Entrepreneurship and business
‘Discuss the relationship between entrepreneurship, innovation and economic development. What role if any do creativity and problem solving play in this relationship? Refer to both theory and examples from the business world to support your discussion.’
“Economic development is so far simply the object of economic history, which in turn is merely a part of universal history, only separated from the rest for purposes of exposition”(Schumpeter, 2008, p 58). Economic expansion is vital because it provides a firm grounding for the future of society and has the ability to create solutions for many economic problems. For example, a lack of developments in the economy makes it difficult to effectively contribute to the reduction of poverty, particularly in developing economies. In addition, a stagnant economy will inevitably lead to a decrease in jobs available. Therefore economic expansion can reduce unemployment as it creates an increase in the availability of jobs in a rising population. Schumpeter (2008, p 63) believes that “such changes in economic life are not forced upon it from without but arise by its own initiative, from within”, thus locating a role for entrepreneurship and innovation. In this essay I will illustrate how entrepreneurship and innovation positively affect economic development. Hindle (2009: 75) defines innovation as “the combination of an inventive process and an entrepreneurial process to create new economic value for defined stakeholders”. This definition suggests that innovators can have a positive effect on economic development through the creation or improvement of new superior technology from current systems. Entrepreneurship describes the way in which one undertakes innovations and innovative ideas, by exploiting its gains and turning it into economic profit. This could result in new business openings which consequentially impacts economic development as the profits of the business go back into the economy resulting in further
“Economic development is so far simply the object of economic history, which in turn is merely a part of universal history, only separated from the rest for purposes of exposition”(Schumpeter, 2008, p 58). Economic expansion is vital because it provides a firm grounding for the future of society and has the ability to create solutions for many economic problems. For example, a lack of developments in the economy makes it difficult to effectively contribute to the reduction of poverty, particularly in developing economies. In addition, a stagnant economy will inevitably lead to a decrease in jobs available. Therefore economic expansion can reduce unemployment as it creates an increase in the availability of jobs in a rising population. Schumpeter (2008, p 63) believes that “such changes in economic life are not forced upon it from without but arise by its own initiative, from within”, thus locating a role for entrepreneurship and innovation. In this essay I will illustrate how entrepreneurship and innovation positively affect economic development. Hindle (2009: 75) defines innovation as “the combination of an inventive process and an entrepreneurial process to create new economic value for defined stakeholders”. This definition suggests that innovators can have a positive effect on economic development through the creation or improvement of new superior technology from current systems. Entrepreneurship describes the way in which one undertakes innovations and innovative ideas, by exploiting its gains and turning it into economic profit. This could result in new business openings which consequentially impacts economic development as the profits of the business go back into the economy resulting in further
References: Binks, M & Lumsdaine, E. (2009) Entrepreneurship from Creativity to Innovation. Trafford Publishing Helpman, E. (2004) The Mystery of Economic Growth. Cambridge, MA: Harvard University Press. Hindle, K. (2009) The relationship between innovation and entrepreneurship: Easy definition, hard policy, downloaded from http://www.swinburne.edu.au/lib/ir/onlineconferences/agse2009/000173.pdf as at 2009 Kirkham, P. Mosey, S. P. Binks, M. R. (2009) Ingenuity in Practice: A Guide for Clear Thinking. University of Nottingham institute for enterprise and innovation Knight, F. H. 1964 [1957]. Risk, Uncertainty, and Profit, with a new preface. Reprints of Economic Classics. New York: A.M. Kelley. Schumpeter, J. A. (2008) The theory of economic development. Transaction Publishers, New Brunswick (U.S.A.) and London (U.K). Szirmai, A. Naudé, W. and Goedhuys, M. (2011) Entrepreneurship, Innovation, and Economic Development: An Overview. Downloaded at http://fds.oup.com/www.oup.com/pdf/13/9780199596515.pdf as at 2011 Verspagen, B. (2005) ‘Innovation and Economic Growth’. In J. Fagerberg, D. C. Mowery, and R. R. Nelson (eds), The Oxford Handbook of Innovation. Oxford: Oxford University Press.