The identification of the factors predicting the national top entrepreneurs innovation

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1 International Research Journal of Applied and Basic Sciences 2013 Available online at ISSN X / Vol, 7 (1): Science Explorer Publications The identification of the factors predicting the national top entrepreneurs innovation Jila Haghani 1, Amir Hussein Ali Beigi 2, BabakJamshidi Navid 3 1. Business Management M.A. Student, Department of Business Management, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran. 2. Associate Professor, the Faculty of Agriculture, Razi University, Kermanshah, Iran. 3. Department of Business Management, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran. Corresponding Author Jila_haghani@yahoo.com ABSTRACT : The present paper attempts to identify the factors predicting the innovation ofiran'stop entrepreneurs. Innovation is referred as realizing and operationalizing new ideas and generally converting creativity into an objective result. The study method is descriptive-survey. The study community is composed of all the national top entrepreneurs introduced in the sixth national festival of the top entrepreneurs (2011) in Iranian provinces Ilam, Kurdistan, Kermanshah, Lorestan and Hamadan. To determine the sample size, the census procedure was used and 54 persons were selected as the sample. To gather data, a researcher-made questionnaire was designed which included some open questions and the reminder of the questions were presented in a Likertfive-point scale. The content reliability of the questionnaire was approved by the faculty supervisor and advisor and its validity was extracted using Chronbakh alpha by The study data was analyzed using SPSS software, which in the descriptive statistics level, some factors were used including frequency, percentage and cumulative percentage, and in the inferential statistics level, and correlation coefficient tests, t-test andthe Mann Whitney U test were applied. In order to identify the variables predicting the innovation of entrepreneurs studied, the step-by-stepmultiple regressionmethod was used. The findings indicated that creativity, education and economic level are considered to be three factors predicting the innovation of the studied entrepreneurs. The results of the multiple correlation coefficient test indicated that the creativity pays the most significant role which explains a significant amount of entrepreneurial innovation. Keyword: entrepreneur, entrepreneurship, innovation, creativity, positive emotions INTRODUCTION Today being up to date and innovative is necessary for the survival, preservation and promotion of every organization. Companies and organizations in a period of time under various names such as "knowledge age", "post-industrial age", "Age of Speed, "age of entrepreneurship" and finally the "age of creativity and innovation" have prepared themselves to manage rapid and profound changes in the world. At this critical juncture, a struggle has been started to gain industrial, scientific and technical advantages; and prospective organizations and institutions while encountering such widespread developments have searched for modern methods (Zabihi, 2006). The speed of changes and evolutions is excessive, so that innovation and creativity is regarded asan essential key to the survival of organization and the most significant source for achieving competitive advantage (Shahshani, 2007). In such circumstances, organizations can be successful if take privilege of innovative and creative employees, and above all have entrepreneurs who can create sufficient space for innovation in their ownorganizations (GolestanHashemi, 2005). Snow (2007) proposes a definition of innovation; he believes that innovation is defined as "a product or service or a new idea, a new business model" (Baron and Tang, 2011). Drucker (1986) defines innovation as the creation of new values and satisfaction of customers. Innovation is creating new products or services, processes and systems which are initiated by a new thinking and after a successful operation come into utilization phase. Innovation is total creativity and strategy (Pardakhtchi and ShafieZadeh, 2005, p 74). Research on innovative entrepreneurs in firms with multiple criteria is very important for development (Baron and Tang, 2011).More than

2 forty years ago Baumol noted that trying to understand entrepreneurship without entrepreneur is like trying to know Shakespeare without Hamlet (Baron and Tang, 2011). According to Schumpeter (father of entrepreneurship), an entrepreneur i s someone who recognizes how resources should be combined to create additional value (Rahimi Phil Abadi et al, 2001). Schumpeter's most significant work was to establish strong links between entrepreneurship and innovation. In his own definition of entrepreneurship,schumpeter emphasizes innovation and its role in the instability of economic systems. He argued that the dynamic equilibrium is created not through optimization entrepreneur but through entrepreneurs' innovation. A healthy economy is one which its harmony is interrupted continually by different innovations and this is a basic and undeniable principle of economic theory and practice. According to Schumpeter, entrepreneurs are beginning to change and emerge new opportunities (SamadAghai, 2003). Nowadays, innovation and creativity have increasingly received attention in various fields, because today's world is the world of knowledge, and when knowledge is regarded as an important factor in each filed, some values are added to the present world (Hosse ini, 1999)FirestTein (1996) consider innovation as a strategic tool for business. The entrepreneurs play significant roles in innovation. The innovation lies in the nature of entrepreneurship. The entrepreneurs deal with their problems in an innovative way and they have several tools such as workforce, capital, markets, and ideas; to succeed, they must organize such