How creative destruction functions in corporate entrepreneurial process: an empirical investigation of Schumpeterian concept in engineering firm settings in Pakistan

Muhammad Zubair Alam,Amber Pervaiz,Muhammad Rizwan Ullah,Shazia Kousar

doi:10.1186/s13731-022-00199-3

Abstract

Schumpeter's idea of creative destruction (CD) explains innovation functions in organisations. This paper investigates the CD concept in engineering firms by explaining how technical opportunity (TO) transforms into corporate entrepreneurship (CE) actions once opportunities have a market orientation (MO). A survey was conducted using a structured questionnaire with 132 managers of engineering firms in Pakistan. Structural Equation Modelling (SEM) using Partial Least Square (PLS) approach has been used to analyse the data. Results reveal that MO and TO exerts a positive influence on CE. MO is the reason for the emergence of TO, which corporate entrepreneurs in engineering firms exploit. CD intensifies the impact of MO on TO significantly. Opportunity recognition in engineering firms is distinguished and bounded by MO and technical viability. Engineering firms need to identify gaps in the market through naturally occurring obsolescence of products and services (CD) to create TO with appropriate MO. This study has revived a classical debate over opportunity recognition by incorporating external factors to propose the CE model. The Schumpeterian opportunity recognition process and CD have been examined for engineering firms.

Highlights

History has proved that businesses should be capable of rapid change, transformation, and innovation to fulfil the fast-changing marketplace’s expectations (Schoemaker et al, 2018)
This study offers a new approach for firms in the opportunity recognition process, which transforms from the inner organisational function of change to look for gradual obsolescence of products and services in the market through the natural process of creative destruction (CD) in the opportunity creation process
Results indicate that market orientation (MO) is positively associated with corporate entrepreneurship (CE) (β = 0.19, p < 0.05), supporting H1, technical opportunity (TO) is positively associated with CE (β = 0.202, p < 0.05), supporting H2 and MO is positively associated with TO (β = 0.289, p < 0.05), supporting H3

Summary

Introduction

History has proved that businesses should be capable of rapid change, transformation, and innovation to fulfil the fast-changing marketplace’s expectations (Schoemaker et al, 2018). In this regard, corporations should improve their innovation capability (Kelley et al, 2009) through CE (Lee & Pati, 2017). "ENTR is the primary catalyst for innovation." This view is entirely concerned with entrepreneurial action as a crucial transformation mechanism. Schumpeter (1934) defined CD as a process of industrial transformation where new opportunities are introduced to the market at the cost of existing ones. CE is liable for promoting the gales of CD within an organisation through inspection of new opportunities, resource acquisition, implementation, commercialisation, exploitation, and development of new products and services (Guth & Ginsberg, 1990)

Results

Discussion

Conclusion