Innovation And Entrepreneurship

Innovation, Entrepreneurship and the Economic Theories

Entrepreneurship begins with innovation and innovation itself has no limits. Entrepreneurship and innovation are without a doubt connected. However, there is a difference between the two. There is a risk associated in entrepreneurship which is not there in innovation. Innovation is bringing value to an idea and entrepreneurship is bringing the innovations to life. Over the years, society has benefitted from innovation significantly. ‘Economists estimate that between 50 and 80 percent of economic growth comes from innovation and new knowledge’ (Urama and Acheampong, 2013). This report illustrates how innovation has contributed to economic development and the different economic theories

In 2007, Steve Jobs released the first iPhone and there are more than 700 million iPhone users worldwide today (Reisinger, 2017). The creation of the iPhone was a game-changing, transformative invention to the industry. It brought out multiple communication options, numerous applications and extreme convenience to the user. This particular invention opened up even more doors to other inventions through the form of applications such as Uber, Spotify, etc. Everything today can be done by a touch of a screen and this would not be possible without innovation. Critics may challenge the concept of incremental innovation by considering it a waste of resources and conveys only slight developments of existing products and production methods, but the evidence from today suggest that even minor improvements to products can come a long way and the benefits are far too great to ignore or class as a

For instance, Henry Ford’s innovation of the modern assembly line helped spark a major transformation of both society and manufacturing. By reducing the cost of production substantially with standardization and more efficient assembly, he was able to produce automobiles in masses. This led to many industries adopting this method and almost everything today, from soft drinks to electrical appliances, are made on assembly lines. Ford’s idea is an example of one of the most revolutionary process innovations. Joseph Schumpeter’s theory of creative destruction observes that ‘competition, and with it a more efficient allocation of resources, arises only through the invasion of these markets by new entrepreneurs, who destroy the existing market equilibrium with their innovations’ (Entrepreneurship.de, 2017). He referred to the entrepreneur as “the agent of innovation” (Solow, 2007). He assumed that with innovation, existing structures are destroyed and that the key to economic development is the existence of discontinuous and profound change that helps to bring the economy out of it’s fixed state and into a dynamic boom. That is exactly what Ford’s invention did. It completely modified production in masses by improving the efficiency of the manufacturing process drastically and economic productivity increased in the long