VII CONGRESS OF INTERNATIONAL BUSINESS UPC “META TRENDS IN BUSINESS”
Impact of Technological Innovation in International Business
Technological Ecosystems: The Spirit of the new company
Academic research presented by:
LEAH
August 2014
I
ÍNDEX
I. Executive Summary
II. Introduction
III. Objectives
IV. Hypothesis
V. Development of the subject
1. Chapter I: Review of the impact of innovations in time
1.1. Wave productive 1785-1842: The Age of coal, iron and the steam
1.2. Wave productive 1896-1947: The Age of Electricity
2. Chapter II: Technological Ecosystem engine of international business
2.1. Ecosystems in the United States and Israel
2.2. Ecosystem in Peru
VI. Conclusion
VII. Recommendations
VIII. Bibliography
IX. Annexes
II
EXECUTIVE SUMMARY
This work presents the impact of technological innovations in international business.
The objective will be to demonstrate that technological ecosystems are promoters of
international business and its application in Peru will bring amazing benefits for the
entire state: government, business, society.
Chapter I explains how technological innovations have been around since the dawn of
time and have evolved along with humans providing opportunities for commercial and
business development internationally. Then, as the second chapter discusses two
countries have been developing successful technological ecosystems, international
engine companies we know today as HP, Apple, and others. And like innovation model
for emerging countries like Peru. To end the situation in Peru is evaluated with respect
to the creation of structures for the development of technological innovations.
Finally, we conclude with a positive attitude towards the initiatives of the Peruvian
government in including steps to encourage innovation measures, which added to the
change of mentality of Peruvian companies and international support in education and
investment, will be able to generate a substantial change in Peruvian exports.
INTRODUCTION
III
It´s said that man's best friend is the dog, canine who is always there for you, you get
every day as if did not see it in years. And that's true, but we leave out the other man's
best friend, who has always been with us from the puns of time to help us meet our
needs: technology. Technology has always been indisputably linked to all the needs
of humanity. It happened with the need to communicate despite the borders with the
telegraph, telephone, radio, television and the internet. The same is true in the
business world, the emergence of new ways to generate revenue through the internet
such as ecommerce, once the traditional sector was constrained.
The TICs revolution has changed every aspect of society and presents challenges for
the government and private companies being impossible don´t take it into account in
future projects. This study is an incentive for the reader to become familiar with the
world of TICs gradually and stimulate innovative and entrepreneurial spirit in him. Once
finished reading the research document the reader will have the tools to make the
decision to join the technological wave.
The research provides explanations to issues such as innovation, ecosystems,
startups, revolution, international business, social, economic, political, funding models,
among others.
OBJETIVES
IV
General objective
Demonstrate the importance of technological ecosystems in the growth of international
business
Specific Objectives
Analyze the impact of technological innovation in business over time.
Expose the role of technological ecosystems in international business development.
HYPOTHESIS
The development of technological ecosystems in Peru can achieve new international
business opportunities for the country.
5
CHAPTER I Innovation is a word we hear a lot nowadays everywhere, mainly, I must say, the
students of the UPC, Universidad Peruana de Ciencias Aplicadas, which is
characterized by its slogan "Push yourself, innovate." But what is mean innovating.
What is the signification of innovate for students in International Business from the
UPC. The RAE says that innovation "is the creation or modification of a product, and
its introduction into the market." The human sciences qualify as "creative exploration
of new ways or alternative solution assuming the search for new knowledge in an area
of curiosity and pleasure of renewal." And the economist Joseph Schumpeter, posed
by the "theory of innovation" that is the key to economic growth disruptively
transforming economy and society combined in a creative and innovative line of attack
the old production processes emerging new production technologies.
By the definitions given above, we can see that innovations are finding new ways to
improve the existing current model in the process of generating social and economic
development. This can be clearly seen from the beginnings of humanity, where
innovation played an important role in the generation gap of Homo Habilis to Homo
Erectus. Homo Habilis is known to produce stone tools that served for defense and
hunting, the use of stone became widespread and was in common use until appeared
Homo Erectus who discovered the fire, thus changing the model life known before.
There was an innovation that emerged as an alternative for progress and social and
economic development, breaking down the foundations of the system.
In the same way throughout human history, entrepreneurs have bets ideas which
materialized in technological innovations like a hurricane that have been down columns
of the existing economic, political and social system. Each technological revolution
marked change in people, organizations, and finance policy raised by the government
and especially in international business. And this chapter talks about this impact of
technological innovations over time. To do this I will draw on two of the cycles or
"waves" defined by economist Kondratieff1 as a tool to illustrate the impact.
