Impact Of Organizational Creativity And Innovation On Entrepreneurial Success

Project and Seminar Material for Economics

Impact Of Organizational Creativity And Innovation On Entrepreneurial Success


The research study focused on an aspect of creativity, that is, product creativity within small enterprises that are craving for survival within the stiffened economy. The enterprises’ actions in creating new product are therefore studied to identify to what degree such vital parts of their actions lead to success of their enterprises.

For clear analysis, the study centers on two broad variables; the dependent variable and the independent variable. The dependent variable is taken as entrepreneurial success which was further broken into sub-variables to include sales increase and profit increase. The independent variable was product creativity which was operationalized in terms of time, that is, new product initiation period, market period, and maturity period.

The hypotheses were tested using the Pearson Product Moment Correlation Co-efficient with interpretation provided for further recommendation and conclusion to be made there on.

Chapter One


1.1 Background of the Study

Entrepreneurship means different things to different people. Conceptually and in practice, the term hints of no stereotypical model. Yet it’s very etymology derived from the French ‘entreprendre which literally means, ‘to undertake’ indicates the minimum characteristics of an entrepreneur. From the perspective of economic functions, three crucial characteristics of entrepreneurial activity are: risk taking, innovation and venturing into new business activities for profit. Entrepreneurship is the professional application of knowledge, skills and competencies and/or of monetizing a new idea, by an individual or a set of people by launching an enterprise de novo or diversifying from an existing one (distinct from seeking self-employment as in a profession or trade), thus to pursue growth while generating wealth, employment and social good.

Creativity is an important driver for entrepreneur to discover new business opportunity, and highlights the key role of innovation and of the entrepreneur as the sources of economic growth.

Our perception of the creative formation of organizations through entrepreneurship has changed dramatically during the past ten years (e.g., Carlsson and Eliasson 1993: Davidsson 2003). For a long time, entrepreneurship was construed in terms of managing a small business or being the owner-manager thereof. However, entrepreneurship is not directly associated with this particular context; it is essentially context-free organizational creativity (Gartner et al. 2003; Hjorth 2003, 2004; Sarasvathy 2001; Steyaert and Hjorth 2003). It is equally likely to be present in large corporations’ renewal efforts and in the identification of new markets and technologies as in the development projects of public organizations or, for that matter, in the reorganization of universities (cf. institutional or social entrepreneurship). At the core of entrepreneurship lies the creation and exploitation of entrepreneurial opportunities regardless of the context (Shane 2003). Entrepreneurship is a creative activity taking place when neither the goal nor often the initial conditions are known at the start, but constructed during the process (Sarasvathy 2001). This happens, because there is no single right or best solution, and even the starting situation may be so complex and constantly changing that it is difficult to analyze it reliably in the extent necessary. Bearing in mind the discussion above, this paper uses the term entrepreneur to refer to an individual or a community of individuals (organization) that creates new business in its operational environment (cf. Hjorth 2003).

Today’s global business environment, innovation and creativity are key ingredients in creating and sustaining strategic advantage. Among the main reasons for this renewal are the new way of thinking managers and economists from countries with a developed market economy and a new perception of economic opportunities. However, innovation cannot be sustainable until and unless it is in aligned with triple bottom line elements that is, economic, social and environmental dimensions. In this context a sustainable environment helps to generate innovations and knowledge, it also changes the knowledge characteristics and ecosystem (Hemsley and Mason, 2013). The entrepreneurial successes are the life blood to businesses around the world. Organizations therefore strive to meet these regulations and standards in order to remain compliant, and to increase the efficiency and credibility of the business. This is evident from the fact that every activity carried out by the businesses revolve around learning and fulfilling the needs of the customers (Ayyagari et al., 2003; Chen, 2005; Choi and Hwang, 2015).

One aspect of great importance for the existence and perpetuation of the rise or decline of Small and mediumsized enterprises (SMEs) in the economy of any country is to their contribution to creating new value. The rhythms alerts or slower, sooner or later, all countries will realize that initiating, developing, supporting even these organizations are not only unavoidable, but will lead to detect the only alternative economically efficient creation of new jobs, maintaining permanent organizational flexibility, stimulation of innovation and creativity (Oncioiu, 2013). Another different approach of innovation capability is “the ability to create innovations in responding to contextual changes and opportunities without organizational disruption, excessive time and costs, or loss of performance” (Buganza and Verganti, 2006). The perception of entrepreneurs is that innovation does not only improve the quality of products or process, but also has a positive economic return on the small enterprise (Tan and Nasurdin, 2011). Every firm has certain business objectives which further funnels down to operations and purchasing sub-objectives.

