of observation 127 5192 *Difference between the issuers' sample and the control group. Standard deviations are reported in italics. Size is measured by the natural logarithm of sales. D/E Ratio is the issuer's debt to equity ratio; Bank debt exposure is the ratio between the bank debt to total debt. The interest coverage ratio is the ratio between the issuer's EBITDA and its interest expenses. The short-term bank debt ratio is the ratio between bank short term debt and total debt. The current ratio is the ratio between issuer's current assets and current liabilities. Tangible ratio is the ratio between tangible fixed*

In the OLS regressions, we estimate beta coefficients using a proxy of financial fragility as the dependent variable and combinations of the explanatory variables for different specifications, as depicted in the next section. More in detail, we compute the variation in the score of our financial fragility indicator for each firm between 2 years after the event (the corporate bond issuance) and the year before the same event. When the difference is positive, it means that our proposed financial fragility metric has worsened (becoming higher), the opposite if the difference

*k*

where *Minibondi,t* is a dummy variable equal to 1 in case of mini-bond funding of firm *i* at time *t* and zero otherwise, and *FirmControlsi,t*�*<sup>1</sup>* is a vector of firm-specific

*γkFirmControlsi*,*t*�<sup>1</sup> þ *ϵ*, (1)

The basic structure of our regressions is as follows:

<sup>Δ</sup>*FinFragility* <sup>¼</sup> *<sup>α</sup>* <sup>þ</sup> *<sup>β</sup>*1ð Þ *Minibond <sup>i</sup>*,*<sup>t</sup>* <sup>þ</sup><sup>X</sup>

*Differences between the two samples (issuers and nonissuers).*


*Descriptive statistics of the pooled sample variables. ΔFinFragility is the difference in the financial fragility indicator between t + 2 and t* � *1; Minibond is a dummy variable equal to 1 if the firm issued minibond at t0; Tangible ratio is the ratio between the tangible fixed assets and the total assets. EBITDA/Sales is the ratio between EBITDA and Sales; the asset liability mismatch variable is the book value of equity over fixed assets ratio; size is the natural logarithm of total assets; SME (Small) is a dummy variable equal to 1 if the firm is a SME (Small) as defined in appendix A.*

#### **Table 8.**

*Variables' descriptive statistics.*

As far as concerned the explanatory variables, we introduce a mini-bond financial dummy variable (*MiniBond)* which is equal to one in case of mini-bond funding of firm i at time t and zero otherwise. Beyond that, we consider a selection of firm-specific control variables: firm size (as log of total asset), profitability (measured as the EBITDA on sales), tangibility (measured as tangible fixed assets over total assets), and book value of equity over fixed assets ratio as a measure of firms' asset-liability mismatch. We introduce also two size dummies, a *SME* and a *Small* dummy variable, that controls for the issuers' classification according to EU Commission standard definition as a SME (Small) or not. SMEs are naturally opaque firms and obtain funds almost exclusively through private equity and bank debt [13]. In general, the informational asymmetry issue may cause shortage of finance and credit rationing and may lead to a disparity in access to bond financing between SMEs and large firms [21, 22]. The dummy size variables aim to test whether is actually more difficult for private SMEs or smaller firm to improve their financial resilience. Appendix A summarizes and describes our firm-specific variables that we have used in the regressions, while **Tables 8** and **9**, report the descriptive statistics and correlation coefficients for the empirical variables, respectively.

#### **5. Empirical results**

**Table 10** shows the outcomes of our regressions, in which the beta coefficients and standard errors (in italics) are displayed. The effect of the mini-bond financing dummy on the change reported in the score of the financial fragility indicator 2 years after the event is negative and highly statistically significant (at the 5 percent level). Thus, the access to the debt capital market is conducive for the Italian companies to a decrease in the financial fragility after the event relative to the same indicator value displayed before this relevant change in their financial policy previously adopted. Consequently, our research hypothesis is confirmed.

**ΔFinFragility**

1.00

�0.0284 �0.0871

0.0029

0.1210 �0.0223

�0.4125

�0.0223

1.00

�0.1249

0.1182

0.0811

� *1; Minibond is a dummy variable equal to 1 if the*

1.00

*Financial Fragility and Corporate Bond Funding of SMEs: An Analysis of the Italian Case*

�0.7613

�0.4259

 0.2583

 1.00

 1.00

0.3055

1.00

0.0493

1.00

1.00

ΔFinFragility

**153**

Minibond

Tangible ratio

EBITDA/Sales Asset-liability

Size

SME Small *Correlation*

*firm issued minibond at t0; Tangible ratio is the ratio between the tangible fixed assets and the total assets.* 

*book value of equity over fixed assets ratio; size is the natural logarithm of total assets; SME (Small) is a dummy variable equal to 1 if the firm is a SME (Small) as defined in appendix A.*

**Table 9.** *Correlation*

 *coefficients.*

 *coefficients of the variables used in the OLS regressions.*

 mismatch

 0.0428 �0.0945

0.0404

0.0555

�0.0156

*ΔFinFragility*

 *is the difference in the financial fragility indicator between t + 2 and t*

�0.1413

�0.0990 *EBITDA/Sales*

 *is the ratio between EBITDA and Sales; the asset liability mismatch variable is the*

�0.0606

�0.2672

�0.2907

0.0622

0.3201

0.3528

 **Minibond**

 **Tangible ratio**

**EBITDA/Sales**

**Asset-liability**

 **mismatch**

 **Size**

 **SME**

 **Small**

*DOI: http://dx.doi.org/10.5772/intechopen.93701*

As regards the other firm-specific control variables, we note that the tangibility variable displays a statistically significant (at 1 percent level) negative beta


*Financial Fragility and Corporate Bond Funding of SMEs: An Analysis of the Italian Case DOI: http://dx.doi.org/10.5772/intechopen.93701*

> **Table 9.**

 *Correlation coefficients.*

As far as concerned the explanatory variables, we introduce a mini-bond financial dummy variable (*MiniBond)* which is equal to one in case of mini-bond funding of firm i at time t and zero otherwise. Beyond that, we consider a selection of firm-specific control variables: firm size (as log of total asset), profitability (measured as the EBITDA on sales), tangibility (measured as tangible fixed assets over total assets), and book value of equity over fixed assets ratio as a measure of firms' asset-liability mismatch. We introduce also two size dummies, a *SME* and a *Small* dummy variable, that controls for the issuers' classification according to EU Commission standard definition as a SME (Small) or not. SMEs are naturally opaque firms and obtain funds almost exclusively through private equity and bank debt [13]. In general, the informational asymmetry issue may cause shortage of finance and credit rationing and may lead to a disparity in access to bond financing between SMEs and large firms [21, 22]. The dummy size variables aim to test whether is actually more difficult for private SMEs or smaller firm to improve their financial resilience. Appendix A summarizes and describes our firm-specific variables that we have used in the regressions, while **Tables 8** and **9**, report the descriptive statistics and correlation coefficients for the empirical

ΔFinFragility �0.075 0.583 �3.4 2.6 5319 Minibond 0.024 0.152 0 1 5319 Tangible ratio 0.194 0.179 0.001 0.983 5319 EBITDA/Sales 7.55% 8.69% �19.36% 99% 5319 Asset-liability mismatch 8.713 18.201 0.017 76 5319 Size 19.691 1.232 12.638 22.777 5319 SME 30.28% 49.86% 0 1 5319 Small 5.41% 22.61% 0 1 5319 *Descriptive statistics of the pooled sample variables. ΔFinFragility is the difference in the financial fragility indicator between t + 2 and t* � *1; Minibond is a dummy variable equal to 1 if the firm issued minibond at t0; Tangible ratio is the ratio between the tangible fixed assets and the total assets. EBITDA/Sales is the ratio between EBITDA and Sales; the asset liability mismatch variable is the book value of equity over fixed assets ratio; size is the natural logarithm of total assets; SME (Small) is a dummy variable equal to 1 if the firm is a SME (Small) as defined in appendix A.*

**Mean Std. Dev. Min Max obs**

**Table 10** shows the outcomes of our regressions, in which the beta coefficients and standard errors (in italics) are displayed. The effect of the mini-bond financing dummy on the change reported in the score of the financial fragility indicator 2 years after the event is negative and highly statistically significant (at the 5 percent level). Thus, the access to the debt capital market is conducive for the Italian companies to a decrease in the financial fragility after the event relative to the same indicator value displayed before this relevant change in their financial policy previ-

As regards the other firm-specific control variables, we note that the tangibility

ously adopted. Consequently, our research hypothesis is confirmed.

variable displays a statistically significant (at 1 percent level) negative beta

variables, respectively.

**Table 8.**

*Variables' descriptive statistics.*

*Entrepreneurship - Contemporary Issues*

**5. Empirical results**

**152**


size dummies (SME e Small), the former has a negative coefficient implying that, inside the small-medium size class, the larger firms are still less vulnerable from a financial point of view. On the contrary, the Small dummy in all regression specifications changes beta coefficient sign and becomes positive and statistically significant indicating that smaller firms (i.e. firms with sales lower that 10 million euro) tends to worsen across time their financial fragility score. This result is not totally unexpected as smaller firms are fundamentally less financial resilient as showed by substantial prior literature [5, 25] and by the anecdotal evidence. Other control variables such as, for instance, profitability are not statistically significant.

*Financial Fragility and Corporate Bond Funding of SMEs: An Analysis of the Italian Case*

Even if our findings are quite robust, we must be aware that our study is limited to a firm-level dataset which is confined to the years up to the coronavirus outbreak and we cannot include in our tests the actual effects on firm financial data of the current global pandemic. Therefore, our results must be read with great caution as it is highly probable that the current crisis may display asymmetric effects across countries, geographical areas and industries that are not reflected in our dataset. Future researches based on new post-pandemic data can fully address this void.

The goal of our study is to contribute to shed new light on the emerging debate on how small businesses can recover from the current crisis triggered by the Covid-19 pandemic. Since SME access to the debt capital market is widely viewed as a valuable source of firm debt diversification, especially for growth firms with a prominent exposure on bank debt, we test whether SME bond issuers are able to reduce their financial vulnerability thanks to this financial policy. The aim is to assess the extent to which SMEs financial choices regarding nonequity external funding can become a key factor in facing real and financial shocks like those

Our empirical analysis has been performed using OLS regression models based on a proprietary hand-collected dataset of 127 first-time mini-bonds issuers across 2013–2017 years jointly with a control sample of around 5200 Italian private firms

Based on our empirical analysis we find a robust evidence on the role that corporate bond financing can play on addressing the SMEs financial fragility issue. Debt diversification away from bank lending helps smaller firms to achieve a more balanced and sound financial policy and, thus in turn, firms are able to improve their financial resilience through this channel of funding. We think that this circumstance is becoming more and more relevant in the current economic climate dominated by the adverse effects on SMEs of the global pandemic crisis. Corporate bond funding offers benefits for SMEs that are not merely confined to what previous literature has already described such as: (a) hastening a more capital marketoriented management culture linked to the firm life-cycle; (b) enhanced market visibility on prospective investors; (c) providing an acclimatization function and a platform for progressive steps toward other more complex forms (even equity) of capital market funding; and (d) reduced costs on subsequent bank lending thanks

As a matter of fact, we offer empirical evidence that corporate bond financing has reduced the financial fragility of Italian SMEs. For these reasons, we can expect that even after the pandemic outbreak the mini-bond funding channel may still play a key, and maybe even enhanced, role in order to overcome the negative consequences of the current financial climate for SMEs where firms will be probably more and more indebted and more reliant on bank lending. Although our study is

**6. Concluding remarks**

*DOI: http://dx.doi.org/10.5772/intechopen.93701*

**155**

triggered by the current Covid-19 pandemic.

that have not issued corporate bonds across the same years.

to heightened bargaining power in the firm-bank relationships.

*Outcome of the OLS Regressions with four different specification. The dependent variable is the difference of the financial fragility indicator between t + 2 and t* � *1. Minibond is a dummy variable equal to 1 if the firm issued minibond at t0; Tangible ratio is the ratio between the tangible fixed assets and the total assets. EBITDA/Sales is the ratio between EBITDA and Sales; the asset liability mismatch variable is the book value of equity over fixed assets ratio; size is the natural logarithm of total assets; SME (Small) is a dummy variable equal to 1 if the firm is a SME (Small) as defined in appendix A. In all specifications industries dummies and year dummies are included. Beta coefficients and robust standard errors (in italics) are displayed. Stars denote the standard level of p-value significance.*

*\* =10%.*

*\*\*=5%.*

*\*\*\*=1%.*

#### **Table 10.**

*OLS regressions on financial fragility.*

coefficient implying that the firms that presents higher tangible asset at the event date are more able to reduce their financial vulnerability. Here, our results suggest that SMEs with more intangible assets tends to develop, ceteris paribus, a more fragile financial structure and this it is happened even before the current pandemic crisis. We reckon that this is an interesting result as it shows that the presence of consistent tangible assets not only offers a wider scope for pledging collateral to potential investors playing a mitigating role regarding the borrower default risk [23, 24] but it can also be helpful to reduce the financial fragility.

Size variables presents a mixed picture. On one hand, in the specification 1 in which size is measured as log of total asset, we have a statistically negative coefficient showing that size as expected matters: the larger the firm the better its financial resilience. On the other hand, when we consider more in detail the two

#### *Financial Fragility and Corporate Bond Funding of SMEs: An Analysis of the Italian Case DOI: http://dx.doi.org/10.5772/intechopen.93701*

size dummies (SME e Small), the former has a negative coefficient implying that, inside the small-medium size class, the larger firms are still less vulnerable from a financial point of view. On the contrary, the Small dummy in all regression specifications changes beta coefficient sign and becomes positive and statistically significant indicating that smaller firms (i.e. firms with sales lower that 10 million euro) tends to worsen across time their financial fragility score. This result is not totally unexpected as smaller firms are fundamentally less financial resilient as showed by substantial prior literature [5, 25] and by the anecdotal evidence. Other control variables such as, for instance, profitability are not statistically significant.

Even if our findings are quite robust, we must be aware that our study is limited to a firm-level dataset which is confined to the years up to the coronavirus outbreak and we cannot include in our tests the actual effects on firm financial data of the current global pandemic. Therefore, our results must be read with great caution as it is highly probable that the current crisis may display asymmetric effects across countries, geographical areas and industries that are not reflected in our dataset. Future researches based on new post-pandemic data can fully address this void.

#### **6. Concluding remarks**

The goal of our study is to contribute to shed new light on the emerging debate on how small businesses can recover from the current crisis triggered by the Covid-19 pandemic. Since SME access to the debt capital market is widely viewed as a valuable source of firm debt diversification, especially for growth firms with a prominent exposure on bank debt, we test whether SME bond issuers are able to reduce their financial vulnerability thanks to this financial policy. The aim is to assess the extent to which SMEs financial choices regarding nonequity external funding can become a key factor in facing real and financial shocks like those triggered by the current Covid-19 pandemic.

Our empirical analysis has been performed using OLS regression models based on a proprietary hand-collected dataset of 127 first-time mini-bonds issuers across 2013–2017 years jointly with a control sample of around 5200 Italian private firms that have not issued corporate bonds across the same years.

Based on our empirical analysis we find a robust evidence on the role that corporate bond financing can play on addressing the SMEs financial fragility issue. Debt diversification away from bank lending helps smaller firms to achieve a more balanced and sound financial policy and, thus in turn, firms are able to improve their financial resilience through this channel of funding. We think that this circumstance is becoming more and more relevant in the current economic climate dominated by the adverse effects on SMEs of the global pandemic crisis. Corporate bond funding offers benefits for SMEs that are not merely confined to what previous literature has already described such as: (a) hastening a more capital marketoriented management culture linked to the firm life-cycle; (b) enhanced market visibility on prospective investors; (c) providing an acclimatization function and a platform for progressive steps toward other more complex forms (even equity) of capital market funding; and (d) reduced costs on subsequent bank lending thanks to heightened bargaining power in the firm-bank relationships.

As a matter of fact, we offer empirical evidence that corporate bond financing has reduced the financial fragility of Italian SMEs. For these reasons, we can expect that even after the pandemic outbreak the mini-bond funding channel may still play a key, and maybe even enhanced, role in order to overcome the negative consequences of the current financial climate for SMEs where firms will be probably more and more indebted and more reliant on bank lending. Although our study is

coefficient implying that the firms that presents higher tangible asset at the event date are more able to reduce their financial vulnerability. Here, our results suggest that SMEs with more intangible assets tends to develop, ceteris paribus, a more fragile financial structure and this it is happened even before the current pandemic crisis. We reckon that this is an interesting result as it shows that the presence of consistent tangible assets not only offers a wider scope for pledging collateral to potential investors playing a mitigating role regarding the borrower default risk

Size variables presents a mixed picture. On one hand, in the specification 1 in which size is measured as log of total asset, we have a statistically negative coefficient showing that size as expected matters: the larger the firm the better its financial resilience. On the other hand, when we consider more in detail the two

[23, 24] but it can also be helpful to reduce the financial fragility.

**Dependent variabile: ΔFinFragility**

*Entrepreneurship - Contemporary Issues*

*significance. \* =10%. \*\*=5%. \*\*\*=1%.*

**Table 10.**

**154**

*OLS regressions on financial fragility.*

*Specification:* 1234 Minibond �0.115\*\* �0.117\*\* �0.118\*\* �0.118\*\*

Tangible ratio �0.273\*\*\* �0.274\*\*\* �0.290\*\*\* �0.282\*\*\*

EBITDA/Sales 0.238 0.219 0.188 0.190

Asset-liability mismatch 0,0003 0.0003 0.0003 0.0003

*0.013 0.013* SME �0.074\*\*\* �0.066\*\* �0.036\* �0.043\*\*

Small 0.095\* 0.117\*\*

Constant 0.554 0.335 0.029 0.030

Industry dummies YES YES YES YES Year dummies YES YES YES YES R squared 0.045 0.046 0.044 0.046 #obs 5319 5319 5319 5319 *Outcome of the OLS Regressions with four different specification. The dependent variable is the difference of the financial fragility indicator between t + 2 and t* � *1. Minibond is a dummy variable equal to 1 if the firm issued minibond at t0; Tangible ratio is the ratio between the tangible fixed assets and the total assets. EBITDA/Sales is the ratio between EBITDA and Sales; the asset liability mismatch variable is the book value of equity over fixed assets ratio; size is the natural logarithm of total assets; SME (Small) is a dummy variable equal to 1 if the firm is a SME (Small) as defined in appendix A. In all specifications industries dummies and year dummies are included. Beta coefficients and robust standard errors (in italics) are displayed. Stars denote the standard level of p-value*

Size �0.028\* �0.017

*0.056 0.056 0.056 0.056*

*0.054 0.054 0.054 0.054*

*0.137 0.137 0.135 0.135*

*0.0004 0.0005 0.0005 0.0005*

*0.026 0.026 0.019 0.019*

*0.367 0.372 0.281 0.280*

*0.047 0.045*

limited to the Italian unlisted firm context, we reckon that our findings can provides useful insights to other countries particularly considering that the economic effects of the current pandemic have been so pervasive.

**References**

[1] Holton S, Martina Lawless M, McCann F. Firm credit in the euro area:

[2] Lawless M, O'Connel B, O' Toole C. Financial structure and diversification of European firms. Applied Economics.

*DOI: http://dx.doi.org/10.5772/intechopen.93701*

*Financial Fragility and Corporate Bond Funding of SMEs: An Analysis of the Italian Case*

[9] Canton E, Grilo I, Monteagudo J, van der Zwan P. Perceived credit constraints in the European Union. Small Business

[10] Casey E, O'Toole C. Bank lending constraints, trade credit and alternative financing during the financial crisis: Evidence from European SMEs. Journal of Corporate Finance. 2014;**27**:173-193

[11] Beck T, Demirgüç-Kunt ASLI, Maksimovic V. Financing patterns around the world: Are small firms different? Journal of Financial Economics. 2008;**89**(3):467-487

[12] Moritz A, Block JH, Heinz A. Financing patterns of European SMEs— An empirical taxonomy. Venture Capital. 2016;**18**(2):115-148

[14] Diamond D. Monitoring and reputation: The choice between bank loans and directly placed debt. Journal of Political Economy. 1991;**99**(4):

[15] Chemmanur T, Fulghieri P. Reputation, renegotiation, and the choice between bank loans and publicly traded debt. Review of Financial Studies. 1994;**7**(3):475-506

[16] Denis DJ, Mihov VT. The choice among bank debt, non-bank private debt, and public debt: Evidence from new corporate borrowings. Journal of Financial Economics. 2003;**70**(1):3-28

[17] Hale G, Santos JA. The decision to first enter the public bond market: The role of firm reputation, funding choices, and bank relationships. Journal of

613-673

689-721

[13] Berger A, Udell GF. The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle. Journal of Banking and Finance. 1998;**22**(6–8):

Economics. 2013;**41**(3):701-715

[3] Altman EI, Esentato M, Sabato G. Assessing the creditworthiness of Italian SMEs and mini-bond issuers. Global Finance Journal. 2018. DOI: 10.1016/j.

[4] Andrieu G, Staglianò R, van der Zwan P. Bank debt and trade credit for SMEs in Europe: Firm-, industry-, and country-level determinants. Small Business Economics. 2018;**51**(1):245-264

[5] Masiak C, Block JH, Moritz A, Lang F, Kraemer-Eis H. How do micro firms differ in their financing patterns from larger SMEs? Venture Capital.

[6] Ferrando A, Griesshaber N.

pdf [Accessed: 22 March 2020]

[7] Garagorri ISME. Vulnerability analysis: A tool for business continuity. In: North K, Varvakis G, editors. Competitive Strategies for Small and Medium Enterprises. Heidelberg:

[8] European Central Bank. SME Access to Finance in the Euro Area: Barriers and Potential Policy Remedies. Monthly Bulletin, 79-97. Resource Document. European Central Bank. 2014. Available from: https://www.ecb.europa.eu/pub/ pdf/other/art2\_mb201407\_pp79-97en. pdf [Accessed: 22 March 2020]

Financing Obstacles among Euro Area Firms: Who Suffers the Most? Resource Document. European Central Bank. 2011. Available from: http://www.ecb. europa.eu/pub/pdf/scpwps/ecbwp1293.

A tale of three crises. Applied Economics. 2014;**46**(2):190-211

2015;**47**(23):2379-2398

gfj.2018.09.003

2019:1-25

Springer; 2016

**157**


### **Appendix A: variables' definitions**

### **Author details**

Emanuele Rossi\* and Simone Boccaletti Department of Business and Law, University of Milano-Bicocca, Milan, Italy

\*Address all correspondence to: emanuele.rossi@unimib.it

© 2020 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

*Financial Fragility and Corporate Bond Funding of SMEs: An Analysis of the Italian Case DOI: http://dx.doi.org/10.5772/intechopen.93701*

#### **References**

limited to the Italian unlisted firm context, we reckon that our findings can provides useful insights to other countries particularly considering that the economic effects

**Definition Source Notes**

Minibond Minibond dummy variable Borsa Italiana website Equal to 1 if the firm issued

Self-constructed from financial ratios from Amadeus—Bureau van Dijk database

Amadeus—Bureau van Dijk database

Amadeus—Bureau van Dijk database

Amadeus—Bureau van Dijk database

van Dijk database SME SME dummy variable Self-constructed Equal to 1 if the firm employees

Small Small dummy variable Self-constructed Equal to 1 if the firm employees

Department of Business and Law, University of Milano-Bicocca, Milan, Italy

© 2020 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium,

\*Address all correspondence to: emanuele.rossi@unimib.it

See section 4.2

mini-bond, zero otherwise

A level below 1 of the ratio indicates a mismatch

are less than 250 and total asset less than € 43 million and sales lower than € 50 million, zero

are less than 50 and total asset and sales less than €10 million,

otherwise

zero otherwise

of the current pandemic have been so pervasive.

financial fragility indicator at t + 2 and the financial fragility indicator at t � 1

Tangible ratio is the ratio between the tangible fixed assets and the total assets

The ratio between EBITDA

The book value of equity over fixed assets ratio

Size Natural log of Total Assets Amadeus—Bureau

**Appendix A: variables' definitions**

*Entrepreneurship - Contemporary Issues*

ΔFinFragility Difference between the

and sales

**Variable name**

Tangible ratio

EBITDA/ Sales

Assetliability mismatch

**Author details**

**156**

Emanuele Rossi\* and Simone Boccaletti

provided the original work is properly cited.

[1] Holton S, Martina Lawless M, McCann F. Firm credit in the euro area: A tale of three crises. Applied Economics. 2014;**46**(2):190-211

[2] Lawless M, O'Connel B, O' Toole C. Financial structure and diversification of European firms. Applied Economics. 2015;**47**(23):2379-2398

[3] Altman EI, Esentato M, Sabato G. Assessing the creditworthiness of Italian SMEs and mini-bond issuers. Global Finance Journal. 2018. DOI: 10.1016/j. gfj.2018.09.003

[4] Andrieu G, Staglianò R, van der Zwan P. Bank debt and trade credit for SMEs in Europe: Firm-, industry-, and country-level determinants. Small Business Economics. 2018;**51**(1):245-264

[5] Masiak C, Block JH, Moritz A, Lang F, Kraemer-Eis H. How do micro firms differ in their financing patterns from larger SMEs? Venture Capital. 2019:1-25

[6] Ferrando A, Griesshaber N. Financing Obstacles among Euro Area Firms: Who Suffers the Most? Resource Document. European Central Bank. 2011. Available from: http://www.ecb. europa.eu/pub/pdf/scpwps/ecbwp1293. pdf [Accessed: 22 March 2020]

[7] Garagorri ISME. Vulnerability analysis: A tool for business continuity. In: North K, Varvakis G, editors. Competitive Strategies for Small and Medium Enterprises. Heidelberg: Springer; 2016

[8] European Central Bank. SME Access to Finance in the Euro Area: Barriers and Potential Policy Remedies. Monthly Bulletin, 79-97. Resource Document. European Central Bank. 2014. Available from: https://www.ecb.europa.eu/pub/ pdf/other/art2\_mb201407\_pp79-97en. pdf [Accessed: 22 March 2020]

[9] Canton E, Grilo I, Monteagudo J, van der Zwan P. Perceived credit constraints in the European Union. Small Business Economics. 2013;**41**(3):701-715

[10] Casey E, O'Toole C. Bank lending constraints, trade credit and alternative financing during the financial crisis: Evidence from European SMEs. Journal of Corporate Finance. 2014;**27**:173-193

[11] Beck T, Demirgüç-Kunt ASLI, Maksimovic V. Financing patterns around the world: Are small firms different? Journal of Financial Economics. 2008;**89**(3):467-487

[12] Moritz A, Block JH, Heinz A. Financing patterns of European SMEs— An empirical taxonomy. Venture Capital. 2016;**18**(2):115-148

[13] Berger A, Udell GF. The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle. Journal of Banking and Finance. 1998;**22**(6–8): 613-673

[14] Diamond D. Monitoring and reputation: The choice between bank loans and directly placed debt. Journal of Political Economy. 1991;**99**(4): 689-721

[15] Chemmanur T, Fulghieri P. Reputation, renegotiation, and the choice between bank loans and publicly traded debt. Review of Financial Studies. 1994;**7**(3):475-506

[16] Denis DJ, Mihov VT. The choice among bank debt, non-bank private debt, and public debt: Evidence from new corporate borrowings. Journal of Financial Economics. 2003;**70**(1):3-28

[17] Hale G, Santos JA. The decision to first enter the public bond market: The role of firm reputation, funding choices, and bank relationships. Journal of

Banking and Finance. 2008;**32**(9): 1928-1940

[18] Eisele A, Nowak E. Market innovations for (non-bank) financing of SMEs in the light of the crisis and new regulation: A policy perspective. In: Mayer C et al., editors. Finance and Investment. The European Case. Vol. 12. UK: Oxford University Press; 2018. pp. 221-238

[19] Ongena S, Pinoli S, Rossi P, Scopelliti AD. Bank credit and marketbased finance for corporations: The effects of minibond issuances in Italy. In: Working Paper Presented at Conference "Securities Markets. Trends, Risks and Policies". Milan, Italy: Bocconi University; 2019

[20] Pagano M, Panetta F, Zingales L. Why do companies go public? An empirical analysis. Journal of Finance. 1998;**53**(1):27-64

[21] Berger AN, Udell GF. A more complete conceptual framework for SME finance. Journal of Banking and Finance. 2006;**30**(11):2945-2966

[22] Ang JS, Cole RA, Lin JW. Agency costs and ownership structure. Journal of Finance. 2000;**55**(1):81-106

[23] Hall G, Hutchinson P, Michaelas N. Determinants of the capital structure of European SMEs. Journal of Business Finance and Accounting. 2004;**31**(5–6): 711-728

[24] De Jong A, Kabir R, Nguyen T. Capital structure around the world: The roles of firm- and country-specific determinants. Journal of Banking and Finance. 2008;**32**(9):1954-1969

[25] Mol-Gomez-Vasquez A, Hernández-Cánovas G, Koëter-Kant J. Bank market power and the intensity of borrower discouragement: Analysis of SMEs across developed and developing European countries. Small Business Economics. 2019;**53**(1):211-225

**159**

Section 4

Entrepreneurial Dynamics

and Innovation

Section 4

## Entrepreneurial Dynamics and Innovation

Banking and Finance. 2008;**32**(9):

*Entrepreneurship - Contemporary Issues*

innovations for (non-bank) financing of SMEs in the light of the crisis and new regulation: A policy perspective. In: Mayer C et al., editors. Finance and Investment. The European Case. Vol. 12. UK: Oxford University Press; 2018. pp. 221-238

[18] Eisele A, Nowak E. Market

[19] Ongena S, Pinoli S, Rossi P, Scopelliti AD. Bank credit and marketbased finance for corporations: The effects of minibond issuances in Italy. In: Working Paper Presented at

University; 2019

1998;**53**(1):27-64

711-728

**158**

Conference "Securities Markets. Trends, Risks and Policies". Milan, Italy: Bocconi

[20] Pagano M, Panetta F, Zingales L. Why do companies go public? An empirical analysis. Journal of Finance.