1 Kondratieff 1995
6
1.1. Wave productive 1785-1842: the Age of coal, iron and steam
Think of the 1600 takes us back undoubtedly to identify celebrities of human history,
such as: Galileo, Newton and Descartes. We can imagine Galileo in his time as
professor of geometry, mechanics, and astronomy at the University of Padua in Italy,
or Newton toughing courses at the University of Cambridge as Lucasian Professor.
However, the role of this section is to give a look to the years 1600's with a different
view, emphasizing the important work of middle class entrepreneurs, much less known
than the figures mentioned above, in the phenomenon that was the Industrial
Revolution in the status quo and political, social and economic standards known until
that time.
First, we discuss the third son of an English middle class family, Hugh Plat. Plat was
an inventor who got to make a new alternative for coke when he noted that the
bituminous coal burned in the same manner as wood when it is produced charcoal2.
This new approach was used in roasted malt and later in the industry thanks to the
contributions of other entrepreneurs like Abraham Darby. Darby was a member of a
family of English Quakers3, which had similarity to Plat entrepreneurial spirit and great
talent experimenting with making cast iron foundry to develop a method of high quality
high powered coke oven.
This venture enabled a new source of supply of iron better quality and greater volume,
delegating its use in the manufacture of cookware and kitchenware establishing
opportunities for creation of new goods such as building railways, bridges and the
famous machine steam. This is where the blacksmith and English inventor, Thomas
Newcomen, in 1712 dazzles with first steam engine. This machine was replicated in to
100 copies for then be modified by James Watt, engineer and inventor Scottish, in
partnership with Matthew Boulton, english entrepreneur, creating Boulton & Watt
signature with that would be commercialized and expanded internationally. The
reforms that generated this machine in transport are surprising because replaced the
2 Cfr Platt 1594:80 3 The Quakers were a religious community founded in England by George Fox. They have been
known like Quakers because they were following instructions to shake in the name of the Lord.
7
rudimentary forms of transport such as the use of animals or human power in favor of
complex technologies. In the same way it did in the industrial sector, changing small
family workshops for larger factories that housed large numbers of employees
providing labor and specialization in the use of these new technologies. The labor of
workers in factories and opportunities in improving the transport of goods from one
country to another increased cross-border trade and international business in a
different social and economic system: capitalism led by the big business.
This first wave of the years: 1785-1842, years more years less, pretty much sums up
the process of irruption, frenzy, synergy and maturity presented in the book of Carlorta
Perez4, Technological Revolutions and Financial Capital: The Dynamics of Bubbles
and Financial good times which proves the hypothesis of this essay.
The big bang as Charlotte mentioned to the emergence of an innovative idea, is the
beginning of the wave, where the world is in crisis and companies are stagnant or in a
mature period therefore becomes important to look for opportunities to solve this
economic jam. This at times of Plat and Darby happened when the economic model
had reached its highest point standing firm but without growth. Can´t identify if the
goverment, dynasties or existing bourgeoisie were looking out of this impasse or were
aware of the stagnation of the system, but the truth is that there visionaries people in
an uncertain environment proposed an innovative change, through innovation in raw
material or a different method of foundry. Entrepreneurs seek capital to develop their
projects and with luck got to attract risky investors to launch the product to market.
Consumers realize the benefits of the new proposal and choose to change their style
of consumption gradually causing the breakdown of the foundations of the previous
model. Very similar to what happened with James Watt and the steam engine. In their
search for funding met the businessman Boulton who filled of money to the company
that together created to commercialize the invention. Quickly, it welcomed famous in
the industry leaving obsolete the products used before and marking the difference
between the old and the new5.
4 Venezuelan scientific experts on technology and socio-economic development. Specialist neo-
Schumpeterian court. 5 Cfr Perez 1891:81
8
Suddenly we are in the stage of frenzy where all possible options that carry the
revolution are explored. Now it is sought new markets to mimic the process of
revolution, an take place the "hobby of built railroads, bridges" as in the industrial
revolution which generates overinvestment. Wealth has increased and was held by a
group of people, bringing the rich at the top of the pyramid and the poor in deplorable
conditions producing the phenomenon of migration of rural people to cities. Therefore
movements of the proletariat against the bourgeoisie, words created and used in the
eighteenth century after the Industrial Revolution. In the words of Carlota, frenzy is the
time for speculation, corruption and unashamed passion-even celebrated- for wealth.