tools in new and different ways. So innovation is one of the necessary conditions for the success of entrepreneurial activities (Pardakhtchi&Shafiezadeh, 2005, pp ). Similar research such as this study have been conducted; a study performed in US entitled "the role of entrepreneurs in firms' economic innovation: the effects of shared creativity, innovation and environmental dynamics," by Baron and Tank (2011) investigated a mode l showing that there is a positive and significant relationship between positive emotions and creativity levels, and both of these relationships are moderated by environmental dynamics. The study findings indicate that positive emotions among investor entrepreneurs are significantly associated with their creativity and such creativity has a positive relationship with innovation in organization. Both of these relationships are modulated by environmental dynamism and have a greater power in a dynamic environment than a static one (Baron & Tang, 2011). Bass et al (2008) in a study entitled "The effect of emotions on the creativity of entrepreneurs" concluded that positive emotions enhance creativity in general but making little impact on higher levels of activation, i.e. positive emotions are not associated with higher levels of activation, or it is less possible to be combined with adjusted material. Additional evidence suggests that there is an insignificant association between negative feelings and creativity. In addition, negative attitudes are associated with low activity. In general, it is clear that a higher composition of positive emotions, and positive concentration and success have been shown by the many entrepreneurs (Bass et al, 2008). Although some criteria in the present study are based on the criteria used in previous studies and have shown acceptable reliability and validity, it is clear that the structure of such filed is so complex and determining.therefore, applying this research by using additional criteria can be confidently accepted. So the present study attempts to consider how the actions and characteristics of entrepreneurs affect economic firms. In this regard, purpose of this study is to investigate the effects of individual and professional characteristics (age, gender, educational level, economic status and previous experience) as the five independent variables, positive emotions and creativity and innovation at the individual and organizational level in order toanswer the main research question. It is hoped that this research offer an evidence-based insight to identify and analyze the factors affecting the innovation of entrepreneurs. 20

3 The study conceptual model and the hypotheses Figure 1. The study conceptual model (the model is designed by the researcher) The hypotheses related to the entrepreneurs'' professional and personal variables There is a positive and significant relationship between the age of the entrepreneurs and their positive emotions There is a positive and significant relationship between the age of the entrepreneurs and their creativity There is a positive and significant relationship between the age of the entrepreneurs and their innovation There is a statistically significant relationship between men and women's positive emotions There is a significant and positive relationship between entrepreneurs' education level and their positive emotions There is a significant and positive relationship between entrepreneurs' education level and their creativity There is a significant and positive relationship between entrepreneurs' education level and their innovation There is a significant and positive relationship between entrepreneurs' education level and their economic situation There is a significant and positive relationship between entrepreneurs' economic situation and their innovation There is a significant and positive relationship between entrepreneurs' previous experience and their income There is a significant and positive relationship between entrepreneurs' previous experience and their age Positive emotions hypothesis There is a significant and positive relationship between entrepreneurs' positive emotions and their creativity Innovation hypotheses There is a significant and positive relationship between entrepreneurs' creativity and their innovation The higher level of entrepreneurs'' creativity make them more radical and additional MATERIAL AND METHODS The present paper is applied in terms of objective and it is descriptive-survey in terms of data collection. The study statistical community is composed of the top entrepreneurs in Iranian provinces including Ilam, Kurdistan, Kermanshah, Lorestan and Hamadan. Due to the limited size of the total statistical community, census method is used, and the sample size is comprised of all the top entrepreneurs (54 persons) of the mentioned provinces which participated in the sixth national entrepreneurship festival (2011). To gather data, a researcher-made questionnaire was designed which its questions are based on the sources related to the study topic and its findings and also some standard questionnaires which had topics consistent with the present study. And the study mainly aimed to 21