[21] Berger AN, Udell GF. A more complete conceptual framework for SME finance. Journal of Banking and Finance. 2006;**30**(11):2945-2966

[22] Ang JS, Cole RA, Lin JW. Agency costs and ownership structure. Journal

[23] Hall G, Hutchinson P, Michaelas N. Determinants of the capital structure of European SMEs. Journal of Business Finance and Accounting. 2004;**31**(5–6):

[24] De Jong A, Kabir R, Nguyen T. Capital structure around the world: The roles of firm- and country-specific determinants. Journal of Banking and Finance. 2008;**32**(9):1954-1969

Hernández-Cánovas G, Koëter-Kant J. Bank market power and the intensity of borrower discouragement: Analysis of SMEs across developed and developing European countries. Small Business Economics. 2019;**53**(1):211-225

[25] Mol-Gomez-Vasquez A,

of Finance. 2000;**55**(1):81-106

1928-1940

**161**

**Chapter 10**

**Abstract**

*William (Marty) Martin*

entrepreneurs of all ages.

age children to older adults.

entrepreneurs along the age continuum.

**1. Introduction**

Entrepreneurship at Any Age

**Keywords:** ages, developmental, generational, bias, stereotype

Entrepreneurship represents a mindset and set of behaviors which can occur at many ages across the developmental continuum from early childhood to late adulthood. In this selective review of the literature, a narrative analysis illuminates insight to inform academics and practitioners regarding the intersection of age and entrepreneurship. These insights are first built upon a conceptual foundation grounded in a developmental perspective and then organized into opportunities and challenges facing entrepreneurs at various ages along the developmental continuum. Entrepreneurs of all share many commonalities yet they are also face unique opportunities and challenges. Many of these opportunities and challenges are age based. These commonalities and challenges must be understood by all those stakeholders in the entrepreneurship ecosystem to enhance the success of

Entrepreneurship as an academic field and societal trend appears to be growing. The field of entrepreneurship is defined as "…the study of sources of opportunities; the processes of discovery, evaluation, and exploitation of opportunities [1]." Entrepreneurs are "…individuals who discover, evaluate, and exploit them [opportunities] ([1], p. 217)." Entrepreneurs may be of nearly any age from school

Despite the reality that there are entrepreneurs of all ages, far too many of us automatically imagine that the entrepreneur is an adult in their early 20s to mid-30s, college educated, and has launched a technological venture. One study found that the mean age for launching a company is in the late 30s to early 40s [2]. The Kaufmann Foundation [3] found that the most frequent ages of entrepreneurs in descending order in 2019 were the following: 20–34 (27.2%); 55–64 (25.1%); 45–54 (24.8%); and 35–44 (22.9%). This age breakdown reflects a change from 1996 during which it was found that as age increased, the rate of new entrepreneurs decreased. The Kaufmann Foundation is missing two age cohorts: entrepreneurs under the age of 20 and entrepreneurs 65 and older. This chapter will focus on

Regardless of the age of the entrepreneur, there are both common challenges and unique challenges. Furthermore, there are also common and unique opportunities. This chapter will first frame entrepreneurship from a developmental theoretical frame and then review the literature on the relationship between age and entrepreneurship. This literature review will not be exhaustive due to space limitations. After theorizing about entrepreneurship and reviewing the pertinent literature,

#### **Chapter 10**

## Entrepreneurship at Any Age

*William (Marty) Martin*

#### **Abstract**

Entrepreneurship represents a mindset and set of behaviors which can occur at many ages across the developmental continuum from early childhood to late adulthood. In this selective review of the literature, a narrative analysis illuminates insight to inform academics and practitioners regarding the intersection of age and entrepreneurship. These insights are first built upon a conceptual foundation grounded in a developmental perspective and then organized into opportunities and challenges facing entrepreneurs at various ages along the developmental continuum. Entrepreneurs of all share many commonalities yet they are also face unique opportunities and challenges. Many of these opportunities and challenges are age based. These commonalities and challenges must be understood by all those stakeholders in the entrepreneurship ecosystem to enhance the success of entrepreneurs of all ages.

**Keywords:** ages, developmental, generational, bias, stereotype

#### **1. Introduction**

Entrepreneurship as an academic field and societal trend appears to be growing. The field of entrepreneurship is defined as "…the study of sources of opportunities; the processes of discovery, evaluation, and exploitation of opportunities [1]." Entrepreneurs are "…individuals who discover, evaluate, and exploit them [opportunities] ([1], p. 217)." Entrepreneurs may be of nearly any age from school age children to older adults.

Despite the reality that there are entrepreneurs of all ages, far too many of us automatically imagine that the entrepreneur is an adult in their early 20s to mid-30s, college educated, and has launched a technological venture. One study found that the mean age for launching a company is in the late 30s to early 40s [2]. The Kaufmann Foundation [3] found that the most frequent ages of entrepreneurs in descending order in 2019 were the following: 20–34 (27.2%); 55–64 (25.1%); 45–54 (24.8%); and 35–44 (22.9%). This age breakdown reflects a change from 1996 during which it was found that as age increased, the rate of new entrepreneurs decreased. The Kaufmann Foundation is missing two age cohorts: entrepreneurs under the age of 20 and entrepreneurs 65 and older. This chapter will focus on entrepreneurs along the age continuum.

Regardless of the age of the entrepreneur, there are both common challenges and unique challenges. Furthermore, there are also common and unique opportunities. This chapter will first frame entrepreneurship from a developmental theoretical frame and then review the literature on the relationship between age and entrepreneurship. This literature review will not be exhaustive due to space limitations. After theorizing about entrepreneurship and reviewing the pertinent literature,

the challenges and opportunities experienced by entrepreneurs at different ages will be described. These challenges and opportunities will be discussed not just from the lens of the entrepreneur but entrepreneurial ecosystems. Toward the end of this chapter, recommendations will be presented for entrepreneurs of specific age groups and entrepreneurship support organizations (ESOs). Next, a research agenda with specific hypotheses will also be presented for academics to include age as a key variable in research. Finally, recommendations will be formulated for entrepreneurship educators in formal and informal educational settings.

#### **2. Theoretical frame: developmental perspective**

The theoretical frame in this chapter is grounded in a developmental perspective drawing upon Amartya Sen's capability approach. Sen equates human development with the enlargement of positive freedoms [4]. A related concept of Sen's capability approach is agency. Agency is "a person's ability to pursue and realize the goals that he or she values…the opposite of a person with agency is someone who is forced, oppressed, or passive ([4], p. 3)." Moreover, human agency is a central concept among motivation theories [5].

This capability approach is reinforced with a lifespan developmental approach drawing upon Baltes [6]. According to Baltes [6], "Lifespan developmental psychology involves the study of constancy and change in behavior throughout the life course (ontogenesis), from conception to death (p. 611)." The behavior of focus in this chapter is entrepreneurial activity. A team of researchers [7] assert citing the body of research, "Individuals' orientation toward entrepreneurial activities differs depending on where they stand in their lifespans (p. 1)." Our lifespans are typically measured by age and occasionally by developmental periods such as adolescence.

Yet, age is a more commonly used marker of human development. There are two categories of age: chronological and subjective. Chronological age is marked by date of birth or the number of years alive. Varying patterns of entrepreneurship have been documented regarding chronological age [8]. In contrast to chronological age, subjective age is how young or old an individual experience themselves to be [9]. Beyond chronological age, age-related factors such as a future time perspective account for changes in motivation [10]. Hence, age is objective and subjective as well as static and dynamic.

Age is not the only marker of the development of human development and entrepreneurship. It was empirically found that entrepreneurial activity varies by age, yet this relationship is mediated by perceived opportunities and perceived skills [11]. As it relates to opportunities, it was found that entrepreneurial intent among high school students was positively influenced by parents first, peers second, and the neighbors third [12]. Hence, entrepreneurs are embedded in a social context. The impact of context on the development of entrepreneurial behavior is well established [13]. Furthermore, in one study, it was empirically demonstrated that entrepreneurs embedded in a supportive social context are more likely to translate their entrepreneurial intent into an actual startup [14].

Any discussion of development circles back to the nature/nurture debate. The nature/nurture debate will not be resolved here. Yet, the evidence is clear that the chances of a child becoming an entrepreneur is increased by 60% if one of the parents is an entrepreneur [15]. This finding does not address the degree to which entrepreneurship is influenced by genetics. Obschonka [16] writes, "Recent research in behavioral genetics suggests that entrepreneurship has a substantial genetic component (p. 196)." Regardless of the relative contributions of nature or nurture, Obschonka [16] concludes that, "…adolescence is a crucial developmental

**163**

of new firms [25].

*Entrepreneurship at Any Age*

*DOI: http://dx.doi.org/10.5772/intechopen.94440*

employment is not inherently desirable.

effects of such education as follows:

*tutors and advisers ([19], p. 303)."*

new venture over the 12-meeting training program.

**3. Brief literature review: age and entrepreneurship**

phase in entrepreneurial development (p. 200)." Another period of an increase in entrepreneurial activity is job loss of individuals over the age of 50 as described by Moulton and Scott [17]: "We find that job loss shows a strong association into self-employment, particularly less desirable forms of self-employment (p. 1539)." This finding is important because it demonstrates that entrepreneurship or self-

Returning to the nature/nurture debate, entrepreneurship educators assume that entrepreneurship can be learned [18]. As such, this assumption suggests that entrepreneurship can be nurtured along the age continuum. One such entrepreneurship education program targeting primary/elementary school children described the

*"The implementation of this EE model from September 2009 to June 2014 allowed us to conclude that children can be entrepreneurs and can open, operate, and close a small enterprise in the short term, thanks to the experience transmitted by the* 

However, there is a dearth of literature on entrepreneurship education targeting older adults over the age of 50. Moreover, most of these programs target younger entrepreneurs [20]. Hantman and Gimmon [21] describe an entrepreneurship incubator in which 70% of the 22 participants, all of whom were 55 or older, launched a

It is beyond the scope here to review the body of literature on the relationship between age and entrepreneurship. The research to date is mixed regarding the relationship between age and entrepreneurship. The UK (United Kingdom) govern-

Past research has shown an inverted U-shaped relationship between age and entrepreneurship [7]. It has also been argued that there is a negative relationship between age and engaging in entrepreneurship [11, 23]. In an empirical study examining high-growth companies, it was found that founders under the age of 25 are strongly disadvantaged at creating high growth companies with a surge in creating such companies after the age of 35 and another surge after the age of 46 until plateauing at age 60 [24]. As for business ownership, individuals over the age of 55 represent one-third of all firms although this same age cohort launches 15 percent

The type of business launched also vary by age. Personal services, retail and restaurants are more likely launched by entrepreneurs in the 35–53 age cohort [25]. In contrast, entrepreneurs 55 and older are more likely to launch high-tech manufacturing, real estate, metal & machinery, and health care services [25]. Entrepreneurial ventures can be categorized into four segments: financed growth; organic growth; stable small employer; and stable micro [25]. Financed growth firms were defined as those with at least \$400,000 in financing cash inflows and organic growth firms were defined as those with less than \$400,000 in financing cash inflows [25]. The other segments are the following: stable small employer and stable micro. The difference is that the stable small employer is defined as having over \$500,000 in expenses primarily payroll and the stable micro has no or very few employees with less than \$500,000 in expenses [25]. It was found that younger entrepreneurs 35 and under were less likely to own financed growth and stable small employer ventures [25]. Yet, the 35–54 age cohort were overall

ment [22] defines older entrepreneurship as any entrepreneur 50 and older.

#### *Entrepreneurship at Any Age DOI: http://dx.doi.org/10.5772/intechopen.94440*

*Entrepreneurship - Contemporary Issues*

among motivation theories [5].

well as static and dynamic.

the challenges and opportunities experienced by entrepreneurs at different ages will be described. These challenges and opportunities will be discussed not just from the lens of the entrepreneur but entrepreneurial ecosystems. Toward the end of this chapter, recommendations will be presented for entrepreneurs of specific age groups and entrepreneurship support organizations (ESOs). Next, a research agenda with specific hypotheses will also be presented for academics to include age as a key variable in research. Finally, recommendations will be formulated for entre-

The theoretical frame in this chapter is grounded in a developmental perspective drawing upon Amartya Sen's capability approach. Sen equates human development with the enlargement of positive freedoms [4]. A related concept of Sen's capability approach is agency. Agency is "a person's ability to pursue and realize the goals that he or she values…the opposite of a person with agency is someone who is forced, oppressed, or passive ([4], p. 3)." Moreover, human agency is a central concept

This capability approach is reinforced with a lifespan developmental approach drawing upon Baltes [6]. According to Baltes [6], "Lifespan developmental psychology involves the study of constancy and change in behavior throughout the life course (ontogenesis), from conception to death (p. 611)." The behavior of focus in this chapter is entrepreneurial activity. A team of researchers [7] assert citing the body of research, "Individuals' orientation toward entrepreneurial activities differs depending on where they stand in their lifespans (p. 1)." Our lifespans are typically measured by age and occasionally by developmental periods such as adolescence. Yet, age is a more commonly used marker of human development. There are two categories of age: chronological and subjective. Chronological age is marked by date of birth or the number of years alive. Varying patterns of entrepreneurship have been documented regarding chronological age [8]. In contrast to chronological age, subjective age is how young or old an individual experience themselves to be [9]. Beyond chronological age, age-related factors such as a future time perspective account for changes in motivation [10]. Hence, age is objective and subjective as

Age is not the only marker of the development of human development and entrepreneurship. It was empirically found that entrepreneurial activity varies by age, yet this relationship is mediated by perceived opportunities and perceived skills [11]. As it relates to opportunities, it was found that entrepreneurial intent among high school students was positively influenced by parents first, peers second, and the neighbors third [12]. Hence, entrepreneurs are embedded in a social context. The impact of context on the development of entrepreneurial behavior is well established [13]. Furthermore, in one study, it was empirically demonstrated that entrepreneurs embedded in a supportive social context are more likely to translate

Any discussion of development circles back to the nature/nurture debate. The nature/nurture debate will not be resolved here. Yet, the evidence is clear that the chances of a child becoming an entrepreneur is increased by 60% if one of the parents is an entrepreneur [15]. This finding does not address the degree to which entrepreneurship is influenced by genetics. Obschonka [16] writes, "Recent research in behavioral genetics suggests that entrepreneurship has a substantial genetic component (p. 196)." Regardless of the relative contributions of nature or nurture, Obschonka [16] concludes that, "…adolescence is a crucial developmental

their entrepreneurial intent into an actual startup [14].

preneurship educators in formal and informal educational settings.

**2. Theoretical frame: developmental perspective**

**162**

phase in entrepreneurial development (p. 200)." Another period of an increase in entrepreneurial activity is job loss of individuals over the age of 50 as described by Moulton and Scott [17]: "We find that job loss shows a strong association into self-employment, particularly less desirable forms of self-employment (p. 1539)." This finding is important because it demonstrates that entrepreneurship or selfemployment is not inherently desirable.

Returning to the nature/nurture debate, entrepreneurship educators assume that entrepreneurship can be learned [18]. As such, this assumption suggests that entrepreneurship can be nurtured along the age continuum. One such entrepreneurship education program targeting primary/elementary school children described the effects of such education as follows:

*"The implementation of this EE model from September 2009 to June 2014 allowed us to conclude that children can be entrepreneurs and can open, operate, and close a small enterprise in the short term, thanks to the experience transmitted by the tutors and advisers ([19], p. 303)."*

However, there is a dearth of literature on entrepreneurship education targeting older adults over the age of 50. Moreover, most of these programs target younger entrepreneurs [20]. Hantman and Gimmon [21] describe an entrepreneurship incubator in which 70% of the 22 participants, all of whom were 55 or older, launched a new venture over the 12-meeting training program.

#### **3. Brief literature review: age and entrepreneurship**

It is beyond the scope here to review the body of literature on the relationship between age and entrepreneurship. The research to date is mixed regarding the relationship between age and entrepreneurship. The UK (United Kingdom) government [22] defines older entrepreneurship as any entrepreneur 50 and older.

Past research has shown an inverted U-shaped relationship between age and entrepreneurship [7]. It has also been argued that there is a negative relationship between age and engaging in entrepreneurship [11, 23]. In an empirical study examining high-growth companies, it was found that founders under the age of 25 are strongly disadvantaged at creating high growth companies with a surge in creating such companies after the age of 35 and another surge after the age of 46 until plateauing at age 60 [24]. As for business ownership, individuals over the age of 55 represent one-third of all firms although this same age cohort launches 15 percent of new firms [25].

The type of business launched also vary by age. Personal services, retail and restaurants are more likely launched by entrepreneurs in the 35–53 age cohort [25]. In contrast, entrepreneurs 55 and older are more likely to launch high-tech manufacturing, real estate, metal & machinery, and health care services [25]. Entrepreneurial ventures can be categorized into four segments: financed growth; organic growth; stable small employer; and stable micro [25]. Financed growth firms were defined as those with at least \$400,000 in financing cash inflows and organic growth firms were defined as those with less than \$400,000 in financing cash inflows [25]. The other segments are the following: stable small employer and stable micro. The difference is that the stable small employer is defined as having over \$500,000 in expenses primarily payroll and the stable micro has no or very few employees with less than \$500,000 in expenses [25]. It was found that younger entrepreneurs 35 and under were less likely to own financed growth and stable small employer ventures [25]. Yet, the 35–54 age cohort were overall

overrepresented across all firms based upon a population comparison. Among the older entrepreneurs 55 and older, they were more likely to be in the stable small employer and micro segment [25].

As for exits, it was found that "a founder at age 50 is approximately twice as likely to experience a successful exit compared to a founder at age 30 ([24], p. 74)." Yet, founders 55 and older are the least likely to employ others although the most likely to survive [25].

Another finding emerging from the growing body of literature on age and entrepreneurship is that entrepreneurs of different ages manifest different goals related to what it means to be an entrepreneur [7]. To this point, younger and older entrepreneurs are more likely to launch ventures which are more socially oriented than middle age entrepreneurs [7]. These types of ventures fall under the category of social entrepreneurship.

#### **4. Challenges/opportunities**

There is a wide array of reasons why ventures fail to launch, why ventures fail to generate a profit, why ventures fail to survive, and why ventures fail to exit. One of the more common challenges has to do with managing the finances of entrepreneurial ventures regardless of the age of the entrepreneur. Competence in accounting practices has been found to be a challenge for entrepreneurs between the ages of 18 to 59 and a predictor of small business failure [26]. Working capital has always represented a challenge for small businesses [26]. Lack of liquidity has become even more of a challenge given the impact of COVID-19 [27]. Although this is not the only challenge, this challenge is more than likely related to the survival of the entrepreneurial venture.

A common challenge may revolve around stereotype bias and entrepreneurs especially those who are under the age of 18 and even over the age of 50. This type of bias may present roadblocks to those seeking to become entrepreneurs because they do not fit the "mental model" of the appropriate age of an entrepreneur. Related to both age groups is an increasing degree of interdependence among others. Specifically, for those entrepreneurs under the age of 18, it is likely that parental involvement will be higher. For those over the age of 50, it is likely that involvement with children and even aging parents will be higher. In fact, empirical evidence is emerging about the U-shaped curve of age discrimination in the workplace [28]. This empirical work has to be extended to entrepreneurial settings until researchers being to investigate bias and stereotyping in entrepreneurship using age as a variable in addition to the numerous studies investigating gender.

Younger and older entrepreneurs may benefit from a different set of resources. Regarding entrepreneurship, it was found that a focus on opportunity seeking is central to venture growth among entrepreneurs from 24 to 74 [29]. Of all the generations, the millennial generation is more interested in digital entrepreneurship than previous generations [33].

Regarding specific opportunity sets for entrepreneurs, it is conceivable that younger entrepreneurs have greater physical resources such as enhanced cognitive function and are also less encumbered with family and other responsibilities [24]. As for older entrepreneurs, it is conceivable that they have greater access to capital of all types including financial, social, and human [24]. Mental health is a key moderator between the age of the entrepreneur and a focus on opportunities [29]. Intergenerational entrepreneurship represents another opportunity for entrepreneurs of all ages. This ranges from launching firms together to intergenerational entrepreneurship education [30].

**165**

exhaustive.

the age continuum.

across the age continuum.

across the age continuum.

*Entrepreneurship at Any Age*

account (p. 8)."

stereotype.

construct is warranted [34].

*DOI: http://dx.doi.org/10.5772/intechopen.94440*

zations offer services appropriate for specific life phases.

**6. Future research agenda: age and entrepreneurship**

ogy, family systems, sociology, and gerontology [32].

**5. Recommendations: from entrepreneur to entrepreneurship ecosystem**

The role of formal and informal organizations in shaping and supporting entrepreneurship is critical [31]. Yet, the type of support may vary given the heterogeneity of entrepreneurs. Bohlmann et al. [11] found that entrepreneurs of different ages need different types of support. Furthermore, the current entrepreneurship ecosystem has been critiqued by Bohlmann et al. [11] "These programs do not accurately take the needs and motivation of different ages into

Brieger et al. [7] recommend that high quality entrepreneurship support organi-

As an example, Gielnik et al. [29] based upon their study on the role of mental

Entrepreneurship research is increasingly taking a development approach. Even further, research is increasingly investigating older entrepreneurs who are 55 and older [21]. Future research ideally will draw upon a range of theories including developmental theories. Yet, researchers have eleven theoretical perspectives from which to frame future research beyond developmental theories. Eleven perspectives include the following: negative relationship personal health; rigidity; time allocation; risk propensity; discrimination; positive relationship human capital; social capital; financial capital; emotion; family obligation; and gender

Beyond the theoretical base of future research, different research designs are recommended including cross-sectional and longitudinal designs. Given the focus on age and entrepreneurship, cohort based, and panel research designs are also worth pursuing among future researchers. The challenge for researchers may be to collaborate with researchers from other disciplines such as developmental psychol-

This line of research should go beyond age and also examine cohort effects by generation. To this point, the call for such research has been made, "It is critical that scholars of international entrepreneurship explore millennial entrepreneurs and contrast them across generations and countries ([33], p. 9)." Given the social context of younger and older entrepreneurs in particular, intersectionality as a

This research should be grounded in qualitative, quantitative, mixed methods and even deploy big data analytic models. Much of the research should be hypothesis driven but not all of the research due to the nascent aspects of the nexus between age and entrepreneurship as well as generation and entrepreneurship. The following hypotheses represent a starting point to engage researchers in contributing to the dearth on aging and entrepreneurship. These hypotheses are by no means

H1: There are differences in entrepreneurial intent among entrepreneurs across

H2: There are differences in entrepreneurial motivation among entrepreneurs

H3: There are differences in "push" and "pull" factors among entrepreneurs

health for maintaining a high level focus on opportunities suggest that policy makers should invest in maintaining or improving mental health and invest in increasing learning & development opportunities targeting older entrepreneurs. *Entrepreneurship - Contemporary Issues*

employer and micro segment [25].

likely to survive [25].

of social entrepreneurship.

**4. Challenges/opportunities**

the entrepreneurial venture.

than previous generations [33].

entrepreneurship education [30].

overrepresented across all firms based upon a population comparison. Among the older entrepreneurs 55 and older, they were more likely to be in the stable small

As for exits, it was found that "a founder at age 50 is approximately twice as likely to experience a successful exit compared to a founder at age 30 ([24], p. 74)." Yet, founders 55 and older are the least likely to employ others although the most

Another finding emerging from the growing body of literature on age and entrepreneurship is that entrepreneurs of different ages manifest different goals related to what it means to be an entrepreneur [7]. To this point, younger and older entrepreneurs are more likely to launch ventures which are more socially oriented than middle age entrepreneurs [7]. These types of ventures fall under the category

There is a wide array of reasons why ventures fail to launch, why ventures fail to generate a profit, why ventures fail to survive, and why ventures fail to exit. One of the more common challenges has to do with managing the finances of entrepreneurial ventures regardless of the age of the entrepreneur. Competence in accounting practices has been found to be a challenge for entrepreneurs between the ages of 18 to 59 and a predictor of small business failure [26]. Working capital has always represented a challenge for small businesses [26]. Lack of liquidity has become even more of a challenge given the impact of COVID-19 [27]. Although this is not the only challenge, this challenge is more than likely related to the survival of

A common challenge may revolve around stereotype bias and entrepreneurs especially those who are under the age of 18 and even over the age of 50. This type of bias may present roadblocks to those seeking to become entrepreneurs because they do not fit the "mental model" of the appropriate age of an entrepreneur. Related to both age groups is an increasing degree of interdependence among others. Specifically, for those entrepreneurs under the age of 18, it is likely that parental involvement will be higher. For those over the age of 50, it is likely that involvement with children and even aging parents will be higher. In fact, empirical evidence is emerging about the U-shaped curve of age discrimination in the workplace [28]. This empirical work has to be extended to entrepreneurial settings until researchers being to investigate bias and stereotyping in entrepreneurship using age as a vari-

Younger and older entrepreneurs may benefit from a different set of resources. Regarding entrepreneurship, it was found that a focus on opportunity seeking is central to venture growth among entrepreneurs from 24 to 74 [29]. Of all the generations, the millennial generation is more interested in digital entrepreneurship

Regarding specific opportunity sets for entrepreneurs, it is conceivable that younger entrepreneurs have greater physical resources such as enhanced cognitive function and are also less encumbered with family and other responsibilities [24]. As for older entrepreneurs, it is conceivable that they have greater access to capital of all types including financial, social, and human [24]. Mental health is a key moderator between the age of the entrepreneur and a focus on opportunities [29]. Intergenerational entrepreneurship represents another opportunity for entrepreneurs of all ages. This ranges from launching firms together to intergenerational

able in addition to the numerous studies investigating gender.

**164**

#### **5. Recommendations: from entrepreneur to entrepreneurship ecosystem**

The role of formal and informal organizations in shaping and supporting entrepreneurship is critical [31]. Yet, the type of support may vary given the heterogeneity of entrepreneurs. Bohlmann et al. [11] found that entrepreneurs of different ages need different types of support. Furthermore, the current entrepreneurship ecosystem has been critiqued by Bohlmann et al. [11] "These programs do not accurately take the needs and motivation of different ages into account (p. 8)."

Brieger et al. [7] recommend that high quality entrepreneurship support organizations offer services appropriate for specific life phases.

As an example, Gielnik et al. [29] based upon their study on the role of mental health for maintaining a high level focus on opportunities suggest that policy makers should invest in maintaining or improving mental health and invest in increasing learning & development opportunities targeting older entrepreneurs.

#### **6. Future research agenda: age and entrepreneurship**

Entrepreneurship research is increasingly taking a development approach. Even further, research is increasingly investigating older entrepreneurs who are 55 and older [21]. Future research ideally will draw upon a range of theories including developmental theories. Yet, researchers have eleven theoretical perspectives from which to frame future research beyond developmental theories. Eleven perspectives include the following: negative relationship personal health; rigidity; time allocation; risk propensity; discrimination; positive relationship human capital; social capital; financial capital; emotion; family obligation; and gender stereotype.

Beyond the theoretical base of future research, different research designs are recommended including cross-sectional and longitudinal designs. Given the focus on age and entrepreneurship, cohort based, and panel research designs are also worth pursuing among future researchers. The challenge for researchers may be to collaborate with researchers from other disciplines such as developmental psychology, family systems, sociology, and gerontology [32].

This line of research should go beyond age and also examine cohort effects by generation. To this point, the call for such research has been made, "It is critical that scholars of international entrepreneurship explore millennial entrepreneurs and contrast them across generations and countries ([33], p. 9)." Given the social context of younger and older entrepreneurs in particular, intersectionality as a construct is warranted [34].

This research should be grounded in qualitative, quantitative, mixed methods and even deploy big data analytic models. Much of the research should be hypothesis driven but not all of the research due to the nascent aspects of the nexus between age and entrepreneurship as well as generation and entrepreneurship. The following hypotheses represent a starting point to engage researchers in contributing to the dearth on aging and entrepreneurship. These hypotheses are by no means exhaustive.

H1: There are differences in entrepreneurial intent among entrepreneurs across the age continuum.

H2: There are differences in entrepreneurial motivation among entrepreneurs across the age continuum.

H3: There are differences in "push" and "pull" factors among entrepreneurs across the age continuum.

H4: There are differences in opportunities in entrepreneurial financing among entrepreneurs across the age continuum.

H5: There are differences in entrepreneurial exits among entrepreneurs across the age continuum.

#### **7. Inclusive entrepreneurship education: all ages matter**

It has previously been mentioned that the ideal entrepreneur and most entrepreneurship education program are not inclusive by age. In fact, they target younger entrepreneurs often under the age of 30. Following this trend, there appears to be a lot of focus on weaving entrepreneurship education into primary/elementary school and secondary/high school not to mention colleges/universities. These efforts should continue but ought to be expanded to include other age groups over the age of 30 up to retirement age or older.