But the chaos cannot last forever so range of reflection and rearrangement try to put
in balance individual interests with collective welfare. Now, cannot pass unnoticed the
social unrest and is installed as a barrier of growth, depending on the ruling political
powers and institutions take action to improve the situation. This in eighteenth century
sparked big fascists movement, nationalists and a parallel cycle of revolution as the
one in 1820 in Spain, and 1830 and 1848 in France. Furthermore, called to reflection
of Pope Leo XIII:
“…If the worker provides to other their forces to the industry. He provides it in order to
meet the necessities of life and sustenance and for all this work acquires true and
perfect right, not only to demand salary, but to do what he wants with it.…”6
In the phase of synergy, the key word is production. Instead of step Frenzy growth is
stable and harmonious with production. The economic benefits dripping all layers of
society which feels a stadium of prosperity and a reign of the middle class. New
thoughts on the spirit of the company are included with the French Enlightenment7,
and the industry expands to USA, Germany, Italy, Switzerland and others causing later
revenge for supremacy among nations.
6 Rerum Novarum Encyclical 1891 7 Although the French Enlightenment date from the late seventeenth, it is prolonged to the early
nineteenth that why it is important to mention it, especially in studies by Adam Smith in The Wealth of Nations (1776).
9
Turning to the last phase, maturity, markets are saturated and productivity gradually
reaches its limits as in 1866, upon exhaustion of cheap carbon sources8. Despite this
the biggest beneficiaries continue to rely on the system and proclaiming eternal
progression, but the scenario gradually becomes suitable for a new big bang and
technological innovation.
1.2. Wave productive 1896-1947: The Age of Electricity
The age of electricity is a particularly notable time for his technological inventions
highlighting the most momentous invention for humanity: electricity. Electricity
revolutionized lifestyles of people and how we do business internationally and foreign
trade. Electricity is the backbone of the revolution of products that appeared later as
radio, television, computers, cell phones, etc. that are part of our life. Just imagine a
typical day of a person nowadays: Since the day begins with the sound of electric alarm
clock, turn on the light in the room, has breakfast with hot water from the electric kettle
while watch their children play with a battery toy that he gave them. Then, he goes
quickly to work because he must mark his entry with proximity card in the electrical
system of the company, turn on the computer and puts to load the cell phone that forgot
connected yesterday. Soon it is 6 or 7 pm. and should go shopping at the supermarket,
where he is receiving with those electric doors that open when you are close. Then he
listens the mall worker says the daily deals, he choose the products that go to buy and
approaches to the cash register in order to pay. The cashier uses a code reader to
register the products he is carrying in her computer while the electrical band bring him
the other goods. And culminating the day goes home and rises the electrical garage,
saving the car and then go to see their children watching television in the living room.
With this we can see that electricity led to the creation of a large number of artifacts
that have become a right for all of us and have become necessary as we cannot
imagine life without them. The impact of electricity has been so great that cannot go
unnoticed in this study, so this section is dedicated to the detailed explanation of how
8 Jevons 1866
10
a technological innovation, electricity, boosted foreign trade satisfying global needs,
being replicable and scalable in time.
The history of electricity takes us to the year 600 BC when the philosopher Thales de
Mileto experimented with amber rod and a piece of wool that rub long time get a spark.
However, this event was only the observation of the phenomenon and it was not until
1774 when electricity was used by Alessandro Volta to produce continuous power
through perpetual electrophorus. In 1800, Volta would create the electric battery, which
would be used as the basis for manufacturing the first electric motor by Joshep Henry
in 1831. The same year, Michael Faraday show that could generate electricity without
chemicals, elements of which it was made the battery, by experimenting with magnet
and wire. Soon appear the dynamo and transformer´s Faraday, the last one leads to
an alternating current voltage.
Then, the use of electricity is presented systematically throughout the eighteenth
century. Morse's telegraph (1836), the large-scale generator of Gramme (1870), Bell's
telephone (1876), the microphone of Hughes (1878) and Edison incandescent electric
lamp (1879) are the most prominent examples of the application of electricity in
telecommunications, lighting and industry.
