Entrepreneurship and Innovation: Lessons Learned from Tesla Company
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Tribunale Bologna 24.07.2007, n.7770 - ISSN 2239-7752
Direttore responsabile: Antonio Zama
Entrepreneurship and Innovation: Lessons Learned from Tesla Company
14 luglio 2018
Paul Marinescu, Sorin-George Toma Toma, Catalin Gradinaru
Contributo selezionato da Filodiritto tra quelli pubblicati nei Proceedings “International Conference on
Economics and Administration 2017”
Per acquistare i Proceedings clicca qui:
http://www.filodirittoeditore.com/index.php?route=product/product&path=78&product_id=143
Contribution selected by Filodiritto among those published in the Proceedings “International Conference on
Economics and Administration 2017”
To buy the Proceedings click here:
http://www.filodirittoeditore.com/index.php?route=product/product&path=78&product_id=143
TOMA Sorin-George[1], MARINESCU Paul[2], GRADINARU Catalin[3]
[1] University of Bucharest, (ROMANIA) [2] University of Bucharest, (ROMANIA) [3] University of Bucharest,
(ROMANIA)
Emails: tomagsorin62@yahoo.com, paulmarinescu1@gmail.com, gradinarubusiness@gmail.com
Abstract
Today’s interconnected global business world is characterized by uncertainty and risk. As growth in the
Fourth Industrial Revolution is driven by human creativity, entrepreneurship and innovation have become key
prerequisites for achieving business success in a highly competitive and turbulent business environment. The
purpose of this paper is to highlight the relationship between entrepreneurship and innovation at Tesla
Company, one of the most innovative companies worldwide. The research is based on a case study. The paper
shows that Tesla Company is a perfect example of a firm that succeeded in linking entrepreneurship
with innovation. It is not only a company that has changed the paradigm of the car industry but also a
company that has continuously reinvented itself through its innovative products.
Introduction
Numerous factors (e.g., economic, social, technological, demographic, environmental, geopolitical) have
highly influenced the recent evolution of human society. In this respect, disruptive technologies, terrorist
attacks, interstate conflicts, tensions between economic blocks, income and wealth disparities, cyber fragility,
global disease outbreaks, structural unemployment and underemployment, asset bubble, energy price shocks,
population growth, climate change and large- scale migration have led to an increasing volatility, complexity
and ambiguity of the world [1].
Today’s interconnected global business world is characterized by uncertainty and risk. There is a considerable
impact on businesses the current Fourth Industrial Revolution, based on cyber-physical production systems, is
Filodiritto (Filodiritto.com) " un marchio di InFOROmatica S.r.l
1Tribunale Bologna 24.07.2007, n.7770 - ISSN 2239-7752
Direttore responsabile: Antonio Zama
having (e.g., mobile networks, technology platforms) across all industries all over the world [2]. As growth in
this industrial revolution is driven by human creativity, entrepreneurship and innovation have become key
prerequisites for achieving business success in a highly competitive and turbulent business environment. Only
companies capable of building an organizational culture that stimulates the entrepreneurial and innovative
spirit will thrive in the Fourth Industrial Revolution. They understand the need for sustainable innovation
in order to face the challenges of the twenty-first century business context [3] and to create new
competitive advantages [4].
The purpose of this paper is to highlight the relationship between entrepreneurship and innovation at
Tesla Company, one of the most innovative companies worldwide. The research is based on a case study.
The remainder of this paper is divided into three sections. The next section presents the literature review. It is
followed by the research methodology. The third section displays the case of Tesla Company. The paper ends
with conclusions.
Literature review
Since the end of the last century entrepreneurship and innovation have evolved and become important
fields of study. Entrepreneurship has been defined as “the scholarly examination of how, by whom, and with
what effects opportunities to create future goods and services are discovered, evaluated, and exploited” [5, p.
218], “the resource, process and state of being through and in which individuals utilize positive opportunities
in the market by creating and growing new business firms” [6, p. 4], “an activity that involves the discovery,
evaluation and exploitation of opportunities to introduce new goods and services, ways or organizing,
markets, processes, and raw materials through organizing efforts that previously had not existed” [7, p. 4] or
“an integrated concept that permeates an individual’s business in an innovative manner” [8, p. 4].
On its turn, innovation represents “the ability of individuals, companies, and entire nations to continuously
create their desired future” [9, p. 19], “the creation of new knowledge and ideas to facilitate new business
outcomes, aimed at improving internal business processes and structures and to create market driven products
and services [10, p. 21] or “the multi-stage process whereby organizations transform ideas into new/improved
products, service or processes, in order to advance, compete and differentiate themselves successfully in their
marketplace” [11, p. 1334].