4 gather required information for answering the proposed questions by using this questionnaire. Except for a few questions on respondents' demographic characteristics (age, education, gender, etc.) and two questions related to innovation, the questionnaire's questions were designed in a closed form and based on 5-score Leakert scale. Considering the study framework, the questionnaire is formed based on eight main components including age, gender, education, previous experiences, economic situation, positive emotions (Watson & Clark, 1988), creativity and innovation. 54 questionnaires were administered through and post. The questionnaire return rate was the content reliability of the questionnaire was approved by 5 experienced professors in Kermanshah Razi University and Kermanshah Islamic Azad University, and also the thesis supervisor and advisor, and its validity was extracted using Chronbkah alpha by Using descriptive statistics, the present study examines the statistical community characteristics. To investigate the relationship between dependent and independent variables and also to investigate the study hypotheses using software SPSS, and correlative coefficient test, t-test and Mann-Whitney test are used. Also, to test the linear correlation between the components studies, multiple regression is applied. Hypothesis THE RESULT OF THE TESTS Table 1. the results of the study hypotheses testing Type of Test Correlation Coefficient -0/130-0/323-0/190 Mann-Whitney /208 0/404 0/436 0/159 0/446 Mann-Whitney t 0/82 0/395 0/550 0/641 Significance Level 0/149 0/040 0/233 0/14 0/193 0/009 0/004 0/329 0/012 0/03 0/002 0/011 0/001 0/001 The multiple regression tests of the variables influencing innovation In order to identify the variables influencing the innovation of the entrepreneurs studied, the multiple step by step regression was used and the results are presented in Table 2. Table 2. the variables influencing the innovation of the entrepreneurs studied based on the regression step by step analysis Model The value of B Standard Error Beta T Ϭ Creativity 0/23 0/47 0/34 4/9 0/01 Education Level 0/4 0/18 0/21 2/2 0/03 Economic Situation 2/6 1/3 0/14 2 0/03 As it could be seen in Table 2, the creativity plays significant roles in explaining innovation or in predicting the innovation of the entrepreneurs studied. Table 2 shows multiple correlation coefficient and determination coefficient for the above predictor variables and also the dependent variable of the innovation. As it is seen, by an increase in each variable to regression model, multiple correlation coefficients and determination coefficient is increased. Creativity Education Innovation Economic Situation 2.6 Figure 2. The model for the variables influencing the innovation of entrepreneurs 22

5 Table 3. multiple correlation coefficients and predictor variables determination coefficient and the innovation of the entrepreneurs studied Predictor/independent variable R R 2 The amount of change in R 2 Creativity 0/35 0/12 0/12 Education 0/44 0/20 0/08 Economic Situation 0/46 0/21 0/01 The most significant role is played by creativity which accounts for a considerable percentage of (12%) of the entrepreneurs'' innovations. Therefore, it could be said that one significant factor for predicting the entrepreneurs'' innovation in the study is related to their innovation, i.e. those with a higher level of creativity take privilege of a higher innovation. However, the above mentioned variables play some roles in predicting innovation. The results indicated that 0.20 of the innovation as variance is influenced by the entrepreneurs'' education level and 0.21 % of innovation is influenced by the entrepreneurs'' income. Other variables in the present study have an indirect impact on innovation. DISCUSSION AND CONCLUSION Based on the results from Table (1), there is not any significant relationship between the entrepreneurs' age and their positive emotion, and there is a negative relationship between entrepreneurs' age and their creativity. In the other words, by an increase in entrepreneurs' age, their creativity is reduced because younger entrepreneurs have a higher motivation and risk taking. The study findings indicated that age was not related to entrepreneurial innovation, perhaps it means that every creative person is not necessarily innovative and creativity is distinct from innovation. There is a higher creativity in younger entrepreneurs but this creativity in each age can be transformed into innovation. Entrepreneurs' gender and education did not affect their positive emotions. Entrepreneurs' education level has a positive and significant impact on their creativity. This means that entrepreneurs with higher education levels were more creative than entrepreneurs with low education and also there is a significant positive relationship between entrepreneurs'' education and their innovation. This means that by an increase in entrepreneurs'' education, their innovation is increased as well. The results indicated that there is not a positive and significant relationship between education level and income. This means that in the present study, people with higher education did not earn more than those with lower education levels. Maybe it is for this reason that most entrepreneurs who have been introduced into the festival are the investors of that specific industry and all of them have not a higher education level. They do investment and specialized people and staffs are responsible for program planning, production, marketing and sales. The income level of the entrepreneurs has a positive impact on their innovation. This means that entrepreneurs with higher income levels are more innovative than entrepreneurs with a lower income level. The study results showed that the entrepreneurs with a higher income level are more capable of utilizing creativity of themselves and others and are easily able to transform creativity into innovation. There is a positive significant relationship between entrepreneurs' previous experience and their income, and the entrepreneurs with the previous experience in entrepreneurship had a higher income. There was a significant positive relationship between entrepreneurs' previous experience and their age, and entrepreneurs in aupper age had a more entrepreneurial experience. Positive emotions have a positive significant impact on entrepreneurs' creativity. The entrepreneurs with average higher positive emotions are more creative than the entrepreneurs with average lower positive emotions. There is positive relationship between creativity and innovation, and also the higher levels of creativity increases innovation and making these innovations more radical. Based on the overall objective of the study which is the identification of the factors predicting top