Volume 5, Issue 3 - Special Issue: Entrepreneurship, Innovation and Risk, Guest Co-Editors: Salvatore Esposito De Falco and Antonio Renzi

This paper proposes a conceptual reading of the interplay between sunk costs and slack resources in innovation, adopting an entrepreneurial perspective. Antecedent literature mostly depicts the relationship between slack and innovation as an inverse u-shaped curve. However, this approach is way too unrealistic and it does not take in account both the different impact of heterogeneous types of slack and of sunk costs. We argue that not all slacks positively contribute to innovation and, hence, the u-shaped relationship is merely verified in case of highly flexible slack resources. In addition, the presence of sunk costs is a friction factor, which makes the first part of the curve less steep. Therefore, entrepreneurs are solicited to innovation by the presence of some easy recoverable slack types, as financial or knowledge ones. On the converse, a consistent level of sunk cost may discourage their innovative activity. In this setting, absorbed slack resources increase the level of sunk costs.

Socioeconomic trends (such as makers, crowdsourcing, sharing economy, gamification) as well as technological trends (such as cloud computing, 3D printing technology, application, big data, TV on demand and the Internet of things) are changing the scenario and creating new opportunities, new businesses and, as a result, new players. The high level of uncertainty caused by the fast speed of innovation technology along with an enormous amount of information difficult to analyse and exploit are characterizing the current framework. On the other hand, businesses such as Netflix – with its 44,000 users and a long tail business model – show a new service based on TV on demand where innovation starts from the convergence between two different industries (TV and the Internet) and spreads on the need of new users. Quirky, with its innovative open business model, is manufacturing new products designed and developed by the community and finally produced with the use of 3D printing technology. While Google in a multi-sided model are giving their new glasses to different developers who build their own application on them, Kickstarter finds its business funders in the crowd, and pays them back with its future products, according to what the organization needs. Another element that adds complexity to the previous framework is the new customer. He or she is showing a social attitude in favour of transparency, openness, collaboration, and sharing. Every second more than 600 tweets are posted on Twitter and around 700 status updates are posted on Facebook. At the same time, people are receiving text messages, e-mails and skype or phone calls and simultaneously consuming TV, radio and print media. In this scenario characterized by trends where employees, funders, customers and partners do not play a stable role but work together with a sort of “platform organization” to create a product or service completely customized for different market niches, how can an organization set up an innovative business model in a defined trend? Is it possible to identify a sort of framework, able to inspire new business models, with an examination of trends? In this article we will use a mix of different approaches to inspire new business model.

This paper introduces an entrepreneurial innovation supported by public research. TITAN is an R&D project funded by European Structural Funds with the National Operational Program for “Research and Competitiveness” 2007–2013 (NOP for R&C). General purpose of TITAN project is to achieve a multi-application and multi-channel platform to manage value-added services (VAS) and e-payments. From the EPAS protocols perspective of standardizing the electronic payment, VAS data management will be included in the current financial messages (CAPE – ISO 20022). In order to improve the process of card payment transactions through the delivery of new VAS was born the cooperation between EPASOrg and TITAN’s team. This cooperation would facilitate the examination and submission to ISO 20022 of data components related to the provision of added-value services meeting the requirements of those new contactless applications developed in the framework of the project. This is the principal and most entrepreneurial innovation concentrated on the integration of payment and VAS that draws attention to a new model delivering the VAS on a multi-application device used by both payment and VAS, during the same payment transaction. The latter result has led a Change Request to ISO in order to allow the extension to the VAS on the standard ISO 20022 related to card payment. The innovative model proposed is validated through a sample scenario and, finally, the conclusions summarize the next steps and underlines possible implications for future business and technological developments.

When seizing new investment opportunities, CVC investors face a tension between learning rewards and risks in the form of market and technological uncertainties. Based on an inductive qualitative study relying upon a unique, longitudinal dataset of 260 CVC deals carried out by the top CVC investors in the biopharmaceutical industry between 2003 and 2013, we argue that the extent to which a CVC investor (and its corporate sponsor) may learn from new ventures depends on the nature of its risk attitude and, more in general, on its portfolio diversification (low risk) or concentration (high risk) strategy. In so doing, we identify four typologies of CVC portfolio strategies that allow for growth and learning options available to the parent sponsor, showing that there is a curvilinear (U-shaped) relationship between learning propensity and portfolio diversification. We also develop a tool for determining a CVC opportunity set that may help a fund to optimally allocate capital based on its own risk-return preferences. Theory for CVC decision-making is advanced by furthering two propositions requiring future empirical validation.