If indeed entrepreneurship educators offer targeted entrepreneurship curricula that is age appropriate, then this education ought to also embrace an inter-generational element rather than "segregating" the target audiences by age cohorts. Yet, the case can be made for exclusive entrepreneurship education targeting specific age cohorts given the unique challenges and opportunities facing entrepreneurs at different ages and developmental periods.

The case for targeting specific age cohorts and even generational cohorts can be further subdivided into types of entrepreneurs within a given age cohort and generational cohort. As an illustration, it was found that there are eight types of entrepreneurs in the Baby Boom Generation (born between 1946 and 1964) [35]. This typology categorizes entrepreneurs into these categories or types: new versus existing, new opportunity versus new necessity, full-time versus part-time, and incorporated versus unincorporated entrepreneurs [35]. The author of this study argues "Understanding baby boomer entrepreneurs better and assisting them to develop entrepreneurship could be an effective strategy for our aging population ([35], p. 70)."

#### **8. Recommendations**

The recommendations set forth for entrepreneurs are presented from the lens of offering tailor made recommendations for different age groups across the developmental continuum.

#### **8.1 School age entrepreneurs**

School age entrepreneurs are deeply embedded in a family context and increasingly a school context with a rise in entrepreneurship educational programs targeting school age entrepreneurs. The degree to which these ventures are actually family firms is subject to further discovery, but the role of parents, other relatives and others is critical to the success of school age entrepreneurs. The current legal and regulatory system not to mention societal norms may impose unique barriers for school age entrepreneurs because they have not achieved the age of majority. Hence, stakeholders in the entrepreneurship ecosystem should continue to design and deliver tailored solutions for school age entrepreneurs while at the same time advocating to relax some legal and regulatory barriers.

**167**

*Entrepreneurship at Any Age*

**8.2 College age entrepreneurs**

**8.3 Young adult entrepreneurs**

flow to ensure survival.

**8.4 Middle age entrepreneurs**

programming, support, and advocacy.

**8.5 Older age entrepreneurs**

*DOI: http://dx.doi.org/10.5772/intechopen.94440*

College age entrepreneurs are increasingly warmly embraced by colleges and universities which offer degree and certificate programs in entrepreneurship. These efforts should continue along with the hackathons and business plan competitions. Likewise, research should continue involving college age entrepreneurs yet educational, programming and research investments need to be more inclusive of other age groups beyond the college age entrepreneurs. In most nations, college attendance and graduation are the exception not the rule. As such, attention should be paid to those who are college but decide not to attend college and start ventures

in the skilled trades, retail, and food/beverages as well as gig workers.

Young adult entrepreneurs have decided to choose a particular path in life regarding their occupational identify and way to earn an income. At some point, during young adult, these entrepreneurs will make a commitment as a partner and even add the role of a parent. As such, greater attention is warranted to look at the varying roles for young adults and how they balance the tasks associated with these roles as well as the challenges of launching a new venture often without steady cash

Middle age entrepreneurs are often ignored by the entrepreneurship ecosystem except to include them as mentors and financiers. These entrepreneurs often select entrepreneurship after some adverse life event ranging from a health event to a job loss event. Hence, programming ought to focus upon not just launching a venture but also managing grief and other emotions associated with a sudden loss of stability. Similar to young age entrepreneurs, these middle age entrepreneurs with aging parents may be part of the "sandwich generation" requiring different types of

Older age entrepreneurs are nearly invisible in the entrepreneurship ecosystem as participants. Proactive steps must be taken to include older entrepreneurs to counter the bias and stereotyping which occurs among older entrepreneurs. This step will require that leaders and decision makers in the entrepreneurship ecosystem look at their own biases and stereotypes and rid their organizations of such

Although these recommendations are presented as if they are separate, they are not. Leading organizations dedicated to enhancing entrepreneurship along the lifespan should seek to be "friendly" and "serve" entrepreneurs of all age or

Furthermore, the designers, funders and evaluators of entrepreneurship programs targeting entrepreneurs at various ages must also consider the differences among the opportunity versus the necessity entrepreneurs. This categorization is similar to the push/pull framework [36]. This framework suggests that some entrepreneurs are pushed into entrepreneurship for such reasons as a lack of other career alternatives and others are pulled into entrepreneurship to pursue opportunities.

biases which become part of the culture, policies, and procedures.

differentiate based upon serving entrepreneurs of a certain age group.

#### **8.2 College age entrepreneurs**

*Entrepreneurship - Contemporary Issues*

of 30 up to retirement age or older.

different ages and developmental periods.

the age continuum.

([35], p. 70)."

**8. Recommendations**

**8.1 School age entrepreneurs**

mental continuum.

entrepreneurs across the age continuum.

H4: There are differences in opportunities in entrepreneurial financing among

H5: There are differences in entrepreneurial exits among entrepreneurs across

It has previously been mentioned that the ideal entrepreneur and most entrepreneurship education program are not inclusive by age. In fact, they target younger entrepreneurs often under the age of 30. Following this trend, there appears to be a lot of focus on weaving entrepreneurship education into primary/elementary school and secondary/high school not to mention colleges/universities. These efforts should continue but ought to be expanded to include other age groups over the age

If indeed entrepreneurship educators offer targeted entrepreneurship curricula that is age appropriate, then this education ought to also embrace an inter-generational element rather than "segregating" the target audiences by age cohorts. Yet, the case can be made for exclusive entrepreneurship education targeting specific age cohorts given the unique challenges and opportunities facing entrepreneurs at

The case for targeting specific age cohorts and even generational cohorts can be further subdivided into types of entrepreneurs within a given age cohort and generational cohort. As an illustration, it was found that there are eight types of entrepreneurs in the Baby Boom Generation (born between 1946 and 1964) [35]. This typology categorizes entrepreneurs into these categories or types: new versus existing, new opportunity versus new necessity, full-time versus part-time, and incorporated versus unincorporated entrepreneurs [35]. The author of this study argues "Understanding baby boomer entrepreneurs better and assisting them to develop entrepreneurship could be an effective strategy for our aging population

The recommendations set forth for entrepreneurs are presented from the lens of offering tailor made recommendations for different age groups across the develop-

School age entrepreneurs are deeply embedded in a family context and increas-

targeting school age entrepreneurs. The degree to which these ventures are actually family firms is subject to further discovery, but the role of parents, other relatives and others is critical to the success of school age entrepreneurs. The current legal and regulatory system not to mention societal norms may impose unique barriers for school age entrepreneurs because they have not achieved the age of majority. Hence, stakeholders in the entrepreneurship ecosystem should continue to design and deliver tailored solutions for school age entrepreneurs while at the same time

ingly a school context with a rise in entrepreneurship educational programs

advocating to relax some legal and regulatory barriers.

**7. Inclusive entrepreneurship education: all ages matter**

**166**

College age entrepreneurs are increasingly warmly embraced by colleges and universities which offer degree and certificate programs in entrepreneurship. These efforts should continue along with the hackathons and business plan competitions. Likewise, research should continue involving college age entrepreneurs yet educational, programming and research investments need to be more inclusive of other age groups beyond the college age entrepreneurs. In most nations, college attendance and graduation are the exception not the rule. As such, attention should be paid to those who are college but decide not to attend college and start ventures in the skilled trades, retail, and food/beverages as well as gig workers.

#### **8.3 Young adult entrepreneurs**

Young adult entrepreneurs have decided to choose a particular path in life regarding their occupational identify and way to earn an income. At some point, during young adult, these entrepreneurs will make a commitment as a partner and even add the role of a parent. As such, greater attention is warranted to look at the varying roles for young adults and how they balance the tasks associated with these roles as well as the challenges of launching a new venture often without steady cash flow to ensure survival.

#### **8.4 Middle age entrepreneurs**

Middle age entrepreneurs are often ignored by the entrepreneurship ecosystem except to include them as mentors and financiers. These entrepreneurs often select entrepreneurship after some adverse life event ranging from a health event to a job loss event. Hence, programming ought to focus upon not just launching a venture but also managing grief and other emotions associated with a sudden loss of stability. Similar to young age entrepreneurs, these middle age entrepreneurs with aging parents may be part of the "sandwich generation" requiring different types of programming, support, and advocacy.

#### **8.5 Older age entrepreneurs**

Older age entrepreneurs are nearly invisible in the entrepreneurship ecosystem as participants. Proactive steps must be taken to include older entrepreneurs to counter the bias and stereotyping which occurs among older entrepreneurs. This step will require that leaders and decision makers in the entrepreneurship ecosystem look at their own biases and stereotypes and rid their organizations of such biases which become part of the culture, policies, and procedures.

Although these recommendations are presented as if they are separate, they are not. Leading organizations dedicated to enhancing entrepreneurship along the lifespan should seek to be "friendly" and "serve" entrepreneurs of all age or differentiate based upon serving entrepreneurs of a certain age group.

Furthermore, the designers, funders and evaluators of entrepreneurship programs targeting entrepreneurs at various ages must also consider the differences among the opportunity versus the necessity entrepreneurs. This categorization is similar to the push/pull framework [36]. This framework suggests that some entrepreneurs are pushed into entrepreneurship for such reasons as a lack of other career alternatives and others are pulled into entrepreneurship to pursue opportunities.

#### **9. Conclusion**

Entrepreneurship is all too often considered a more viable career option for those who are younger. Yet, as discussed above, the empirical evidence including a meta-analysis conclude that the opposite is true. Specifically, older entrepreneurs are more likely to succeed than younger entrepreneurs [37]. A central theme throughout this chapter is to challenge some assumptions that the general public, the media, academics and other stakeholders in the entrepreneurship ecosystem have about who is an entrepreneur, who seeks to be an entrepreneur out of necessity or opportunity seeking, and who should be served by entrepreneurship support organizations. The empirical evidence suggests a quite different picture that what is imagined in the eyes of most about the prototypical entrepreneur.

Fundamentally, entrepreneurship is a choice that individuals make at various stages of their life's journey. This choice sometimes arises out of identifying an opportunity, sometimes arises out of needing to earn income, and sometimes arises out of the existential need to "chart your own course." Regardless of the origins of the choice, entrepreneurship may occur at nearly any age from 10 to 100. The age and generational diversity of entrepreneurs is a reality that must be embraced by policy makers, entrepreneurship educators, entrepreneurship support organizations, and entrepreneurship researchers. Embracing the age and generational diversity of entrepreneurs begins with you and your beliefs about who aspires to and currently is an entrepreneur.

#### **Conflict of interest**

The authors declare no conflict of interest.

#### **Author details**

William (Marty) Martin DePaul University, Chicago, USA

\*Address all correspondence to: martym@depaul.edu

© 2020 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

**169**

Springer; 2015

*Entrepreneurship at Any Age*

**References**

*DOI: http://dx.doi.org/10.5772/intechopen.94440*

[9] Montepare JM. Subjective age: Toward a guiding lifespan framework. International Journal of Behavioral Development. 2009;**33**(1):42-46. DOI:

[10] Henry H, Zacher H, Desmette D. Future time perspective in the work context: A systematic review of quantitative studies. Frontiers of Psychology. 2017;**28**:1-22. DOI: 10.3389/

10.1177/0165025408095551

[11] Bohlmann C, Rauch A, Zacher H. A lifespan perspective on entrepreneurship: Perceived opportunities and skills explain the negative association between age and entrepreneurial activity. Frontiers in Psychology. 2017 Dec 1;**8**:2015. DOI:

10.3389/fpsyg.2017.02015

11;**10**(2):225-251

DEV-2012-12105

jbusvent.2019.105982

296. DOI: 10.1086/678493

[12] Patuelli R, Santarelli E, Tubadji A. Entrepreneurial intention among high-school students: The importance of parents, peers, and neighbors. Eurasian Business Review. 2020 Apr

[13] Obschonka M, Silbereisen RK. Entrepreneurship from a developmental science perspective. International Journal of Developmental Science. 2012;**6**:107-115. DOI: 10.3233/

[14] Meoli A, Fini R, Sobrero M, Wiklund J. How entrepreneurial intentions influence entrepreneurial career choices: The moderating influence of social context. Journal of Business Venturing. 2020 May 1;**35**(3):105982. DOI: 10.1016/j.

[15] Lindquist MJ, Sol J, Van Praag M. Why do entrepreneurial parents have entrepreneurial children? Journal of Labor Economics. 2015 Apr 1;**33**(2):269-

fpsyg.2017.00413

[1] Shane S, Venkataraman S. The promise of entrepreneurship as a field of research. Academy of Management

[2] Kautonen T, Down S, Minniti M.

preferences. Small Business Economics.

[3] Kaufmann Foundation. Who is the entrepreneur? Race and ethnicity age, and immigration trends among new entrepreneurs in the United States, 1996- 2019. Trends in Entrepreneurship, No. 9. Available from: https://www.kauffman. org/wp-content/uploads/2020/07/ Kauffman\_Trends-in-Entrepreneurship-Who-is-the-Entrepreneur-9-Race-and-Ethnicity-Age-and-Immigration-Trends-Among-New-Entreprenurs-in-the-

[4] Sen A. Development as Freedom.

[6] Baltes PB. Theoretical propositions of life-span developmental psychology: On the dynamics between growth and decline. Developmental

Psychology. 1987;*23*(5):611-626. DOI:

[8] Ainsworth S. Aging entrepreneurs and volunteers: Transition in late career. In: Bal PM, Kooij DT, Rousseau D, editors. Aging, Workers, and the Employee-Employer Relationship.

[7] Brieger SA, Bäro A, Criaco G, Terjesen SA. Entrepreneurs' age, institutions, and social value creation goals: A multi-country study. Small Business Economics. 2020 Jan 24:1-29. doi: 10.1007/s11187-020-00317-z

10.1037/0012-1649.23.5.611

Review. 2000;**25**(1):217-226

Ageing and entrepreneurial

2014;**42**(3):579-594

United-States\_2020.pdf

New York: Anchor Books;

Press; 1985

[5] Deci EL, Ryan RM. Intrinsic Motivation and Self-Determination in Human Behavior. New York: Plenum

*Entrepreneurship at Any Age DOI: http://dx.doi.org/10.5772/intechopen.94440*

### **References**

*Entrepreneurship - Contemporary Issues*

Entrepreneurship is all too often considered a more viable career option for those who are younger. Yet, as discussed above, the empirical evidence including a meta-analysis conclude that the opposite is true. Specifically, older entrepreneurs are more likely to succeed than younger entrepreneurs [37]. A central theme throughout this chapter is to challenge some assumptions that the general public, the media, academics and other stakeholders in the entrepreneurship ecosystem have about who is an entrepreneur, who seeks to be an entrepreneur out of necessity or opportunity seeking, and who should be served by entrepreneurship support organizations. The empirical evidence suggests a quite different picture that what is

Fundamentally, entrepreneurship is a choice that individuals make at various stages of their life's journey. This choice sometimes arises out of identifying an opportunity, sometimes arises out of needing to earn income, and sometimes arises out of the existential need to "chart your own course." Regardless of the origins of the choice, entrepreneurship may occur at nearly any age from 10 to 100. The age and generational diversity of entrepreneurs is a reality that must be embraced by policy makers, entrepreneurship educators, entrepreneurship support organizations, and entrepreneurship researchers. Embracing the age and generational diversity of entrepreneurs begins with you and your beliefs about who aspires to

imagined in the eyes of most about the prototypical entrepreneur.

**9. Conclusion**

**168**

**Author details**

William (Marty) Martin

DePaul University, Chicago, USA

provided the original work is properly cited.

and currently is an entrepreneur.

The authors declare no conflict of interest.

**Conflict of interest**

\*Address all correspondence to: martym@depaul.edu

© 2020 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium,

[1] Shane S, Venkataraman S. The promise of entrepreneurship as a field of research. Academy of Management Review. 2000;**25**(1):217-226

[2] Kautonen T, Down S, Minniti M. Ageing and entrepreneurial preferences. Small Business Economics. 2014;**42**(3):579-594

[3] Kaufmann Foundation. Who is the entrepreneur? Race and ethnicity age, and immigration trends among new entrepreneurs in the United States, 1996- 2019. Trends in Entrepreneurship, No. 9. Available from: https://www.kauffman. org/wp-content/uploads/2020/07/ Kauffman\_Trends-in-Entrepreneurship-Who-is-the-Entrepreneur-9-Race-and-Ethnicity-Age-and-Immigration-Trends-Among-New-Entreprenurs-in-the-United-States\_2020.pdf

[4] Sen A. Development as Freedom. New York: Anchor Books;

[5] Deci EL, Ryan RM. Intrinsic Motivation and Self-Determination in Human Behavior. New York: Plenum Press; 1985

[6] Baltes PB. Theoretical propositions of life-span developmental psychology: On the dynamics between growth and decline. Developmental Psychology. 1987;*23*(5):611-626. DOI: 10.1037/0012-1649.23.5.611

[7] Brieger SA, Bäro A, Criaco G, Terjesen SA. Entrepreneurs' age, institutions, and social value creation goals: A multi-country study. Small Business Economics. 2020 Jan 24:1-29. doi: 10.1007/s11187-020-00317-z

[8] Ainsworth S. Aging entrepreneurs and volunteers: Transition in late career. In: Bal PM, Kooij DT, Rousseau D, editors. Aging, Workers, and the Employee-Employer Relationship. Springer; 2015

[9] Montepare JM. Subjective age: Toward a guiding lifespan framework. International Journal of Behavioral Development. 2009;**33**(1):42-46. DOI: 10.1177/0165025408095551

[10] Henry H, Zacher H, Desmette D. Future time perspective in the work context: A systematic review of quantitative studies. Frontiers of Psychology. 2017;**28**:1-22. DOI: 10.3389/ fpsyg.2017.00413

[11] Bohlmann C, Rauch A, Zacher H. A lifespan perspective on entrepreneurship: Perceived opportunities and skills explain the negative association between age and entrepreneurial activity. Frontiers in Psychology. 2017 Dec 1;**8**:2015. DOI: 10.3389/fpsyg.2017.02015

[12] Patuelli R, Santarelli E, Tubadji A. Entrepreneurial intention among high-school students: The importance of parents, peers, and neighbors. Eurasian Business Review. 2020 Apr 11;**10**(2):225-251

[13] Obschonka M, Silbereisen RK. Entrepreneurship from a developmental science perspective. International Journal of Developmental Science. 2012;**6**:107-115. DOI: 10.3233/ DEV-2012-12105

[14] Meoli A, Fini R, Sobrero M, Wiklund J. How entrepreneurial intentions influence entrepreneurial career choices: The moderating influence of social context. Journal of Business Venturing. 2020 May 1;**35**(3):105982. DOI: 10.1016/j. jbusvent.2019.105982

[15] Lindquist MJ, Sol J, Van Praag M. Why do entrepreneurial parents have entrepreneurial children? Journal of Labor Economics. 2015 Apr 1;**33**(2):269- 296. DOI: 10.1086/678493

[16] Obschonka M. Adolescent pathways to entrepreneurship. Child Development Perspectives. 2016 Sep;**10**(3):196-201. DOI: 10.1177%2F0266242619843234

[17] Moulton JG, Scott JC. Opportunity or necessity? Disaggregating self-employment and entry at older ages. Social Forces. 2016 Jun 1;**94**(4):1539-1566

[18] Sarasavathy SD, Venkataraman S. Entrepreneurship and method: Open questions for an entrepreneurial future. Entrepreneurship Theory and Practice. 2011;**35**(1):113-135. DOI: 10.1111%2Fj.1540-6520.2010.00425.x

[19] de Lourdes Cárcamo-Solís M, del Pilar Arroyo-López M, del Carmen Alvarez-Castañón L, García-López E. Developing entrepreneurship in primary schools. The Mexican experience of "My first enterprise: Entrepreneurship by playing". Teaching and Teacher Education. 2017 May 1;**64**:291-304. DOI: 10.1016/j. tate.2017.02.013

[20] Matricano D. Grey vs. young entrepreneurs: are they really that different in terms of entrepreneurial intentions? Empirical evidence from Italy. International Journal of Business and Management. 2018;**13**:76. DOI: 10.5539/ijbm.v13n2p76

[21] Hantman S, Gimmon E. Dare to dream: New venture incubator for older adults. Educational Gerontology. 2014;**40**(10):1-8. DOI: 10.1080/03601277.2014.893748

[22] U.K. Government. Help and support for older workers. Department for Work and Pensions. 2020. London. Available from: https://www.gov. uk/government/publications/helpand-support-for-older-workers/ help-and-support-for-older-workers

[23] Levesque M, Minniti M. The effect of aging on entrepreneurial behavior.

Journal of business venturing. 2006 Mar 1;**21**(2):177-194. DOI: 10.1016/j. jbusvent.2005.04.003

[24] Azoulay P, Jones BF, Kim JD, Miranda J. Age and high-growth entrepreneurship. AER: Insights. 2020;**2**(1):65-82. DOI: 10.1257/ aeri.20180582

[25] JP Morgan Chase & Co. Gender, age, and small business financial outcomes. 2014. Available from: https:// www.jpmorganchase.com/corporate/ institute/document/institute-reportsmall-business-financial-outcomes.pdf

[26] Sibanda JJ, Manda DC. Symptoms of accounting practices that contribute to small business failures. Problems and perspectives in management. 2016(14, Iss. 4 (contin.)):194-202.

[27] Cowling M, Brown R, Rocha A. <? covid19?> Did you save some cash for a rainy COVID-19 day? The crisis and SMEs. International Small Business Journal. 2020 Aug 4: doi: 10.1177%2F0266242620945102

[28] Marchiondo LA, Gonzales E, Ran S. Development and validation of the workplace age discrimination scale. Journal of Business and Psychology. 2016 Dec 1;**31**(4):493-513. DOI: 10.1007/ s10869-015-9425-6

[29] Gielnik, M.M., Zacher, H., & Frese, M. Focus on opportunities as a mediator of the relationship between business owners' age and venture growth. Journal of Business Venturing. 2012. 27: 127-142. doi:10.1016/j.jbusvent.2010.05.002

[30] Baschiera B, Santini S, Socci M. Intergenerational entrepreneurship education: Older entrepreneurs reducing youngsters' social and work disengagement. Problems of Education in the 21st Century. 2018;76(1):7.

[31] Lange GS, Johnston WJ. The value of business accelerators and incubators–an

**171**

*Entrepreneurship at Any Age*

*DOI: http://dx.doi.org/10.5772/intechopen.94440*

entrepreneur's perspective. Journal of Business & Industrial Marketing. 2020 Apr 4. doi:10.1108/JBIM-01-2019-0024

[32] Zhao H, O'Connor G, Wu J, Lumpkin GT. Age and entrepreneurial career success: A review and metaanalysis. Journal of Business Venturing.

[33] Liu J, Zhu Y, Serapio MG, Cavusgil ST. The new generation of millennial entrepreneurs: A review and call for research. International Business Review. 2019 Oct 1;**28**(5):101581. DOI:

10.1016/j.ibusrev.2019.05.001

[35] Zhang T. Eight types of "baby boomer" entrepreneurs. Australian Journal of Career

10.1177/1038416218810220

10.1093/workar/waw031

[37] Maalaoui A, Tornikoski E, Partouche-Sebban J, Imen S. Why some third age individuals develop entrepreneurial intentions: Exploring the psychological effects of posterity. Journal of Small Business Management. 2020;**58**(3):447-473. DOI:

10.1080/00472778.2019.1659684

[34] Dy A. Agwunobi AJ. International Journal of Entrepreneurial Behavior & Research: Intersectionality and mixed methods for social context in entrepreneurship; 2019 Nov 11

Development. 2019;**28**(1):61-72. DOI:

[36] Halvorsen CJ, Morrow-Howell N. A conceptual framework on selfemployment in later life: Toward a research agenda. Work, Aging and Retirement. 2017;**2**:313-324. DOI:

2020

*Entrepreneurship at Any Age DOI: http://dx.doi.org/10.5772/intechopen.94440*

*Entrepreneurship - Contemporary Issues*

[16] Obschonka M. Adolescent pathways to entrepreneurship. Child Development Perspectives. 2016 Sep;**10**(3):196-201. DOI: 10.1177%2F0266242619843234

Journal of business venturing. 2006 Mar 1;**21**(2):177-194. DOI: 10.1016/j.

[24] Azoulay P, Jones BF, Kim JD, Miranda J. Age and high-growth entrepreneurship. AER: Insights. 2020;**2**(1):65-82. DOI: 10.1257/

[25] JP Morgan Chase & Co. Gender, age, and small business financial outcomes. 2014. Available from: https:// www.jpmorganchase.com/corporate/ institute/document/institute-reportsmall-business-financial-outcomes.pdf

[26] Sibanda JJ, Manda DC. Symptoms of accounting practices that contribute to small business failures. Problems and perspectives in management. 2016(14,

[27] Cowling M, Brown R, Rocha A. <? covid19?> Did you save some cash for a rainy COVID-19 day? The crisis and SMEs. International Small Business Journal. 2020 Aug 4: doi: 10.1177%2F0266242620945102

[28] Marchiondo LA, Gonzales E, Ran S. Development and validation of the workplace age discrimination scale. Journal of Business and Psychology. 2016 Dec 1;**31**(4):493-513. DOI: 10.1007/

[29] Gielnik, M.M., Zacher, H., & Frese, M. Focus on opportunities as a mediator of the relationship between business owners' age and venture growth. Journal of Business Venturing. 2012. 27: 127-142. doi:10.1016/j.jbusvent.2010.05.002

[30] Baschiera B, Santini S, Socci M. Intergenerational entrepreneurship education: Older entrepreneurs reducing youngsters' social and work disengagement. Problems of Education in the 21st Century. 2018;76(1):7.

[31] Lange GS, Johnston WJ. The value of business accelerators and incubators–an

Iss. 4 (contin.)):194-202.

s10869-015-9425-6

jbusvent.2005.04.003

aeri.20180582

[17] Moulton JG, Scott JC. Opportunity

[18] Sarasavathy SD, Venkataraman S. Entrepreneurship and method: Open questions for an entrepreneurial future. Entrepreneurship Theory and Practice. 2011;**35**(1):113-135. DOI: 10.1111%2Fj.1540-6520.2010.00425.x

[19] de Lourdes Cárcamo-Solís M, del Pilar Arroyo-López M, del Carmen Alvarez-Castañón L, García-López E. Developing entrepreneurship in primary schools. The Mexican experience of "My first enterprise: Entrepreneurship by playing".

Teaching and Teacher Education. 2017 May 1;**64**:291-304. DOI: 10.1016/j.

[20] Matricano D. Grey vs. young entrepreneurs: are they really that different in terms of entrepreneurial intentions? Empirical evidence from Italy. International Journal of Business and Management. 2018;**13**:76. DOI:

[21] Hantman S, Gimmon E. Dare to dream: New venture incubator for older adults. Educational

Gerontology. 2014;**40**(10):1-8. DOI: 10.1080/03601277.2014.893748

[22] U.K. Government. Help and support for older workers. Department for Work and Pensions. 2020. London. Available from: https://www.gov. uk/government/publications/helpand-support-for-older-workers/ help-and-support-for-older-workers

[23] Levesque M, Minniti M. The effect of aging on entrepreneurial behavior.

or necessity? Disaggregating self-employment and entry at older ages. Social Forces. 2016 Jun

1;**94**(4):1539-1566

tate.2017.02.013

10.5539/ijbm.v13n2p76

**170**

entrepreneur's perspective. Journal of Business & Industrial Marketing. 2020 Apr 4. doi:10.1108/JBIM-01-2019-0024

[32] Zhao H, O'Connor G, Wu J, Lumpkin GT. Age and entrepreneurial career success: A review and metaanalysis. Journal of Business Venturing. 2020

[33] Liu J, Zhu Y, Serapio MG, Cavusgil ST. The new generation of millennial entrepreneurs: A review and call for research. International Business Review. 2019 Oct 1;**28**(5):101581. DOI: 10.1016/j.ibusrev.2019.05.001

[34] Dy A. Agwunobi AJ. International Journal of Entrepreneurial Behavior & Research: Intersectionality and mixed methods for social context in entrepreneurship; 2019 Nov 11

[35] Zhang T. Eight types of "baby boomer" entrepreneurs. Australian Journal of Career Development. 2019;**28**(1):61-72. DOI: 10.1177/1038416218810220

[36] Halvorsen CJ, Morrow-Howell N. A conceptual framework on selfemployment in later life: Toward a research agenda. Work, Aging and Retirement. 2017;**2**:313-324. DOI: 10.1093/workar/waw031

[37] Maalaoui A, Tornikoski E, Partouche-Sebban J, Imen S. Why some third age individuals develop entrepreneurial intentions: Exploring the psychological effects of posterity. Journal of Small Business Management. 2020;**58**(3):447-473. DOI: 10.1080/00472778.2019.1659684

**173**

**Chapter 11**

**Abstract**

*Knut Ingar Westeren*

innovations take place in the companies.

company uses 1.05 kg of feed to produce 1 kg of fish.

