Entrepreneurship, innovation and economic development are linked to one another through different factors and characteristics of each other. Entrepreneurship “is the result of what entrepreneurs do and refers to events and their economic impact” (Lumsdaine E, Binks M 2007 P11). This definition demonstrates that entrepreneurship is an outcome of an act of a person who has a particular quality. This act may be taking initiative and creating a business idea from an opportunity that has been seen. It is also created from changes of supply and demand of consumer needs and this is where entrepreneurs are different to other people, as they would see this change in demand and supply consumers with the service or product that is wanted.
Innovation “is more than an invention – it involves change and it ultimately results in a useful product or process that is commercialised and widely disseminated” (Lumsdaine E, Binks M 2007 P179). This means that a product is not only invented, it is distributed in to the economy and used by the majority of the target market. The difference between an invention and innovation is that an invention is a product that has been produced by some who has a creative trait but the product may not necessarily be used by the intended target market, while innovation is taking the invention through the process of being sold to the intended target market and being used on a timely basis. An example of an invention is an eight wheeler electric car. The creativity of the idea is there, but it was not commercialised and distributed, therefore it was not innovated. Whereas an item like the Apple iPhone was invented and was commercialised and distributed and is now one of the most popular smart phones.
Economic development is a “qualitative measure of progress in an economy. It refers to development and adoption of new technologies and general improvement in living standards.” (Business Dictionary, unknown). This is when the wealth of the economy increases. Economic development can be initiated from new product development, as people would purchase this new product meaning the company that have created it will see an increase in sales and profit.
Entrepreneurship is linked to innovation as it is entrepreneurs that have innovative ideas and execute them in order for them to be successful. Entrepreneurship is about taking a risk in business idea. A man called Donald Douglas, can be classified as an entrepreneur. He was a man who “had his own aircraft company in 1920” (great achievements 2003). He had an idea where people should be able to be transported in planes. At this stage only cargo and fighter planes had been invented and people used ships to travel between countries and other destinations. Donald Douglas falls into the Harvey Leibenstein’s definition of an entrepreneur. Harvey Leibenstein said that entrepreneurs were “gap fillers” (Nayab N 2010). By this, he meant that they saw a gap in an imperfect market and took the opportunity to make a profit by developing new goods or services.
Problem solving is when a person seeks a problem in a certain area and creates solutions to solve this problem that would benefit consumers, buy providing them with a service or a product and also the creator in terms of money. Therefore Donald Douglas identified a problem and a demand for consumer needs, used an invention that was already operational, but modified to change its intended use and carry passengers in comfort. His idea and knowledge were revolutionary as it had created a new form of transport and people have been using this idea and modifying it even today. Donald Douglas’ creation had an impact on many economies as it meant people were able to travel to...