entrepreneurs' innovation and based on the results, it could be concluded that entrepreneurs' education level is one of the factors predicting the entrepreneurs' innovation in the study. According to the knowledge gap theory, education prepares individual to do tasks such as data processing reading, understanding and remembering and it is possible that individual be aware of an issue or know more about it due to the media exposure.thus, entrepreneurs with higher education levels have a more innovation than entrepreneurs with low education levels. Another factor predicting entrepreneurs' innovation is its economic situation. In this study, economic situation was measured with a monthly income of entrepreneurs. The results showed that people with higher incomes were more innovative than entrepreneurs with low income. The economic situation of entrepreneurs has a significant impact on business activities and their decision making and also the entrepreneurs with a strong economic situation, even if they are not themselves creative, are able to buy ideas and transform them into innovation, because creativity is a new idea and thinking, and it is a way to transform the ideas into action, and to do this, some products, services and instruments are required which the most important one is the economic situation of entrepreneur.based on the results, the most significant factor for predicting the entrepreneurs' innovation is their innovation. Firstly, it is 23

6 assumed that the creativity is one factor which plays some roles in innovation. Innovation will start with a creative idea. In other words, creativity acts as a raw material for innovation. In general, creativity is the necessary condition for innovation. Although not enough itself, the ideas that are product of creativity could be regarded as those which are empirically practical. In this study also surveyed entrepreneurs with higher levels of creativity had a higher innovation than entrepreneurs with less creative levels, and also the higher levels of creativity in them have made these creativities more radical. These results have some consistency and similarities with those of Baron and Tang (2011) performed in several southeastern states of America. The results of both studies suggest that positive emotions have a direct and significant impact on the entrepreneurs' innovation and creativity. And positive emotions significantly enhance the creativity of entrepreneurs.the results of both studies show that creativity has a direct and positive impact on entrepreneurs' innovation. This means that by an increase in creativity, innovation is increased, and also the higher levels of creativity make creativity more radical. The results of both studies show that relationship between positive emotions and innovation is adjusted by creativity and positive emotions have an indirect impact on innovation.the study results indicated that the variable positive emotions can have an indirect impact on innovation. The relationship between positive emotion and innovation is modulated by creativity variable. Also, the emotions are related to an important aspect of entrepreneurship. The nature of such impacts is a direct one and they are modulated by internal variables. In particular, in this study, creativity modulates relationship between positive emotions and innovation. In the past, positive emotions were regarded as the primary source of error or bias; an issue which interferes with cognitive processes such as judgment and decision making, and has determining impacts on important organizational processes. However, recent findings show that the emotions, especially positive emotions have many benefits for people who experience it. For example, an extensive review of available evidence Litolomiresky et al (2005) concluded that people who experience positive emotions tend to succeed and act in multiple activity fields. Not only because success brings happiness, but also because it positive emotions affect the success. The recent findings explain such results in the light of recent entrepreneurship and show that positive emotions among entrepreneurs enhance creativity among entrepreneurs and result in the indirect promotion of innovation, because innovation is often a key factor in the success of new business. The desire to experience positive emotions in broader range may have significant advantages for entrepreneur and its newly-established businesses. These results are also consistent with those of Buss et al (2008) entitled "the impact of emotion on the creativity of entrepreneurs". Both studies showed that positive emotions enhance creativity in general but they have little impact on the higher levels of activation and indirectly increase innovation. REFERENCES AghaiFishani T Creativity and innovation in human and organizations. Tehran: Termeh Publications Baron Robert A, Jintong T The role of entrepreneurs in firm-level innovation: Joint effects of positive effect, and environmentalism. Journal of Business Venturing. Bas T, john B, Keith T Managing innovation. New Your Wast Sussex Compani. Faizbakhsh SA. On creativity. Tehran: Baran Publications GolestanHashemi SM. Organizational and technological creativity and innovation, Rahiaf Journal, No. 26 Hosseini A The nature of creativity and the ways to develop it. AstanGhodsRazavi Publications Pardakhtchi MH, Shafie Zadeh H An introduction to organizational entrepreneurship. Tehran; Arasbaran Publications Rahimi Fil Abadi F, Hayedeh Moghadam A. Organizational entrepreneurship. Tehran: Diba Publications SaeidiKia M The principles and basics of entrepreneurship. Tehran: Kia Publications Samad Aghai J Creativity as the essence of entrepreneurship. Tehran: Daneshgah Tehran Publications Shahshahi MH Entrepreneur. Karaj: DaneshBahman Publications Shan M The seven circles of innovation: an innovation: an innovation management model. Zabihi MR, Moghadasi AR Entrepreneurship: from theory to practice. Mashhad: AstanGhodsRazavi Publications 24