Entrepreneurship and Economic Development. Essay Example

society, simplifying the definition of concepts like innovation and creativity.

The definition of innovation according to the Oxford English dictionary is the act or process of introducing new methods, ideas, or products to something established. This accurately represents the change process that is inherent in entrepreneurship. It is crucial to distinguish between creativity and innovation - creativity involves generating ideas, while innovation involves implementing these ideas.

Innovation is the acceptance and implementation of new ideas that disrupt and change established norms. The Segway is an example of a highly imaginative concept that has not yet achieved true innovation. Only when it challenges traditional forms of transportation can it be considered innovative. Economic development, closely linked to economic growth, refers to the transformation and restructuring of a country's economy in relation to technological and social advancements, according to the World Bank.

Oregon State University defines economic development as "the institutional changes made to promote economic betterment. It is the social organizational changes made to promote growth in an economy." These definitions both emphasize social change and progress, leading to an improvement in a country's economic outlook. The central theme here is change and innovation. By revisiting Joseph Schumpeter's work, we can understand how these three concepts - economic development, social change, and innovation - are interconnected. Schumpeter's theory of economic development serves as the pivotal link between them.

This theory highlights the significant role played by entrepreneurs in driving economic development. The author conceptualizes an economy as a collection of businesses and enterprises, each embodying a distinct combination of production factors like labor, land, and finance. Schumpeter argues that true economic development occurs only with the introduction of novel combinations

of these factors.

According to Schumpeter, there are two types of changes: gradual and discrete. Gradual changes have a minimal impact on economic activity, such as enhancing design or altering the presentation of a product or process. Conversely, discrete changes entail fundamental shifts in a product or process that cannot be attributed to prior versions. Regardless of whether the change is gradual or discrete, the innovation necessary to generate new combinations of production factors necessitates some form of spark. Schumpeter attributes the initiation of this spark to the entrepreneur.

In Schumpeter's theory, there is a clear association between entrepreneurship, innovation, and economic development. The involvement of creativity is critical in initiating economic development through discrete change. Creativity and problem solving play a vital role in the interconnectedness of entrepreneurship, innovation, and economic development. To create economic development, entrepreneurial activities following Schumpeter's innovative approach rely on creative problem-solving abilities.

Innovation and creativity are closely linked. Innovation, which involves making changes to established processes, necessitates creativity. Established processes are typically not the worst solution; in fact, they are often the best solution found thus far. The Leibenstein type of entrepreneur is inclined to identify problems within these established methods and discover opportunities to creatively and innovatively solve them.

This is the place where new products are invented, services are created, processes are employed, and real economic development occurs. Let's examine the creation of a digital music player as an intriguing example. Currently, it is a vast market, largely controlled by Apple's iPods. However, there were instances when people doubted its success. They couldn't understand why individuals would go through the trouble of transferring their CDs onto their computers and then onto

their digital music player rather than simply using a personal CD player.

Entrepreneurs like Kane Kramer and Steve Jobs recognized the doubt surrounding personal digital music players as a potential business opportunity. The emergence of this market brought about a significant change, introducing a completely new segment to the economy. This form of innovation is considered to be a chaotic and unpredictable economic process, differing from the equilibrium-based analytical methods commonly used in economic theory.

According to Schumpeter's theory of "creative destruction," the concept of entrepreneurship leading to real economic gains can be challenging due to people's fear of the unknown. However, Schumpeter argues that successful entrepreneurs are able to overcome this resistance by creatively breaking down economic stagnation. In essence, it is the entrepreneur's responsibility to disrupt market equilibriums and utilize their creativity and problem-solving skills to their fullest extent.

This paragraph suggests that catalytic change is not the only way entrepreneurs can drive economic change. The Austrian school of economic thinking also emphasizes the important role of entrepreneurs in spotting opportunities during the dynamic balance between supply and demand. Entrepreneurs need to be able to identify when levels of supply and demand change and capitalize on this to make profits until resources are redistributed to achieve market equilibrium once again.

The entrepreneur plays a crucial role in preventing shortages and surpluses in the economy, ensuring economic development and solving the problems within the economic system. Both types of entrepreneurs, the innovative and problem-solving ones, contribute to driving economic development through their creative and innovative approach. The catalytic entrepreneur, inspired by Schumpeter's perspective, challenges economic "equilibriums" and creates positive changes that overcome economic barriers.

The Austrian school-style entrepreneur

has the responsibility of being attentive to market changes and adjusting strategies to attain profitability and market efficiency. Both types of entrepreneurs are crucial for economic progress, and the challenges they face in terms of innovation and creativity underscore the interconnectedness and close association between these theories. Ultimately, there is great significance in the link between entrepreneurship, innovation, and economic development.

Economic development and innovation are closely intertwined, with a reliance on one another. Innovation is vital for economic development, and entrepreneurs have a critical role in propelling this progression. Consequently, entrepreneurs are essential for advancing the economy and fostering economic development. The interaction among these three elements hinges on creative thinking and problem-solving capabilities that accomplished entrepreneurs possess. The amalgamation of creativity and problem-solving skills frequently results in innovation, ultimately stemming from imaginative inspiration.

Innovation and entrepreneurship are crucial for economic development as they foster creativity and problem-solving. In an organization, intrapreneurs, who function as innovators, contribute to driving change and promoting innovation with less risk compared to traditional entrepreneurs. However, it is possible that their rewards may not align proportionally with the success of their ventures. Nonetheless, intrapreneurs undeniably play a vital role as catalysts for transformation.

These individuals engage in innovation but carry less risk and may not receive proportional rewards for the success of their new venture. Nonetheless, they serve as change agents. References: Oxford Dictionary definition of Innovating (http://oxforddictionaries. com/view/entry/m_en_gb0412650#m_en_gb0412650), World Bank Definition of Economic Development (http://www. worldbank. org/depweb/english/beyond/global/glossary. html), OSU Definition (http://oregonstate. edu/instruct/anth370/gloss. html), Entrepreneurial Economics Wiki (http://en. wikipedia. org/wiki/Entrepreneurial_economics)