Relationship between Entrepreneurship, Innovation and Economic Essay

Relationship between Entrepreneurship, Innovation and Economic Development - Essay Example Market therefore becomes central to the economic development where entrepreneurship and innovation become powerful factors to influence economic growth. Position of the paper Entrepreneurship and innovation are critical issues within socio-economic development that are intrinsically linked to growth. In the contemporary environment of competitive business, the role of creative entrepreneurship becomes vital ingredient of competitive advantage within the industry, irrespective of its structure or model. Indeed, various paradigms of economic growth are significantly impacted by entrepreneurial vision that anticipates change and competently exploits it for profit (Kuratko and Hodgetts, 2004). In the current environment of competitive business, entrepreneurship and innovation become the major enabling elements of competitive advantage and intrinsic part of economic growth. The paper would therefore be discussing the facilitating role of entrepreneurship and innovation in the economic dev elopment of society and how creativity and problem solving support the relationship. How entrepreneurship and innovation become driving force for economic development While the normal human behavior tends to follow a rational approach, an entrepreneur is highly indigenous in his/her actions and thoughts which often results in innovation and path breaking ideas, impacting human lives and leading to development (Harvey, M. and R. Evans, 1995). Oprah Winfrey is fitting example of entrepreneurial creativity who grabbed opportunity and brought about major social change vis-a-vis perspective in racial discrimination. She showed how a person can rise above the conformity of race and gender to become successful and promote socio-economic development of society. Indeed, the development of society is based on the revolutionary ideas of the few which has considerably influenced and restructured social fabric in a more rationale manner. Kirzner (1973) believes that entrepreneurs tend to identif y profit opportunities and act on their insights to become more productive, thus contributing towards economic growth. A market driven economy hugely supports entrepreneurial innovation as it is able to experiment with new ideas and exploit opportunities. Entrepreneurship is dynamic and evolves with changing times to maintain its leverage against industrial rivals. Facebook, twitter, Apple, Microsoft etc. are important companies that were able to exploit new ideas and turned them into roaring businesses. Through the evolving process of entrepreneurial creativeness, the companies, that fundamentally adopt a culture of entrepreneurship and innovation, are better able to cope with increasing competition in the market and impact economic growth. The major theories that support the relationship between creative entrepreneurship and development Schumpeter (1934) has been one of the most influential social scientist to propose that economic growth is driven by innovation. He asserted that radical innovation brought disruptive changes while incremental innovations were proactive in continuous process of change. According to him, there were five types of innovation. While new product development ensured that people’s changing requirements are met, new methods of productions like lean production, TQM etc promoted efficiency and quality. Market