However, only when the widespread use of electricity spread around the world can say
that revolutionized the world. They were new businesses distributing new technologies
and services related to them. For example, Atlantic Telegraph Company was a
company incorporated with the ideal of building the first transatlantic telegraph cable
linking Europe to America. Due to the failure of the first would enter Telcon, Telegraph
Construction and Maintenance Company to build the second transatlantic telegraph
cable. The New York soon appears with Mississippi Valley Printing Telegraph
Company in 1856, Western Union Telegraph Company9 had an extensive network of
telegraph why offering telegram transmission services and money transfers. Then, The
Bell Telephone Company begin operations under the support of obtaining patents like
the telephone and in 1885 changed its name to American Telephone and Telegraph
Company, AT & T, which would create the first national long distance network of viable
9 Nowadays knows like Western Union
11
costs. In 1892, General Electric Company was formed by the merger of Thomas Alva
Edison Company, Edison General Electric Company and Thomson-Houston Electric
Company offering various services based on electricity including turbochargers used
in World War II.
This last company, General Electric, is very clear example of what Schumpeter tells
us. Schumpeter tells us that technological innovations are usually constituted in
clusters of entrepreneurs who open the way to a new technology. In this case Thomas
Alva Edison formed the light bulb and inaugurates Edison General Electric Company
opening the road for imitators of the product, called by Schumpeter as imitation effect
arise. The product is increasingly covet by entrepreneurs and start to appear in the
market flocks of companies that make large profits of the product as Thomson-Houston
Electric Company and Canadian General Electric, Edison competitors, did. Soon the
new technological move the market in their favor and older firms should be molded to
new structures or disappear. Innovations expand in all the markets and go from being
a novelty to become usual. Innovative entrepreneurs become normal heads of
companies who conquer the structure and the situation is normalized, waiting for
another innovation to occur and change the paradigm again, like Thomas Edison did
in his time, going from entrepreneur to the boss of General Electric Corporation witch
not only leads the electricity sector, it is also in transportation sector, Power & Water,
Aviation, Oil & Gas, Health and Capitals.
CHAPTER II The previous chapter explained that technological innovations are like extensions of
the body and can be made by entrepreneurs from all strata of society. However, there
is still skepticism about opportunities of emerging countries in the technological
competition that the global world has today. Some argue that great powers like the
12
United States, are uniquely capable of developing quality technology to the market.
But this is false. In recent years, the same technology and globalization that this
brought, has broken down barriers so that the Earth has become flat10 and countries
such as Israel, India, China, fiercely competing to be at the forefront in technology
services.
Thus we should not be surprised if in emerging countries, talk about Latin Americans
as Chile, Mexico, Colombia, and Peru, materialize world-class entrepreneurs. The
news did not stop telling us about a teenager, with a Peruvian mother and Bolivian
father, who at just 13 years had developed a mobile application11 that managed to take
first place among the best-selling apps in Appstore. Now the young age of 17 working
on Facebook and is a benchmark for Latin Americans. On the other hand, the web
portal The Economist published an interactive list of the three largest Internet
companies based in 50 countries according to its market valuation, scale, among
others. Peru is ranked 47 thanks to the achievements of his three startups: Place
Points valued at $ 4 million, CinePapaya $ 3 million and Idakoos at $ 1 million.
These are two examples that break with abundant skepticism even among people and
leads us to reflect on the measures being taken by the government and private
institutions to develop ecosystems to promote the establishment of technological
value. Especially in countries exporting raw material by excellence that should make a
technological leap in the process of not getting behind in the global trend.
This chapter begins by explaining the model that referencing countries are
implementing technology such as the United States and Israel and then analyze some
measures that are being implemented in Peru to increase our competitiveness in
technological innovations.
2.1. Ecosystems in the United States and Israel
Ecosystem is a word that has become fashionable in recent times and is used
frequently to refer to the digital age in which we live.
An ecosystem in an initial definition presented by the RAE is " Community of living
beings whose vital processes are interrelated and develop in terms of physical factors
10 Friedman 2005 11 4Snaps by Michael Sayman. Find it Here
13
in the same ambient" This is a technological field is building a favorable environment
to enhance technology projects in a process of interaction and interdependence among
individuals who share the same spirit of entrepreneurial.
Ecosystems provide to entrepreneurs counseling, continuous feedback and key
resources to shore up their technology projects. They are a source of knowledge and
inspiration, as it is composed of teachers, trainers and subject matter experts. The first
technology ecosystem was introduced in Silicon Valley, Palo Alto, California in 1939
by a professor at Stanford University and two excellent students, then HP founders.
They are Professor Frederick Terman and students David Packard and William
Hewlett. The importance of Silicon Valley is that it marked a model or standard for
developing technology in a collaborative space and it would soon be followed by other
countries such as Israel. This model brings together three important: education,
funding and market.
