Discuss the relationship between entrepreneurship innovation and economic development essay
Relationship between entrepreneurship, innovation and economic development Essay
Discuss the relationship between entrepreneurship, innovation and economic development. What role do creativity and problem solving play in this relationship? Refer to both theory and examples from the business world to support your discussion.
From 18th century, economists have paid great attention to the effect which entrepreneurship and innovation have on the development of economy (Van Dijk, 1999). Hisrich, Peters and Shepherd (2010) have discussed that an entrepreneur can be defined as an individual who has the ability to manage the limited resources more effective, applies creativity and innovation in the marketplace in order to appropriate profits and is keen to bear the uncertain condition. Since it can act to integrate three factors of production in productive ways to cater to the needs of characters, several economists regard it as a special factor of production besides labor, capital and land (Kirby, 2003). In addition, innovation means not only the creation of better or more effective products, technologies or ideas which are accepted by markets, but also the existing products of which quality are improved to satisfy consumers (Shane and Ulrich, 2004). It seems that both entrepreneurship and innovation rank high on promoting the development of economy. Accordingly, this essay will discuss
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In general, innovation has been regarded as one of the most momentous factors to the whole process of entrepreneurship. Similarly, entrepreneurship has become one of the most significant factors to innovation. It is said by Castillo (2009) that neither entrepreneurs nor innovators has considered themselves as each other, though, entrepreneurship requires innovation and vice versa. Usually, entrepreneurs desire to find out the best way, which can produce newer and better products and improve the quality of their previous goods, to search for new markets and capture purchasers’ attention by using the limited resources, and at the end of this, they can obtain more profits. In this process, when an entrepreneur creates a new product or uses a method that is new to it, it makes a technical change.
At that time, the first firm which made the change is an innovator. Thus, it is the same with what Drucker (1989) said that, during this process of exploring the right way, innovation is the specific means of entrepreneurs, that is to say, innovators have the abilities to exploit change as a chance for a new product and increase the value of existing products by means of improving its quality. Ultimately, the new and updated products will develop new markets and meet the needs to purchasers through the cooperation between entrepreneurship and innovation. In a word, as a special section of the process of entrepreneurship, innovation always accompanied with entrepreneurship, and meanwhile, they supplement each other.
In the term of entrepreneurship, it is received by a host of scholars that there is an affinitive relationship between entrepreneurship and the development of economy. To begin with, as a matter of fact, there is an approach of which the name is Global Entrepreneurship Monitor (GEM) to examining the complicated relationship between the level of entrepreneurship and the level of economic growth. In this method, researchers considered the growth of a nation’s gross domestic product (GDP) as the representative of the economic development, and then, they set up a GEM model, which is made up of demand side which is represented by entrepreneurial opportunities and supply side which is represented by entrepreneurial capacity factors. After measuring large bodies of data around forty countries, the GEM consortium is sure that entrepreneurship has a positive effect on the development of economy (Deakins and Freel, 2003). Moreover, as Hisrich, Peters and Shepherd (2010) stated, entrepreneurship becomes the driving force of the economy from two angles, one is to increase the outputs and profits, and the other one is to enhance the structure of business in the society to promote the development of economy.
The American multinational information technology corporation, Dell Computer Corporation, can be considered as an appropriate example. Initially, the traditional sales model of information technology industry is that manufactures produce typical products in mass production one time, after that, they sell the products to the franchisers, and purchasers get the products ultimately. This kind of sales model results in a series of problems. As an example, franchisers will charge consumers for some extra money, so the price is usually higher than that in the sales model of direct marketing. When the prices of IT productions are higher than the value of them to consumers, the number of sales will decrease rapidly. That will lead to losses of large number of consumers (Biebrauer, 2000). In contrast, Dell Computer Corporation centers on the needs of consumers, so Michael Dell adopt the direct selling model, which means that manufactures sell productions to consumers directly, instead of old sales systems (Kraemer, Dedrick and Yamashiro, 2006). By using this kind of sales model, Dell Computer Corporation can prepare a satisfying production for every consumer at a low price. That gives a great opportunity to compete in the marketplace. It is certain that the change on the sales model can increase the profits. Hence, the economy in this company is stimulated by entrepreneurship. To concluded, entrepreneurship plays a crucial role in the process of stimulating the development of economy.