The above definitions show that entrepreneurship and innovation have been defined from different
perspectives and can be linked. In this respect, the broad stream of literature that has been developed in order
to prove their connection concludes that:
● There is a symbiotic relationship between them as innovation leads ultimately to the creation of new
products and/or services, and entrepreneurship seeks to identify and exploit opportunities for such
products/services [7; 12]. Some theories argue that entrepreneurship has a major contribution in carrying
innovation into the economic process [13] or uses innovation to create change [14] while other opinions
consider innovation as a critic characteristic of entrepreneurship [15] or as a determinant of
entrepreneurship [16].
● Entrepreneurship and innovation shared some common notions such as value creation and newness [12].
Research methodology
The research uses the case study method. This method has allowed the exploration and understanding of the
Tesla Motor case over a period of time. To this end, secondary data were collected and analyzed through the
deployment of a significant literature review. The main sources were articles and books from the domains of
Filodiritto (Filodiritto.com) " un marchio di InFOROmatica S.r.l
2Tribunale Bologna 24.07.2007, n.7770 - ISSN 2239-7752
Direttore responsabile: Antonio Zama
management, entrepreneurship, business, innovation, and company reports. The first phase of the literature
review process consisted in establishing entrepreneurship and innovation as the review’s topics. It was
followed by the identification and selection of the relevant literature on these subjects. The third phase dealt
with the reading and analyzing the data gathered from various sources (e.g., electronic databases). Finally, it
was written the conceptual framework of the paper.
Entrepreneurship and innovation at Tesla Company
Elon Musk is an entrepreneur who plans to change the world with a mindset towards sustainability. He is
often compared to Steve Jobs in terms of being a technology visionary, with an exceptional drive, “innovative
acumen” and “relentless work ethics”, successfully creating value for his shareholders [17, p. 10]. Among his
business endeavors there are noticeable achievements such as co-founder of Tesla Inc. and founder of SpaceX
(Fig. 1). He was previously a Pay-Pal co-founder which was sold in 2002 to eBay. Founded in 2003 by a
group of Silicon Valley engineers, Tesla Inc. is about creating better electric cars in comparison to gasoline
automobiles, accelerating the “advent of sustainable transport by providing compelling, mass-market electric
cars as soon as possible” [18, 2]. Its CEO, Elon Musk, plans “to continue developing increasingly accessible
and mass-market electric cars” [19, p. 27].
In his pursuit of making mass-market affordable electric vehicles whilst giving “the zero-emission mobility a
push” [20, p. 85], the company announced that their patents will be made available to anyone who wants to
use them in good faith. By doing so in opening their IP portfolio “they want to invite other car makers to
jointly tackle the carbon crisis by enhancing the technology and develop the market for electric vehicles
which compared to the gasoline powered cars is minimal these days” [20, p. 85]. This is, indeed, a surprising
fact because other competitors in the industry are making considerable efforts to keep total secrecy in
connection to the topic on hand.
Fig. 1. The main business endeavors of Elon Musk
Tesla Inc. incorporates:
● The Gigafactory: Critical for the production of the batteries that “push forward” Tesla cars and make a leap
Filodiritto (Filodiritto.com) " un marchio di InFOROmatica S.r.l
3Tribunale Bologna 24.07.2007, n.7770 - ISSN 2239-7752
Direttore responsabile: Antonio Zama
towards their market approach aiming at a sustainable environment, this factory is the world’s largest
lithium ion cell producer with the most advanced batteries. Created with the help of their strategic partners
such as Panasonic, the building has the largest footprint of any building in the In this factory, there will also
be produced battery packs destined for stationary storage use [21].
● The Fremont factory: Created in order to be able to achieve the goal of building affordable mass production
electric vehicles (EV), this factory now has the capacity of producing 500.000 cars per year. The location
was previously owned by New United Motor Manufacturing Inc., a General Motors and Toyota joint
venture. By its purchase, Tesla reinstated thousands of jobs [22] and launched several innovative car models
(Table 1).
● The Solar City: Founded in 2006 and merged into Tesla in November 2016, Solar City represents
“the largest solar energy service provider in America” [23, p. 1]. Considered a revolution in the
industry, Solar City aims at providing solutions in order to achieve “more affordable and
sustainable alternative to electricity from utilities” [24]. With an innovation driven vision, the
company created a product aimed at homeowners: the solar roof. This product is created so as to
provide households power (electricity) whilst being tougher, providing better isolation and lasting
longer than a conventional roof [25].