Regarding education, Silicon Valley had not been made it if were not for the
educational support provided by Stanford University to the ecosystem. Stanford would
be a source of innovation, in terms of advances in research and training of many
companies that have made Silicon Valley one of the most innovative and productive
high-tech regions in the world12. Frederick Terman, one of its first presidents,
generated close links between university students and the technology industry
booming. Create what he called "the secret weapon of Stanford", the Stanford
Industrial Park. This would be leased to technology companies in order to provide
money to hire renowned university professors in exchange for the advantage of being
near the university and as a means of transfer of technology from research labs of the
university to the companies’ park13. Also, for the financing side is important to highlight
the momentum provided by the venture capital in Silicon Valley consolidation. By 1920,
Vannevar Bushm professor of engineering and scientific advisor to the government of
USA enhanced technology centers when he convinced the state to fund R & D activities
aimed at national defense in World War II. This finally also brought increased demand
for electronics opening a market for technologies developed in Palo Alto.
12 Stanford University (2014) (http://www.stanford.edu/about/history/history_ch3.html) 13 Cfr Rogers y Larsen 1984 :30
14
The implementation of these three components exposed to other factors such as the
lack of the industry, the availability of lawyers, managers, talent agents14 and other
factors of the age succeeded in making unique and unrepeatable Silicon Valley. Other
countries have imitated the model, however have failed to overcome the success it has
achieved so far in the United States, which currently has three of the largest
ecosystems15.
However, their case is an important lesson that helps us to establish bases to start with
our story with technology. Just as Israel did at their time, now known as the best
entrepreneurial ecosystem in the world after Silicon Valley.
The Startup Genome consultant join with Telefonica Digital present us the Startup
Ecosystem Report 2012, which provides a quick look at the 20 largest ecosystems in
the world in a ranking prepared based on 8 variables: Output Startup, Funding,
Company Performance, Talent, Support, Mindset, Trendsetter, Differentiation from
SV16.
Tel Aviv, Israel is ranked second in the index and is a special case worth mentioning
because it exemplifies how Israel at its inception as a state was an exporter of
agricultural products, became an exporter of high-tech, getting 50% of its exports come
from the technology industry.
Curiously, Tel Aviv like the Silicon Valley ecosystem collects the three components
mentioned earlier: education, funding and market.
Yigal Erlich, founder of the venture capital industry in Israel and partner of the
investment fund Yozma, remember that thirty years ago, the venture capital funds in
Israel did not exist and today the country is considered the largest market in the world
14 Look for Annex I 15 1°: Silicon Valley, 3°: The Angeles y 4°: New York. Look for Annex II 16 The first variable measures the index of business activity in the region. The second variable assesses the risk capital available in the ecosystem. Company Performance account the potential of new companies in the ecosystem. The fourth variable measures the talent of entrepreneurs in terms of age, education, experience, ability to mitigate risk, etc. The fifth variable measures the support network in the ecosystem for service providers, mentoring and funding sources. Mindset is the mentality of entrepreneurs in terms of vision, risk tolerance, work ethic, etc. Trendsetter measures the speed with which the ecosystem adopts new technologies, process management and business models. And finally, Differentiation from SV measures the difference between the Silicon Valley and the ecosystem under study taking into account demographics and what kind of businesses are started there.
15
capital risk after the United States17. Incubators programs funded by the state have
been able to support over 1,400 Israeli companies seeking capital and provides
mentoring, work space, computer support and direct connection with fund investments.
Additionally, the University of Tel Aviv has a center for entrepreneurs that connects
students with technology companies who see Israel an attractive location for their R &
D centers. Therefore, it should not be surprising that Israel is the country that more
invests in research and development in the world relative to its GDP. These two factors
have allowed the country a tempting market for large technology companies and
develop a fertile and rapidly growing market that in the near future might put in jams to
American companies.
The case of Israel catches our attention about the strategies that companies are taking
in our country. Are we taking the right path? Or are we falling behind the globalization
and technology that is becoming less asymmetric the information and styles change
consumer purchasing? It makes us think if we are going into what Kjell Nordström and
Jonas Ridderstråle said in his book Funky Business: "The 'surplus society' has a
surplus of like companies, Employing people like, With a similar educational
backgrounds, coming Up With Similar ideas, producing things like, With prices like and
like quality “The ‘surplus society’ has a surplus of similar companies, employing similar
people, with similar educational backgrounds, coming up with similar ideas, producing
similar things, with similar prices and similar quality”.