Therefore, every firm need to measure performance to evaluate how far it is from the set goals. Historically, scholars view entrepreneurs in many ways, but mainly as an innovator who is responsible for the creation of new products, new methods of production and new processes, and who is also capable of identifying new markets (Schumpeter, 1949). In fact, the nature of innovative process that affects enterprise survival and economic growth revolves around the active and inactive functions of the entrepreneur (McPherson, 1996). Literature review indicates that, in Nigeria and in other emerging countries, the subject of innovation reveals that there is a dearth of literature in the developing countries and this creates a major gap in knowledge that has to be filled (Davis et al., 1989; Hage, 1999; Biggs and Shah, 2006; Coad and Rao, 2008; George et al., 2012; Dapice, 2015; Cappa et al., 2016).

1.2 Statement of the Problem

Innovation is critical for organizational long-term prosperity, particularly in dynamic markets. In view of today’s economic climate, increasing global competition, and rapidly changing organisations, an organisation’s ability to innovate is regarded as a key factor for success (Shipton, 2006) and often for mere ongoing survival (Oldham & Cummings, 1996). Whilst the notion that firms need to innovate dates back to the early 1930s (Schumpeter, 1934), governments and organisations are now acutely aware that firms face the challenge of developing new products, systems and processes on a systematic basis. Current BERR policy suggests that innovation is “a major determinant of productivity performance” and that differences in innovation performance are “a significant cause of the UK’s relatively weaker productivity performance” (p.9). This view is backed by extensive research evidence demonstrating a strong positive impact of innovation on firm performance (Brown &Eisenhard 1995; Damanpour& Evan 1984; Damanpour et al. 1989; Hansen, Nohria& Tierney 1999; Roberts 1999; Schulz &Jobe 2001).

It follows, then, that innovation begins with creativity. In the world of organizations, be they private or public, lack of either leads to stagnation, and leaves an organization unable to perform or meet change.7 However, creative thinking cannot be turned on and off at the flick of a switch. And innovation does not occur in a vacuum; it requires effective strategies and frameworks, among which incentives are paramount. Creativity flourishes in organizations that support open ideas:8 these organizations create environments that inspire personnel and maintain innovative workplaces; those that fail are large organizations that stifle creativity with rules and provide no slack for change.

There is a role for management in the creative process: but it is not to manage it; it is to manage for it. Why? Because creativity does not happen exclusively and tacitly in a person’s head but in interaction with a social context wherein it may be codified. For any organization, operating in an external environment, an interactionist model of creativity and innovation needs to encompass organizational context, organizational knowledge, and inter- and intra-organizational relationships, not forgetting the (increasingly multicultural) creative makeup of the individuals (antecedent conditions, cognitive style, ability, intrinsic motivation, knowledge, personality) and teams (group composition, characteristics, and processes) who operate in it reveals just how much focus can shift perception even at a simple, generic level.

1.3 Objectives of the Study

The aim of the present study is to untangle innovation and creativity’s influence on entrepreneurial success and how it effects on organizational outcomes. Specifically,

  1. It seeks to understand how individual perceptions of the team’s innovation and creativity influence idea generation, promotion and implementation and how this process, in turn, leads to a higher likelihood of innovation, which we term innovation intensity.
  2. This study seeks to test the relationship between innovations, the financial performance of organization competitive advantage.
  3. By examining idea generation, idea promotion and implementation, this study attempts to fill some of the gaps identified above and contribute to a greater understanding of individual and team behaviors that can lead to new value for the enterprise.

1.4 Research Hypotheses

H0: Perceptions of entrepreneurial team creativity are not positively related to idea promotion/implementation.

H1: Perceptions of entrepreneurial team creativity are positively related to idea promotion/implementation.

H0: Idea promotion/implementation is not positively related to entrepreneurial team innovation intensity.

H2: Idea promotion/implementation is positively related to entrepreneurial team innovation intensity.1.5

1.5 Significance of the Study

The focus of the study is primarily on training development of employees in some selected business organizations in Lagos State Metropolis as they contribute towards the realization of the set objective of the organization and various ways through which training and development were conducted for the employees. How employee a being selected and what factors should be satisfied in order to enable them improve their performance.