**1. Introduction**

Innovation Processes in

Aquaculture: Comparing

Companies in Norway and Chile

In the last 20 years, aquaculture in general and harvested Atlantic salmon in particular has experienced very high growth rates compared to other food products, and at the same time, salmon production has evolved from semi-manual production techniques to the utilization of high-tech capital-intensive production equipment. This development has seriously challenged the environmental considerations and escalated fish health measures to combat existing and evolving problems. As an answer to these challenges and because of relatively high profit margins, aquaculture of harvested Atlantic salmon has also had a speedy innovation path. This chapter will give a theoretical background and an empirical analysis based on data collection at three companies, two in Norway and one in Chile. The focus is on how innovations take place in different stages of the production process, and how these are built into the production and managerial system. The results show, as expected, links between company operations and the actual innovations, but these links do not have the same structure in Norway and Chile. Factors like human and financial resources, technology, and company organization seem to explain most of the differences between how

**Keywords:** innovations, technology, knowledge, harvested salmon, Norway, Chile

Driven by population growth, urbanization, and increasing wealth, aquaculture has grown by approximately 8 percent per annum over the past 20 years—faster than any other food sector. In 2018, world aquaculture production was 82.1 million tons live weight of which the marine production was 30.8 million tons and about 5 million tons came from salmonids [1]. The harvested salmon part of aquaculture has the possibility to continue this strong growth and thus makes a significant contribution to providing the global population with valuable proteins. Aquaculture is a resource-efficient method of producing protein-rich food. The companies in the study have a feed conversion rate of 1.05 to 1.09, which means that at best, the

This ongoing growth, however, must not come at the cost of the environment or the climate. Aquaculture still requires amounts of wild fish which are processed into fishmeal and fish oil and used as feed, although the share of wild fish in aquaculture feed has been reduced in the last years and is now down below 20%. In some cases, aquaculture production is still not sustainable [2].

#### **Chapter 11**

## Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile

*Knut Ingar Westeren*

#### **Abstract**

In the last 20 years, aquaculture in general and harvested Atlantic salmon in particular has experienced very high growth rates compared to other food products, and at the same time, salmon production has evolved from semi-manual production techniques to the utilization of high-tech capital-intensive production equipment. This development has seriously challenged the environmental considerations and escalated fish health measures to combat existing and evolving problems. As an answer to these challenges and because of relatively high profit margins, aquaculture of harvested Atlantic salmon has also had a speedy innovation path. This chapter will give a theoretical background and an empirical analysis based on data collection at three companies, two in Norway and one in Chile. The focus is on how innovations take place in different stages of the production process, and how these are built into the production and managerial system. The results show, as expected, links between company operations and the actual innovations, but these links do not have the same structure in Norway and Chile. Factors like human and financial resources, technology, and company organization seem to explain most of the differences between how innovations take place in the companies.

**Keywords:** innovations, technology, knowledge, harvested salmon, Norway, Chile

#### **1. Introduction**

Driven by population growth, urbanization, and increasing wealth, aquaculture has grown by approximately 8 percent per annum over the past 20 years—faster than any other food sector. In 2018, world aquaculture production was 82.1 million tons live weight of which the marine production was 30.8 million tons and about 5 million tons came from salmonids [1]. The harvested salmon part of aquaculture has the possibility to continue this strong growth and thus makes a significant contribution to providing the global population with valuable proteins. Aquaculture is a resource-efficient method of producing protein-rich food. The companies in the study have a feed conversion rate of 1.05 to 1.09, which means that at best, the company uses 1.05 kg of feed to produce 1 kg of fish.

This ongoing growth, however, must not come at the cost of the environment or the climate. Aquaculture still requires amounts of wild fish which are processed into fishmeal and fish oil and used as feed, although the share of wild fish in aquaculture feed has been reduced in the last years and is now down below 20%. In some cases, aquaculture production is still not sustainable [2].

Facilities generate nutrient-rich effluent which is often channeled into coastal waters. The waters then become over-fertilized, causing algal bloom and oxygendeprived zones. Innovative developments for reducing the food conversion rate do at the same time reduce emissions and improve profitability. For some time now, the industry has been testing products for their environmental compatibility, embracing all aspects from the extraction of the raw materials through to recycling [3]. The other fundamental challenge is fish health where the industry has spent hundreds of millions USD to develop medicines and procedures that substantively reduce the sea lice and other fish health problems. Given this background, it is easy to argue that the study of innovations will increase in importance in aquaculture. Innovation has been one of the most important subjects in any research and business agenda analysis in recent years, and also aquaculture has been analyzed from many viewpoints.

In the following sections, we will first give a theoretical background for the central concepts we use. Then we will present the empirical part and discuss the data collected and how these data relate to the central questions.

Research question 1: How do the companies in Norway and Chile handle different aspects of the innovation processes?

Research question 2: How can we explain differences in innovation creation and management between the companies in these two countries?

#### **2. Central concepts: innovation perspectives**

#### **2.1 Innovation perspectives**

Innovation plays a key role in the various phases of a company's development and has a decisive influence on the speed of business growth. The knowledge about transfer of technology in particular plays a key role in promoting innovative activity. Innovation is also an important source of stimulating competitive advantage, independent of the situation of the global economy. There are numerous definitions of innovation often starting with Schumpeter [4] and ending with the Oslo Manual [5]. Most definitions contain these key elements: (1) product, (2) process, (3) implementing a new resource, (4) a new market or a new sales formula, and (5) a new type of organizational system. We also have to consider Schumpeter's criteria that an innovation has to add value. How this shall be understood and measured is debated thoroughly, see [6]. Another reasonably agreed viewpoint is to look at innovations as a process which can be divided into three stages—(1) the creative/ idea-generating phase, (2) the actual implementation of the innovation, and (3) innovation management, see [7].

Innovations have also been analyzed by looking at how models have evolved through different time periods. This began in the 1950s–60s with the linear model which looked at the three stages above as a linear process. Then came the interactive models, from 1970 to 1990, that posited that innovations had different types of loops and feed-back effects and the interactive models also introduced networking as a part of innovation analysis.

Starting in the 1990s, we have seen several developments in different directions:

**175**

for a case study.

organization." [22], p. 324.

*Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile*

Another aspect of the innovation concept that has demonstrated importance is the link between knowledge and innovations. This question has been investigated since the concepts of the knowledge economy started to emerge in the late 1990s. More or less all studies end up concluding that there is a link between knowledge and innovations—the crucial question is what characterizes this link, see [7, 13]. Other discussions on delineation of the innovation concept is the private/public question. The private sector must innovate to survive in markets by developing competitiveness while the public sector needs to innovate to improve services to the public. The difference here is that the private sector normally can measure the income side as a part of production while valuating from a public sector perspective the quality/cost benefit is not all that easy. Another discussion centers around the differences in innovations in goods compared to services. The Oslo Manual [5] gives guidelines for how to handle this, but so far innovation in products and processes

*DOI: http://dx.doi.org/10.5772/intechopen.93672*

• The open innovation concept [11]

has gained more attention for goods than for services.

3.Creative thinking (challenge the status quo)

**2.2 The innovation process and the creative/idea-generating phase and** 

One main contribution to analyze creativity and innovations comes from Amabile [14] where she takes as the point of departure the following keywords as

The three keywords from Amabile are discussed in all standard textbooks on innovation like [15], so there will only be a few comments here that are relevant for the focus of the chapter. The expertise keyword relates to knowledge which is one of the most discussed concepts in social science. The first aspect looked at is normally knowledge level, which indicates that you must have a knowledge platform to stand on to be creative. Then knowledge is linked to creative thinking and how the knowledge transfer process takes place. Here the division between explicit and tacit knowledge becomes important. There is a long, extensive and important debate on how tacit knowledge can be converted to explicit knowledge in companies, and how companies can create an environment that promotes creative knowledge transfers, see [16] for a more general presentation and [17]

Amabile [14] discusses motivation as an important factor related to innovations. She finds that when people are intrinsically motivated, they engage in their innovative initiatives for the challenge and enjoyment of it. Amabile's work is paralleled by a number of emerging studies that started in the 1990s trying to explain what they called innovative behavior in organizations, see [18–20]. Based on [19, 21] Yuan and Woodman [22] have the following definition of the innovative behavior: "We define innovative behavior as an employee's intentional introduction or application of new ideas, products, processes, and procedures to his or her work role, work unit, or

• Eco-innovations [12]

**innovative behavior**

the fundaments to develop creativity:

2.Motivation (why we engage)

1.Expertise (knowledge)


*Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile DOI: http://dx.doi.org/10.5772/intechopen.93672*


*Entrepreneurship - Contemporary Issues*

has been analyzed from many viewpoints.

ent aspects of the innovation processes?

**2.1 Innovation perspectives**

innovation management, see [7].

as a part of innovation analysis.

• Disruptive innovations [9]

• Innovation systems [10]

Facilities generate nutrient-rich effluent which is often channeled into coastal waters. The waters then become over-fertilized, causing algal bloom and oxygendeprived zones. Innovative developments for reducing the food conversion rate do at the same time reduce emissions and improve profitability. For some time now, the industry has been testing products for their environmental compatibility, embracing all aspects from the extraction of the raw materials through to recycling [3]. The other fundamental challenge is fish health where the industry has spent hundreds of millions USD to develop medicines and procedures that substantively reduce the sea lice and other fish health problems. Given this background, it is easy to argue that the study of innovations will increase in importance in aquaculture. Innovation has been one of the most important subjects in any research and business agenda analysis in recent years, and also aquaculture

In the following sections, we will first give a theoretical background for the central concepts we use. Then we will present the empirical part and discuss the

Research question 1: How do the companies in Norway and Chile handle differ-

Research question 2: How can we explain differences in innovation creation and

Innovation plays a key role in the various phases of a company's development and has a decisive influence on the speed of business growth. The knowledge about transfer of technology in particular plays a key role in promoting innovative activity. Innovation is also an important source of stimulating competitive advantage, independent of the situation of the global economy. There are numerous definitions of innovation often starting with Schumpeter [4] and ending with the Oslo Manual [5]. Most definitions contain these key elements: (1) product, (2) process, (3) implementing a new resource, (4) a new market or a new sales formula, and (5) a new type of organizational system. We also have to consider Schumpeter's criteria that an innovation has to add value. How this shall be understood and measured is debated thoroughly, see [6]. Another reasonably agreed viewpoint is to look at innovations as a process which can be divided into three stages—(1) the creative/ idea-generating phase, (2) the actual implementation of the innovation, and (3)

Innovations have also been analyzed by looking at how models have evolved through different time periods. This began in the 1950s–60s with the linear model which looked at the three stages above as a linear process. Then came the interactive models, from 1970 to 1990, that posited that innovations had different types of loops and feed-back effects and the interactive models also introduced networking

Starting in the 1990s, we have seen several developments in different directions:

• The division between radical and incremental innovations [8]

data collected and how these data relate to the central questions.

management between the companies in these two countries?

**2. Central concepts: innovation perspectives**

**174**

Another aspect of the innovation concept that has demonstrated importance is the link between knowledge and innovations. This question has been investigated since the concepts of the knowledge economy started to emerge in the late 1990s. More or less all studies end up concluding that there is a link between knowledge and innovations—the crucial question is what characterizes this link, see [7, 13]. Other discussions on delineation of the innovation concept is the private/public question. The private sector must innovate to survive in markets by developing competitiveness while the public sector needs to innovate to improve services to the public. The difference here is that the private sector normally can measure the income side as a part of production while valuating from a public sector perspective the quality/cost benefit is not all that easy. Another discussion centers around the differences in innovations in goods compared to services. The Oslo Manual [5] gives guidelines for how to handle this, but so far innovation in products and processes has gained more attention for goods than for services.

#### **2.2 The innovation process and the creative/idea-generating phase and innovative behavior**

One main contribution to analyze creativity and innovations comes from Amabile [14] where she takes as the point of departure the following keywords as the fundaments to develop creativity:


The three keywords from Amabile are discussed in all standard textbooks on innovation like [15], so there will only be a few comments here that are relevant for the focus of the chapter. The expertise keyword relates to knowledge which is one of the most discussed concepts in social science. The first aspect looked at is normally knowledge level, which indicates that you must have a knowledge platform to stand on to be creative. Then knowledge is linked to creative thinking and how the knowledge transfer process takes place. Here the division between explicit and tacit knowledge becomes important. There is a long, extensive and important debate on how tacit knowledge can be converted to explicit knowledge in companies, and how companies can create an environment that promotes creative knowledge transfers, see [16] for a more general presentation and [17] for a case study.

Amabile [14] discusses motivation as an important factor related to innovations. She finds that when people are intrinsically motivated, they engage in their innovative initiatives for the challenge and enjoyment of it. Amabile's work is paralleled by a number of emerging studies that started in the 1990s trying to explain what they called innovative behavior in organizations, see [18–20]. Based on [19, 21] Yuan and Woodman [22] have the following definition of the innovative behavior: "We define innovative behavior as an employee's intentional introduction or application of new ideas, products, processes, and procedures to his or her work role, work unit, or organization." [22], p. 324.

One fundamental assumption of this definition is that the behavior of all employees is intentional. This raises questions about how we can analyze innovative behavior and how we can explain why some employees are more innovative than others. Practitioners and scientific analysts agree that innovative behavior challenges organizations in one way or another. Studies like Janssen [23] looked at innovative behavior as a three-stage process in this order: idea generation, idea promotion, and idea realization.

When we analyze innovative behavior, it is important to be aware of which level in the organization we put focus on. Normally we divide into the individual level, the work group/team level, and the organizational level. There is interaction between levels, but as we will see from the data collection in project, production takes place in teams, which consist of individuals. Most studies consider that organizations like companies are divided into groups, and in each group, there is at least one person that has managerial responsibility, which in our case is the site manager. But also, of fundamental importance are the individual attributes for both the leader and the participants in the group. The outcome variable which is innovative behavior can be made operational by looking at six characteristics, see [20]. This was developed further by Janssen [23] using nine work behavior elements for innovative behavior: "(1) Creating new ideas for difficult issues (idea generation); (2) Searching out new working methods, techniques, or instruments (idea generation); (3) Generating original solutions for problems (idea generation); (4) Mobilizing support and trust for innovative ideas (idea promotion); (5) Acquiring approval for innovative ideas (idea promotion); (6) Making important organizational members enthusiastic for innovative ideas (idea promotion); (7) Transforming innovative ideas into useful applications (idea realization); (8) Introducing innovative ideas into the work environment in a systematic way (idea realization); (9) Evaluating the utility of innovative ideas (idea realization)" [23], p. 292.

Yuan and Woodman [22] also tried to explain innovative behavior and they used skill variables like education and organizational variables like (power) distance. One result from [22] was that the importance of the supervisor and his relationship to the rest of the group was fundamental. This corresponded with the results from the project reported in this study. Yuan and Woodman [22] also did more detailed statistical analysis trying to identify paths. This suggested several interesting results but most of them seemed to be quite context dependent.

#### **2.3 Innovation management**

#### *2.3.1 Fundamentals of innovation management*

There are numerous models and suggestions about how to manage innovations. We begin looking at the concepts of Tidd and Bessant [24] where they outlined how innovation can be analyzed as a core process within an organization. They use four keywords or key areas to look at this. The first is **searching** which means how the organization must look for opportunities for innovation. The next step is to **select** what the organization can and will do and why. The third step is about **implementation**, i.e. how the company will manage the process, so the innovation is working successfully in the company. For the fourth and final step, they use the word **capture**. This is the process by which the company will benefit from the innovation and implement the innovation into the general strategy of the company.

It is interesting to see how different studies and articles rely on the same factors when analyzing innovation management. In this respect, we will look at work like [25–27]. The article by Adams et al. [25] gives a literature review and summary of many studies which examined innovation management, so one can say that the

**177**

*Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile*

c.The integration of innovation strategy and firm strategy

results in [25] are the state of the art. The following list of indicators can be used to

a.Inputs and resource situation: Manpower, capital, and financial resources

g.Commercialization: market research, market testing, marketing, and sales

The question about innovation in low-tech industries compared to high-tech industries is relevant for aquaculture. Fagerberg et al. [7] discussed this theme in their "Handbook of Innovations" to determine if there are significant differences between innovation management and innovation processes in low-tech, mediumtech and high-tech companies. Thirty years ago, fish farming was a low-tech industry but a transition into use of high-tech equipment has rapidly taken place, fostering productivity, ecologic and sustainable development arguments. This has led to a demand of high-level knowledge for almost all aspects of innovation in aquaculture.

*2.3.2 Some comments on the relationship between organizational structure and* 

There is a sizeable amount of literature on development from hierarchical organizations to network based organizational models. The main achievement from the point of view of innovation is that creative ideas can be linked by different networks to different people and show different possibilities without everything going through one established hierarchical model. This argument again is linked to the knowledge management assumption that knowledge workers now have a greater demand for autonomy than earlier. An article by Jensen [28] describes how the autonomy pyramid is turned upside down with the introduction of what can be called the knowledge economy and knowledge organizations. One argument from Jensen is that several people at different levels in the organization may have more knowledge than the responsible manager. This knowledge contributes to innovativeness in such a way that it is counterproductive to have a hierarchal system. If the network organization is too loosely coupled so that core knowledge and competences are without managerial control, there could be negative consequences. Another argument that has changed organizational thinking is what can be called the learning organization. Studies by Senge and Suzuki [29] and Lundvall and Borrás [30] suggested that organizations improved in flexibility and innovativeness when the organizational structure had learning processes on every level. Another argument for change in organizational structure that promotes innovativeness is the development of project-based organizations. Because of factors like managerial freedom, risk reduction, and possibilities for making contacts

b.Knowledge management: Idea generation, knowledge repository, and information

*DOI: http://dx.doi.org/10.5772/intechopen.93672*

d.Organization and culture

f. The use of IT-based solutions

h.Complexity and risk

*innovations*

flows

analyze the innovation process, adapted from [25]:

e.Technology and technological collaboration

results in [25] are the state of the art. The following list of indicators can be used to analyze the innovation process, adapted from [25]:


*Entrepreneurship - Contemporary Issues*

idea realization.

One fundamental assumption of this definition is that the behavior of all employees is intentional. This raises questions about how we can analyze innovative behavior and how we can explain why some employees are more innovative than others. Practitioners and scientific analysts agree that innovative behavior challenges organizations in one way or another. Studies like Janssen [23] looked at innovative behavior as a three-stage process in this order: idea generation, idea promotion, and

When we analyze innovative behavior, it is important to be aware of which level in the organization we put focus on. Normally we divide into the individual level, the work group/team level, and the organizational level. There is interaction between levels, but as we will see from the data collection in project, production takes place in teams, which consist of individuals. Most studies consider that organizations like companies are divided into groups, and in each group, there is at least one person that has managerial responsibility, which in our case is the site manager. But also, of fundamental importance are the individual attributes for both the leader and the participants in the group. The outcome variable which is innovative behavior can be made operational by looking at six characteristics, see [20]. This was developed further by Janssen [23] using nine work behavior elements for innovative behavior: "(1) Creating new ideas for difficult issues (idea generation); (2) Searching out new working methods, techniques, or instruments (idea generation); (3) Generating original solutions for problems (idea generation); (4) Mobilizing support and trust for innovative ideas (idea promotion); (5) Acquiring approval for innovative ideas (idea promotion); (6) Making important organizational members enthusiastic for innovative ideas (idea promotion); (7) Transforming innovative ideas into useful applications (idea realization); (8) Introducing innovative ideas into the work environment in a systematic way (idea realization); (9) Evaluating the

Yuan and Woodman [22] also tried to explain innovative behavior and they used skill variables like education and organizational variables like (power) distance. One result from [22] was that the importance of the supervisor and his relationship to the rest of the group was fundamental. This corresponded with the results from the project reported in this study. Yuan and Woodman [22] also did more detailed statistical analysis trying to identify paths. This suggested several interesting results

There are numerous models and suggestions about how to manage innovations. We begin looking at the concepts of Tidd and Bessant [24] where they outlined how innovation can be analyzed as a core process within an organization. They use four keywords or key areas to look at this. The first is **searching** which means how the organization must look for opportunities for innovation. The next step is to **select** what the organization can and will do and why. The third step is about **implementation**, i.e. how the company will manage the process, so the innovation is working successfully in the company. For the fourth and final step, they use the word **capture**. This is the process by which the company will benefit from the innovation and implement the

It is interesting to see how different studies and articles rely on the same factors when analyzing innovation management. In this respect, we will look at work like [25–27]. The article by Adams et al. [25] gives a literature review and summary of many studies which examined innovation management, so one can say that the

utility of innovative ideas (idea realization)" [23], p. 292.

but most of them seemed to be quite context dependent.

*2.3.1 Fundamentals of innovation management*

innovation into the general strategy of the company.

**2.3 Innovation management**

**176**


The question about innovation in low-tech industries compared to high-tech industries is relevant for aquaculture. Fagerberg et al. [7] discussed this theme in their "Handbook of Innovations" to determine if there are significant differences between innovation management and innovation processes in low-tech, mediumtech and high-tech companies. Thirty years ago, fish farming was a low-tech industry but a transition into use of high-tech equipment has rapidly taken place, fostering productivity, ecologic and sustainable development arguments. This has led to a demand of high-level knowledge for almost all aspects of innovation in aquaculture.

#### *2.3.2 Some comments on the relationship between organizational structure and innovations*

There is a sizeable amount of literature on development from hierarchical organizations to network based organizational models. The main achievement from the point of view of innovation is that creative ideas can be linked by different networks to different people and show different possibilities without everything going through one established hierarchical model. This argument again is linked to the knowledge management assumption that knowledge workers now have a greater demand for autonomy than earlier. An article by Jensen [28] describes how the autonomy pyramid is turned upside down with the introduction of what can be called the knowledge economy and knowledge organizations. One argument from Jensen is that several people at different levels in the organization may have more knowledge than the responsible manager. This knowledge contributes to innovativeness in such a way that it is counterproductive to have a hierarchal system. If the network organization is too loosely coupled so that core knowledge and competences are without managerial control, there could be negative consequences.

Another argument that has changed organizational thinking is what can be called the learning organization. Studies by Senge and Suzuki [29] and Lundvall and Borrás [30] suggested that organizations improved in flexibility and innovativeness when the organizational structure had learning processes on every level. Another argument for change in organizational structure that promotes innovativeness is the development of project-based organizations. Because of factors like managerial freedom, risk reduction, and possibilities for making contacts

independently, we have seen many innovative processes taken out of the company and organized on a project basis.

#### **2.4 Innovations in aquaculture**

#### *2.4.1 Background*

Aquaculture is one of the fastest growing food producing segments the later years. Norway and Chile are the leading countries in the world for harvested salmon production and a total of more than 90% of the salmon production from the two countries is exported. With today's open cage technology there are only a limited number of places in the world where the natural conditions enable efficient production of salmon in the sea. In addition to Norway and Chile, the UK, Canada, the Faroe Islands, and Australia also contribute to worldwide production. **Table 1** shows global production which has shown an increase in production of about 66% from 2010 to 2018.

High profitability on the one hand and environmental challenges on the other are factors that have driven innovation and alternative manufacturing technologies in the aquaculture industry in recent years. Current trends in the development of innovations and new technology in aquaculture are proceeding in several directions:


Since 2005 Norwegian producers have been obliged to monitor how emissions from the plants affect the area around the site in order to monitor whether the


**179**

system and business parts.

*Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile*

environmental impact is at all times sound and sustainable both in the individual locality and in the region. This has given rise to several innovative initiatives.

Fish health and measures for combating fish diseases are serious issues in aquaculture production. The major problem with fish health in aquaculture is sea lice. There are different treatments for combating the sea lice and the use of antibiotics is being reduced to nearly zero. If there are disease challenges in individual locations or over larger areas, measures introduced by the authorities can have major consequences for production. Significant research and innovative activities are required to find measures that can improve fish health with impacting production

On this background, it is easy to argue that the study of innovations will increase in importance in aquaculture. There have been several articles and projects dealing with innovations in aquaculture but still many gaps remain to be filled. Joffre et al. [32] compiled a literature review and they find that "*Lack of detailed analysis of the innovation process*" ([32], p. 139) is a field where new knowledge needs to be added,

Joffre et al. [32] have suggested to look at innovations in aquaculture by diving

Our study of innovations in three companies shows that technology-based innovations play a major role. This relates to feeding systems, equipment for monitoring the fish in the cage, new procedures for delousing of the salmon, and measures for improving productivity of maintenance. The different technologybased innovations vary over a broad spectrum of technologies from incremental to radical innovations. On the radical side we have seen the introduction of solutions that combine hydroacoustic technology to monitor fish movement with advanced machine learning algorithms to observe fish behavior and objectively measure fish appetite. This enables the person responsible for feeding to optimize operations and reduce the feed conversion ratio while increasing growth rates. The use of equipment like this also demands new types of knowledge transfers, from the producer of

The above example also shows us that innovations are linked together. The new technology demands new knowledge which means the management of the company must have a systemic approach to adopt a new knowledge structure. Whether this example can be called a systemic innovation is questionable but at some point, a new knowledge structure can be labeled innovative. Another technological example is a new mechanical water-based delousing system. Here the personnel at the site work together with the personnel on the delousing boat and there must be transfers of knowledge both ways. The delousing procedures also affect the business approaches because of the slaughtering logistics of the fish in the cage. We found several other examples that one innovation that originated in one part of the production system at the site had consequences for other parts. Often the chain of reactions started in the technology area and then spread to

the equipment to the site personnel and internally at the site.

*DOI: http://dx.doi.org/10.5772/intechopen.93672*

as little as possible.

*2.4.2 Innovations in aquaculture*

and this is our main concern.

• Technology-driven

• Systemic

them into the following categories:

• Business and managerial

#### **Table 1.**

*Global production of Atlantic salmon from 2005 to 2016 and estimates for 2017 and 2018.*

#### *Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile DOI: http://dx.doi.org/10.5772/intechopen.93672*

environmental impact is at all times sound and sustainable both in the individual locality and in the region. This has given rise to several innovative initiatives.

Fish health and measures for combating fish diseases are serious issues in aquaculture production. The major problem with fish health in aquaculture is sea lice. There are different treatments for combating the sea lice and the use of antibiotics is being reduced to nearly zero. If there are disease challenges in individual locations or over larger areas, measures introduced by the authorities can have major consequences for production. Significant research and innovative activities are required to find measures that can improve fish health with impacting production as little as possible.

#### *2.4.2 Innovations in aquaculture*

On this background, it is easy to argue that the study of innovations will increase in importance in aquaculture. There have been several articles and projects dealing with innovations in aquaculture but still many gaps remain to be filled. Joffre et al. [32] compiled a literature review and they find that "*Lack of detailed analysis of the innovation process*" ([32], p. 139) is a field where new knowledge needs to be added, and this is our main concern.

Joffre et al. [32] have suggested to look at innovations in aquaculture by diving them into the following categories:


*Entrepreneurship - Contemporary Issues*

and organized on a project basis.

**2.4 Innovations in aquaculture**

*2.4.1 Background*

from 2010 to 2018.

in several directions:

independently, we have seen many innovative processes taken out of the company

Aquaculture is one of the fastest growing food producing segments the later years. Norway and Chile are the leading countries in the world for harvested salmon production and a total of more than 90% of the salmon production from the two countries is exported. With today's open cage technology there are only a limited number of places in the world where the natural conditions enable efficient production of salmon in the sea. In addition to Norway and Chile, the UK, Canada, the Faroe Islands, and Australia also contribute to worldwide production. **Table 1** shows global production which has shown an increase in production of about 66%

High profitability on the one hand and environmental challenges on the other are factors that have driven innovation and alternative manufacturing technologies in the aquaculture industry in recent years. Current trends in the development of innovations and new technology in aquaculture are proceeding

• Several facilities are being developed and tested for land-based farming

Since 2005 Norwegian producers have been obliged to monitor how emissions from the plants affect the area around the site in order to monitor whether the

Norway 574 945 1234 1171 1208 1253 Chile 385 130 598 504 564 677 UK 120 143 166 157 177 153 Canada 108 122 135 146 139 145 Faroe Islands 17 42 76 78 80 72 Australia 18 33 54 51 61 61 United States 10 18 20 23 22 19 Ireland 12 18 16 16 17 14 Iceland 7 1 4 8 12 14 Others 1 4 16 8 14 9 Total 1252 1456 2319 2162 2294 2418

**2005 2010 2015 2016 2017E 2018E**

• Developments in traditional open cage facilities

• Submersible facilities and larger offshore installations

*Global production of Atlantic salmon from 2005 to 2016 and estimates for 2017 and 2018.*

• Semi-closed facilities in the sea

**178**

**Table 1.**

*Production figures in 1000 tons.*

*Source: Ref. [31].*

• Business and managerial

Our study of innovations in three companies shows that technology-based innovations play a major role. This relates to feeding systems, equipment for monitoring the fish in the cage, new procedures for delousing of the salmon, and measures for improving productivity of maintenance. The different technologybased innovations vary over a broad spectrum of technologies from incremental to radical innovations. On the radical side we have seen the introduction of solutions that combine hydroacoustic technology to monitor fish movement with advanced machine learning algorithms to observe fish behavior and objectively measure fish appetite. This enables the person responsible for feeding to optimize operations and reduce the feed conversion ratio while increasing growth rates. The use of equipment like this also demands new types of knowledge transfers, from the producer of the equipment to the site personnel and internally at the site.

The above example also shows us that innovations are linked together. The new technology demands new knowledge which means the management of the company must have a systemic approach to adopt a new knowledge structure. Whether this example can be called a systemic innovation is questionable but at some point, a new knowledge structure can be labeled innovative. Another technological example is a new mechanical water-based delousing system. Here the personnel at the site work together with the personnel on the delousing boat and there must be transfers of knowledge both ways. The delousing procedures also affect the business approaches because of the slaughtering logistics of the fish in the cage. We found several other examples that one innovation that originated in one part of the production system at the site had consequences for other parts. Often the chain of reactions started in the technology area and then spread to system and business parts.

