investment in patent rights by the higher education institutions will ensure future capital investments into the institution. Intellectual property (IP) policies should be framed so as to capture the wealth generated and to distribute it equitably between investors, partners, the university and the entrepreneur. Such rewards will generate future interest for both the investors and the entrepreneurs. Policies, procedures and network contacts to capture venture capital must be established.
Research and Development policies in entrepreneurship must be refined and focused. Currently, the focus of entrepreneurial research at Tshwane University of Technology in South Africa falls within the three niche areas of business clustering, business development and management of innovation. In each of these niche areas it will be necessary to develop Masters and Doctorate programmes in entrepreneurship and innovation. This in turn will mean a need for the improvement of the staff qualification profile within these areas. Along with the Masters and Doctorate programmes, accredited research outputs must be produced in entrepreneurship and innovation (Grundling & Steynberg, 2006:6). In addition to the Masters degrees in Entrepreneurship and the Masters degree in Comparative Local Development, a Masters degree in Cognitive Reasoning should be considered for the future. Such a course should include a thorough foundation in finance reasoning along with creative thinking and business planning.
Institutional structures to be established
The higher education institution will have to establish itself as a seamless knowledge node into which a variety of parties can contribute. Parties contributing to such a knowledge node might include industrial partners, specialists from industry, relevant government agencies, foreign investors, community forums, labour unions, academic specialists, research foundations, funding agencies, students and potential entrepreneurs. Such a node would provide the necessary contact between entrepreneurs, funding agencies, industry and labour. This will ensure exposure of research and innovative ideas to the relevant parties. It would also provide a relevant export/import platform for entrepreneurship within the country. In addition to this, regular colloquia should be held to allow potential entrepreneurs to expose their innovative ideas to the funding agencies. An information network connecting entrepreneurs to venture capitalists should be established within this knowledge node.
Such forums would allow industrial partners to present commercially-oriented research proposals to the higher education institution which funding agencies in turn would be willing to fund. Gregorio and Shane (2003:212) also emphasize the need for the higher education institution to demonstrate intellectual eminence. It is suggested that better quality researchers are more likely to exploit inventions than lesser qualified researchers. The intellectual eminence also makes it easier for researchers involved to start enterprises and to exploit their inventions (Gregorio & Shane, 2003:212). In addition, more eminent researchers provide a better knowledge base and this in turn will attract better qualified researchers and students. To ensure an intellectual eminence of their outputs, higher education institutions should select students carefully.
The higher education institution should also encourage the development of incubators, either close to the institution or close to the involved industry. This will certainly influence the start up capital expenditure. Gregorio and Shane (2003:213) suggest that such incubators would allow entrepreneurs to “ripen” technologies in close proximity to inventors and specialists.
The establishment of technology parks could be instituted at the institution. Dana, et al. (2005:12) report that the first technology parks were established in the Netherlands. It is hardly surprising that the Netherlands is one of the leading nations in promoting entrepreneurship, comparing favourably with Israel, Singapore and Silicone Valley. Perhaps such parks could be established in conjunction with the government and serve to expose students to the entrepreneurial culture.
Information networks connecting entrepreneurs to venture capitalists should be established within the higher education institution. Dushnitsky and Lenox (2004:618) reinforce this view. Gregorio and Shane (2003:214) also recommend that in exchange for taking an equity stake in TLO start-ups the institution should pay patenting, marketing or other up-front costs. These measures would encourage the formation of start-up enterprises. Furthermore, locating a higher education institutional foundation presence in physical proximity to the enterprises donating the capital might be an advantage (Gregorio & Shane, 2003:211).
Strategy to develop an entrepreneurial innovative culture
·Re-curriculation of syllabi within Entrepreneurship programmes
When training entrepreneurs two realms of knowledge should be recognized, “tacit” and “explicit”. “Explicit knowledge is easily identifiable, easy to articulate, capture and share. By contrast, tacit knowledge consists predominately of intuition, feelings, perceptions and beliefs, often difficult to express and therefore difficult to capture and transfer. Of the two, tacit knowledge carries the greater value in that it is the essence of innovation” (Dana et al., 2005:10). Perhaps an illustration given by Ali (2001:339) serves to illustrate the difference between the skills involved in producing an artifact. The engineer is a man of action developing mental skills but seldom having the opportunity to develop manual skills. The craftsman uses his hands more than his head, tools more than instruments and rarely uses science or mathematics. Both are geared towards inventing. The engineer is concerned with ideas and artifacts, while the craftsman is concerned with the making of artefacts. The craftsman has no ready made methods and the technique is devised during the process. The engineer draws mainly on explicit scientific skills while the craftsman draws on intuitive, tacit knowledge. This person is involved in the creation of something new, an innovative skill. The engineer’s plans and blueprints might well involve tactic knowledge.