The purpose of this paper is to investigate the relationship between entrepreneurship, innovation and quality performance in small and medium‐size enterprises. With respect to the relationship between entrepreneurship, innovation and economic development, Schumpeter () highlights the role of entrepreneurship is. Free Essay: Discuss the relationship between entrepreneurship, innovation and economic development. What role do creativity and problem solving play in this.
As a result, further economic development in this period promotes entrepreneurship. Drucker views innovation as the purposeful search for changes and the opportunities that such changes might offer. Similarly, Schumpeter presents that innovation is the engine of change in economy. Furthermore, he raises the issue of creative destruction as a tool of entrepreneurship that discrete innovation destroys traditional market and rapidly replaces less competitive economic activities development.
These suggest that innovation is the catalyst of economic development.Innovation & Entrepreneurship
For example, an iPod is derived from combing various technologies with unique design, which is an innovation in MP3 player industry. The production of an iPod included 41, jobs worldwide increating job opportunities and boosting global trade Linden, Kreamer and Dedrick, Furthermore, Boston Consulting Group Collaborative Economics, also states that innovation is becoming an important economic motivator based on their research on the US Productivity Growth Outputs.
For these reasons, innovation is the major force for economic development.
Relationship between Entrepreneurship, innovation and development | Syed Salman - salonjardin.info
Nevertheless, the level economic development affects the function of innovation. According to the Artadi and Xavierthe stage of economic development of a country covers factor-driven stage, efficiency-driven stage and innovation driven stage.
Innovation plays different roles in different development phases. In factor-driven stage, the economy of a country is primarily driven by abundant and low-cost labor and natural resources. The contribution from innovation is negligible that is not worth considering in this period.
Then, in efficiency-driven stage, countries seek to improve procession efficiency and promote productivity with existed technologies. In this phase, innovation is a secondary consideration. Later, in innovation-driven stage, innovation is an essential element of economic development. Most sectors or industries are experiencing Schumpterian renaissance: In summary, innovation is the pre-requisite for real entrepreneurship, which adapted by entrepreneurship to stimulate economic development.
However, different level of economic development affects the popularity of entrepreneurship and the function of innovation. According to the definition, the objective of sustainability is to maintain an environment that assures to sustain the development of human beings. This issue is becoming popular in recent years because of its positive effects on entrepreneurship, innovation and economic development. It is widely accepted that generating competitive advantages is crucial for entrepreneurs that own growing firms Penrose, cited in Kor and Mahoney, Hart cited in Paton, points out that the goal of sustainability is entirely consistent with the profit motive competitive advantages.
In other words, sustainability, as the vital process of generating competitive advantages, plays a significant role in entrepreneurship. Taking social responsibility is an important aspect of sustainability and helps enterprises generate competitive advantages.
NIKE is a suitable example of this. NIKE was accused of using child labour in production of its sneakers in Pakistan in This unsustainable behaviour incurred criticisms from several society groups and damaged its brand image, resulted numerous people refused to purchase its products.
In this case, NIKE derives competitive advantages from its sustainable management. This indicates sustainability enhances the development of entrepreneurship. It is mentioned in the Section 2 that entrepreneurship has positive effects on innovation and economic development. Kao states that entrepreneurship is a potential force for sustainability, which indicates it is likely that sustainability has important influence on innovation and economic development through enterprise performance.
Haier developed and combined new Fluorine-Free and Energy-saving technologies and built new venues in order to produce this product Yao, Pan and Yuan, In other words, it destroys the traditional Fluorine-added air conditioner industry and launched new air conditioners into the market. Through this case, the production of new air conditioner develops innovation and the new manufacture venues offer more job opportunities, which is beneficial to economic development.
For these reasons, sustainability boosts innovation and economic development through enterprise performance. Conclusion In conclusion, the relationship between entrepreneurship, innovation and economic development is complex.
This essay illustrates that innovation is the premise of entrepreneurship. This paper also illustrates that entrepreneurship plays an important role in economic development. He also thinks that innovation bustle deconcentrates the market. Acs stated that one factor for the growth in the employment rate in US is the increase in the rivalry. This reduces economies of scale, increases in import competitions and provided improved structures of vertical integration.
Another econometric cram of the US telephone industry by Gort and Sung uttered that greater efficiency in the industry is produced by increased competition. Job creation, Industrial structure and start ups: Audretsch et al provided an econometric swot up stating that 18 European countries proven to be successful in terms of growth in the economy because of greater share of SME sector.
In an evocative swot of small business activity in Germany, Wengenrothp. A study in Sweden by Davidsson et al provided that numerous net jobs were created in the small business activity sector and another main factor highlighted was that the firms were not growth oriented but were founded by entrepreneurs as a hobby. Acs offered an innovation gauge, distinct as the sum of innovations per 1k employees in diverse industry sectors.
Through the application of this gauge on the U. Almeida and Kogut and Almeida concluded that unexplored fields are innovated by small firms relatively in the field of technology. They differ from large companies in this way, who concentrate more on patents and opt to research and innovate in risk free explored zones.
As we can see that both have strong connection but generally the inventions may be carried out at anyplace while innovations and ideas are applied when you commingle knowledge, resources and skills or abilities. Therefore the inventor or the entrepreneur attempts all these tasks in the firms for proving the viability of his idea.
These innovators learn from their past experiences as they tend to opt for profit opportunities, their test n error basis approach brings the market to equilibrium.
Their profits are due to the risk they bear while practicing innovations. Innovation is embedded in the entrepreneur and due to this they perform their entrepreneurship activity. Innovations give them the feedback of their activity, promote them and create the urge and stimulate the new individuals to shift as an entrepreneur.
The Relationship Between Entrepreneurship, Innovation and Economic Development
Galindo, Relation of Innovations and Growth of the Economy: Innovation can bring improvement in the existing product so giving a higher position to an entrepreneur will boost his confidence and morale to make new innovation s.
All this circular process will impact the economic growth positively. So innovation process is a factor of profit enhancing and may be considered as growth mechanism. In terms of problem solving, the Central Banks can play a vital role in easing the process of providing credit to the entrepreneurs. The money supply for the creativity will build competition in the market and will promote SME sector to come up with more innovations and ideas which will affect 4 positively on the society as a whole.
However both the factors i. Practical Example s from the Business World: See the example of New Zealand where a group of university individuals started a program with innovation.
SPARK program was incepted by a Dean of business school, Vice chancellor and an internal champion came up with this idea to develop the knowledge into potential wealth through entrepreneurship. They thought, researched, found the gaps then took the best universities of the industry and came up with the solution to promote and strengthen their economy. This program is about enterprise and innovation.
You tube is a creativity that is problem solving to the people in diversified ways as well as its contributing in the development of the country. This video streaming website promoted video streaming business in the country as well as in the world.
Another example of entrepreneurship and innovation is Google and Facebook which turned out to be one of the biggest companies of the world. Their idea, innovation and creativity promoted them to success while they transformed their entrepreneurial activity to a well established organization while solving the problem to their country and across the globe.
Thus above research and examples have proven that the stronger and the strengthened the institutions are within the country, the better opportunities for the entrepreneurs to innovate and show their creativity that can help for the development of the economy.