Entrepreneurship in a Different Era

Abstract

With the development of technology, and the change in economy, population etc. the Industrial economy, internet economy and intelligent economy present different characteristics, and entrepreneurship under these different era varies greatly, and there are great differences in the characteristics and value creation logic of business models under the background of industrial economy era, network economy era and intelligent economy era, and the requirements for successful entrepreneurship are quite different, e.g. educational background, understanding of the economy, methods for market survey, and business model etc. So it is valuable to find the differences and generalize patterns in various era, and provide guidance for entrepreneurship in the digital and intelligent economy era, based on insights of cases, both failure and success.

1. Introduction

Entrepreneurship is the process of seeking and developing opportunities to create value, by integrating resources creatively under the current resource constraints [1]. The essence of entrepreneurship is to meet the undiscovered needs, or to meet the known needs more efficiently. Under the background of different era, the economy, technology and population etc. vary greatly, and the market opportunities and entrepreneurship are also very different. What can we learn from the evolution of technological development? What will be the challenges for future entrepreneurship? We focus these issues by looking back and assessing this research stream, noting key milestones and the contributions it has made to our knowledge.

In the discussion that follows, we first seek to develop a clear understanding of the characteristics of entrepreneurship under industrial economy, network economy and intelligent economy. We then assess the contribution of past research on entrepreneurship and crystalize our findings. We comment on current research streams and how these have advanced our knowledge of entrepreneurship. Finally, we suggest directions for future research on entrepreneurship under the digital economy.

2. Entrepreneurship under industrial economy

Under the background of industrial economy, entrepreneurship is usually based on its own key resources and capabilities, and the transaction structure (contractual relationship) formed by participants in the industrial value chain to realize value creation, transmission, acquisition and distribution. In this case, the business relationship between enterprises, customers and partners is a “linear” business relationship, and entrepreneurship is the relationship and state of value creating activities of the enterprise, and it is the way and logic of all participants’ value activities.

In many researches on entrepreneurship, because of the different research perspectives and research purposes, the definition of entrepreneurship is different accordingly. Generally speaking, the essential characteristics and core logic of entrepreneurship in the context of industrial economy include the following:

First, the essence of entrepreneurship is to create or jointly create value for customers and partners as the ultimate goal. Therefore, entrepreneurship takes value creation as the core, based on the core resources and capabilities of the enterprise, by identifying and mining the value needs of customers, adjusting the transaction structure of stakeholders, improving the transaction efficiency, by delivering the products or services as the value carrier to customers, completing the value transmission and acquisition, and through the value distribution mechanism, enabling customers to obtain value, and all stakeholders (participants) make profits.

Second, entrepreneurship is a structural, holistic and logical generalization of all business activities. Magretta [2] believes that entrepreneurial innovation is the improvement or innovation of industrial value chain, including manufacturing and marketing. Therefore, entrepreneurship and enterprise management theories are closely related, such as value chain theory, operation management theory, marketing theory, and strategic management theory. Entrepreneurship as a general description, in this respect, it covers a wider scope and broader meaning than enterprise strategy.

Third, entrepreneurship is an organic combination of a whole set of business activities, which cannot be summarized by any local activities or contents. Entrepreneurship, as a whole set of methods and procedures, various activities are interrelated and organically combined, which is the sum of business relations and transaction modes of all stakeholders in the process of business activities. Although strategic decision-making and management, customer identification and positioning, market planning and promotion, technical support and improvement are all important and indispensable parts of entrepreneurship, they cannot represent the overall concept of entrepreneurship.

Fourth, entrepreneurship is the transaction structure, profit model or revenue and expenditure mode constructed and dominated by the focus enterprises. Any start-up needs to be supported by the core resources and capabilities of the focus enterprise, and other stakeholders participate in through a specific transaction structure around the focus enterprise. Any enterprise, regardless of its size and strength, must have its own core resources and capabilities. Otherwise it will not survive in the competition. Therefore, any enterprise has two identities in different value networks or industrial chains: one is the “leader” of some value networks or industrial chains, that is, the focus enterprise; Second, as a “participant” of some value networks or industrial chains, that is, a partner. But according to the current research results of entrepreneurship, people pay more attention to the role of the focus enterprise in the value network or industrial chain, and less attention to the participants.

Under the background of industrialized economy, the “linear” characteristics of entrepreneurship in the industrial chain have gradually evolved into the “network” and “integration” characteristics across the boundary of the industrial chain in the era of network economy and intelligent economy.

3. Entrepreneurship under network economy

With the development and wide application of Internet technology, the era of industrial economy has evolved into the era of network economy, and entrepreneurship has undergone great changes. The Internet accelerates the speed and frequency of information transmission between transaction subjects, reduces the intermediate links, and eliminates the constraints of time and space, thus greatly reducing the transaction cost. Internet technology has created a large number of well-known enterprises, such as Amazon, apple, Facebook and Google in the United States, Alibaba, Baidu, Tencent, Jingdong and Xiaomi technology in China, Tata and Infosys in India. It is with the help of the Internet “platform” that these enterprises have created a business miracle, and also spawned and boosted the explosive growth of DHL, FedEx, UPS in US, and SF and “four Tongs and one Da” in China and other express giants in the world.