● The assembly facility from Tilburg is an assembly and testing facility for Tesla cars in Europe
equipped with an indoor driving track. The cars are tested by former race pilots [26; 27].
● The plant from Lathrop, California: Once used by Daimler-Chrysler, the facility is a specialized production.
Since late 2016, all vehicles produced in Tesla’s factory have had the adequate hardware for full self-driving
capability providing superior safety levels in comparison to those of a human driver.
Table 1. The innovative car models launched by Tesla Company
Car model Overview
- Launched in 2012, Model S was the world’s first premium 100% electric sedan,
providing
passengers both comfort and sports car performance.
Model S - Extremely secure, managing to reach a maximum 5-star safety rating from the U.S.
National Highway Traffic Safety Administration on all safety
- Regarding innovation, the company launched in 2014 a two-dual motor,
transforming the car into the fastest four-door production car in
- Another groundbreaking feature achieved by Tesla is found in Model X, being the
all-time fastest and safest sport utility vehicle (SUV). Safety standards include
technology that permits the driver to have more visibility that he could not access on
his own: surround cameras, ultrasonic sensors and a radar capable to see beyond
the vehicle ahead and in heavy weather conditions.
Model X - With the safety standard in mind, the car produced by Tesla is the first SUV in
history to achieve a 5-star safety rating in all sub-categories and
- Innovation and technology in this model is translated into features such as Active
Safety (with advanced active safety features) and Clean-Air Cabin (the delivered air
quality is medical- graded).
- https://tesla.com/modelx
Filodiritto (Filodiritto.com) " un marchio di InFOROmatica S.r.l
4Tribunale Bologna 24.07.2007, n.7770 - ISSN 2239-7752
Direttore responsabile: Antonio Zama
Model 3 is also designed with the highest safety features in mind, providing comfort,
Model 3 utility and performance into a premium sedan.
https://www.tesla.com/model3
Sources: [22; 28]
On its turn, founded in 2002, SpaceX creates highly advanced rockets and spacecraft. With lowering costs on
mind, efforts are made so as to enable people to live on other planets, making spaceflights accessible.
Innovation here is at its best (Table 2), propelling them towards great achievements. For example, on May
2012, Dragon became the first privately owned spacecraft to visit the International Space Station [29].
Table 2. The rocket models launched by SpaceX
Rocket model Overview
Was the first privately owned commercial spacecraft to visit the International
Dragon Space Station,
delivering cargo from and back to Earth.
Starting as an experimental technology demonstrator, this two-stage rocket
is configured in such a way as to promote the concept of reusable rockets
with the purpose of transporting satellites into orbit. It is also capable of
Falcon 9
transporting the Dragon spacecraft. A leap was made towards ensuring a
safe spatial flight in a way that it is equipped with nine first-stage engines,
being able to carry out a mission even in the event of an engine shutdown.
Build to be become the world’s most powerful operational rocket, with a lift
capacity of about 54 metric tons, surpassing its nearest competitor (Delta IV
Heavy) with more than a double payload capacity with only one third of the
Falcon heavy
cost.
Its mission is to carry humans and deliver payloads to orbit. The Falcon
Heavy is also capable of carrying the Dragon spacecraft.
Sources: [29; 30]
Lowering costs by promoting its reusable launch technology proved its viability (after four failed attempts) on
8th April 2016 after the Dragon launch carrying cargo for the International Space Station with the successful
landing of its first stage rocket Falcon 9 on their Atlantic Ocean floating platform (instead of crashing and
sinking on the bottom) [31].
Elon Musk is an entrepreneur par excellence. Entrepreneurship and innovation have found a generous field of
expression at Tesla Company, one of the most promising American businesses. According to the international
rankings, Tesla Motors hold the third place in 2015 and the fourth place in 2016 among the world’s ten most
innovative companies [32].
Conclusions
Entrepreneurship and innovation have become two of the most debated topics in the business literature in the
last decades. Entrepreneurship has proved to be the engine of the capitalist economic system and its fuel is
innovation. Both find their meaning in value creation.
The paper shows that Tesla Company is a perfect example of a firm that succeeded in linking
Filodiritto (Filodiritto.com) " un marchio di InFOROmatica S.r.l
5Tribunale Bologna 24.07.2007, n.7770 - ISSN 2239-7752
Direttore responsabile: Antonio Zama
entrepreneurship with innovation. It is not only a company that has changed the paradigm of the car industry
but also a company that has continuously reinvented itself through its innovative products.