2.2. Ecosystem in Peru
Years ago the European economies led the commercial world, came after United
States with his liberal model. China appeared in the equation and commercial
structures changed, then after little time we´d discussed about the potential of the
BRICS countries. Later period, the statistics would predict that growth would be more
balanced and favorable for emerging countries making the eyes of investors land on
them and the confidence of the private sector, although still fragile, raised.
At that point countries like Peru, Chile, Thailand, or perhaps even Israel itself gain
strength and is expected to they be ready to face that challenge. It is where they ought
17 United for Israel (2014) (http://www.unidosxisrael.org/tel-aviv-mejor-ecosistema-emprendedor-del-
mundo-tras-silicon-valley/)
16
to decide to follow the same path or opt for an innovative technology industry. So, it
become important to ask what do they want to be: administrators of the present or
builders of the future?18
At present, the initiatives by the government and some private institutions make us
think that yes, we want to make that change towards technology. However, according
to the Global Innovation Index introduced last July 18 by Jhonson Cornell University,
Business School Insead and the World Intellectual Property Organization shows the
actions are still very weak and we need more entrepreneurs join to the change. The
index assesses innovation programs in 143 countries in which Peru was ranked 73
being below other Latin American countries such as Chile, Colombia and Mexico. The
post is not quite low but allows us to observe the points where we need to improve,
citing some as: Percentage of education spending relative to GDP (115) Percentage
of domestic credit issued to the private sector to GDP (104), Collaboration between
university - industry research (105) and knowledge creation (119)19.
As we see, the Peru´s lowest score in the index curiously are part of the 3 factors of
the ecosystem that we talked about before: education, funding and market. Much so
that, I will disaggregate the three components to identify the initiatives proposed to
date for each one.
Education:
In a globalized world, innovation is the source of economic growth and differentiation
and therefore the takeoff of international business. This poses a strong challenge to
countries as they will have to develop the necessary tools to foster the innovative spirit
in its people through education systems and development of scientific research. Faced
with this situation, last July 28th President Ollanta Humala mentioned in his speech his
concern for the Peruvian educational system. The state gives priority to education in
the National Productive Diversification Plan, for which be increased by 4,000 million
soles in the education budget from 2015 to reach historic increase 0.5% of GDP20.
18 Guillermo Quiroga makes us that question in SemanaEcomomica.com. 19 Look for Annex III to observe the complete qualification of Peru. 20 RPP (2014) (http://www.rpp.com.pe/2014-07-29-los-puntos-claves-de-ollanta-humala-en-su-
mensaje-por-fiestas-patrias-noticia_711986.html)
17
Trained and active human talent to undertake innovative and disruptive ideas with an
international project are source of concern for state and private sector. For this reason
in the country there are about 26 centers of expertise and training in developing digital
initiatives, called incubators and accelerators. Some examples of this programs are:
Startup-Peru from Ministry of Production, Wayra from Telefonica, Lima Valley, Startup
Academy, StartUPC and Emprende UP.
Startup Peru is an initiative of the Ministry of
Production, which since 2012 has been
launching national competitions among
entrepreneurs with the aim of consolidating a
collaborative network of mentoring, training
and experience to provide sufficient information to differentiate, survive, grow and
expand in time. The Minister Gladys Triveño mentions that: "This initiative is supported
by the great skill of the Peruvian to develop creative solutions to complex problems,
and the great entrepreneurial force that is already recognized worldwide"21.
Due to the host of this statewide initiative, the Ministry of Production will pursue this
initiative with the launch of at least two annual competitions in 2014-2016. In 2014 it
will finance 48 projects; in 2015 to 100; while in 2016 to 120. In order to reduce the risk
of mortality business, the ministry will submit a proposal for the creation of strategic
alliances with corporate research centers and will provide continuity and reinforcement
lines of funding for incubators witch offers Start-Up Peru´s program, with a goal of
twenty finance incubators for 201622.
Furthermore, Wayra is a Telefonica venture, that bringing together entrepreneurs
related to TICs with the latest technology to develop innovative ideas and be supported
by an international network of career mentors. Wayra has successfully collaborate with
the creation of 26 Startups, including on them the most famous Peruvians startups:
Cinepapaya, and Plaza Points and Joinnus. Wayra is a global initiative which is display
in several capitals of Latin American countries such as Lima, Bogota, Santiago,
21 START-UP PERU (2014) (http://start-up.pe/noticias/2013-11-29-Inicio-del-programa-Start-Up-
Per%C3%BA.html) 22 Cfr National Productive Diversification Plan 2014: 64
18
Buenos Aires, Caracas and Mexico D.F; and in
capitals of European countries: Madrid, London,
Dublin, among others. The entire organization
formed more than 297 Startups, 20,554 projects, 14 academies, 9.7 million of euros
and 1,600 people on the network. This allows share experiences, find funding, a new
partner or simply expand your number of business contacts. This is what makes Wayra
a significant project for Peru, because makes us part of the macro global technological
ecosystem and gives us great opportunities to learn.
