Entrepreneurship and business

Topics: Entrepreneurship, Innovation, Economic growth Pages: 6 (1926 words) Published: February 21, 2014
‘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 expansion. Therefore the key to economic development is the inextricable relationship between entrepreneurship and innovation. However, it is also important to recognise the significant function of creativity and problem solving within this relationship. Having a creative capability and an enhanced problem solving prowess links directly to the skills associated with being a budding entrepreneur and possessing innovative competency. Therefore, this essay seeks to establish the way in which entrepreneurship and innovation directly affect economic development, as well as the importance of creativity and problem solving within this relationship. Firstly I will address the role of creativity and problem solving with regard to economic development, innovation and entrepreneurship. Secondly I will specifically focus on the impact of entrepreneurship, and thirdly I will expand on the effect of innovation. “We are all creative” (Kirkham et al, 2009, p 69) but it is how we use our creativity that makes the difference. Creativity and problem solving can merge together to coin the concept of creative problem solving. Kirkham, Mosey and Binks (Kirkham et al, 2009) suggest that this idea entails that to creatively solve a problem one would need a specific knowledge about the problem as well as the capabilities needed to solve it. However there are many different combinations of this. This idea of creative problem solving is heavily associated with entrepreneurship as different combinations of knowledge and capabilities can bring forward different entrepreneurial opportunities. For example if there is no knowledge about a problem and one lacks the capabilities to provide a solution to it, an opportunity for innovation arises. Conversely, if there is full knowledge of a problem and the capabilities to solve it, the opportunity for entrepreneurship diminishes, as the need to for innovation and problem solving is reduced as the problem has already been resolved. Therefore, an...

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.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Entrepreneurship And Business Essay
  • Entrepreneurship Essay
  • Essay about Entrepreneurship
  • Essay on Social Entrepreneurship
  • Entrepreneurship Essay
  • Entrepreneurship Essay
  • The connection between entrepreneurship and small business. Essay
  • Entrepreneurship and Small Business Essay

Become a StudyMode Member

Sign Up - It's Free