The paper contributes to a better understanding of the relationship between entrepreneurship and innovation
at Tesla Company. Future researches may find other arguments that support this connection.
REFERENCES
1. World Economic Forum (2016). The Global Risks Report 2016. 11th Geneva: World Economic Forum.
Available at: http://www3.weforum.org/docs/Media/TheGlobalRisksReport2016.pdf (Accessed 30 May 2017).
2. Schwab, K. (2015). The Fourth Industrial Revolution: What It Means and How to Respond. Foreign
Affairs, 12.12.2015. Available at: https://foreignaffairs.com/articles/2015-12-12/fourth-industrial-revolution (Accessed 10
June 2017).
3. Hargadon, (2015). Sustainable Innovation: Build Your Company’s Capacity to Change the World.
Stanford: Stanford University Press.
4. Capgemini Consulting (2015). The Innovation Game: Why and How Businesses are Investing in
Innovation Centers. Available at:
https://capgemini-consulting.com/resource-file access/resource/pdf/innovation_center_v14.pdf (Accessed 11 June
2017).
5. Shane, S., Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of
Management Review, 25(1), pp. 217-226.
6. Naudé, W. (2013). Entrepreneurship and economic development: Theory, evidence and policy. IZA DP
No. 7507. Available at: http://ftp.iza.org/dp7507.pdf (Accessed 29 May 2017). Shane, S. (2003).
7. Kuratko, D. F. (2017). Entrepreneurship: Theory, Process, Practice. 10th Boston: Cengage Learning.
8. Kao, J. (2007). Innovation Nation: How America Is Losing Its Innovation Edge, Why It Matters, and What
We Can Do To Get It Back. New York: Free
9. Plessis, M.D. (2007). The role of knowledge management in innovation. Journal of Knowledge
Management, 11(4), pp. 20-29.
10. Baregheh, A., Rowley, J., Sambrook, S. (2009). Towards a multidisciplinary definition of innovation.
Management Decision, 47(8), pp. 1323-1339.
11. Mitra, J., Entrepreneurship, Innovation and Regional Development: An Introduction. Abingdon:
Routledge, 2012.
12. Audretsch, D. B., Falck, O., Heblich, S., Lederer, A. (eds.) (2011). Handbook of Research on Innovation
and Entrepreneurship. Cheltenham: Edward
13. Burns, P. (2011). Entrepreneurship and Small Business: Start-up, Growth, and Maturity. New York:
Palgrave Macmillan.
14. Wickham, P. A. (2006). Strategic Entrepreneurship. 4th Harlow: Pearson Education Limited.
15. OECD (2016). Entrepreneurship at a Glance 2016. Paris: OECD
16. Gebert, M. (2014). Could Tesla Motors be the new Nokia for the automotive industry?, pp. 1-16.
Available at: https:// r esearchgate.net/profile/Michael_Gebert2/publication/261356392_
Could_Tesla_Motors_be_the_new_Nokia_for_the_automotive_industry/links/00463533eabd7263ec000000.p
Filodiritto (Filodiritto.com) " un marchio di InFOROmatica S.r.l
6Tribunale Bologna 24.07.2007, n.7770 - ISSN 2239-7752
Direttore responsabile: Antonio Zama
d f (Accessed 10 June 2017).
17. Bilbeisi, K. M., Kesse, M. (2017). Tesla: A successful entrepreneurship strategy, pp. 1-10. Available
at: http://www.westga.edu/~bquest/2017/tesla2017.pdf (Accessed 1 June 2017).
18. Frohman, (2015). Applying the theory of disruptive innovation to recent developments in the electric
vehicle market. Asia Pacific Business & Economics Perspectives, 31(1), pp. 18-41.
19. Moritz, M., Redlich, T., Krenz, P., Buxbaum-Conradi, S., Wulfsberg, J.-P. (2015). Tesla Motors, Inc:
Pioneer towards a new strategic approach in the automobile industry along the open source movement?, pp.
85-92. Available at: https://researchgate.net/profile/Manuel_Moritz/publication/284730817_ Tesla_Motors_Inc_-
Pioneer_towards_a_new_strategic_approach_in_the_automobile_industry_along_the_open_source_movemen
t/links/5658705808ae4988a7b74a31.pdf (Accessed 1 June 2017).
20. ***(2017). Tesla Gigafactory. Available at: https://tesla.com/gigafactory (Accessed 1 June 2017).