#### **3. Empirical part**

The data collection that forms the empirical part of the project started in 2017 with support from the Regional Research Fund, Nord, Norway [33]. The project's main goal was to analyze innovations, competitiveness, and transfer of knowledge in salmon aquaculture production in two companies in Norway and one in Chile. In this chapter, we focus on the innovations part of the project. Data was collected from three companies:

Marine Harvest (now renamed Mowi), Chile: MH Chile

Marine Harvest (now renamed Mowi), Norway, Region North Norway: MH North Midt-Norsk Havbruk, (Mid-Norwegian Aquaculture): MNH

Mowi is one of the largest aquaculture companies in the world (the main product is harvested Atlantic salmon) with total sales (in 2019) of more than 4.1 billion EUR, operations in 25 countries and about 15,000 employees [34]. Midt-Norsk Havbruk is a Norwegian company with sales of more than 100 million EUR. So, these are large and profitable companies.

We started the data collection at Marine Harvest's production sites in Chile in 2017. In Chile, Marine Harvest has operations in Region X and Region XI. We collected data from seven sites in Region X where Puerto Montt is the city where Marine Harvest has its headquarters. We have also collected data from three sites in Region XI outside the town of Aysen. We did data collection from Marine Harvest's sites in Region North in Norway at the beginning of 2018 and during the data collection we visited six sites. From Mid-Norwegian Aquaculture, MNH, we collected data from eight sites.

We used a structured questionnaire filled in by the research team when we were visiting the sites. We used three kinds of questions, with some being numeric about production, size etc. Then we had some questions where we asked for evaluation of statements using a Likert scale. Finally, we had some questions about innovation processes. The data collection process was quite resource intensive because we stayed at the sites for only 1 day, with boat transport to and from the site consuming up to 6 hours of that day. All formal information was checked against the databases of the companies.

**Table 2** shows the data collection by company and by employee position. We have a total of 35 questionnaires collected from Marine Harvest Chile (MH Chile), 52 from Marine Harvest North (MH North) and 37 from Mid-Norwegian Aquaculture (MNH). The distribution of responses show that we have about as many responses from site managers as from operators in Chile, while in Norway we have a higher number of responses from operators than from site managers. Normally, there are 4–7 people in the work team at the site and the data shows that we have a reasonably


**181**

**Table 3.**

*Number of years of experience and group size.*

MH Chile

MH North

*Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile*

representative distribution from the sites in Norway. The reason we have a relatively large share of site managers in Chile is because of transport and accessibility

**Table 3** shows that the average group size for the sites in Chile is 6.14, at MH North 5.02 and for MNH 3.92. Another important difference lies in how the work is organized. At the sites in Chile, everyone lives at the site 24/7 and it is normally a week's shift. The sites in Norway organize work by traveling to the site in the morning and leaving in the evening - a working day that normally begins at 8 am

We also asked for information on how long the employees had worked at the site and in the company. **Table 3** shows very similar results in the sense that in both Norway and Chile, employees have an average of about 5 years at the site and

**Table 4** contains information about structural factors on how production takes place. In Chile, the cages used are based on rectangular steel structures where, in most cases, 14 to 16 cages are attached together. In Norway, the system is more flexible in the sense that the site can have from 6 to 14 circular cages made from high density polyethylene (like Isoflon PEHD 1000) floating 10–30 m from each other. The Chilean system has the advantage that the cages are easier to access, with walkways along the cage edges, while the Norwegian (European) system cages are

inside the cages that were currently in operation. Here we see that the total volume of water is less in Norway than in Chile since the number of cages in Norway is smaller and the size in volume of the individual cages is relatively similar. We also have information of the number of fish at the site at the time of data collection, and the average weight was 3.36 kg in Chile and from 2 to 3 kg in Norway. The data collection shows that we have many observations of fish that are relatively early in the growth cycle. This applies to the relevant sites in both Chile and Norway. The same trend is also found in the data showing how many months are left before the fish are to be processed.

Maintaining and developing routines is essential for production in companies and other organizations where stability is needed in production. On the other hand, the ability to change routines is seen as an indicator of the extent to which a company has a potential for the development of competitiveness and stimulate innovation. We examined how routines could change in the companies and important indicators were type and frequency of changes in routines and the extent to which the changes were implemented and followed up. In **Table 5** we see the main results

> N 35 35 35 Average 5.60 10.37 6.14

> N 52 52 52 Average 5.67 11.79 5.02

> Average 5.11 11.03 3.92

Average 5.48 11.16 5.16

MNH N 37 37 37

Total N 124 124 124

**Number of years employed in the company**

(cubic meters) of water that is

**Number of people in the workgroup**

*DOI: http://dx.doi.org/10.5772/intechopen.93672*

and ends between 4 and 5 pm.

only possible to access by boat.

between 10 and 11 years in the company.

Furthermore, we find in **Table 4** the volume in m3

**Number of years employed in same job**

considerations.

*N: number of answers—in all* **Tables 2***–***17***, N represents numbers of answers.*

*Source: the source for all* **Tables 2***–***17** *is data collection done as a part of the project [33].*

#### **Table 2.**

*Distribution of respondents with respect to position and company.*

#### *Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile DOI: http://dx.doi.org/10.5772/intechopen.93672*

representative distribution from the sites in Norway. The reason we have a relatively large share of site managers in Chile is because of transport and accessibility considerations.

**Table 3** shows that the average group size for the sites in Chile is 6.14, at MH North 5.02 and for MNH 3.92. Another important difference lies in how the work is organized. At the sites in Chile, everyone lives at the site 24/7 and it is normally a week's shift. The sites in Norway organize work by traveling to the site in the morning and leaving in the evening - a working day that normally begins at 8 am and ends between 4 and 5 pm.

We also asked for information on how long the employees had worked at the site and in the company. **Table 3** shows very similar results in the sense that in both Norway and Chile, employees have an average of about 5 years at the site and between 10 and 11 years in the company.

**Table 4** contains information about structural factors on how production takes place. In Chile, the cages used are based on rectangular steel structures where, in most cases, 14 to 16 cages are attached together. In Norway, the system is more flexible in the sense that the site can have from 6 to 14 circular cages made from high density polyethylene (like Isoflon PEHD 1000) floating 10–30 m from each other. The Chilean system has the advantage that the cages are easier to access, with walkways along the cage edges, while the Norwegian (European) system cages are only possible to access by boat.

Furthermore, we find in **Table 4** the volume in m3 (cubic meters) of water that is inside the cages that were currently in operation. Here we see that the total volume of water is less in Norway than in Chile since the number of cages in Norway is smaller and the size in volume of the individual cages is relatively similar. We also have information of the number of fish at the site at the time of data collection, and the average weight was 3.36 kg in Chile and from 2 to 3 kg in Norway. The data collection shows that we have many observations of fish that are relatively early in the growth cycle. This applies to the relevant sites in both Chile and Norway. The same trend is also found in the data showing how many months are left before the fish are to be processed.

Maintaining and developing routines is essential for production in companies and other organizations where stability is needed in production. On the other hand, the ability to change routines is seen as an indicator of the extent to which a company has a potential for the development of competitiveness and stimulate innovation. We examined how routines could change in the companies and important indicators were type and frequency of changes in routines and the extent to which the changes were implemented and followed up. In **Table 5** we see the main results


#### **Table 3.**

*Number of years of experience and group size.*

*Entrepreneurship - Contemporary Issues*

The data collection that forms the empirical part of the project started in 2017 with support from the Regional Research Fund, Nord, Norway [33]. The project's main goal was to analyze innovations, competitiveness, and transfer of knowledge in salmon aquaculture production in two companies in Norway and one in Chile. In this chapter, we focus on the innovations part of the project. Data was collected

Marine Harvest (now renamed Mowi), Norway, Region North Norway: MH North

Mowi is one of the largest aquaculture companies in the world (the main product

We started the data collection at Marine Harvest's production sites in Chile in 2017. In Chile, Marine Harvest has operations in Region X and Region XI. We collected data from seven sites in Region X where Puerto Montt is the city where Marine Harvest has its headquarters. We have also collected data from three sites in Region XI outside the town of Aysen. We did data collection from Marine Harvest's sites in Region North in Norway at the beginning of 2018 and during the data collection we visited six sites. From Mid-Norwegian Aquaculture, MNH, we collected data from eight sites.

We used a structured questionnaire filled in by the research team when we were visiting the sites. We used three kinds of questions, with some being numeric about production, size etc. Then we had some questions where we asked for evaluation of statements using a Likert scale. Finally, we had some questions about innovation processes. The data collection process was quite resource intensive because we stayed at the sites for only 1 day, with boat transport to and from the site consuming up to 6 hours of that day. All formal information was checked against the databases

**Table 2** shows the data collection by company and by employee position. We have a total of 35 questionnaires collected from Marine Harvest Chile (MH Chile), 52 from Marine Harvest North (MH North) and 37 from Mid-Norwegian Aquaculture (MNH). The distribution of responses show that we have about as many responses from site managers as from operators in Chile, while in Norway we have a higher number of responses from operators than from site managers. Normally, there are 4–7 people in the work team at the site and the data shows that we have a reasonably

Operator N 18 43 26 87

Site manager N 17 9 11 37

Total N 35 52 37 124

*N: number of answers—in all* **Tables 2***–***17***, N represents numbers of answers. Source: the source for all* **Tables 2***–***17** *is data collection done as a part of the project [33].*

*Distribution of respondents with respect to position and company.*

**Company Total**

**MH Chile MH North MNH**

In % 51.4 82.7 70.3 70.2

In % 48.6 17.3 29.7 29.8

In % 100.0 100.0 100.0 100.0

is harvested Atlantic salmon) with total sales (in 2019) of more than 4.1 billion EUR, operations in 25 countries and about 15,000 employees [34]. Midt-Norsk Havbruk is a Norwegian company with sales of more than 100 million EUR. So,

Marine Harvest (now renamed Mowi), Chile: MH Chile

Midt-Norsk Havbruk, (Mid-Norwegian Aquaculture): MNH

**3. Empirical part**

from three companies:

of the companies.

these are large and profitable companies.

**180**

**Table 2.**


*\* At data collection point of time.*

#### **Table 4.**

*Information on production structure, average figures.*


#### **Table 5.**

*Changes in routines.*

from the questions asked about changes routines. We asked site manager and operators at the site asked if there have been proposals for changes in procedures within the respondent's area of responsibility:

#### 1.never

2.previously you can remember


We also asked if the suggestion was followed up and the criterion here was if the suggestion has been written down. Furthermore, it is asked what type of proposal it was, whether the change was linked to the product, the manufacturing processes, the organization, or logistics.

**Table 5** shows that the average score for the company in Chile was 3.86, while for the sites in Norway it was 3.65 and 4.11, which gives the same average score for Chile and Norway. Since higher numbers show greater frequency the results show major differences in the process of formalizing proposed changes in routines at

**183**

**Table 6.**

*Follow-up of suggestions for changes in routines.*

*Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile*

sites in Chile compared to Norway, which shows clearly higher implementation

The extent to which the proposals have been followed up also show a relatively large difference between Norway and Chile in the sense that around 94% answer yes to follow-up in Norway while the corresponding figure is 62.9% in Chile, see **Table 6**. The results here also show that innovative behavior contributes stronger through the process of changing routines in Norway compared to Chile. This may be related to managerial/organizational factors, culture, and that resources for changes are more easily accessible in Norway than in Chile. This will be commented in detail

In this project, we did a thorough data collection on innovation using a structured questionnaire, but we also made notes from comments of the interviewed persons. As stated in the theoretical part of this chapter, innovation is currently one of the most discussed topics influencing company developments, see Westeren et al. [13]. Aquaculture has changed fundamentally from utilizing manual methods of production to be a capital high-tech and innovative intensive production. With a few exceptions, aquaculture has also earned high profits, which has enabled a rapid

It is not easy to interview employees of companies about innovations because it is necessary to distinguish between innovations and changes in production more generally. We used the well-known criteria for innovation from the Oslo Manual [5], where the central criteria states that innovations must have something new or improved that differs significantly for the company and relates to a product, process or the organization. The theoretical part of this chapter gives a thorough discussion of this. The interviews took place after we had first explained the innovation criteria

**Table 7** shows that some respondents had never initiated any proposals for innovation, and these are taken out of the percentage calculations. The product from aquaculture companies is salmon delivered to the wellboat. There are weight and quality classifications, but the product is generally a standard commodity. Therefore, the majority of the proposals for innovations are linked to the production process at the site. The span of the proposals here is very wide, ranging from major changes in feeding systems to smaller proposals for new ways of carrying out

**Table 8** shows the results of the question regarding the origin of the ideas for the innovations. Here there is a difference in the structure of the answers in the

MH Chile N 22 13 35

MH North N 49 3 52

MNH N 35 2 37

**Is the proposal for a change in routines followed up Total**

**Yes No**

In % 62.9 37.1 100.0

In % 94.2 5.8 100.0

In % 94.6 5.4 100.0 N 106 18 124 In % 85.5 14.5 100.0

*DOI: http://dx.doi.org/10.5772/intechopen.93672*

pace for innovative actions, see [33].

maintenance and other smaller technical tasks.

capacity in Norway.

in the next section.

to the respondent.

#### *Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile DOI: http://dx.doi.org/10.5772/intechopen.93672*

sites in Chile compared to Norway, which shows clearly higher implementation capacity in Norway.

The extent to which the proposals have been followed up also show a relatively large difference between Norway and Chile in the sense that around 94% answer yes to follow-up in Norway while the corresponding figure is 62.9% in Chile, see **Table 6**. The results here also show that innovative behavior contributes stronger through the process of changing routines in Norway compared to Chile. This may be related to managerial/organizational factors, culture, and that resources for changes are more easily accessible in Norway than in Chile. This will be commented in detail in the next section.

In this project, we did a thorough data collection on innovation using a structured questionnaire, but we also made notes from comments of the interviewed persons. As stated in the theoretical part of this chapter, innovation is currently one of the most discussed topics influencing company developments, see Westeren et al. [13]. Aquaculture has changed fundamentally from utilizing manual methods of production to be a capital high-tech and innovative intensive production. With a few exceptions, aquaculture has also earned high profits, which has enabled a rapid pace for innovative actions, see [33].

It is not easy to interview employees of companies about innovations because it is necessary to distinguish between innovations and changes in production more generally. We used the well-known criteria for innovation from the Oslo Manual [5], where the central criteria states that innovations must have something new or improved that differs significantly for the company and relates to a product, process or the organization. The theoretical part of this chapter gives a thorough discussion of this. The interviews took place after we had first explained the innovation criteria to the respondent.

**Table 7** shows that some respondents had never initiated any proposals for innovation, and these are taken out of the percentage calculations. The product from aquaculture companies is salmon delivered to the wellboat. There are weight and quality classifications, but the product is generally a standard commodity. Therefore, the majority of the proposals for innovations are linked to the production process at the site. The span of the proposals here is very wide, ranging from major changes in feeding systems to smaller proposals for new ways of carrying out maintenance and other smaller technical tasks.


**Table 8** shows the results of the question regarding the origin of the ideas for the innovations. Here there is a difference in the structure of the answers in the

In % 62.9 37.1 100.0 MH North N 49 3 52 In % 94.2 5.8 100.0 MNH N 35 2 37 In % 94.6 5.4 100.0 N 106 18 124 In % 85.5 14.5 100.0

#### **Table 6.**

*Follow-up of suggestions for changes in routines.*

*Entrepreneurship - Contemporary Issues*

MH Chile

MH North

*At data collection point of time.*

*Information on production structure, average figures.*

the respondent's area of responsibility:

2.previously you can remember

3.the last 3 months

the organization, or logistics.

4.last month

5.last week

1.never

*Changes in routines.*

**Table 5.**

*\**

**Table 4.**

**Number of cages**

**Cage volume in m3**

**Number of fish in cage\***

N 35 35 35 35 35 Average 14.46 286,149 769,957 3.36 5.66

N 52 52 52 52 52 Average 10.90 260,915 1,281,154 3.10 7.83

Average 8.03 240,810 1,298,648 2.14 7.08

Average 11.25 262,038 1,142,084 2.89 6.99

Average 3.86 1.34

Average 3.65 3.25

Average 4.11 3.84

Average 3.85 2.89

**Changes in routines Formal changes in routines**

MNH N 37 37 37 37 37

Total N 124 124 124 124 124

MH Chile N 35 35

MH North N 52 52

MNH N 37 37

Total N 124 124

from the questions asked about changes routines. We asked site manager and operators at the site asked if there have been proposals for changes in procedures within

We also asked if the suggestion was followed up and the criterion here was if the suggestion has been written down. Furthermore, it is asked what type of proposal it was, whether the change was linked to the product, the manufacturing processes,

**Table 5** shows that the average score for the company in Chile was 3.86, while for the sites in Norway it was 3.65 and 4.11, which gives the same average score for Chile and Norway. Since higher numbers show greater frequency the results show major differences in the process of formalizing proposed changes in routines at

**Average weight of fish\***

**Months before slaughter\***

**182**


#### **Table 7.**

*Types of innovative proposals.*


#### **Table 8.**

*Origin of the innovation.*

sense that Chile has a predominance of innovations stemming from self-generated proposals, while in Norway the innovation ideas to a greater extent are generated from a cooperative process at the site.

**Table 9** provides information on the length of time between when the idea of innovation was proposed until it was actually tested or put into practice. Here it is interesting to see that what one might call the maturation time of the idea varies both in Norway and in Chile, but on the average, the time to process the idea through the system was longer in Chile than in Norway.

We also have information as to whether the innovative idea was an answer to an acute or persistent problem. The results indicate that innovativeness essentially was a response to a persistent problem.

We have also asked respondents to estimate the cost of implementing the innovative idea and the results are stated in **Table 10**. The cost figure for Chile is in Chilean pesos (CLP) and for Norway in Norwegian kroner (NOK). Taking into account that 1 NOK is about 75 CLP, the average cost in Norwegian NOK for the innovative ideas in Chile is approximately 100,000 NOK, and for the Norwegian projects, it is about 200,000 NOK. This means that the Norwegian projects are on

**185**

*Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile*

**Time it took from the idea was generated until it was put forward in the company**

**1 month 6 months 12 months More than** 

In % 40.0 26.7 13.3 20.0 100.0

In % 34.7 59.2 6.1 0.0 100.0 MNH N 18 12 3 1 34 3 In % 52.9 35.3 8.8 2.9 100.0 Total N 47 49 10 7 113 11 In % 41.6 43.4 8.8 6.2 100.0

> **Cost of producing the innovation in CLP and NOK**

> > 100,000)

MHH N 33 33

N 30 30

N 49 49 Average NOK 201,673 19.82

Average NOK 200,303 26.91

*The time it took from the idea was generated until it was put forward in the company.*

Average CLP 7,501,000 (= approx. NOK

N 12 8 4 6 30 5

N 17 29 3 0 49 3

**Number of valid answers**

**The number of days it took to produce the innovation.**

12.6

**1 year**

**Unanswered**

average twice as costly as in Chile. **Table 10** also shows the calculation of the average number of days it took to produce the innovation after the decision was made. The result here is 12.60 days in Chile, 19.82 days for MH North, and 26.91 for MNH in Norway which seems likely since the Norwegian projects are clearly greater than the

**Table 11** shows the results of where the decision to implement the innovation was actually made. The table shows a structural difference between Chile and Norway in the sense that more decisions are made at the company level in Chile, while in Norway, the majority of decisions are made on the site. The message here is that in Chile the decision has been moved further up the company hierarchy even though the projects in Chile are clearly smaller than the projects in the Norway. **Table 12** shows the distribution of answers after asking if the innovations need new knowledge to be implemented. Here the results show a clear necessity for new knowledge with larger needs for new knowledge in Norway since the Norwegian innovations are larger and more comprehensive. Westeren [33] show that the majority of innovations required new ways to exchange knowledge and this ten-

We also asked if the innovations affected the corporate culture. **Table 13** shows the results that Chile clearly sees no influence, while Norway sees somewhat more influence on the organization, yet both countries remain negative on the average.

*DOI: http://dx.doi.org/10.5772/intechopen.93672*

MH Chile

MH North

**Table 9.**

MH Chile

MH North

**Table 10.**

Chilean ones, both in cost and scope.

*Cost of producing and the time it took for the innovative projects.*

dency was higher in Norway than in Chile.

*Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile DOI: http://dx.doi.org/10.5772/intechopen.93672*


#### **Table 9.**

*Entrepreneurship - Contemporary Issues*

MH Chile

MH North

**Table 7.**

MH Chile

MH North

**Table 8.**

*Origin of the innovation.*

*Types of innovative proposals.*

**Completely selfgenerated**

sense that Chile has a predominance of innovations stemming from self-generated proposals, while in Norway the innovation ideas to a greater extent are generated

**Types of innovative proposals Number of** 

N 6 20 4 30 5

N 8 38 3 49 3

In % 20.0 66.7 13.3 100.0

In % 16.3 77.6 6.1 100.0 MNH N 0 32 2 34 3 In % 0.0 94.1 5.9 100.0 Total N 14 90 9 113 11 In % 12.4 79.6 8.0 100.0

> **From the site collectively**

**Organization**

**Origin of the innovation Number** 

**Outside the company**

**From the company**

N 14 16 0 0 30 5

N 8 34 4 3 49 3

In % 46.7 53.3 0.0 0.0 100.0

In % 16.3 69.4 8.2 6.1 100.0 MNH N 7 19 8 0 34 3 In % 20.6 55.9 23.5 0.0 100.0 Total N 29 69 12 3 113 11 In % 25.7 61.1 10.6 2.7 100.0

**Product Production process**

**valid answers**

**of valid answers** **Unanswered**

**Unanswered**

**Table 9** provides information on the length of time between when the idea of innovation was proposed until it was actually tested or put into practice. Here it is interesting to see that what one might call the maturation time of the idea varies both in Norway and in Chile, but on the average, the time to process the idea

We also have information as to whether the innovative idea was an answer to an acute or persistent problem. The results indicate that innovativeness essentially was

We have also asked respondents to estimate the cost of implementing the innovative idea and the results are stated in **Table 10**. The cost figure for Chile is in Chilean pesos (CLP) and for Norway in Norwegian kroner (NOK). Taking into account that 1 NOK is about 75 CLP, the average cost in Norwegian NOK for the innovative ideas in Chile is approximately 100,000 NOK, and for the Norwegian projects, it is about 200,000 NOK. This means that the Norwegian projects are on

from a cooperative process at the site.

a response to a persistent problem.

through the system was longer in Chile than in Norway.

**184**

*The time it took from the idea was generated until it was put forward in the company.*


#### **Table 10.**

*Cost of producing and the time it took for the innovative projects.*

average twice as costly as in Chile. **Table 10** also shows the calculation of the average number of days it took to produce the innovation after the decision was made. The result here is 12.60 days in Chile, 19.82 days for MH North, and 26.91 for MNH in Norway which seems likely since the Norwegian projects are clearly greater than the Chilean ones, both in cost and scope.

**Table 11** shows the results of where the decision to implement the innovation was actually made. The table shows a structural difference between Chile and Norway in the sense that more decisions are made at the company level in Chile, while in Norway, the majority of decisions are made on the site. The message here is that in Chile the decision has been moved further up the company hierarchy even though the projects in Chile are clearly smaller than the projects in the Norway.

**Table 12** shows the distribution of answers after asking if the innovations need new knowledge to be implemented. Here the results show a clear necessity for new knowledge with larger needs for new knowledge in Norway since the Norwegian innovations are larger and more comprehensive. Westeren [33] show that the majority of innovations required new ways to exchange knowledge and this tendency was higher in Norway than in Chile.

We also asked if the innovations affected the corporate culture. **Table 13** shows the results that Chile clearly sees no influence, while Norway sees somewhat more influence on the organization, yet both countries remain negative on the average.


#### **Table 11.**

*At what level is the decision to initiate innovation?*


#### **Table 12.**

*Does innovation need new knowledge to be implemented?*


**187**

**Table 15.**

*Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile*

is easier to build trust and confidence among all employees.

*Does the idea require a stronger network of trust between the employees?*

*Does innovation require changes in the IT-based systems?*

**Table 14** shows the results of the question of whether implementing the innovation requires stronger trust in the network between those who work at the site. The answer to this is a clear yes in Norway, while we get a clear no in Chile. One explanation for this in Chile is a two-level leadership structure at the sites. The site manager and the assistant site manager make the managerial decisions at the site in Chile. The operators are to a lesser extent involved, mainly when the innovative ideas come from the operator level. In Norway, the management of the site, including innovation decision making, is done under a much more collectivistic "atmosphere". Innovations will always be linked to changes, and those changes challenge the network of trust. Since knowledge is higher and more equally distributed in Norway, it

It is further asked in **Table 15** whether implementing the innovations will require changes in the IT-based systems at the site. The answer here gives a main emphasis on no in both countries which is somewhat surprising since digitalization has significantly advanced in both countries, especially in the use of advanced

**Table 16** provides the results regarding potential problems funding the innovation. Here we get a unanimous response that funding is not a problem for

> **Does the idea require a stronger network of trust**

> > **Yes No**

In % 33.3 66.7 100.0

In % 81.6 18.4 100.0 MNH N 25 9 34 3 In % 73.5 26.5 100.0 Total N 75 38 113 11 In % 66.4 33.6 100.0

> **Does innovation require changes in the IT-based systems**

> > **Yes No**

In % 26.7 73.3 100.0

In % 26.5 73.5 100.0 MNH N 10 24 34 3 In % 29.4 70.6 100.0 Total N 31 82 113 11 In % 27.4 72.6 100.0

N 8 22 30 5

N 13 36 49 3

N 10 20 30 5

N 40 9 49 3

**Number of valid answers**

> **Number of valid answers**

**Unanswered**

**Unanswered**

*DOI: http://dx.doi.org/10.5772/intechopen.93672*

surveillance and feeding systems.

MH Chile

MH North

**Table 14.**

MH Chile

MH North

#### **Table 13.**

*Does innovation affect the organizational culture?*

*Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile DOI: http://dx.doi.org/10.5772/intechopen.93672*

**Table 14** shows the results of the question of whether implementing the innovation requires stronger trust in the network between those who work at the site. The answer to this is a clear yes in Norway, while we get a clear no in Chile. One explanation for this in Chile is a two-level leadership structure at the sites. The site manager and the assistant site manager make the managerial decisions at the site in Chile. The operators are to a lesser extent involved, mainly when the innovative ideas come from the operator level. In Norway, the management of the site, including innovation decision making, is done under a much more collectivistic "atmosphere". Innovations will always be linked to changes, and those changes challenge the network of trust. Since knowledge is higher and more equally distributed in Norway, it is easier to build trust and confidence among all employees.

It is further asked in **Table 15** whether implementing the innovations will require changes in the IT-based systems at the site. The answer here gives a main emphasis on no in both countries which is somewhat surprising since digitalization has significantly advanced in both countries, especially in the use of advanced surveillance and feeding systems.

**Table 16** provides the results regarding potential problems funding the innovation. Here we get a unanimous response that funding is not a problem for


#### **Table 14.**

*Entrepreneurship - Contemporary Issues*

MH Chile

MH North

**Table 11.**

MH Chile

MH North

**Table 12.**

MH Chile

MH North

**The company central**

*At what level is the decision to initiate innovation?*

*Does innovation need new knowledge to be implemented?*

*Does innovation affect the organizational culture?*

**The company at the regional level**

**At what level is the decision to implement innovation Number** 

**Production unit (site)**

N 8 10 12 0 30 5

N 0 17 29 3 49 3

In % 26.7 33.3 40.0 0.0 100.0

In % 0.0 34.7 59.2 6.1 100.0 MNH N 0 11 23 0 34 3 In % 0.0 32.4 67.6 0.0 100.0 Total N 8 38 64 3 113 11 In % 7.1 33.6 56.6 2.7 100.0

> **Does innovation need new knowledge to be implemented**

> > **Yes No**

In % 60.0 40.0 100.0

In % 79.6 20.4 100.0 MNH N 30 4 34 3 In % 88.2 11.8 100.0 Total N 87 26 113 11 In % 77.0 23.0 100.0

> **Influencing the organizational culture of organization**

> > **Yes No**

In % 13.3 86.7 100.0

In % 38.8 61.2 100.0 MNH N 16 18 34 3 In % 47.1 52.9 100.0 Total N 39 74 113 11 In % 34.5 65.5 100.0

N 4 26 30 5

N 19 30 49 3

N 18 12 30 5

N 39 10 49 3

**of valid answers**

**Number of valid answers**

**Number of valid answers**

**The person who made the proposal** **Unanswered**

**Unanswered**

**Unanswered**

**186**

**Table 13.**

*Does the idea require a stronger network of trust between the employees?*


#### **Table 15.**

*Does innovation require changes in the IT-based systems?*


#### **Table 16.**

*Problems funding the innovation.*


#### **Table 17.**

*The innovation planned and/or implemented.*

innovations in Norway. This must be understood in the context that Norwegian innovations are normally funded as a part of the implementation process and the companies in Norway showed a positive attitude for doing innovations. The results are clearly different in Chile where about half of the projects have financing problems. This seems to illustrate the fact that he innovation process in Chile is much more bureaucratic and decoupled from the site.

Some of the same reality is set out in **Table 17** where it is asked to what extent the innovation is only planned or also implemented. For the projects in Norway, nearly all proposed innovations are completed or under implementation. We see a quite different degree of implementation in Chile in the sense that many proposed innovations may not have been implemented or only partially implemented.