Entrepreneurship is to enroll consumers in production and value creation, enhance the connection between manufacturers and consumers, and they create and share value together. It is a group of modes in which the supply and demand form a community platform, to realize the isolation mechanism to maintain organizational stability and realize connection dividend, in the uncertain and fuzzy internet environment.

With the development and application of internet technology, the traditional industrial economy has transformed into a network one, and entrepreneurship has the following distinctive characteristics:

First, the production and management boundaries of manufacturers tend to disappear, making the traditional labor division and entrepreneurship ineffective. For example, Xiaomi technology has developed from a triathlon entrepreneurship of “hardware + new retail + Internet service” to an ecological cluster consists of more than 90 enterprises, and built a three-tier product matrix of mobile phone accessories, intelligent hardware and consumer products around mobile phones. In China, Meituan car-hailing service and DiDi takes-out service infiltrate each other’s core business in order to compete for the entrance of community local life… Where is the boundary of internet companies? What industry is your company in? etc. these questions may be difficult to answer. Industry boundaries are blurred.

Second, the uncertainty of the internet makes entrepreneurship random and instable, while traditional enterprises lose the competitive advantage built on their resources and capabilities. At the same time, the resources and capabilities of enterprises are becoming more and more unreliable. On the one hand, the flow of resources and capabilities between different enterprises is more and more frequent, and the traditional theory (e.g. Resource-based view, RBV) of obtaining competitive advantage by relying on the non-flow of resources and capabilities between enterprises or difficult to copy has been greatly challenged [3]. For example, the emergence of open source mode and sharing economy represents the change of resources and capabilities from the view of ownership to the view of use. For example, in 2014, Tesla opened all intellectual property rights free of charge to promote the development of clean energy vehicles. On the other hand, the former core competitiveness may become the core rigidity, which hinders the innovation and development of the enterprises. Path dependence often begins with a successful product or pattern. Once a method or process is found to be particularly effective, we hope to fix it, as eventually leads to low efficiency and degradation of core competence [4]. Today’s advantage is replaced by tomorrow’s trend.

Third, the Internet has realized the decentralization of media. Under the background of network economy, it is no longer a centralized media era controlled and updated by a few particular people or organizations, but a self-media era created, participated, communicated and shared by the masses. This makes the content and voice of media more diversified, such as Facebook, microblog, Wechat, RenRen etc. The community entrepreneurship can better meet the needs and experiences of the public, and it has been developing rapidly.

Fourth, under the network economy, the core competitiveness of enterprises expands from internal resources and capabilities to external ones, including external resources integrating capability, partnership, customer relationship, etc., which makes the business model of enterprises more “non-replicable”. Today, there are more and more contacts between enterprises and customers, e.g. user forums, social networks, web browsing records, intelligent hardware interaction, etc. These contacts leave traces of customers, helping enterprises better grasp the needs of customers and improve the customization of products or services. Cooperation between enterprises can further enlarge the availability of data. For example, the driving records obtained by Uber can not only be used to optimize the dispatch algorithm, but also can be provided to the insurance company for personalized car insurance customization based on personal driving habits. Finally, the enterprise’s insight into customers will be more and more accurate.

The Internet has subverted the traditional sense of entrepreneurship, making the whole world more and more transparent, geographical distance and artificial distinction tend to be invalid. This kind of “gathering” across time and space makes people’s information communication, knowledge production and diffusion effortless. This in turn accelerates the speed and frequency of entrepreneurial innovation and upgrading [5].

4. Entrepreneurship under intelligent economy

Germany officially launched industry 4.0 at the Hanover Industrial Exposition in 2013, which is the era of promoting industrial change by using information technology, that is, the era of intelligence. With the development and implementation of industry 4.0, intelligent technology has been promoted and applied, and the network economy has been upgraded to the intelligent economy accordingly. The core of intelligent (industry 4.0) is the deep integration of information system and physical system, including vertical integration within the enterprise, horizontal integration between industrial chain and end-to-end integration. With the deep integration of digital, network, intelligent and manufacturing, a large number of new-type entrepreneurship with intelligent as the core emerge, such as the application of intelligent “robot” application software such as Uber in US and DiDi in China. Business model innovation is crucial to manufacturing. So, in the era of industry 4.0, what is the business model of manufacturing in the future? It is to solve customer problems. Therefore, in the future, manufacturers will not only be limited to hardware sales, but also gain more added value by providing after-sales services and other follow-up services, which is soft manufacturing. The system with “information” function becomes the new core of hardware products, which means that personalized demand and small batch customization will become the trend. Manufacturing enterprises need to increase the added value of products as much as possible, expand higher quality and richer services, propose better and more perfect solutions to meet the personalized needs of consumers and lead the way of “soft manufacturing + personalized customization” (Table 1).