StartUPC is a center for Startups acceleration of university of
UPC, Universidad Peruana de Ciencias Aplicadas. This program
has the support of the University of Tel Aviv, Israel, which lets to
promote entrepreneurship through knowledge transfer.
Furthermore, StartUPC is an important opportunity for the
incubated companies as access to counseling at low cost and be
more likely to get funding. An example of this is Vip Soul, one of
the UPC accelerated startups, which got 150 thousand nuevos soles from FIDECOM
competition launched to startups. On the other hand, university students have the
option to participate in those ventures and learn from them, which fosters
entrepreneurial spirit than previously spoke. Percy Augustin de Loayza, Head of Unit
Entrepreneurship mentioned that the objective of the program is to foster creativity and
sustainability startups and entrepreneurs get passionate about their projects.
"If something distinguishes the Peruvian ecosystem from Silicon Valley, the area of
California where they reside and have gestated various global technology brands, is
that in Peru there is still the idea that we must be jealous with our project business.
There aren´t shared and only speaks enough in its development stage, while Silicon
Valley operates under a collaborative scheme. The ideas are discussed, feed and
improve in different areas.
“This has to be lose slowly, "says Augustin. ”If anything we are learning is that more
important than the idea is that you put passion to be concrete, and that cannot be
copied, Percy said.
19
In summary, there are several programs in Peru supporting technological ventures to
get enough resources to operate in the market and to become profitable.
Funding:
Once modeled the business idea and obtain a sustainable project is time to seek for
funding. This part is crucial for entrepreneurs because it divided the profitable projects
than the ones are not. Xavi Sanchez, founder of Emprenderalia says that ideas are
free, but what really matters is how you run them. Survive during the first months of a
startup is a real juggling exercise, so get to know the different options we have to fund
our project is fundamental.
For this reason here we are some ways of financing in Peru.
The best known and most widespread in Peru is the Seed Capital financing, provided
by state agencies, Angels investors, venture capital entities, among others.
The State provides capital through:
Startup Perú: Up to S/.150, 000 for capital projects.
Research and Development Fund for Competitiveness - Innovate: S/. 200
million to research and product innovation projects.
Fund for innovation, science and technology (Fincyt): finances counseling,
missions, internships, research and strengthening of incubators. Since its
inception it has funded more than 1000 R & D projects.
In addition, promises to include COFIDE´s participation in promoting this type of
financing as well as design a system of incentives for the formation of networks of
angel investors, according to the National Productive Diversification Plan23.
Angel investors are another source of seed funding that seeks to fund investment
projects developed by entrepreneurs who need funding and cannot resort to the
financial system or risk capital. One of the initiatives in this type of financing is Business
Angels Club of Peru by José Carlos Sánchez Bartra and Albert Colomer i Espine. Also,
Guillermo Vivanco, director of Angel Ventures Peru bets on Peruvian entrepreneurship
offering an alternative funding.
23 Cfr National Productive Diversification Plan 2014: 64
20
On the other hand, a different alternative funding has caused a sensation among
entrepreneurs, allowing get money from several people and at the same time expose
their projects and make it known quickly. This alternative is called Crowdfunding.
Websites like Kickstarter24, Fundly25 or Indiegogo26 are the most popular.
Finally there is the traditional bank financing that is no stopped to be an attractive
option but can be limited for entrepreneurs who are not creditworthy because they have
no economic support. And borrowing from family and friends is one of the most used
routes between Peruvian startups.
In this respect, Percy Augustine of StartUPC mentions that investors in Peru "still prefer
to go to traditional sectors. When in reality instead of putting a million dollars in a real
estate project could put the same amount in 20 business ‘startups’ and in that way
minimize your risk”27
Market:
The Peruvian market in general terms had recorded an increase in technology buying.
However, the majority of technology products is concentrated in the capital and the
coastal area. We need more investment in infrastructure and wiring to allow rural areas
to intercommunicate with the world. In measure that can we reduce this gap, Peru will
able to improve competitiveness indicators and of course provide welfare to these
people.