#### **4. Discussion and conclusions**

The research questions are about how companies in Norway and Chile handle different aspects of the innovation process. The production equipment of the companies is quite comparable, with the Norwegian equipment being a little more

**189**

Norway compared to Chile.

*Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile*

technologically advanced than the Chilean. But the organizational set up differs in at least two ways. The site manager has more autonomy toward the executive level in Norway. And consequently, the most knowledge demanding processes - feeding and monitoring of the salmon in the cage - is a process that rotates between all members of the group at the site, while in Chile, this is the responsibility of the site manager and the assistant site manager. Other differences include a slightly higher education level in Norway, in addition to a more equally oriented labor culture in

Looking back at the literature review, creativity is a central aspect. In the tables about change in routines, we see a quite high and equal drive to generate the initiatives to challenge routines as a start of an innovative process. But when we come to the crucial stage of formalization, the Chilean sites lose pace. We find a significant difference in what we might call implementation and completion ability. The flatter organizational structure and more collective attitude in Norway seem to be important elements to explain why the innovative behavior in order to change routines is

We were surprised by the results in **Table 7** where there is a quite considerable difference between product and process innovations among the Norwegian companies. One explanation is that at NH North they had initiated a program for improving the condition of the salmon in the process of transfer to the wellboat, and they classified this as a product innovation. At MH North they also implemented fish health measures to reduce mortality for the transfer of salmon from the cage to the wellboat also classified as a product innovation. This discussion reveals the fact that innovations often are linked together. To have one innovation that contributes to increase quality of the salmon into a higher quality class (a product innovation) it is often necessary to develop equipment which can represent a process innovation. But still, aquaculture will mainly have process innovations linking together activities since it has developed into a high-tech industry producing a quite standardized commodity. We saw emphasis of this integrated view on innovations more in Norway than in Chile, which is supported by the results in **Table 12**, where new knowledge and new ways to exchange knowledge are more emphasized in Norway. This is also an argument for the open innovation focus because a demand for more integrated innovations makes it favorable to have different kinds of input at an early stage. The results from **Tables 10** and **11**, combined with our experience based on the visits to the sites, have revealed a view that innovations were more efficiently used as a tool to strengthen competitiveness in Norway as compared to Chile. The Norwegian innovation management was based on a different logic than the Chilean. This refers to the selection and implementation processes mentioned in the literature review. When an innovative idea was suggested and accepted in Norway, the financial resources were an integral part of the innovation management. That is why we find the large differences in **Tables 16** and **17** where there were no problems financing the innovation in Norway compared to nearly 50% of all projects in Chile encountering financing issues. This also explains the very high conduction rate in

All three companies had a reasonably good resource situation in that they enjoyed good profit margins, with Norway probably doing a little better. However, this does not explain the big differences in innovation management that we find. The first element as an explanation is better possibilities for taking decisions at the site level in Norway. In Chile, we find more of the pyramidal structure including a

In Chile, we also find a smaller willingness to include financial planning in the innovation process, even given that the projects are smaller and not so knowledgedemanding as in Norway. This indicates what we can recall from the theoretical

stronger belief in control from the central/regional company level.

*DOI: http://dx.doi.org/10.5772/intechopen.93672*

stronger and more related to the site.

Norway than in Chile.

#### *Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile DOI: http://dx.doi.org/10.5772/intechopen.93672*

technologically advanced than the Chilean. But the organizational set up differs in at least two ways. The site manager has more autonomy toward the executive level in Norway. And consequently, the most knowledge demanding processes - feeding and monitoring of the salmon in the cage - is a process that rotates between all members of the group at the site, while in Chile, this is the responsibility of the site manager and the assistant site manager. Other differences include a slightly higher education level in Norway, in addition to a more equally oriented labor culture in Norway than in Chile.

Looking back at the literature review, creativity is a central aspect. In the tables about change in routines, we see a quite high and equal drive to generate the initiatives to challenge routines as a start of an innovative process. But when we come to the crucial stage of formalization, the Chilean sites lose pace. We find a significant difference in what we might call implementation and completion ability. The flatter organizational structure and more collective attitude in Norway seem to be important elements to explain why the innovative behavior in order to change routines is stronger and more related to the site.

We were surprised by the results in **Table 7** where there is a quite considerable difference between product and process innovations among the Norwegian companies. One explanation is that at NH North they had initiated a program for improving the condition of the salmon in the process of transfer to the wellboat, and they classified this as a product innovation. At MH North they also implemented fish health measures to reduce mortality for the transfer of salmon from the cage to the wellboat also classified as a product innovation. This discussion reveals the fact that innovations often are linked together. To have one innovation that contributes to increase quality of the salmon into a higher quality class (a product innovation) it is often necessary to develop equipment which can represent a process innovation. But still, aquaculture will mainly have process innovations linking together activities since it has developed into a high-tech industry producing a quite standardized commodity. We saw emphasis of this integrated view on innovations more in Norway than in Chile, which is supported by the results in **Table 12**, where new knowledge and new ways to exchange knowledge are more emphasized in Norway. This is also an argument for the open innovation focus because a demand for more integrated innovations makes it favorable to have different kinds of input at an early stage.

The results from **Tables 10** and **11**, combined with our experience based on the visits to the sites, have revealed a view that innovations were more efficiently used as a tool to strengthen competitiveness in Norway as compared to Chile. The Norwegian innovation management was based on a different logic than the Chilean. This refers to the selection and implementation processes mentioned in the literature review. When an innovative idea was suggested and accepted in Norway, the financial resources were an integral part of the innovation management. That is why we find the large differences in **Tables 16** and **17** where there were no problems financing the innovation in Norway compared to nearly 50% of all projects in Chile encountering financing issues. This also explains the very high conduction rate in Norway compared to Chile.

All three companies had a reasonably good resource situation in that they enjoyed good profit margins, with Norway probably doing a little better. However, this does not explain the big differences in innovation management that we find. The first element as an explanation is better possibilities for taking decisions at the site level in Norway. In Chile, we find more of the pyramidal structure including a stronger belief in control from the central/regional company level.

In Chile, we also find a smaller willingness to include financial planning in the innovation process, even given that the projects are smaller and not so knowledgedemanding as in Norway. This indicates what we can recall from the theoretical

*Entrepreneurship - Contemporary Issues*

**Table 16.**

**Table 17.**

*Problems funding the innovation.*

innovations in Norway. This must be understood in the context that Norwegian innovations are normally funded as a part of the implementation process and the companies in Norway showed a positive attitude for doing innovations. The results are clearly different in Chile where about half of the projects have financing problems. This seems to illustrate the fact that he innovation process in Chile is much

**Problems funding innovation Number of valid answers Unanswered**

**Yes No**

MH Chile N 16 14 30 5 In % 53.3 46.7 100.0 MH North N 0 49 49 3 In % 0.0 100.0 100.0 MNH N 0 34 34 3 In % 0.0 100.0 100.0 Total N 16 97 113 11 In % 14.2 85.8 100.0

**The innovation planned and/or implemented Number** 

**implemented**

**Implemented Partially** 

MH Chile N 16 10 4 30 5 In % 53.3 33.3 13.3 100.0 MH North N 1 48 0 49 3 In % 2.0 98.0 0.0 100.0 MNH N 0 34 0 34 3 In % 0.0 100.0 0.0 100.0 Total N 17 92 4 113 11 In % 15.0 81.4 3.5 100.0

**of valid answers**

**Unanswered**

Some of the same reality is set out in **Table 17** where it is asked to what extent the innovation is only planned or also implemented. For the projects in Norway, nearly all proposed innovations are completed or under implementation. We see a quite different degree of implementation in Chile in the sense that many proposed innovations may not have been implemented or only partially implemented.

The research questions are about how companies in Norway and Chile handle different aspects of the innovation process. The production equipment of the companies is quite comparable, with the Norwegian equipment being a little more

more bureaucratic and decoupled from the site.

**Only planned**

**4. Discussion and conclusions**

*The innovation planned and/or implemented.*

**188**

considerations about innovative behavior—keywords like support, trust, and approval are important to explain the differences between Norway and Chile, see **Table 14**. This points back to the more fundamental discussion about trust in innovation processes. This theme is investigated by research by Sankowska [35], Panayides and Lun [36] and Ellonen et al. [37], and they all find a positive relation between trust and innovation. Sankowska [35] is using Structural Equation Modeling and finds that trust affects innovations both directly and through the processes of knowledge creation and transfer. The results from this project shed light on innovation processes in three large and resourceful companies and the results must be interpreted in this context. There is reason to believe that smaller aquaculture companies also try to develop innovation strategies but how this more in detail goes on needs to be investigated.

Concerning future research more in general, we refer to one of the latest books about innovation and knowledge creation, Bathelt et al. [38]. They give a thorough discussion on the most relevant perspectives of innovation, but they encourage further research on innovation because "we are still faced with many unanswered questions and new challenges in economic and social life that need new analytical perspectives as well as new answers and solutions" [38], p. 1.

#### **Author details**

Knut Ingar Westeren Faculty of Social Sciences, Nord University, Levanger, Norway

\*Address all correspondence to: knut.i.westeren@nord.no

© 2020 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

**191**

2013

*Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile*

Innovation and Interactive Learning.

[11] Chesbrough H, Vanhaverbeke W, West J. Open Innovation: Researching a New Paradigm. Oxford: Oxford

[12] OECD. Sustainable Manufacturing and Eco-Innovation. Paris: OECD; 2009. Available from: https://www.oecd.org/

de Fátima Sales M, Similä JO, Staduto J. Competitiveness and Knowledge: An International Comparison of Traditional

[14] Amabile TM. How to Kill Creativity. Boston, MA: Harvard Business School

innovation/inno/43423689.pdf

Firms. London: Routledge; 2018

[15] Dawson P, Andriopoulos C. Managing Change, Creativity and Innovation. London: Sage; 2014. p. 638

[16] Nonaka I, Teece DJ. Managing Industrial Knowledge: Creation, Transfer and Utilization. London: Sage; 2001. DOI: 10.4135/9781446217573

[17] Westeren KI. Theoretical considerations of the innovation concept and case study - Innovation in a food producing firm. Informe Gepec.

[18] Kanter RM. When a thousand flowers bloom: Structural, collective, and social conditions for innovation in organization. In: Staw BM, Cummings LL, editors. Research in Organizational Behavior. Greenwich, CT: JAI Press; 1988. pp. 169-211

[19] West MA, Farr JL. Innovation at work: Psychological perspectives. Social

[20] Scott SG, Bruce RA. Determinants of innovative behavior: A path model of

Behavior. 1989;**4**:15-30

2014;**18**(2):163-176

[13] Westeren KI, Cader H,

Publishing; 1998

London: Anthem Press; 2010

University Press; 2006

*DOI: http://dx.doi.org/10.5772/intechopen.93672*

[1] FAO. The State of World Fisheries and Aquaculture 2020: Sustainability

in Action. Rome: FAO; 2020. Available from: http://www.fao.org/ state-of-fisheries-aquaculture

**References**

[2] Diana JS, Egna HS, Chopin T, Peterson MS, Cao L, Pomeroy R. Responsible aquaculture in 2050: Valuing local conditions and human innovations will be key to success. Bioscience. 2013;**63**:255-262

[3] OECD. The Ocean Economy in 2030.

[5] OECD. Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data. Paris: OECD; 2018. Available from: https://www.oecd.org/sti/inno/

[6] Battisti G, Stoneman P. Defining and Measuring the Innovativeness of Firms. Warwick: Economic Statistics Centre of

[7] Fagerberg J, Mowery DC, Nelson RR. The Oxford Handbook of Innovation. Oxford: Oxford University Press; 2005

[4] Schumpeter JA. The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. New Brunswick: Transaction Publishers; 1982. p. 244

Paris: OECD; 2016. p. 254

oslo-manual2018-info.pdf

Excellence (ESCoE); 2019. p. 54

[8] Henderson RM, Clark KB. Architectural innovation: The reconfiguration of existing product technologies and the failure of established firms. Administrative Science Quarterly. 1990;**35**(1):9-30

[9] Christensen CM. The innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Cambridge (MA): Harvard Business Review Press;

[10] Lundvall B-Å. National Systems of Innovation: Toward a Theory of

*Innovation Processes in Aquaculture: Comparing Companies in Norway and Chile DOI: http://dx.doi.org/10.5772/intechopen.93672*

#### **References**

*Entrepreneurship - Contemporary Issues*

in detail goes on needs to be investigated.

perspectives as well as new answers and solutions" [38], p. 1.

considerations about innovative behavior—keywords like support, trust, and approval are important to explain the differences between Norway and Chile, see **Table 14**. This points back to the more fundamental discussion about trust in innovation processes. This theme is investigated by research by Sankowska [35], Panayides and Lun [36] and Ellonen et al. [37], and they all find a positive relation between trust and innovation. Sankowska [35] is using Structural Equation Modeling and finds that trust affects innovations both directly and through the processes of knowledge creation and transfer. The results from this project shed light on innovation processes in three large and resourceful companies and the results must be interpreted in this context. There is reason to believe that smaller aquaculture companies also try to develop innovation strategies but how this more

Concerning future research more in general, we refer to one of the latest books about innovation and knowledge creation, Bathelt et al. [38]. They give a thorough discussion on the most relevant perspectives of innovation, but they encourage further research on innovation because "we are still faced with many unanswered questions and new challenges in economic and social life that need new analytical

**190**

**Author details**

Knut Ingar Westeren

Faculty of Social Sciences, Nord University, Levanger, Norway

© 2020 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium,

\*Address all correspondence to: knut.i.westeren@nord.no

provided the original work is properly cited.

[1] FAO. The State of World Fisheries and Aquaculture 2020: Sustainability in Action. Rome: FAO; 2020. Available from: http://www.fao.org/ state-of-fisheries-aquaculture

[2] Diana JS, Egna HS, Chopin T, Peterson MS, Cao L, Pomeroy R. Responsible aquaculture in 2050: Valuing local conditions and human innovations will be key to success. Bioscience. 2013;**63**:255-262

[3] OECD. The Ocean Economy in 2030. Paris: OECD; 2016. p. 254

[4] Schumpeter JA. The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. New Brunswick: Transaction Publishers; 1982. p. 244

[5] OECD. Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data. Paris: OECD; 2018. Available from: https://www.oecd.org/sti/inno/ oslo-manual2018-info.pdf

[6] Battisti G, Stoneman P. Defining and Measuring the Innovativeness of Firms. Warwick: Economic Statistics Centre of Excellence (ESCoE); 2019. p. 54

[7] Fagerberg J, Mowery DC, Nelson RR. The Oxford Handbook of Innovation. Oxford: Oxford University Press; 2005

[8] Henderson RM, Clark KB. Architectural innovation: The reconfiguration of existing product technologies and the failure of established firms. Administrative Science Quarterly. 1990;**35**(1):9-30

[9] Christensen CM. The innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Cambridge (MA): Harvard Business Review Press; 2013

[10] Lundvall B-Å. National Systems of Innovation: Toward a Theory of

Innovation and Interactive Learning. London: Anthem Press; 2010

[11] Chesbrough H, Vanhaverbeke W, West J. Open Innovation: Researching a New Paradigm. Oxford: Oxford University Press; 2006

[12] OECD. Sustainable Manufacturing and Eco-Innovation. Paris: OECD; 2009. Available from: https://www.oecd.org/ innovation/inno/43423689.pdf

[13] Westeren KI, Cader H, de Fátima Sales M, Similä JO, Staduto J. Competitiveness and Knowledge: An International Comparison of Traditional Firms. London: Routledge; 2018

[14] Amabile TM. How to Kill Creativity. Boston, MA: Harvard Business School Publishing; 1998

[15] Dawson P, Andriopoulos C. Managing Change, Creativity and Innovation. London: Sage; 2014. p. 638

[16] Nonaka I, Teece DJ. Managing Industrial Knowledge: Creation, Transfer and Utilization. London: Sage; 2001. DOI: 10.4135/9781446217573

[17] Westeren KI. Theoretical considerations of the innovation concept and case study - Innovation in a food producing firm. Informe Gepec. 2014;**18**(2):163-176

[18] Kanter RM. When a thousand flowers bloom: Structural, collective, and social conditions for innovation in organization. In: Staw BM, Cummings LL, editors. Research in Organizational Behavior. Greenwich, CT: JAI Press; 1988. pp. 169-211

[19] West MA, Farr JL. Innovation at work: Psychological perspectives. Social Behavior. 1989;**4**:15-30

[20] Scott SG, Bruce RA. Determinants of innovative behavior: A path model of individual innovation in the workplace. Academy of Management Journal. 1994;**37**(3):580-607

[21] West MA, Farr JL. Innovation at work. In: West MA, Farr JL, editors. Innovation and Creativity at Work: Psychological and Organizational Strategies. Chichester: Wiley; 1990. pp. 3-13

[22] Yuan F, Woodman RW. Innovative behavior in the workplace: The role of performance and image outcome expectations. Academy of Management Journal. 2010;**53**(2):323-342

[23] Janssen O. Job demands, perceptions of effort - Reward fairness and innovative work behavior. Journal of Occupational and Organizational Psychology. 2000;**73**(3):287-302

[24] Tidd J, Bessant J. Managing Innovation, Integrating Technological, Market and Organizational Change. 5th ed. Chichester: Wiley; 2013. p. 680

[25] Adams R, Bessant J, Phelps R. Innovation management measurement: A review. International Journal of Management Reviews. 2006;**8**(1):21-47

[26] Dodgson M. The Management of Technological Innovation: An International and Strategic Approach. Oxford: Oxford University Press; 2000

[27] Hidalgo A, Albors J. Innovation management techniques and tools: A review from theory and practice. R&D Management. 2008;**38**(2):113-127

[28] Jensen HS. Management and learning in the knowledge society. Journal of Regional Analysis and Policy. 2008;**38**(2):130-137

[29] Senge PM, Suzuki J. The Fifth Discipline: The Art and Practice of the Learning Organization. New York: Doubleday; 1994

[30] Lundvall B-Å, Borrás S. The Globalising Learning Economy. Implications for Innovation Policy. Brussels: European Commission; 1997

[31] Finansdepartementet. NOU 2019:18 Skattlegging av havbruksvirksomhet. Oslo: Finansdepartementet; 2019

[32] Joffre OM, Klerkx L, Dickson M, Verdegem M. How is innovation in aquaculture conceptualized and managed? A systematic literature review and reflection framework to inform analysis and action. Aquaculture. 2017;**470**:129-148

[33] Westeren KI. Competitiveness, Competence Management and Transfer of Knowledge in Food Fish Production in Norwegian and International Context. Report to RFF Nord. Levanger: Nord University; 2019

[34] Mowi. Salmon Farming Industry Handbook 2020. Bergen: Mowi; 2020

[35] Sankowska A. Relationships between organizational trust, knowledge transfer, knowledge creation, and firm's innovativeness. The Learning Organization. 2013;**20**(1):85-100

[36] Panayides PM, Lun YV. The impact of trust on innovativeness and supply chain performance. International Journal of Production Economics. 2009;**122**(1):35-46

[37] Ellonen R, Blomqvist K, Puumalainen K. The role of trust in organisational innovativeness. European Journal of Innovation Management. 2008;**11**(2):160-181

[38] Bathelt H, Cohendet P, Henn S, Simon L, editors. The Elgar Companion to Innovation and Knowledge Creation. Cheltenham: Edward Elgar Publishing; 2017. p. 840

**193**

Thailand, Vietnam and India [5].

**Chapter 12**

**Abstract**

**1. Introduction**

Farming

Entrepreneurship in Urban

*Suaad Jassem and Mohammad Rezaur Razzak*

this field on a smaller scale and with less capital outlay.

**Keywords:** vertical farming, indoor farming, high-tech farming

In 2015, the United Nations, committed to end "World Hunger" by 2030, as one of its Sustainable Development Goals. However, two converging phenomena are driving the likelihood of major implications for urban planners in terms of achieving such a goal [1]. The first is the fact that concentration of people in the world's urban centers is witnessing a dramatic rise. According to recent estimates by the United Nations Fund for Population Action, by the year 2050 over 9 billion people are forecasted to be residing in urban centers [2]. It is estimated the rise in urban population will dramatically increase the demand for food, and considering the impact of climate change and reduction in arable land for cultivation, there is likelihood of food shortages [3]. Furthermore, the economic disparity between rural and urban dwellers is also expected to drive younger people from rural farming communities, to seek better lifestyles in large cities, rather than continue on the footsteps of their predecessors [4]. This trend is already having an impact on availability of farm workers in rural communities in countries such as China,

Jungles through High-Tech Vertical

Demographic movements forecasted by the United Nations indicates that, over the next few decades greater portion of people will be concentrated in and around large cities of the world. Such population dynamics in parallel with emerging phenomena such as global pandemics and impact of climate change are posing threats to the supply chain of agricultural production. The reliance on traditional open-field cultivation and transportation of fresh products to distant urban locations are coming under threat. This has been further exposed by the current pandemic (Covid-19) that is impeding farm production along with movement of people and goods. A viable solution lies in vertical in-door farming driven by advanced technologies. The use of high-tech solutions to grow vegetables, fruits and flowers close to consumption centers has taken off successfully in many locations around the world. However, majority of such projects have been set up by investors; with access to substantial capital. In order to mitigate the possibilities of food shortages in densely populated cities, initiatives need to be undertaken to foster growth of large-scale entrepreneurship by individuals that can venture into

#### **Chapter 12**

*Entrepreneurship - Contemporary Issues*

1994;**37**(3):580-607

pp. 3-13

individual innovation in the workplace. Academy of Management Journal.

[30] Lundvall B-Å, Borrás S. The Globalising Learning Economy. Implications for Innovation Policy. Brussels: European Commission; 1997

[31] Finansdepartementet. NOU 2019:18 Skattlegging av havbruksvirksomhet. Oslo: Finansdepartementet; 2019

[32] Joffre OM, Klerkx L, Dickson M, Verdegem M. How is innovation in aquaculture conceptualized and

[33] Westeren KI. Competitiveness, Competence Management and Transfer of Knowledge in Food Fish Production in Norwegian and International

Context. Report to RFF Nord. Levanger:

knowledge transfer, knowledge creation, and firm's innovativeness. The Learning Organization. 2013;**20**(1):85-100

[36] Panayides PM, Lun YV. The impact of trust on innovativeness and supply chain performance. International Journal of Production Economics.

[34] Mowi. Salmon Farming Industry Handbook 2020. Bergen: Mowi; 2020

[35] Sankowska A. Relationships between organizational trust,

2017;**470**:129-148

Nord University; 2019

2009;**122**(1):35-46

2008;**11**(2):160-181

2017. p. 840

[37] Ellonen R, Blomqvist K, Puumalainen K. The role of trust in organisational innovativeness. European Journal of Innovation Management.

[38] Bathelt H, Cohendet P, Henn S, Simon L, editors. The Elgar Companion to Innovation and Knowledge Creation. Cheltenham: Edward Elgar Publishing;

managed? A systematic literature review and reflection framework to inform analysis and action. Aquaculture.

[21] West MA, Farr JL. Innovation at work. In: West MA, Farr JL, editors. Innovation and Creativity at Work: Psychological and Organizational Strategies. Chichester: Wiley; 1990.

[22] Yuan F, Woodman RW. Innovative behavior in the workplace: The role of performance and image outcome expectations. Academy of Management

[23] Janssen O. Job demands, perceptions

Journal. 2010;**53**(2):323-342

of effort - Reward fairness and innovative work behavior. Journal of Occupational and Organizational Psychology. 2000;**73**(3):287-302

[24] Tidd J, Bessant J. Managing Innovation, Integrating Technological, Market and Organizational Change. 5th ed. Chichester: Wiley; 2013. p. 680

[25] Adams R, Bessant J, Phelps R. Innovation management measurement: A review. International Journal of Management Reviews. 2006;**8**(1):21-47

[26] Dodgson M. The Management of Technological Innovation: An International and Strategic Approach. Oxford: Oxford University Press; 2000

[27] Hidalgo A, Albors J. Innovation management techniques and tools: A review from theory and practice. R&D Management. 2008;**38**(2):113-127

[28] Jensen HS. Management and learning in the knowledge society. Journal of Regional Analysis and Policy.

[29] Senge PM, Suzuki J. The Fifth Discipline: The Art and Practice of the Learning Organization. New York:

2008;**38**(2):130-137

Doubleday; 1994

**192**

## Entrepreneurship in Urban Jungles through High-Tech Vertical Farming

*Suaad Jassem and Mohammad Rezaur Razzak*

#### **Abstract**

Demographic movements forecasted by the United Nations indicates that, over the next few decades greater portion of people will be concentrated in and around large cities of the world. Such population dynamics in parallel with emerging phenomena such as global pandemics and impact of climate change are posing threats to the supply chain of agricultural production. The reliance on traditional open-field cultivation and transportation of fresh products to distant urban locations are coming under threat. This has been further exposed by the current pandemic (Covid-19) that is impeding farm production along with movement of people and goods. A viable solution lies in vertical in-door farming driven by advanced technologies. The use of high-tech solutions to grow vegetables, fruits and flowers close to consumption centers has taken off successfully in many locations around the world. However, majority of such projects have been set up by investors; with access to substantial capital. In order to mitigate the possibilities of food shortages in densely populated cities, initiatives need to be undertaken to foster growth of large-scale entrepreneurship by individuals that can venture into this field on a smaller scale and with less capital outlay.

**Keywords:** vertical farming, indoor farming, high-tech farming

#### **1. Introduction**

In 2015, the United Nations, committed to end "World Hunger" by 2030, as one of its Sustainable Development Goals. However, two converging phenomena are driving the likelihood of major implications for urban planners in terms of achieving such a goal [1]. The first is the fact that concentration of people in the world's urban centers is witnessing a dramatic rise. According to recent estimates by the United Nations Fund for Population Action, by the year 2050 over 9 billion people are forecasted to be residing in urban centers [2]. It is estimated the rise in urban population will dramatically increase the demand for food, and considering the impact of climate change and reduction in arable land for cultivation, there is likelihood of food shortages [3]. Furthermore, the economic disparity between rural and urban dwellers is also expected to drive younger people from rural farming communities, to seek better lifestyles in large cities, rather than continue on the footsteps of their predecessors [4]. This trend is already having an impact on availability of farm workers in rural communities in countries such as China, Thailand, Vietnam and India [5].

The second phenomenon is a more recent manifestation that is the global pandemic in 2020 attributed to the nouvelle coronavirus (Covid-19) that has brought about unprecedented changes in socioeconomic order of human society, with greater impact on people residing in crowded urban centers [1]. The pandemic severely impacted distribution of fresh products from farms to centers of consumption. Additionally, in many countries such as USA, the lockdown prevented farm workers to work in the fields, which led farmers to destroy large portion of their crops [6].

A recently published study in The Lancet indicates that future occurrences of virus-borne diseases will evolve and continue to emerge in rapid succession [7], while the movement of people looking for better economic opportunities will increase pressure on large cities to accommodate more influx of such people, thus driving them into urban concrete jungles [8].

One of the major fallouts of above two converging trends will show up in the disruption of food supply chains, thus impacting food security [9]. Particularly, demand for fresh perishable products (e.g., vegetables and certain types of fruits) will be difficult to cope with [10] . The economic prosperity that are expected to drive growth of urban jungles will also increase demand for transporting people and goods, thus creating severe traffic congestions making the situation more dire [8]. The time taken to transport fresh food items and the corresponding cost of transportation from far away farms will render the supply of such products from distant locations less feasible.

One sustainable solution to ensuring reliable fresh products supply within urban jungles could be through vertical farming in unutilized urban spaces using some of the technologies that have been developed for urban centers [11]. Some of the latest advances in vertical farming technology are driven by advanced hyper-connected systems aligned with technologies that drive Industry 4.0 (such as AI and IoT) [12]. These emerging technology applications in agriculture are also driving down capital cost of in-door farms that can be set up in small spaces.

The large concentration of people in major metropolises is likely to create pressure on availability of horizontal space, making them prohibitively expensive to use for agriculture [13]. Ironically, however it appears that one of the scarcest resources in large cities, idle space, is also widely available in the form of vertical space in most large cities, but out of the view of most people [14]. For instance, there are many abandoned warehouses, underground structures underneath tall skyscrapers, rooftops, underground shelters beneath railway stations, unutilized factory spaces, unused space at stadiums and government buildings, parking lots, etc. These spaces may be used for installing self-contained vertical farms in controlled environments [11].

The goal of this chapter is to present emerging entrepreneurship opportunities through vertical farming in unutilized spaces in crowded cities around the world (interchangeably referred to as urban jungles in this study). The chapter starts by presenting a description of vertical farming along with an overview of technologies that are presently driving them, followed by discourse on advantages and disadvantages of vertical farming based on economic, social and environmental impact. The following section presents some of the challenges faced by entrepreneurs that have ventured into the business of vertical farming in urban spaces. Finally, the chapter discusses several cases related to the different models of vertical farming being implemented around the world. These models are expected to serve as potential roadmaps for tech-savvy youth that will be entering the job market over the next few decades. Such educated workforce may be incentivized to consider entrepreneurial forays into the field of high-tech vertical urban farming.

