Predicting Successful Entrepreneurial Innovations
“The way we typically think about entrepreneurship is to write a business plan and then take it to a crowdfunding website or to venture capitalists to try to get funding,” said Raja Roy, assistant professor of innovation and entrepreneurship at Martin Tuchman School of Management. “But how do you identify the opportunity that will capture value?”
The formula for success relies on several factors, Roy explains. To start, entrepreneurs need to consider value creation (the worthwhileness of their idea), as well as value capture (the ability of their idea to make money). “Just because you have value creation doesn’t mean you’ll capture value,” he said.
Capturing value, he adds, depends to a large extent on whether large corporations will want to copy innovations and take a chunk of the market share. “If you can predict when a large company will not imitate your idea, that is opportunity identification for capturing value,” he noted.
Roy studies the machine tool, industrial robotics and image sensor industries to determine what products were introduced by firms in these fields and when, as well as how they fared in the marketplace. For machine tools, he used product-introduction data from a variety of sources, such as the marketing flyers for all the machine tools manufactured between 1975 and 1995.
He is applying his findings, gleaned from both quantitative and qualitative methodologies including panel data and expert-corroborated business-history analysis, to explore how firms adapt to technological disruptions — to try to spot opportunities, from an entrepreneur’s perspective, that large incumbents will likely find “unattractive.”
“My goal is to create industry models for predicting what types of companies and innovations would likely succeed and be profitable, and under what circumstances.”
With help from his colleagues in the Innovation and Entrepreneurship (I&E) cluster at NJIT, Roy has used the findings from his research to design a new Ph.D.-level course in I&E for the university. This new course was recently approved by NJIT's Committee on Graduate Education and is slated to begin this upcoming academic year.