However, the figures predict a 9% increase in sales of technological equipment such
as smartphones, tablets, laptops and televisions, according to the Chamber of
Commerce of Lima. This due to the measures taken in foreign trade on FTAs, such as
TPP, allowing the entry of low-cost cell from countries like China, Korea and Vietnam
in exchange for duty-free access for Peruvian products these markets.28
On the other hand, a study by the consulting Millward Brown shows that Peruvians
spend more time in front of a smartphone than any other citizen in Latin America.
24 KICKSTARTER 2014 (www.kickstarter.com) 25 FUNDLY 2014 (https://fundly.com) 26 INDIEGOGO 2014 (www.indiegogo.com) 27 Journal El Comercio 2014 (http://elcomercio.pe/economia/peru/peru-tendra-startups-crecimiento-global-antes-2019-noticia-1724863) 28 Journal Gestión 2014 (http://gestion.pe/economia/peru-importo-smartphones-us-2951-millones-
primeros-cuatro-meses-2014-2100262)
21
Approximately they spend more than 170 minutes per day using smartphone, 141
minutes on notebook, 137 minutes on television and 66 minutes with a tablet29. This
may also indicate that there is a large potential market for mobile applications in Peru.
In conclusion, yes we can talk about a Peruvian ecosystem, since various stakeholders
are collaborating in the formation of a network of tech entrepreneurs. Although it is in
an initial stage, I think there are desire of the state to include in its management as
important for the development of the country. Furthermore, the contribution of
universities, UPC, UP, UNTEC are revolutionizing the thinking of their students who
increasingly are more excited about this wave of TICs.
Additionally, it should be mentioned as part of the National Innovation Week30, the
activities to be undertaken to promote the innovative spirit, attracting international
experts of technology and encourage innovation in traditional companies.
18 -21 August Advanced Seminar on Integrated Model of Management Innovation.
19 – 20 August National Congress of Innovation.
20 August Ceremony recognizing the winners of SINACYT National Innovation Award.
21 August Meeting of Young Innovators.
29 Journal La Prensa 2014 (http://laprensa.pe/tecnologia-ciencia/noticia-peru-usan-smartphones-mas-
que-otros-paises-america-latina-29815) 30 INNOTECPERU 2014 (http://www.innotecperu.org)
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CONCLUSION
This research defines innovation as a process of creative disruption that requires
ingenuity and curiosity for the continuous renewal and its importance lies in the ability
to break social, political and economic paradigms and become the key driver once
again of the international business.
We rode over time and we conclude that technological innovations were appearing in
order to satisfy the needs of man. The man has been evolving over time and with this
his needs and technology, reaching this latest to become part of the body as an
extension of he. Now because the technology is part of being human, we conclude that
anyone no matter where they come from and what their social, economic and physical
condition can be a technology entrepreneur just needs the right environment to start
discovering their innovative spirit.
Also, the second chapter concludes to boost the entrepreneurial and innovative spirit
in the population should create appropriate structures for this. In that sense the United
States has been a pioneer, and making the Silicon Valley ecosystem becomes the
number 1 worldwide and model for other economies that are attracted by technology
and comprehensive benefits. The world is living a technological revolution again and
countries like Israel have used to ride the wave. Peru is waking up and everything
indicates that they are taking the right steps to develop a technology industry. However,
there is still a long way networks include more support and greater integration between
the actors.
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RECOMMENDATIONS
The present research has had the trajectory of analyze some facts that have given rise
to most of humanity in order to show our main hypothesis that is the importance of
technological innovation in the international business world internationally. That's why
I resorted to the bibliography of experts in the field, as were Schumpeter and Perez,
who advocate the promotion of entrepreneurial spirit. The text also says roughly
success of Silicon Valley to promote the innovative spirit than speaks Schumpeter ,
and creating a different concept called ecosystem of which other economies could
extract the best practices for tropicalize its reality as a country.
That is important to note that although the technology is as old as humanity, very little
has been said about it in the bibliography available. However, nowadays ever more
literature has been passionate about the revolution caused by technology in the field
of international business, and books as Lean Startup, Startup Nation, among others
are examples of them. An Additional research is needed so as to encompass the
complex system that is generates about ICT's and even more is a challenging to build
stable structures for implementation in developing countries like Peru. To complete is
listed the recommendations by the World Bank for developing countries in improving
the technology degree.
Improve affordability to reach people who do not yet have access to ICT
networks.
Expand access to more advanced and accessible ICT and broadband for high-
speed Internet.
Expand the new ICT infrastructure to improve service delivery and use it as an
economic resource.
Develop and harmonize the skills of the people who are needed in the service
industry based on information technology and knowledge economy.
XXIV
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