Entrepreneurship and Market Innovation by KIBS in Developing Economies: Inclusive agenda for opportunity creation

Abstract

Objectives: This paper aims to investigate the plans for entrepreneurship and market innovation by Knowledge-Intensive Business Services (KIBS) in developing economies as an inclusive agenda for opportunity creation. Theoretical Background: KIBS are specialized services that involve economic activities which are intended to result in the creation, accumulation, or dissemination of knowledge. KIBS's emergence has turned into a powerful sector with rising importance in many economies since the 1980s. It currently represents over 60% of the Gross National Income (GNI) in most developed countries, though a lesser percentage in developing economies but a dynamic factor in manufacturing and human resources industries performance in many countries. This study is based on Schumpeter’s entrepreneurship theory of innovation which considers the entrepreneurial innovation as new combinations. Although, Schumpeter referred to the opening of a new market as a type of innovation and its importance limited attention and emphasis was given to it in comparison to product and process innovations. A great percentage of innovation in developing countries is attributable to the imitation of innovation from developed economies which make market pioneering the main strategy employed for market innovation in most developing economies. This study is necessary to provide empirical findings and literature to support activities going on and as an inclusive agenda for opportunity creation in the developing economies Approach/Methods: A framework is built-in which KIBS small and medium-sized enterprises (SMEs) employed different plans like radical innovation or new market pioneering. Knowledge for market innovation can be strategically obtained from two discrete knowledge institutional sources. These sources are the formal institutions such as universities, research institutes, Research and Development, collaborations with firms and so on, and the informal institutional sources like the suppliers, clients, network of friends, families, and others. The quantitative approach was employed for data collection from 510 SMEs in the KIBS sector of Lagos, Nigeria at firm level. Results/Insights: The results suggest that the informal sources seem more strategic in supporting the needs of KIBS SMEs for market innovation. They serve as the major source of acquiring knowledge for the opening of the new market. Thus, the informal system should be given recognition as a significant part of the institutional system that has an impact on innovation in developing economies. Implications: The findings of this study could assist in formulating policy agendas for promoting market innovation, based on the use of knowledge acquired from the formal and informal sources by KIBS SMEs in developing economies. Moreover, practitioners should explore the valuable insight to identify and exploit the strategies of the formal and informal knowledge institutions for new market innovation inside and outside the developing economies. The scope of the study is specifically designed for KIBS sectors; therefore the results may not be completely viable for all service sectors. Further research may examine if the results can be generalised to other service sectors. This paper contributes to the growing body of literature generally in entrepreneurship (new market innovation perspective) and entrepreneurship in developing economies (institutional perspective), by providing a better understanding of the strategies of the formal and informal institutional sources of knowledge that are related to the opening of new markets by KIBS SMEs in developing economies.