**195**

*Entrepreneurship in Urban Jungles through High-Tech Vertical Farming*

The concept of vertical farming on a domestic scale has been around for quite some time; however, the modern concept of vertical farming on a commercial scale using advanced technologies is relatively recent. It represents the application of technology in controlled environments to grow agricultural plants such as vegetables, fruits and flowers [11]. Such farming techniques have been applied using abandoned ocean shipping containers where empty space is available, and also inside buildings such as abandoned warehouses, environmentally damaged land space, underground or rooftops of structures of existing buildings, in dilapidated buildings and even under railway stations [15]. In general, such farming can be done in any unutilized space whether the space is in a closed or

Although the approach to vertical farming comes in different sizes and shapes,

The application of modern hydroponics is credited to a California based scientist, Willaim F. Gerrick about 100 years ago [19]. The system utilizes water as a base for the roots of the plants where the fluid is filled with the optimum balance of nutrients required for the plants to grow. The present-day application of hydroponics uses computerized systems to control the nutrient solution in which the base of each plant is submerged. The plants do not require any inert media to support them such

The hydroponics method has relatively low maintenance cost as it does not require tilling, soil removal, fertilizers, etc. The water is recycled, and the composition of the nutrients including oxygen is controlled by automatic feedback loops. Depending on which vegetable or fruit is to be grown, the nutrient solution is controlled by computer software with customized settings for each type

In 1990, NASA worked to develop a system to substitute soil for a spray of nutrient rich mixture of air and mist so that astronauts on missions to space stations can grow their own food [12]. Aeroponics is considered a technological leap forward in high-tech farming [20]. In fact, while hydroponics uses water solution as a growing medium, aeroponics does not require a growing medium. The mist that is sprayed over the roots is sufficient to enable the plant to grow in

one common factor is that they all grow plants without soil and use the height of a structure effectively in growing such plants. The plants are supplied with nutrients mainly through three systems: hydroponics, aeroponics and aquaponics [13]. Each system is contained inside an environment where the amount of light, temperature and supply of nutrients is controlled based on the type of plant that is being grown. Multiple layers of plant-beds are stacked parallelly above each bed, thus making best use of vertical rather than horizontal space [17]. Such environments are usually free of insects, weeds and pests thus allowing the plants to grow

*DOI: http://dx.doi.org/10.5772/intechopen.93667*

**2. Vertical farming**

open environment [16].

without any damage [18].

as sand or gravel (see **Figure 1**).

a healthy manner (See **Figure 2**) [11].

*2.1.1 Hydroponics*

of crop [12].

*2.1.2 Aeroponics*

**2.1 Classification based on technology**

### **2. Vertical farming**

*Entrepreneurship - Contemporary Issues*

driving them into urban concrete jungles [8].

cost of in-door farms that can be set up in small spaces.

neurial forays into the field of high-tech vertical urban farming.

distant locations less feasible.

controlled environments [11].

crops [6].

The second phenomenon is a more recent manifestation that is the global pandemic in 2020 attributed to the nouvelle coronavirus (Covid-19) that has brought about unprecedented changes in socioeconomic order of human society, with greater impact on people residing in crowded urban centers [1]. The pandemic severely impacted distribution of fresh products from farms to centers of consumption. Additionally, in many countries such as USA, the lockdown prevented farm workers to work in the fields, which led farmers to destroy large portion of their

A recently published study in The Lancet indicates that future occurrences of virus-borne diseases will evolve and continue to emerge in rapid succession [7], while the movement of people looking for better economic opportunities will increase pressure on large cities to accommodate more influx of such people, thus

One of the major fallouts of above two converging trends will show up in the disruption of food supply chains, thus impacting food security [9]. Particularly, demand for fresh perishable products (e.g., vegetables and certain types of fruits) will be difficult to cope with [10] . The economic prosperity that are expected to drive growth of urban jungles will also increase demand for transporting people and goods, thus creating severe traffic congestions making the situation more dire [8]. The time taken to transport fresh food items and the corresponding cost of transportation from far away farms will render the supply of such products from

One sustainable solution to ensuring reliable fresh products supply within urban jungles could be through vertical farming in unutilized urban spaces using some of the technologies that have been developed for urban centers [11]. Some of the latest advances in vertical farming technology are driven by advanced hyper-connected systems aligned with technologies that drive Industry 4.0 (such as AI and IoT) [12]. These emerging technology applications in agriculture are also driving down capital

The large concentration of people in major metropolises is likely to create pressure on availability of horizontal space, making them prohibitively expensive to use for agriculture [13]. Ironically, however it appears that one of the scarcest resources in large cities, idle space, is also widely available in the form of vertical space in most large cities, but out of the view of most people [14]. For instance, there are many abandoned warehouses, underground structures underneath tall skyscrapers, rooftops, underground shelters beneath railway stations, unutilized factory spaces, unused space at stadiums and government buildings, parking lots, etc. These spaces may be used for installing self-contained vertical farms in

The goal of this chapter is to present emerging entrepreneurship opportunities through vertical farming in unutilized spaces in crowded cities around the world (interchangeably referred to as urban jungles in this study). The chapter starts by presenting a description of vertical farming along with an overview of technologies that are presently driving them, followed by discourse on advantages and disadvantages of vertical farming based on economic, social and environmental impact. The following section presents some of the challenges faced by entrepreneurs that have ventured into the business of vertical farming in urban spaces. Finally, the chapter discusses several cases related to the different models of vertical farming being implemented around the world. These models are expected to serve as potential roadmaps for tech-savvy youth that will be entering the job market over the next few decades. Such educated workforce may be incentivized to consider entrepre-

**194**

The concept of vertical farming on a domestic scale has been around for quite some time; however, the modern concept of vertical farming on a commercial scale using advanced technologies is relatively recent. It represents the application of technology in controlled environments to grow agricultural plants such as vegetables, fruits and flowers [11]. Such farming techniques have been applied using abandoned ocean shipping containers where empty space is available, and also inside buildings such as abandoned warehouses, environmentally damaged land space, underground or rooftops of structures of existing buildings, in dilapidated buildings and even under railway stations [15]. In general, such farming can be done in any unutilized space whether the space is in a closed or open environment [16].

#### **2.1 Classification based on technology**

Although the approach to vertical farming comes in different sizes and shapes, one common factor is that they all grow plants without soil and use the height of a structure effectively in growing such plants. The plants are supplied with nutrients mainly through three systems: hydroponics, aeroponics and aquaponics [13]. Each system is contained inside an environment where the amount of light, temperature and supply of nutrients is controlled based on the type of plant that is being grown. Multiple layers of plant-beds are stacked parallelly above each bed, thus making best use of vertical rather than horizontal space [17]. Such environments are usually free of insects, weeds and pests thus allowing the plants to grow without any damage [18].

#### *2.1.1 Hydroponics*

The application of modern hydroponics is credited to a California based scientist, Willaim F. Gerrick about 100 years ago [19]. The system utilizes water as a base for the roots of the plants where the fluid is filled with the optimum balance of nutrients required for the plants to grow. The present-day application of hydroponics uses computerized systems to control the nutrient solution in which the base of each plant is submerged. The plants do not require any inert media to support them such as sand or gravel (see **Figure 1**).

The hydroponics method has relatively low maintenance cost as it does not require tilling, soil removal, fertilizers, etc. The water is recycled, and the composition of the nutrients including oxygen is controlled by automatic feedback loops. Depending on which vegetable or fruit is to be grown, the nutrient solution is controlled by computer software with customized settings for each type of crop [12].

#### *2.1.2 Aeroponics*

In 1990, NASA worked to develop a system to substitute soil for a spray of nutrient rich mixture of air and mist so that astronauts on missions to space stations can grow their own food [12]. Aeroponics is considered a technological leap forward in high-tech farming [20]. In fact, while hydroponics uses water solution as a growing medium, aeroponics does not require a growing medium. The mist that is sprayed over the roots is sufficient to enable the plant to grow in a healthy manner (See **Figure 2**) [11].

**Figure 1.**

*Illustration of a basic hydroponic system. Source: [20].*

#### **Figure 2.**

*Illustration of a basic aeroponic system. Source: [12].*

The technology has now been commercialized and is used by pioneering companies such as Aero-Farms in USA. The system is revolutionary because it uses 90% less water than hydroponics. Plants grown with aeroponics technology have shown to have higher uptake of vitamins and other essential minerals such as potassium and magnesium required for healthy human bodies. This technology is now widely applied in arid regions of the world where water is scarce and costly to provide such as hot places in the Middle East and extremely cold places such as Antarctica [21] .

#### *2.1.3 Aquaponics*

This system differs from hydroponics because, the water solution where the plants are submerged, are also used to grow certain variety of fish (such as tilapia and perch) that thrive in such an environment [22]. In fact, the fish and the plants have a symbiotic relationship, where the waste produced by the fish serve as a natural source of organic fertilizer for plants, and in return the plants purify the water from the waste. Typically, aquaponics requires substantially more water supply than hydroponics. However, the additional cost of supplying water to

**197**

**Figure 3.**

*Entrepreneurship in Urban Jungles through High-Tech Vertical Farming*

aquaponic systems is made up through the availability of two kinds of cash crops, vegetables and fish [6]. The diagram in **Figure 3** shows a basic aquaponic system.

Vertical farming can also be classified based on the type of structure they are housed in. Two of the most popular structures are: (i) building-based vertical farms

Such farms are situated inside abandoned warehouses and buildings, new buildings in the basement or rooftops, unused basement parking space, abandoned subway stations, etc. The spaces occupied for the farming projects are closed and controlled through special HVAC systems and LED lighting [24]. Once the environment is built and vegetables are planted, the system requires minimum human involvement during the growth stage of the vegetables. Human labor is involved only during picking the vegetables and packing, and for re-plantation [25].

A new trend in such farming has also been initiated where such farms are set up close to large hypermarkets, restaurants and hotels that have a daily requirement for large amounts of fresh products such as leafy green vegetables, tomatoes, cucumbers, etc. For the customers, the proximity of the farms to the customers reduces transport cost, inventory cost and also ensures that extremely fresh products that are available 24/7 (see **Figure 4**). For the farmers, they have ready

This type of structure has become quite popular mainly due to the mobility offered by such a system. Basically, 40-feet ocean shipping containers are refurbished with drip irrigation, lighting and HVAC systems controlled by computers. These containers can be moved into any space where the containers can fit into

*DOI: http://dx.doi.org/10.5772/intechopen.93667*

**2.2 Classification based on structure**

*2.2.1 Building-based vertical farms*

and (ii) shipping-container vertical farms [23] .

customers close by that will buy their daily production.

*2.2.2 Shipping-container vertical farms*

*Illustration of a basic aquaponic system. Source: [6].*

aquaponic systems is made up through the availability of two kinds of cash crops, vegetables and fish [6]. The diagram in **Figure 3** shows a basic aquaponic system.

#### **2.2 Classification based on structure**

*Entrepreneurship - Contemporary Issues*

*Illustration of a basic hydroponic system. Source: [20].*

*Illustration of a basic aeroponic system. Source: [12].*

**Figure 1.**

The technology has now been commercialized and is used by pioneering companies such as Aero-Farms in USA. The system is revolutionary because it uses 90% less water than hydroponics. Plants grown with aeroponics technology have shown to have higher uptake of vitamins and other essential minerals such as potassium and magnesium required for healthy human bodies. This technology is now widely applied in arid regions of the world where water is scarce and costly to provide such as hot places in the Middle East and extremely cold places such as Antarctica [21] .

This system differs from hydroponics because, the water solution where the plants are submerged, are also used to grow certain variety of fish (such as tilapia and perch) that thrive in such an environment [22]. In fact, the fish and the plants have a symbiotic relationship, where the waste produced by the fish serve as a natural source of organic fertilizer for plants, and in return the plants purify the water from the waste. Typically, aquaponics requires substantially more water supply than hydroponics. However, the additional cost of supplying water to

**196**

*2.1.3 Aquaponics*

**Figure 2.**

Vertical farming can also be classified based on the type of structure they are housed in. Two of the most popular structures are: (i) building-based vertical farms and (ii) shipping-container vertical farms [23] .

### *2.2.1 Building-based vertical farms*

Such farms are situated inside abandoned warehouses and buildings, new buildings in the basement or rooftops, unused basement parking space, abandoned subway stations, etc. The spaces occupied for the farming projects are closed and controlled through special HVAC systems and LED lighting [24]. Once the environment is built and vegetables are planted, the system requires minimum human involvement during the growth stage of the vegetables. Human labor is involved only during picking the vegetables and packing, and for re-plantation [25].

A new trend in such farming has also been initiated where such farms are set up close to large hypermarkets, restaurants and hotels that have a daily requirement for large amounts of fresh products such as leafy green vegetables, tomatoes, cucumbers, etc. For the customers, the proximity of the farms to the customers reduces transport cost, inventory cost and also ensures that extremely fresh products that are available 24/7 (see **Figure 4**). For the farmers, they have ready customers close by that will buy their daily production.

### *2.2.2 Shipping-container vertical farms*

This type of structure has become quite popular mainly due to the mobility offered by such a system. Basically, 40-feet ocean shipping containers are refurbished with drip irrigation, lighting and HVAC systems controlled by computers. These containers can be moved into any space where the containers can fit into

**Figure 3.** *Illustration of a basic aquaponic system. Source: [6].*

smaller spaces such as empty car parking lots, environmentally damaged land spaces, or even in places where the weather is harsh such as deserts or extremely cold places. Such structures can also be moved to places where there are military bases on large groups of people residing temporarily (see **Figure 5**).

#### **2.3 Advantages and disadvantages of vertical farming**

#### *2.3.1 Advantages*

Vertical high-tech in-door farming has numerous advantages over traditional open field horizontal cultivation. Traditional cultivation requires vast amount of arable space where large equipment such as tractors that run on fossil fuel are required, along with large quantity of farm workers. Furthermore, the open-field cultivation requires synthetically produced chemicals such as urea-based and phosphate-based fertilizers that over a period of time diminish the land's ability to

**Figure 4.** *Vertical farm housed inside a commercial building. Source: [26].*

**199**

*Entrepreneurship in Urban Jungles through High-Tech Vertical Farming*

sustain crops. Most agricultural lands are developed by destroying forests, such as in Brazil where the Amazon rain forests are reduced each year to create for space for planting agricultural products. This not only contributes to displacements of

Additionally, the yield per meter-square from open field cultivation is much lower than that of vertical farming [29]. Open field crops are susceptible to weeds, pests and adverse weather conditions. Finally, products such as vegetables need to be transported a long distance from the fields to urban centers thus increasing fuel

In contrast, high-tech vertical farming has several advantages as noted below:

i.The most obvious advantage of vertical farming is the relatively small amount of horizontal space required to produce multiple varieties of fresh crops (e.g., vegetables, flowers and certain variety of fruits) in the same space. Vertical farming on the other hand enables utilization of unused vertical space in urban centers where typically horizontal space is an

ii.The system ensures that crop production can be done round the year even in harsh weather conditions. In fact, in dry arid places with plenty of sunshine, the energy needed to operate the equipment inside the system can be run on solar power, thus reducing dependence on electricity from the power grid.

iii.This type of farming does not require use of pesticides and herbicides as they are in closed environments. As a result, the products are free of toxins.

iv.Unlike open-field cultivation, vertical farming does not require too many farm workers to be present all the time. Finally, the environment within vertical farming enclosures, are typically safer for people compared to open

v.Entrepreneurs can conduct market feasibility and locate their farms close to the market centers where the products can be sold quickly after plucking them without having to preserve them. This is a great value proposition for both the buyer and seller, as buyers do not need to maintain large inventories, and the time and cost of transporting the products to the retailers is much

vi.Finally, application of advanced technologies, enable people to get real-time feedback on the plants in terms of their stage of growth, health and available

The vertical in-door farms nevertheless have some disadvantages also:

i.The first disadvantage of vertical farming in urban metropolises is the availability of space. Horizontal space in crowded cities, are typically a costly resource. Nevertheless, due to closure of manufacturing industries in places like United States and Western Europe, substantial amount of space is becoming available for alternative uses such as indoor farming. However, in cities that are on a high economic growth trajectory such as cities in Asia: Shanghai, Shenzhen, Singapore, Taipei, Tokyo, etc., it would be very

indigenous flora and fauna, but also contributes to global warming [28] .

*DOI: http://dx.doi.org/10.5772/intechopen.93667*

consumption and other related costs factors.

expensive resource.

field cultivation.

finished goods inventory.

lower.

*2.3.2 Disadvantages*

**Figure 5.** *A vertical farm inside a shipping container. Source: [27].*

#### *Entrepreneurship in Urban Jungles through High-Tech Vertical Farming DOI: http://dx.doi.org/10.5772/intechopen.93667*

*Entrepreneurship - Contemporary Issues*

*2.3.1 Advantages*

smaller spaces such as empty car parking lots, environmentally damaged land spaces, or even in places where the weather is harsh such as deserts or extremely cold places. Such structures can also be moved to places where there are military

Vertical high-tech in-door farming has numerous advantages over traditional open field horizontal cultivation. Traditional cultivation requires vast amount of arable space where large equipment such as tractors that run on fossil fuel are required, along with large quantity of farm workers. Furthermore, the open-field cultivation requires synthetically produced chemicals such as urea-based and phosphate-based fertilizers that over a period of time diminish the land's ability to

bases on large groups of people residing temporarily (see **Figure 5**).

**2.3 Advantages and disadvantages of vertical farming**

*Vertical farm housed inside a commercial building. Source: [26].*

*A vertical farm inside a shipping container. Source: [27].*

**198**

**Figure 5.**

**Figure 4.**

sustain crops. Most agricultural lands are developed by destroying forests, such as in Brazil where the Amazon rain forests are reduced each year to create for space for planting agricultural products. This not only contributes to displacements of indigenous flora and fauna, but also contributes to global warming [28] .

Additionally, the yield per meter-square from open field cultivation is much lower than that of vertical farming [29]. Open field crops are susceptible to weeds, pests and adverse weather conditions. Finally, products such as vegetables need to be transported a long distance from the fields to urban centers thus increasing fuel consumption and other related costs factors.

In contrast, high-tech vertical farming has several advantages as noted below:


#### *2.3.2 Disadvantages*

The vertical in-door farms nevertheless have some disadvantages also:

i.The first disadvantage of vertical farming in urban metropolises is the availability of space. Horizontal space in crowded cities, are typically a costly resource. Nevertheless, due to closure of manufacturing industries in places like United States and Western Europe, substantial amount of space is becoming available for alternative uses such as indoor farming. However, in cities that are on a high economic growth trajectory such as cities in Asia: Shanghai, Shenzhen, Singapore, Taipei, Tokyo, etc., it would be very

difficult to find sufficient horizontal space to establish such farming projects (except for vertical and roof-top farming).


#### **3. High-tech vertical farming projects**

The following are three large scale high-tech vertical farming projects depict how these farms are being managed for producing high-yield fresh products:

#### **3.1 Green spirit farms**

The Green Spirit Farms (GSF) first project was established in 2011 in an abandoned plastic factory in Buffalo, New York. The project has been set on a 44,000 square-feet built-up space. Currently, GSF's business model is to locate abandoned commercial and industrial buildings and set up their vertical farming projects through long-term lease agreements with the building owners. The company enters into these spaces and sets up their farming project through agreements with equipment suppliers on the basis of pay-as-your-earn. Therefore, GSF sets up vertical farms without much initial capital investments in structures and equipment, which allows them to focus on their core competency, that is to be a provider of fresh non-GMO (genetically modified) high-value products such as kale, basil, peppers, stevia, spinach, brussels sprouts, tomatoes, strawberries, etc. They select locations that are close to large-scale customers such as hotels, fresh products wholesale markets and major urban centers. Besides, selling farm products inside the United States, due to the proximity of their farm sites to the Canadian border, they are also able to service customers in Ontario, Canada [26].

GSF mostly utilizes hydroponics technology such as Rotary Vertical Growing Stations (RVGS) that has a high level of efficiency in terms of use of water and

**201**

Some of these challenges are:

*Entrepreneurship in Urban Jungles through High-Tech Vertical Farming*

energy. In fact, GSF claims to use 90% less land, 80% less water and 40% electricity compared to conventional hydroponics farms [11]. The company has received strong support from state and federal agencies through public-private partnerships in the United States for having high social and environmental impact. The company has not only created employment in the local communities, but it has also fostered development of small entrepreneurs who are service providers in terms of food delivery, supply of chemical nutrients, maintenance of facilities, etc. Among the most lasting social impacts is the availability of fresh products throughout the year within a range

The company was set up in 2015 in Seattle, Washington with investment from Jeff Bezos of Amazon [30]. Plenty is one of the few companies in this business that has received a USDA certification as an organic food supplier. The company sells large quantity of its products to retail chains such as Whole Foods and Good Food. In fact, the company claims to be providing 6% of all the fresh products in the greater Seattle area [31] . The technology adopted by the company uses hybridized technology combining aeroponics and aquaponics. The project is housed on a space of 100,000 square-feet. Therefore, the company produces fresh organic products and also fish. The company uses sophisticated technology to produce large quantities of multiple varieties of fresh vegetables and fruits in the same site. The farm grows algae, which serve as feedstock for the fish, while the waste

produced by the fish serves as organic fertilizer for the plants [31].

would have been massive food shortages [31].

water), which is abundantly available in those regions [34].

The company has recently raised additional capital for expansion from new investors such as Google's Eric Schmidt. The farm has proven to be instrumental in ensuring regular supply of fresh products and sweet water fish to supermarkets especially during the Covid-19 pandemic that hit Seattle area quite hard. Had the city relied on supplies from conventional sources such as farms in California, there

This company was established in 2004 in the New Jersey area through joint collaboration between IKEA, David Chang, SoftBank and the Ruler of Dubai [32]. The \$100 Million project is the largest aeroponic farms in the world that uses stateof-the-art agricultural technologies such as AI, aerial drones, IoT and climate control technology [33]. The farm has reported yields that are 390% higher than conventional open cultivation fields. The farm has also enabled agricultural researchers to team up with engineers and scientists to experiment with some of the most sophisticated technologies in the world. The technology is now being replicated in arid regions of the world such as UAE, Qatar and Saudi Arabia in collaboration with MIT and King Abdullah University of Science and Technology by using seawater (instead of fresh

**4. Challenges for entrepreneurs without access to substantial capital**

The vertical farm projects described in the previous section are all fairly largesized investments that make them highly capital intensive. Despite the fact the output of such projects has readily available markets there are numerous challenges for entrepreneurs to get into this business without having substantially deep pockets.

*DOI: http://dx.doi.org/10.5772/intechopen.93667*

of 75 km form any of their facilities [11].

**3.2 Plenty farms**

**3.3 Aero-farms**

*Entrepreneurship in Urban Jungles through High-Tech Vertical Farming DOI: http://dx.doi.org/10.5772/intechopen.93667*

energy. In fact, GSF claims to use 90% less land, 80% less water and 40% electricity compared to conventional hydroponics farms [11]. The company has received strong support from state and federal agencies through public-private partnerships in the United States for having high social and environmental impact. The company has not only created employment in the local communities, but it has also fostered development of small entrepreneurs who are service providers in terms of food delivery, supply of chemical nutrients, maintenance of facilities, etc. Among the most lasting social impacts is the availability of fresh products throughout the year within a range of 75 km form any of their facilities [11].

#### **3.2 Plenty farms**

*Entrepreneurship - Contemporary Issues*

such as solar power.

not feasible.

**3.1 Green spirit farms**

biodiversity and biological cycles.

insect drones to do the pollination.

able to service customers in Ontario, Canada [26].

**3. High-tech vertical farming projects**

(except for vertical and roof-top farming).

difficult to find sufficient horizontal space to establish such farming projects

ii.Second, the consumption of energy and water are quite high, and can prove to be prohibitive in certain cities unless the government subsidizes the electricity tariff for such projects, or there is access to renewable energy sources

iii.In order to compete with traditional farm cultivated products, the present vertical farms are promoting their products as organic, as they do not use pesticides and herbicides. However, in some countries they face obstacles due to government regulations to promote their products as organic. For instance, the USDA (US Department of Agriculture) is very stringent in certifying such products as organic because the nutrients used are not completely organic. The present definition of organic products according to agencies such as the USDA is much wider, that includes systems that promote

iv.Another limitation of vertical farming is that they can offer a limited range of products that have quick turnover cycles such as leafy greens, cauliflower, tomatoes, bell pepper, eggplants, strawberry, etc., while producing grains is

v.Finally, since insects are excluded from the environment, there is no natural pollination. Hence, pollination has to be done by human hands, thus requiring workers for this purpose. Although, new technology is being developed to use

The following are three large scale high-tech vertical farming projects depict how these farms are being managed for producing high-yield fresh products:

The Green Spirit Farms (GSF) first project was established in 2011 in an abandoned plastic factory in Buffalo, New York. The project has been set on a 44,000 square-feet built-up space. Currently, GSF's business model is to locate abandoned commercial and industrial buildings and set up their vertical farming projects through long-term lease agreements with the building owners. The company enters into these spaces and sets up their farming project through agreements with equipment suppliers on the basis of pay-as-your-earn. Therefore, GSF sets up vertical farms without much initial capital investments in structures and equipment, which allows them to focus on their core competency, that is to be a provider of fresh non-GMO (genetically modified) high-value products such as kale, basil, peppers, stevia, spinach, brussels sprouts, tomatoes, strawberries, etc. They select locations that are close to large-scale customers such as hotels, fresh products wholesale markets and major urban centers. Besides, selling farm products inside the United States, due to the proximity of their farm sites to the Canadian border, they are also

GSF mostly utilizes hydroponics technology such as Rotary Vertical Growing Stations (RVGS) that has a high level of efficiency in terms of use of water and

**200**

The company was set up in 2015 in Seattle, Washington with investment from Jeff Bezos of Amazon [30]. Plenty is one of the few companies in this business that has received a USDA certification as an organic food supplier. The company sells large quantity of its products to retail chains such as Whole Foods and Good Food. In fact, the company claims to be providing 6% of all the fresh products in the greater Seattle area [31] . The technology adopted by the company uses hybridized technology combining aeroponics and aquaponics. The project is housed on a space of 100,000 square-feet. Therefore, the company produces fresh organic products and also fish. The company uses sophisticated technology to produce large quantities of multiple varieties of fresh vegetables and fruits in the same site. The farm grows algae, which serve as feedstock for the fish, while the waste produced by the fish serves as organic fertilizer for the plants [31].

The company has recently raised additional capital for expansion from new investors such as Google's Eric Schmidt. The farm has proven to be instrumental in ensuring regular supply of fresh products and sweet water fish to supermarkets especially during the Covid-19 pandemic that hit Seattle area quite hard. Had the city relied on supplies from conventional sources such as farms in California, there would have been massive food shortages [31].

#### **3.3 Aero-farms**

This company was established in 2004 in the New Jersey area through joint collaboration between IKEA, David Chang, SoftBank and the Ruler of Dubai [32]. The \$100 Million project is the largest aeroponic farms in the world that uses stateof-the-art agricultural technologies such as AI, aerial drones, IoT and climate control technology [33]. The farm has reported yields that are 390% higher than conventional open cultivation fields. The farm has also enabled agricultural researchers to team up with engineers and scientists to experiment with some of the most sophisticated technologies in the world. The technology is now being replicated in arid regions of the world such as UAE, Qatar and Saudi Arabia in collaboration with MIT and King Abdullah University of Science and Technology by using seawater (instead of fresh water), which is abundantly available in those regions [34].

#### **4. Challenges for entrepreneurs without access to substantial capital**

The vertical farm projects described in the previous section are all fairly largesized investments that make them highly capital intensive. Despite the fact the output of such projects has readily available markets there are numerous challenges for entrepreneurs to get into this business without having substantially deep pockets. Some of these challenges are:

#### **4.1 High initial capital requirements**

Even when space is available on lease, the initial investments in preparing the space to make it suitable for installing equipment along with arrangements for water and electricity involves substantial capital. Furthermore, the equipment used in building a controlled environment requires large investments in systems that are made by a limited number of vendors. The other initial investments are in deposits required for leasing space, deposits for obtaining commercial utility connections, permits, etc.

#### **4.2 Reluctance of banks to fund vertical farming projects**

Most commercial banks and financial institutions are typically reluctant to provide capital to small entrepreneurs entering into a new field. Banks usually look at the worst-case scenario in assessing loan applications for such projects. For example, if the business fails to meet its goals, then for the bank to recuperate their investments it would be difficult to liquidate the assets of the company.

#### **4.3 Lack of training facilities for entrepreneurs**

The operation of high-tech vertical farms requires knowledge and experience with insights into the critical aspects of managing such a business. For new entrepreneurs without exposure to such businesses it will be difficult to develop and sustain such as venture. Without availability of training facilities to prepare them it may turn out to be a risky venture for new entrepreneurs without substantially deep pockets.

#### **4.4 High operational expenses due to cost of energy**

These projects consume substantial amount of electricity due to lighting and temperature control. Current developments in renewable energy technologies are trying to bring down operational costs of such projects through recycling biomass gas produced by the plants. Nevertheless, the operating costs related to energy, water supply, equipment maintenance and chemical composition of the plant-bed (fluid base) require sufficient working capital.

#### **4.5 Creating opportunities for entrepreneurs: less capital**

Emerging smart technologies are creating opportunities for entrepreneurs who desire to venture into vertical farming with lower levels of investments. Such technologies are enabling indoor farming projects to be set up in relatively small spaces using energy efficient processes that recycle and reuse the resources deployed in the system. For instance, the new generation of LED lights is replicating the same intensity of light with significantly lower energy requirements [13]. Similarly cloud computing, SAAS (Software as a Subscription Service) and Internet of Things are enabling automation without investing heavily into computer systems [24].