Item	Industrial era	Digital era
Change rule	Continuous	Discontinuous
Environment recognition	Predictable	Unpredictable
Business mode-product	Transaction value	Utility value
Business mode-market	Mass market	Personal market
Business mode-customer	Individual value	Group value
Business mode-industry	Boundary constraints	Cross border collaboration
Corresponding thoughts	Linear thinking	Non-linear thinking

Table 1.

Comparison between the industrial and digital era.

Source: Chen and Liao [3].

In the era of intelligence, manufacturing enterprises, based on CPS, use advanced intelligent technology to form self-learning, adaptive and self-improvement capabilities through vertical integration, horizontal integration and intelligent platform integration, so as to enhance the efficiency of design and development, production and manufacturing, channel sales, logistics distribution, after-sales service and other links in the enterprise value chain, Completely subvert the traditional manufacturing enterprise product or service life cycle operation mode, create a new intelligent business model. For example, a clothing brand, SheIn.com, with its powerful data acquisition and mining capabilities, has successfully established a digital nervous system and digital reflection arc. Hundreds of clothes are launched every day to face the customers in the form of products. Through these dynamic and real-time updated data, SheIn can more accurately grasp the real needs of consumers. Through MVP dialog with the market and customers to refresh its understanding of the market, SheIn will launch a lot of products every day, quickly realize the obtained cognition, and then update and optimize the products to have a dialog with the market. In this way, SheIn has a great competitive advantage because its cognitive turnover rate of the market is much higher than that of traditional ones. The cognitive turnover rate of traditional clothing enterprises is calculated by year or quarter, while SheIn’s cognitive turnover rate is by day.

First, vertical integration. From the perspective of vertical integration, i.e. internal information integration of enterprises, the production mode, physical layout and operation status of equipment and the working mode of employees will be greatly changed, and entrepreneurship will also change to meet the personalized customization needs of end customers.

Based on the industrial Internet and intelligent CPS system, the enterprise integrates information in the original enterprise value chain, such as market research, design and development, manufacturing, after-sales service, respectively, forming four information platforms, such as remote customization platform, global design and development platform, intelligent manufacturing and decentralized production platform, and intelligent service platform.

Second, horizontal integration. From the perspective of horizontal integration, i.e. information integration of industrial chain, enterprises extend from internal information integration to information integration of external suppliers, distributors and customers, break the barriers between traditional enterprises and industries, realize “interconnection” and form an intelligent network system with the industrial chain of enterprises as the basic unit. New changes will take place in manufacturing, information integration, resource sharing, asset form and innovation platform based on industrial value chain. In the future, entrepreneurship with industrial chain as the main body will include three levels: value chain level, industrial level and ecological level.

Third, intelligent platform. From the perspective of intelligent platform, that is, information integration of multi industry chain, platform entrepreneurship in the intelligent era provides a new resource integration capability for enterprises, forming a three-dimensional model of “manufacturer – terminal – consumer” with terminal platform as the fulcrum and connecting manufacturers (Intelligent Manufacturing Platform) and consumers. Among them, the terminal platform is divided into three categories: (1) Internet factory, crowdsourcing and crowd R&D platform, through which customers can obtain personalized customized products or services, and also undertake the task of R&D and design, which is also a main work of the current popular “gig economy”. (2) Mobile mall and smart store, customers can search, browse and purchase existing goods at any time and anywhere through the platform. For example, customers can use their mobile phones to purchase goods in “** online mall”, or help customers make purchase decisions through the platform’s intelligent push technology. (3) Intelligent service platform, through which manufacturers can track the relevant data of products or services, and provide consumers with online and offline service support for the whole life cycle of products.

With the continuous enhancement of data capability, when manufacturers and terminal platforms form enough data capability advantages, there will be “capability spillover”, participating in the high profit or low efficiency links in the value chain of other industries, realizing the digital transformation and upgrading of traditional industries, or directly conducting cross-border operations through mergers and acquisitions, new construction and other ways. For example, technology-based giant enterprises, based on their big data capabilities, cross-border into traditional industries, transform the backward links in the traditional industrial chain or add new links, subvert the profit distribution mode of the original industry, and realize the industrialization upgrading. See Figure 1 for the big data application in various fields in China in 2019.

Figure 1.

Big data application in various fields in China. Source: China Information and Communication Research Institute [6].

5. Conclusion

In this article, we have summarized the findings of academic papers and practical articles published in highly ranked international business, management, and finance journals and business journals. We have outlined an agenda for further research on entrepreneurship in the era of digital economy. In conclusion, for the same reason that re-visiting the knowledge problem of economics considering the recent technological developments shows that the “pretense of knowledge” problem exists as before [7], the competitive environment and characteristics of firms evolve over time, and thus the potential sequential adoption of varying international opportunity identification (IOI) processes can be investigated in future research [8].