21. ***(2016). Model 3 unveil Available at:
https:// w w w . t e s l a . c o m / m o d e l 3 ; https:// w w w . t e s l a . c o m / e v e n t / m o d e l - 3 - u n v e i l (Accessed 1 June 2017).
22. Yu, H. (2017). Why investors love Elon Musk, even though Tesla is losing money, pp. 1-2. Available at:
https://forbes.com/sites/howardhyu/2017/02/24/why-investors-love-elon-musk-even-though-tesla-is- losing-money/#75a324c7240e
(Accessed 2 June 2017).
23. ***(2017). About SolarCity. Available at: http://www.solarcity.com/company/about (Accessed 2 June 2017).
24. Tech Insider (2016). Elon Musk unveils solar roof by Available at:
https://www.youtube.com/watch?v=hMrantzEYC8 (Accessed 10 June 2017).
25. ***(2017). About Tesla. Available at: https://tesla.com/about (Accessed 11 June 2017).
26. Randall, (2015). Check out Tesla’s hot new European factory.
Available at: https://www.bloomberg.com/news/photo-essays/2015-10-13/check-out-tesla-s-hot-new-european-factory (Accessed
10 June 2017).
27. ***(2017). Model X. Available at: https://tesla.com/modelx (Accessed 10 June 2017).
28. ***(2017). Quick facts about SpaceX. Available at; http://www.spacex.com/about (Accessed 10 June 2017).
29. ***(2017). Dragon. Available at: http://www.spacex.com/dragon (Accessed 10 June 2017).
30. Nair, K. K. (2016). Future shock: Space X and its reusable rocket. Available
at: http://s3.amazonaws.com/academia.edu.documents/45713141/CAPS_Infocus_KKN_09_1.pdf?AWSAccessKe
yId=AKIAIWOWYYGZ2Y53UL3A&Expires=1497905419&Signature=2rQ5QXGSlleRvl4lKxMg42kWIT
8 %3D&response-content-disposition=inline%3B%20filename%3DFUTURE_SHOCK_SPACE_X_AND_
ITS_REUSABLE_RO.pdf (Accessed 1 June 2017).
31. PricewaterhouseCoopers (2017). 2016 Global Innovation 1000 Available at:
https://www.strategyand.pwc.com/innovation1000#/tab-2016 (Accessed 25 April 2017).
Articolo pubblicato in: Diritto delle nuove tecnologie e delle comunicazioni, New technology
TAG: Innovazione, Proceedings, Tesla, company
Avvertenza
La pubblicazione di contributi, approfondimenti, articoli e in genere di tutte le opere dottrinarie e di commento (ivi comprese le news)
presenti su Filodiritto è stata concessa (e richiesta) dai rispettivi autori, titolari di tutti i diritti morali e patrimoniali ai sensi della legge
sul diritto d'autore e sui diritti connessi (Legge 633/1941). La riproduzione ed ogni altra forma di diffusione al pubblico delle predette
Filodiritto (Filodiritto.com) " un marchio di InFOROmatica S.r.l
7Tribunale Bologna 24.07.2007, n.7770 - ISSN 2239-7752
Direttore responsabile: Antonio Zama
opere (anche in parte), in difetto di autorizzazione dell'autore, è punita a norma degli articoli 171, 171-bis, 171-ter, 174-bis e 174-ter
della menzionata Legge 633/1941. È consentito scaricare, prendere visione, estrarre copia o stampare i documenti pubblicati su
Filodiritto nella sezione Dottrina per ragioni esclusivamente personali, a scopo informativo-culturale e non commerciale, esclusa ogni
modifica o alterazione. Sono parimenti consentite le citazioni a titolo di cronaca, studio, critica o recensione, purché accompagnate
dal nome dell'autore dell'articolo e dall'indicazione della fonte, ad esempio: Luca Martini, La discrezionalità del sanitario nella
qualificazione di reato perseguibile d'ufficio ai fini dell'obbligo di referto ex. art 365 cod. pen., in "Filodiritto"
(https://www.filodiritto.com), con relativo collegamento ipertestuale. Se l'autore non è altrimenti indicato i diritti sono di Inforomatica
S.r.l. e la riproduzione è vietata senza il consenso esplicito della stessa. È sempre gradita la comunicazione del testo, telematico o
cartaceo, ove è avvenuta la citazione.
Filodiritto (Filodiritto.com) " un marchio di InFOROmatica S.r.l
8You can also read