Increasing demand for fresh products in urban centers and advances in innovation related to farming technology alone may not be sufficient to create viable opportunities for new individuals with limited capital who wish to commit to entrepreneurship in high-tech indoor farming. The above developments must parallelly be followed up with support from policymakers and urban planners. For instance, government-initiated programs should be channelized to such entrepreneurs through training and start-up funding. The training programs can be implemented

**203**

*Entrepreneurship in Urban Jungles through High-Tech Vertical Farming*

internship programs with established vertical farming companies.

through business incubation initiatives managed by agencies of the government, universities and other technical instructions. Training need assessment will reveal the type of technical and management training that needs to be imparted including

In addition to capacity building through training, such entrepreneurial ventures should be supported with seed funding for startups followed up by financial assistance for growth. Financing for such projects will initially require subsidized soft-term lending initiatives by the government implemented through financial institutions. Once the projects gather traction and start generating revenues, they will be able to

Overpopulation of urban centers around the globe calls for long-term strategies for policymakers and urban planners. In absence of measures to bolster food production close to the consumption-base there are likely to be food-shortages caused by the fallout of overcrowded cities and occasional environmental shocks due to climate change, infectious diseases, and other natural calamities. Simply relying on traditional cultivation and transporting agricultural products from distant farms to urban centers may turn out to be a recipe for disaster. The United Nations' forecast of over 9 billion people concentrated in large cities by 2050 is a matter of concern that needs proactive solutions based on innovative methods of food production and supply. The long-term prognosis for resilience of food supply chains that depend on traditional farm cultivation also faces threats from reduction in soil fertility caused by excessive use of synthetic fertilizers. After several cycles of cultivation, the land requires time to recover as it loses its ability to support growth of plants. In this way the available land for cultivation is also getting smaller. In many countries, rain forests are being cut down to make space for crop cultivation. This practice will have an adverse impact on the environment thus further exacerbating the negative fallouts of climate change. Traditional open-field cultivation is also exposed to attacks by insects, pests and weeds where the crop needs to be protected from such attacks with the use of pesticides, herbicides and other chemicals. The toxic elements in such chemicals can seep into the underground water system with

The concept of utilizing vertical space to cultivate cash crops in controlled environments, offer a viable alternative to challenges that lay ahead for traditional farming. Emerging technologies that were originally developed to support manufacturing industries (e.g., to drive Industry 4.0) are now being leveraged to drive innovations in vertical indoor farming. Such agricultural projects not only increase the yield of crops per acre, but also grow the products in close proximity to the centers of consumption, thus reducing the cost of fresh food. Furthermore, these crops are produced in environments where they are free from pests and weeds, which means they are free of harmful pesticides, making the products healthy for

Majority of the vertical in-door farming projects around the world, were initially driven by large investors with access to substantial capital. Entrepreneurs without access to such capital find it difficult to venture into vertical farming. However, with the advent of new technological breakthroughs, it is now becoming feasible for entrepreneurs to set up such projects in smaller spaces with significantly less startup capital. Nevertheless, several obstacles still remain that need to be addressed by public policymakers and city planners. These obstacles are mainly related to access

to finance and lack of opportunities for technology transfer.

*DOI: http://dx.doi.org/10.5772/intechopen.93667*

attract venture capital for further growth.

consequences for human health.

human consumption.

**5. Conclusion**

#### *Entrepreneurship in Urban Jungles through High-Tech Vertical Farming DOI: http://dx.doi.org/10.5772/intechopen.93667*

through business incubation initiatives managed by agencies of the government, universities and other technical instructions. Training need assessment will reveal the type of technical and management training that needs to be imparted including internship programs with established vertical farming companies.

In addition to capacity building through training, such entrepreneurial ventures should be supported with seed funding for startups followed up by financial assistance for growth. Financing for such projects will initially require subsidized soft-term lending initiatives by the government implemented through financial institutions. Once the projects gather traction and start generating revenues, they will be able to attract venture capital for further growth.

#### **5. Conclusion**

*Entrepreneurship - Contemporary Issues*

permits, etc.

pockets.

**4.1 High initial capital requirements**

**4.2 Reluctance of banks to fund vertical farming projects**

**4.3 Lack of training facilities for entrepreneurs**

**4.4 High operational expenses due to cost of energy**

(fluid base) require sufficient working capital.

**4.5 Creating opportunities for entrepreneurs: less capital**

Even when space is available on lease, the initial investments in preparing the space to make it suitable for installing equipment along with arrangements for water and electricity involves substantial capital. Furthermore, the equipment used in building a controlled environment requires large investments in systems that are made by a limited number of vendors. The other initial investments are in deposits required for leasing space, deposits for obtaining commercial utility connections,

Most commercial banks and financial institutions are typically reluctant to provide capital to small entrepreneurs entering into a new field. Banks usually look at the worst-case scenario in assessing loan applications for such projects. For example, if the business fails to meet its goals, then for the bank to recuperate their

The operation of high-tech vertical farms requires knowledge and experience with insights into the critical aspects of managing such a business. For new entrepreneurs without exposure to such businesses it will be difficult to develop and sustain such as venture. Without availability of training facilities to prepare them it may turn out to be a risky venture for new entrepreneurs without substantially deep

These projects consume substantial amount of electricity due to lighting and temperature control. Current developments in renewable energy technologies are trying to bring down operational costs of such projects through recycling biomass gas produced by the plants. Nevertheless, the operating costs related to energy, water supply, equipment maintenance and chemical composition of the plant-bed

Emerging smart technologies are creating opportunities for entrepreneurs who desire to venture into vertical farming with lower levels of investments. Such technologies are enabling indoor farming projects to be set up in relatively small spaces using energy efficient processes that recycle and reuse the resources deployed in the system. For instance, the new generation of LED lights is replicating the same intensity of light with significantly lower energy requirements [13]. Similarly cloud computing, SAAS (Software as a Subscription Service) and Internet of Things are enabling automation without investing heavily into computer systems [24].

Increasing demand for fresh products in urban centers and advances in innova-

tion related to farming technology alone may not be sufficient to create viable opportunities for new individuals with limited capital who wish to commit to entrepreneurship in high-tech indoor farming. The above developments must parallelly be followed up with support from policymakers and urban planners. For instance, government-initiated programs should be channelized to such entrepreneurs through training and start-up funding. The training programs can be implemented

investments it would be difficult to liquidate the assets of the company.

**202**

Overpopulation of urban centers around the globe calls for long-term strategies for policymakers and urban planners. In absence of measures to bolster food production close to the consumption-base there are likely to be food-shortages caused by the fallout of overcrowded cities and occasional environmental shocks due to climate change, infectious diseases, and other natural calamities. Simply relying on traditional cultivation and transporting agricultural products from distant farms to urban centers may turn out to be a recipe for disaster. The United Nations' forecast of over 9 billion people concentrated in large cities by 2050 is a matter of concern that needs proactive solutions based on innovative methods of food production and supply.

The long-term prognosis for resilience of food supply chains that depend on traditional farm cultivation also faces threats from reduction in soil fertility caused by excessive use of synthetic fertilizers. After several cycles of cultivation, the land requires time to recover as it loses its ability to support growth of plants. In this way the available land for cultivation is also getting smaller. In many countries, rain forests are being cut down to make space for crop cultivation. This practice will have an adverse impact on the environment thus further exacerbating the negative fallouts of climate change. Traditional open-field cultivation is also exposed to attacks by insects, pests and weeds where the crop needs to be protected from such attacks with the use of pesticides, herbicides and other chemicals. The toxic elements in such chemicals can seep into the underground water system with consequences for human health.

The concept of utilizing vertical space to cultivate cash crops in controlled environments, offer a viable alternative to challenges that lay ahead for traditional farming. Emerging technologies that were originally developed to support manufacturing industries (e.g., to drive Industry 4.0) are now being leveraged to drive innovations in vertical indoor farming. Such agricultural projects not only increase the yield of crops per acre, but also grow the products in close proximity to the centers of consumption, thus reducing the cost of fresh food. Furthermore, these crops are produced in environments where they are free from pests and weeds, which means they are free of harmful pesticides, making the products healthy for human consumption.

Majority of the vertical in-door farming projects around the world, were initially driven by large investors with access to substantial capital. Entrepreneurs without access to such capital find it difficult to venture into vertical farming. However, with the advent of new technological breakthroughs, it is now becoming feasible for entrepreneurs to set up such projects in smaller spaces with significantly less startup capital. Nevertheless, several obstacles still remain that need to be addressed by public policymakers and city planners. These obstacles are mainly related to access to finance and lack of opportunities for technology transfer.

#### *Entrepreneurship - Contemporary Issues*

Besides the entrepreneurs being familiar with the technology and the intricacies of the business, there also needs to be availability of a large pool of human resource that are capable of working in such high-tech vertical farming projects. Therefore, programs led by public-private partnerships, government backed-support, etc. are needed to get the momentum going. The efforts from urban planners and think tanks connected to food supply resilience, need to focus on training and development of potential entrepreneurs and technical staff that can manage high-tech vertical farming, and also providing seed- and growth-funding for such entrepreneurial ventures. The future of urban jungles becoming manageable from the perspective of reliable and resilient food supply chains may depend on how entrepreneurial initiatives in vertical high-tech farming are being planned and developed by policymakers and urban planners.

#### **Author details**

Suaad Jassem1 and Mohammad Rezaur Razzak<sup>2</sup> \*

1 Al-Zahra College for Women, Muscat, Oman

2 Sultan Qaboos University, Muscat, Oman

\*Address all correspondence to: rezaur25@gmail.comm

© 2020 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

**205**

*Entrepreneurship in Urban Jungles through High-Tech Vertical Farming*

[9] Pashchapur A, Bhat C. Urban Agriculture: The Saviour of Rapid Urbanization. KRISHI [Internet]. 2020. Available from: https://krishi.icar.gov. in/jspui/handle/123456789/34552

[10] Kwil I, Piwowar-Sulej K,

Krzywonos M. Local entrepreneurship in the context of food production: A review. Sustainability. 2020

Jan;**12**(1):424. DOI: 10.3390/su12010424

[11] Al-Kodmany K. The vertical farm: Exploring applications for peri-urban areas. In: Smart Village Technology. Cham: Springer; 2020. pp. 203-232. DOI: 10.3390/buildings8020024

Agriculture 4.0: The Future of Farming

[12] De Clerq M, Vats A, Biel A.

Technology. Report at World Government Summit [Internet]. 2018. Available from: https://www. oliverwyman.com/ourexpertise/ insights/2018/feb/agriculture-4-0--thefuture-of-farming-technology.html

[13] Kalantari F, Mohd Tahir O, Mahmoudi Lahijani A, Kalantari S. A review of vertical farming technology: A guide for implementation of building integrated agriculture in cities. In: Advanced Engineering Forum. Vol. 24. Switzerland: Trans Tech Publications Ltd; 2017. pp. 76-91. DOI: 10.4028/www.

scientific.net/AEF.24.76

[14] Spencer G. Indoor Vertical Farming in Asia and Beyond: Digging DEEP in Data. Microsoft Asia Stories [Internet]. 2018. Available from: https://news. microsoft.com/apac/features/indoorvertical-farming-digging-deep-data/

[15] Muller A, Ferré M, Engel S, Gattinger A, Holzkämper A, Huber R, et al. Can soil-less crop production be a sustainable option for soil conservation and future agriculture? Land Use Policy. 2017;**69**:102-105. DOI: 10.1016/j.

landusepol.2017.09.014

*DOI: http://dx.doi.org/10.5772/intechopen.93667*

[1] United Nations. Everyone Included: Social Impact of Covid-19. United Nations Department of Economic and Social Affairs [Internet]. 2020. Available from: https://www.un.org/development/ desa/dspd/everyone-included-covid-19.

[2] UNFPA Annual Report. Global Highlights: United Nations Population Fund [Internet]. 2019. Available from: https://www.unfpa.org/

[3] Szabo S. Urbanisation and food insecurity risks: Assessing the role of human development. Oxford

[4] Egidi G, Salvati L, Vinci S. The long way to Tipperary: City size and worldwide urban population trends, 1950-2030. Sustainable Cities and Society. 2020;**60**:102148. DOI: 10.1016/j.

[5] Kuang B, Lu X, Han J, Fan X, Zuo J. How urbanization influence urban land consumption intensity: Evidence from China. Habitat International. 2020;**100**:102103. DOI: 10.1016/j.

[6] Martin P. COVID-19 and California farm labor. California Agriculture. 2020;**74**(2):67-68. DOI: 10.3733/

[7] Ruan S. Likelihood of survival of coronavirus disease 2019. The Lancet: Infectious Diseases. 2020;**20**(6):630-631. DOI: 10.1016/

[8] Guillen P, Komac U. Cities are more important than ever. In: City Form, Economics and Culture. Springer Briefs in Architectural Design and Technology.

Singapore: Springer; 2020. DOI: 10.1007/978-981-15-5741-5\_3

Development Studies. 2016;**44**(1):28-48. DOI: 10.1080/13600818.2015.1067292

annual-report-2019

scs.2020.102148

habitatint.2019.102103

S1473-3099(20)30257-7

ca.2020a0017

html

**References**

*Entrepreneurship in Urban Jungles through High-Tech Vertical Farming DOI: http://dx.doi.org/10.5772/intechopen.93667*

#### **References**

*Entrepreneurship - Contemporary Issues*

by policymakers and urban planners.

**204**

**Author details**

and Mohammad Rezaur Razzak<sup>2</sup>

1 Al-Zahra College for Women, Muscat, Oman

\*Address all correspondence to: rezaur25@gmail.comm

2 Sultan Qaboos University, Muscat, Oman

provided the original work is properly cited.

\*

© 2020 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium,

Besides the entrepreneurs being familiar with the technology and the intricacies of the business, there also needs to be availability of a large pool of human resource that are capable of working in such high-tech vertical farming projects. Therefore, programs led by public-private partnerships, government backed-support, etc. are needed to get the momentum going. The efforts from urban planners and think tanks connected to food supply resilience, need to focus on training and development of potential entrepreneurs and technical staff that can manage high-tech vertical farming, and also providing seed- and growth-funding for such entrepreneurial ventures. The future of urban jungles becoming manageable from the perspective of reliable and resilient food supply chains may depend on how entrepreneurial initiatives in vertical high-tech farming are being planned and developed

Suaad Jassem1

[1] United Nations. Everyone Included: Social Impact of Covid-19. United Nations Department of Economic and Social Affairs [Internet]. 2020. Available from: https://www.un.org/development/ desa/dspd/everyone-included-covid-19. html

[2] UNFPA Annual Report. Global Highlights: United Nations Population Fund [Internet]. 2019. Available from: https://www.unfpa.org/ annual-report-2019

[3] Szabo S. Urbanisation and food insecurity risks: Assessing the role of human development. Oxford Development Studies. 2016;**44**(1):28-48. DOI: 10.1080/13600818.2015.1067292

[4] Egidi G, Salvati L, Vinci S. The long way to Tipperary: City size and worldwide urban population trends, 1950-2030. Sustainable Cities and Society. 2020;**60**:102148. DOI: 10.1016/j. scs.2020.102148

[5] Kuang B, Lu X, Han J, Fan X, Zuo J. How urbanization influence urban land consumption intensity: Evidence from China. Habitat International. 2020;**100**:102103. DOI: 10.1016/j. habitatint.2019.102103

[6] Martin P. COVID-19 and California farm labor. California Agriculture. 2020;**74**(2):67-68. DOI: 10.3733/ ca.2020a0017

[7] Ruan S. Likelihood of survival of coronavirus disease 2019. The Lancet: Infectious Diseases. 2020;**20**(6):630-631. DOI: 10.1016/ S1473-3099(20)30257-7

[8] Guillen P, Komac U. Cities are more important than ever. In: City Form, Economics and Culture. Springer Briefs in Architectural Design and Technology. Singapore: Springer; 2020. DOI: 10.1007/978-981-15-5741-5\_3

[9] Pashchapur A, Bhat C. Urban Agriculture: The Saviour of Rapid Urbanization. KRISHI [Internet]. 2020. Available from: https://krishi.icar.gov. in/jspui/handle/123456789/34552

[10] Kwil I, Piwowar-Sulej K, Krzywonos M. Local entrepreneurship in the context of food production: A review. Sustainability. 2020 Jan;**12**(1):424. DOI: 10.3390/su12010424

[11] Al-Kodmany K. The vertical farm: Exploring applications for peri-urban areas. In: Smart Village Technology. Cham: Springer; 2020. pp. 203-232. DOI: 10.3390/buildings8020024

[12] De Clerq M, Vats A, Biel A. Agriculture 4.0: The Future of Farming Technology. Report at World Government Summit [Internet]. 2018. Available from: https://www. oliverwyman.com/ourexpertise/ insights/2018/feb/agriculture-4-0--thefuture-of-farming-technology.html

[13] Kalantari F, Mohd Tahir O, Mahmoudi Lahijani A, Kalantari S. A review of vertical farming technology: A guide for implementation of building integrated agriculture in cities. In: Advanced Engineering Forum. Vol. 24. Switzerland: Trans Tech Publications Ltd; 2017. pp. 76-91. DOI: 10.4028/www. scientific.net/AEF.24.76

[14] Spencer G. Indoor Vertical Farming in Asia and Beyond: Digging DEEP in Data. Microsoft Asia Stories [Internet]. 2018. Available from: https://news. microsoft.com/apac/features/indoorvertical-farming-digging-deep-data/

[15] Muller A, Ferré M, Engel S, Gattinger A, Holzkämper A, Huber R, et al. Can soil-less crop production be a sustainable option for soil conservation and future agriculture? Land Use Policy. 2017;**69**:102-105. DOI: 10.1016/j. landusepol.2017.09.014

[16] Astee LY, Kishnani NT. Building integrated agriculture: Utilising rooftops for sustainable food crop cultivation in Singapore. Journal of Green Building. 2010;**5**(2):105-113. DOI: 10.3992/jgb.5.2.105

[17] Munoz H, Joseph J. Hydroponics: Home-Based Vegetable Production System. Inter-American Institute for Cooperation on Agriculture (IICA) [Internet]. 2017. Available from: http://legacy.iica.int/Eng/regiones/ caribe/guyana/IICA%20Office%20 Documents/Hydroponics%20Manual/ Hydroponics%20Manual.pdf

[18] Pullano G. Indoor Vertical Grower Touts concept's Benefits. VGN, Vegetable Grower News [Internet]. 2017. Available from: http:// vegetablegrowersnews.com/index. php/magazine/article/indoor-verticalgrower-touts-concepts-benefits

[19] Evett SR, Colaizzi PD, Lamm FR, O'Shaughnessy SA, Heeren DM, Trotut TJ, et al. Past, Present and Future of Irrigation on the U.S. Great Plains. American Society of Agricultural and Biological Engineers [Internet]. 2020. Available from: https://elibrary.asabe. org/abstract.asp?aid=51079&t=2&redir =&redirType=

[20] Birkby J. Vertical Farming. ATTRA Sustainable Agriculture. National Centre for Appropriate Technology (NCAT) [Internet]. 2016. Available from: https://www.scribd.com/ document/342934556/Vertical-Farming

[21] Ackermann O, Zhevelev HM, Svoray T. Agricultural systems and terrace pattern distribution and preservation along climatic gradient: From sub-humid Mediterranean to arid conditions. Quaternary International. 2019;**502**:319-326. DOI: 10.1016/j. quaint.2018.09.032

[22] Cıceklı M, Barlas NT. Transformation of today greenhouses into high technology vertical farming systems for metropolitan regions. Journal of Environmental Protection and Ecology. 2014;**15**(4):1779-1785. Available from: https://docs. google.com/a/jepe-journal.info/ viewer?a=v&pid=sites&srcid= amVwZS1qb3VybmFsLmluZm98 amVwZS1qb3VybmFsfGd4O jQ1MzQ3ZTRhYzI2YTRlNjk

[23] Al-Chalabi M. Vertical farming: Skyscraper sustainability? Sustainable Cities and Society. 2015;**18**:74-77. DOI: 10.1016/j.scs.2015.06.003

[24] Benke K, Tomkins B. Future food-production systems: Vertical farming and controlled-environment agriculture. Sustainability: Science, Practice and Policy. 2017;**13**(1):13-26. DOI: 10.1080/15487733.2017.1394054

[25] Thomaier S, Specht K, Henckel D, Dierich A, Siebert R, Freisinger UB, et al. Farming in and on urban buildings: Present practice and specific novelties of zero-acreage farming (ZFarming). Renewable Agriculture and Food Systems. 2015;**30**(1):43-54. DOI: 10.1017/S1742170514000143

[26] Smiechowski J. Vertical Farming Venture Achieves Sustainability and Success in New Buffalo, Michigan, Seedstock [Internet]. 2017. Available from: http://seedstock.com/2013/06/10/ vertical-farming-venture-achievessustainability-and-success-in-newbuffalo-michigan/

[27] Trotter G. Farmed Here, Indoor Farm in Bedford Park, Turning off the Lights for Good, Chicago Tribune [Internet]. 2017. Available from: http:// www.chicagotribune.com/business/ ct-farmedhere-closing-0117-biz-20170116-story.html

[28] Nobre CA, Sampaio G, Borma LS, Castilla-Rubio JC, Silva JS, Cardoso M. Land-use and climate change risks in the Amazon and the need of a novel

**207**

*Entrepreneurship in Urban Jungles through High-Tech Vertical Farming*

*DOI: http://dx.doi.org/10.5772/intechopen.93667*

sustainable development paradigm. Proceedings of the National Academy of Sciences. 2016;**113**(39):10759-10768.

[29] Touliatos D, Dodd IC, McAinsh M. Vertical farming increases lettuce yield per unit area compared to conventional horizontal hydroponics. Food and Energy Security. 2016;**5**(3):184-191.

DOI: 10.1073/pnas.1605516113

[30] Peter A. Robots Are Already Farming Crops Inside This Silicon Valley Warehouse. Fast Company World Changing Ides [Internet]. 2019. Available from: https://www. fastcompany.com/90365627/robotsare-already-farming-crops-inside-this-

DOI: 10.1002/fes3.83

silicon-valley-warehouse

raise-cash

story?id=67147957

a4640c9feebb

[31] Tan G, Roof K. SoftBank-Backed Farming Startup Plenty Is in Talks to Raise Cash. Bloomberg News [Internet]. 2020. Available from: https://www.bloomberg.com/news/ articles/2020-03-29/softbank-backedfarming-startup-plenty-is-in-talks-to-

[32] Clark B, Schneider L. Vertical Farming Company AeroFarms is Making Vegetables Tastier and

FEEDING Communities in Need. ABC News [Internet]. 2019. Available from: https://abcnews.go.com/Business/ vertical-farming-company-aerofarmsmaking-vegetables-tastier-feeding/

[33] Fortado L, Trazono E. AeroFarms Raises \$100m as Investors Rush to Indoor Farms. Financial Times [Internet]. 2019. Available from: https://www.ft.com/content/ cac48190-9d8a-11e9-9c06-

[34] Newton L. The farm in the sky. In: Urban Agriculture and Community Values. Cham: Springer; 2020. pp. 105- 118. DOI: 10.1007/978-3-030-39244-4\_7 *Entrepreneurship in Urban Jungles through High-Tech Vertical Farming DOI: http://dx.doi.org/10.5772/intechopen.93667*

sustainable development paradigm. Proceedings of the National Academy of Sciences. 2016;**113**(39):10759-10768. DOI: 10.1073/pnas.1605516113

*Entrepreneurship - Contemporary Issues*

[16] Astee LY, Kishnani NT. Building integrated agriculture: Utilising rooftops for sustainable food crop cultivation in Singapore. Journal of Green Building. 2010;**5**(2):105-113. DOI: into high technology vertical farming systems for metropolitan regions. Journal of Environmental Protection and Ecology. 2014;**15**(4):1779-1785. Available from: https://docs. google.com/a/jepe-journal.info/ viewer?a=v&pid=sites&srcid= amVwZS1qb3VybmFsLmluZm98 amVwZS1qb3VybmFsfGd4O jQ1MzQ3ZTRhYzI2YTRlNjk

[23] Al-Chalabi M. Vertical farming: Skyscraper sustainability? Sustainable Cities and Society. 2015;**18**:74-77. DOI: 10.1016/j.scs.2015.06.003

[24] Benke K, Tomkins B. Future food-production systems: Vertical farming and controlled-environment agriculture. Sustainability: Science, Practice and Policy. 2017;**13**(1):13-26. DOI: 10.1080/15487733.2017.1394054

[25] Thomaier S, Specht K, Henckel D, Dierich A, Siebert R, Freisinger UB, et al. Farming in and on urban

buildings: Present practice and specific novelties of zero-acreage farming (ZFarming). Renewable Agriculture and Food Systems. 2015;**30**(1):43-54. DOI:

[26] Smiechowski J. Vertical Farming Venture Achieves Sustainability and Success in New Buffalo, Michigan, Seedstock [Internet]. 2017. Available from: http://seedstock.com/2013/06/10/ vertical-farming-venture-achievessustainability-and-success-in-new-

[27] Trotter G. Farmed Here, Indoor Farm in Bedford Park, Turning off the Lights for Good, Chicago Tribune [Internet]. 2017. Available from: http:// www.chicagotribune.com/business/ ct-farmedhere-closing-0117-biz-

[28] Nobre CA, Sampaio G, Borma LS, Castilla-Rubio JC, Silva JS, Cardoso M. Land-use and climate change risks in the Amazon and the need of a novel

10.1017/S1742170514000143

buffalo-michigan/

20170116-story.html

[17] Munoz H, Joseph J. Hydroponics: Home-Based Vegetable Production System. Inter-American Institute for Cooperation on Agriculture (IICA) [Internet]. 2017. Available from: http://legacy.iica.int/Eng/regiones/ caribe/guyana/IICA%20Office%20 Documents/Hydroponics%20Manual/

Hydroponics%20Manual.pdf

[18] Pullano G. Indoor Vertical Grower Touts concept's Benefits. VGN, Vegetable Grower News

[Internet]. 2017. Available from: http:// vegetablegrowersnews.com/index. php/magazine/article/indoor-verticalgrower-touts-concepts-benefits

[19] Evett SR, Colaizzi PD, Lamm FR, O'Shaughnessy SA, Heeren DM,

=&redirType=

Trotut TJ, et al. Past, Present and Future of Irrigation on the U.S. Great Plains. American Society of Agricultural and Biological Engineers [Internet]. 2020. Available from: https://elibrary.asabe. org/abstract.asp?aid=51079&t=2&redir

[20] Birkby J. Vertical Farming. ATTRA Sustainable Agriculture. National Centre for Appropriate Technology (NCAT) [Internet]. 2016. Available from: https://www.scribd.com/

document/342934556/Vertical-Farming

[21] Ackermann O, Zhevelev HM, Svoray T. Agricultural systems and terrace pattern distribution and preservation along climatic gradient: From sub-humid Mediterranean to arid conditions. Quaternary International. 2019;**502**:319-326. DOI: 10.1016/j.

10.3992/jgb.5.2.105

**206**

quaint.2018.09.032

[22] Cıceklı M, Barlas NT.

Transformation of today greenhouses

[29] Touliatos D, Dodd IC, McAinsh M. Vertical farming increases lettuce yield per unit area compared to conventional horizontal hydroponics. Food and Energy Security. 2016;**5**(3):184-191. DOI: 10.1002/fes3.83

[30] Peter A. Robots Are Already Farming Crops Inside This Silicon Valley Warehouse. Fast Company World Changing Ides [Internet]. 2019. Available from: https://www. fastcompany.com/90365627/robotsare-already-farming-crops-inside-thissilicon-valley-warehouse

[31] Tan G, Roof K. SoftBank-Backed Farming Startup Plenty Is in Talks to Raise Cash. Bloomberg News [Internet]. 2020. Available from: https://www.bloomberg.com/news/ articles/2020-03-29/softbank-backedfarming-startup-plenty-is-in-talks-toraise-cash

[32] Clark B, Schneider L. Vertical Farming Company AeroFarms is Making Vegetables Tastier and FEEDING Communities in Need. ABC News [Internet]. 2019. Available from: https://abcnews.go.com/Business/ vertical-farming-company-aerofarmsmaking-vegetables-tastier-feeding/ story?id=67147957

[33] Fortado L, Trazono E. AeroFarms Raises \$100m as Investors Rush to Indoor Farms. Financial Times [Internet]. 2019. Available from: https://www.ft.com/content/ cac48190-9d8a-11e9-9c06 a4640c9feebb

[34] Newton L. The farm in the sky. In: Urban Agriculture and Community Values. Cham: Springer; 2020. pp. 105- 118. DOI: 10.1007/978-3-030-39244-4\_7

## *Edited by Mladen Turuk*

Entrepreneurship plays an exceptional role in the development of economies and is a vital source of change in all aspects of society. This book tries to facilitate a fundamental rethinking of entrepreneurial activity and how it is manifested. It addresses a critical shortcoming in much of the research, education, and economic development work that deals with entrepreneurship. Instead of the general theories of entrepreneurship, the book lays a foundation for developing theories of different kinds of entrepreneurial ventures. As the reader navigates these pages, he or she should hopefully broaden their entrepreneurial landscape and identify critical factors that drive contemporary entrepreneurship.

Published in London, UK © 2021 IntechOpen © undefined undefined / iStock

Entrepreneurship - Contemporary Issues

Entrepreneurship

Contemporary Issues

*Edited by Mladen Turuk*