With a mass of successful examples, innovation has becoming an exceedingly contributor to economic development. According to what Peters (1987) said, in an age demanding innovation, a company which cannot innovate and develop itself will be put to the test. Chiefly, innovation can contribute to make more profits by creating new products and improving the existing products. With a large number of competitors around a company, competitions in the market stimulate it to create and update products in order to increase its market share as well as its competitiveness. In addition, innovation can always bring a huge profit, so it also appeals to investment which can be used in the further development.
That can have a positive impact on the output and economic development. By way of illustration, Google Inc. which has triumphed through innovation as of its launch in 1998 can be the representative of innovative companies. Although Google Inc. achieved in the area of Internet search, it has never stopped its steps. Google Inc. employs hundreds of engineers who graduated from first-class universities to create more advanced products, such as Google Translate, Google News and Google Search Appliance. In 2005, Google Inc. purchased Android from Andy Rubin and went on to develop it. Until 2008, Google Inc. released an operating system for mobile devices such as smartphones and tablet computers called Android 1.1 which can be a competitor to Apple’s iPhone (Wired, 2004). In this case, the managers in Google Inc. are not only outstanding innovators but also excellent entrepreneurs. They find a promising field and start their businesses, so innovation brings them a mass of fortunes eventually. Without a doubt, innovation accompanied with entrepreneurship can push the development of economy.
As mentioned above, an entrepreneur who has the ability to apply creativity and innovation well should have a keen observation for existing problems in daily life. Usually, the appearance of a knotty problem leads to the design and development of new products, and that is because entrepreneurs will find a commercial opportunity from the existing problem. During the process of solving problems, creativity can always be put in the first place. It means not only to generate new products but also to combine existing products together in new ways (Kirton, 1976). As Kirby (2003) has shown, creativity can regarded as the ability to think fresh things, whereas, innovation is the ability to do new things. Undoubtedly, the interaction between creativity and innovation is the core of solving problems. After the accomplishment of the new product, it is also extremely important to launch it in the existing market to make profits. That is the whole process from entrepreneurship to economic development. In this process, creativity and innovation become two significant factors. They are the core of solving problems, the essential conditions of entrepreneurship and the catalyst of economic development. Simultaneously, solving problems becomes the main part of entrepreneurship. It is certain that the final aim of these factors is to satisfy consumers’ needs and solve their problems.
To sum up, it is apparent that there is an inseparable and closely connected relationship between entrepreneurship, innovation and economic development. Above all, entrepreneurship is the driving force of the development of economy. Like the example of DELL Computer Corporation, successful entrepreneurs should find a new way or model to make their products more acceptable for consumers. Surly, innovation cannot be ignored during this process. Actually, there may be no innovative and attractive product without innovation. It can be regarded as the key of entrepreneurship. Entrepreneurship accompanied with innovation usually can create perfect products. When consumers are satisfied with the fresh products, the economies of the entrepreneurs’ companies will be promoted unaffectedly. Furthermore, both creativity and problem solving play important roles in these relationships. To meet the need of consumers, entrepreneurs apply the creativity and innovation to produce new products. So creativity can be considered as the catalyst of economic development. Likewise, problem solving can be considered as the main part of entrepreneurship which can promote the process of entrepreneurship.
Explain the Relationship Between, Entrepreneurship, Innovation and Economic Development Essay
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Joseph Schumpeter formally regarded the understanding that entrepreneurs are often innovators, bringing new, improved goods and technologies to markets, creating new niche upcoming solutions and delivering them into new markets. Entrepreneurship focuses on the creativity, moment of inspiration, the why when and how of certain opportunity recognition. According to Schumpeter “the role of entrepreneurship is implicit as an underlying cause of innovation. However, innovation is not solely the domain of entrepreneurs” – The idea of Entrepreneurship somewhat relies on the effective means of innovation. The concept of innovation allows the development of new ideas, inventions and their making come to pass. Economic development undertakes the adoption of new market technologies and industry based economies to see and improvement in economic standards as well as an increase in the net gain of money flow. In regards to the three ideas of entrepreneurship, innovation and economic development I will discuss why I believe they co-exist. Where sustainability fits in is that increasingly our society is becoming more aware of its day-to-day actions with respect to the environment around it.
