Nowadays, with the developing of economic development is facing a new challenge. The notions of entrepreneurship, innovation and creativity become more widely used in business world and Naude (2010) notes that these fields are converging increasingly in recent years. Entrepreneurship has been regarded as the engine of dynamic economic development and growth (Ylinenpaa, 2009). Moreover, Minniti (1999) states that entrepreneurship scholars are catalysts for economic development because of the generation of a network for innovation that promotes the creation of new commercial formations and new ideas. In addition, the importance of creativity is highlighted within the context of economic development dynamics in Schumpeter’s work (1934, 1942) and problem solving is a process which encourages entrepreneurial thinking. Meanwhile, creativity and problem solving are interrelated and interacted on each other. This essay will illustrate the relationship between these significant elements within the market in a particular way. Firstly, definitions of key notions will be given. Secondly, the relationship between entrepreneurship, innovation and economic development will be contributed for a better understanding. In the next part, what role creativity and problem solving plays in that relationship will be introduced with the group project. Further examples will be provided for readers when necessary in the following part of this essay.
Simple definitions of the key issue about entrepreneurship, innovation and creativity will be given in this part and one example related to the notion of creative will be connected. Firstly, start from entrepreneurship with an explanation provided accordingly. The view of entrepreneurship refers to methodologies for business trade that takes the form of new combinations in an attempt to usurp market share. It is the dynamic process of assembling necessary factors of production consisting of human, physical and information resources and doing so in an efficient way (Lazear, 2005). However, entrepreneur is an individual with innovative ideas, utilizing new combinations of means of production (Schumpeter, 1934).Concerning with the second key notion, Rickhards (1985) pointed out that innovation is a process whereby new ideas are put into practice. Hence, it can be defined as a revealing and new variation on the old process. In a broad sense, innovation could be divided into sustaining innovation and disruptive. Sustaining innovation emphasizes on gradual and incremental improvements whereas disruptive innovation is more a discrete and discontinuous transformation. Creativity, put it simply, it is the ability to look differently and stand out the answers to the problem. Bruner (1968) defined it as ‘effective surprise’. Keil(1987) argued that it is more than a process or approach and also be a mind power. A well-known example related to creative destruction is the shift from vacuum tubes to semiconductors that eliminated the advantage of firms such as RCA and Sylvania (Tushman & O’Reilly, 1996). These three sections are balanced in business activities and both have significant effects on economic development and growth.
Following the root of definitions, the illustration of the interlaced relationship between entrepreneurship, innovation and economic development will be presented. Starting with the relationship between innovation and entrepreneurship, these two points have an internal link and mutual influence on each other. Entrepreneurs generate innovative ideas to reinforce discontinuous innovation, or disruptive innovation (Dannels, 2005), which alters the bases of competition through ‘utilizing new combinations of means of production (Schumpeter, 1934). It means that entrepreneurs make economic profit for themselves and to the society by innovative activities to the market and innovation is the essential function of entrepreneurship. Moving to the relationship between entrepreneurship and economic...
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