Entrepreneurship and New Product Development: Exploring the “Advantage of Youth” and “Business Acumen” Views
kHUB post date: December 23, 2022
Originally published: April 23, 2022 (PDMA JPIM • Vol 39 • Issue 5 • September 2022)
Read time: 30 minutes
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We explore the relevance of two different views on new product development (NPD) drivers, defined as “advantage of youth” and “business acumen.” The two arguments, that establish a negative relationship between an individual's age and NPD and a positive impact of professional experience on NPD, are theoretically contextualized and empirically tested in the entrepreneurship domain. Considering a sample of more than 4000 Italian entrepreneurs of innovative start-ups, a series of econometric analyses confirm that both effects apply and reveal interesting nuances as to the relevance of the age effect and the relative importance of different dimensions of entrepreneurs' business acumen on NPD. Further additional analyses highlight how both the “advantage of youth” and “business acumen” do not necessarily lead to successful entrepreneurial NPD, but at the same time, they both are found to importantly characterize top performers among entrepreneurs engaging in NPD. Overall, this in-depth analysis on entrepreneurial NPD and its drivers underlies the importance of a micro-founded and individual-based approach in the study of new product dynamics, and in doing so, it contributes to enrich the upper echelons perspective and related frameworks on innovation outcomes through entrepreneurship. By theorizing and documenting those personal demographic and human capital traits which are mostly associated with entrepreneurial NPD, a series of interesting implications quite naturally descend for several stakeholders: (prospective) entrepreneurs, managers who aim at nurturing an intrapreneurship culture within their companies and policy makers interested in increasing dynamic efficiency in the economic system through the launch of new products and services.
- Entrepreneurial alertness towards new product/service development (NPD) is high when founders are in their 20s and 30s, and it can be further solicited if entrepreneurs have matured previous entrepreneurship and management experience; while other types of human capital, for example, education, appear as less relevant.
- Intrapreneurship teams will be more naturally inclined to engage in NPD activities when formed by young members who have gained some headship familiarity, and by favoring the breadth of their experience rather a depth in their competences.
- Initiatives such as “junior enterprise” non-profit organizations and “job rotation programs” for junior managers, to the extent that are capable to expand the knowledge spectrum of participants towards several domains, can enhance NPD capabilities of firms.
- The drivers of the entrepreneurial NPD phenomenon are not necessarily strong predictors of its success: the inherent non-deterministic nature of (entrepreneurial) NPD success calls for the adoption of an “open” approach to the matter, more oriented to “create favorable conditions for” and then “tolerate failure” rather than to go searching for ex-ante elusive “picking (NPD) winners” strategies.