Generally therefore the study focuses on how training and development can help in solving the problem of low productivity. The importance of the study endeavor it to highlight or why organization accord much emphases on the training and development and why it is regarded as a vital human resources management system.

This system will be limited to the employees training and development in an organization in general and some selected business organizations in Lagos State Metropolis.

1.6 Scope and Limitations of the Study

This study centers on the impact of organizational creativity and innovation on entrepreneurial success, with particular reference to some selected business organizations in Lagos State Metropolis. This research work met a lot of difficulties first and foremost, most visited were reluctant in given out statistical data on low productivity being experienced by the organization.

The researcher encountered some challenges which tend to interfere with the flow of this study such as;

Availability of Research Material:

The research materials available to the researcher at the time of this study was insufficient, thereby limiting the study.


The time at the disposal of the researcher which was allocated for the study was a major limitation as the researcher had to combine other academic activities with the study.

1.7 Definition of Terms


Impact is defined as the action of one object coming forcibly into contact with another, or a marked effect or influence.


An organization or organization is an entity comprising multiple people, such as an institution or an association, which has a collective goal and is linked to an external environment


Creativity is a phenomenon whereby something new and somehow valuable is formed. The created item may be intangible or a physical object.


Innovation is often also viewed as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs.


entrepreneurial is a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.

1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study.
  • Chapter two highlight the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five

Summary Conclusion and Recommendation

5.1 Introduction

It is pertinent to note that this research was aimed at examining the effect of creativity and innovation in organization’s success, thus the topic “impact of organizational creativity and innovation on entrepreneurial success”.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges associated with creativity and innovation on entrepreneurial success in Nigeria.

5.2 Summary

The following findings wad drawn from the study;

  1. Entrepreneurs these days are trying to be innovative and creative in order to sustain and grow in the existing markets by using diversified or modified strategies.
  2. Many entrepreneurs have realized the worth and market potential and are trying their best to capture the foreign markets were they find opportunity exists.
  3. Many entrepreneurs already to go along with the changing business environment and to continue in the market have already adopted new changes let it be technology, online marketing etc.
  4. Entrepreneurs have already started using their capabilities in the best effective and efficient manner in order to be leaders in the markets by entering in foreign markets also.
  5. Finally, it has been found that the level of open team communication about new ideas will positively affect the team creativity and that there is correlation between interpersonal relationships in the workplace and individual creativity. Similar results also reached other authors, for example, Muñoz-Doyague and Nieto (2012) in their study carried out among employees of an automotive firm found that highquality exchanges between the employee and their work group as well as to their immediate superior have a significant positive influence on their creativebehaviour.

5.3 Conclusion

Creativity does not necessarily mean innovation. There is creativity without innovation, but there is no innovation without creativity; creativity precedes innovation. Creativity means to bring new ideas; innovation means converting these ideas into a successful business. Regarding organizational (corporate/ enterprise) culture, it is one of the most important factors affecting both creativity and innovation in organizations. As a result, it can be concluded that all the alternate hypotheses in the study are accepted.

Employees’ willingness to come up with new ideas is also affected by the level of implementation of employees’ new ideas in the form of innovation (while the relationship between variables is relatively week). There is also strong positive relationship between employees’ willingness to produce new ideas and atmosphere of psychological safety. It has also been found that open team communication about new ideas positively affect team creativity and good interpersonal relationships in the workplace positively affect creative performance of individuals.

5.4 Recommendations

The following recommendations were suggested by the researcher from the findings of the study;

  1. The Government can drive innovation through appropriate education policy and skill development.
  2. Innovations require not just inputs and capacity but also a political economy of reform. This involves creating a constituency for innovation where Government, academia, industry and the citizenry are all participants in the innovation movement.
  3. With increasing access to the internet and the Information and Communication Technologies (ICT) revolution, along with wider penetration of media, there is tremendous scope for using these channels to disseminate information on innovation and create platforms for participation.
  4. Systematic reform of the higher education system (including skill based marketable vocational education) in Nigeria, which would act as an enabler for developing the required intellectual capital as well as lay the foundation for effective collaboration between industry, educational institutions and the government.

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