It is becoming increasingly important topic on businesses agendas as without a scope for future revenue streams, the very nature of what they do will not be feasible. Increasingly these days if a business is to be economically viable then sustainability has to be engrained in its model. Schumpeter progressively demonstrates the fundamental view of behaviour from an entrepreneurial point of view and how it must coincide with that of the innovative. In the book ‘The Entrepreneurial Mind’, Jeffry Timmons defined entrepreneurship as “the ability to create and build something from practically nothing.” This shows that without innovation and ideas entrepreneurship cannot come to pass. Innovation is taking an idea and bringing it to market, however market attractiveness, size and dynamics are all important components and thus theory of entrepreneurial understanding plays a vital role in success The view that (radical) innovation is helpful in the promotion of growth through economic development links to the Schumpeterian understanding of ‘creative destruction’ – presupposed that it is the forceful differential that imposes a separate angle of economical structure, commonly replacing the old and imposing the new. The theory of radical innovation ties in consistently with this theory, however to fully understand the ideology behind innovation we must look at the various types.
The two main types of innovation are incremental and as mentioned radical. Incremental innovation consists whereby the improvement of products, ideas, and strategies are put in place –often seen through the use of extension strategies. Positively speaking, incremental innovation helps to increase efficiency of products or services, by maximising the lifetime within their life cycle (short term innovation) and focusing on exploitation competencies. However in terms of long run economic value for development it may struggle to coincide with increases or dramatic changes in population and improvements of technology as two examples; especially in less economically development countries, thus limiting the innovative nature of an idea or action. On the other hand and more understandably tied in with entrepreneurship, we must look at radical innovation. “Radical innovation creates such a dramatic change in products, processes or services, that they transform existing market or industries, or create new ones.” Radical innovation looks to provide something new, accompanied by a disruptive or discontinuous quality that uproots markets and creates significant change within industries. This ties in coherently with entrepreneurship due to the fact that it is often these creations and innovative ideas that entrepreneurs use to bring good and services to the market place. Innovation encourages the go-forward, propelling economic development.
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New creative industries, as well as new firms originate from the entrepreneur causing old companies providing goods and services to react and adapt to market change, in turn leading to a development economically in both the short and long term. The drive to compete and push costs down is what compels market breakthroughs, changing market tastes, fashions and demands which play a role in the success of entrepreneurs. This change is what helps to bring about economic development and through demand and supply problems/wants being solved. It is not only innovation that an entrepreneur provides, yet everyday management and corporate social responsibility that eventually drives success and helps to maintain the sustainable goal. Peter f. Drucker define entrepreneurship as a ‘systematic, professional discipline available to anyone in an organisation’ – Drucker believed that entrepreneurship wasn’t just from an individual, yet it could be introduced systematically by firms and businesses i. e. Corporate Entrepreneurship. Drucker understood that entrepreneurship did not just have to be from initial start-up business but could occur within established organisations as well through management styles and development strategies. In relation to Schumpeter, he regarded development economically as the carrying out of different or new combinations. He developed this concept creating five cases saying that ‘ The introduction of a new good; The introduction of a new method of production; The opening of a new market; The conquest of a new source of supply or raw materials; The carrying out of the new organisation of any industry.’
All of these cases regard the process of economic development and through the structure that Schumpeter has developed we are able to denote the cyclical relationship between entrepreneurship, innovation, and economical development throughout each stage with the ultimate goal of progression in the market place to eventually maintain a sustainable position. I will now explain the importance of innovation with respect to its significance and enhancement of economic development. For the ongoing push to encourage and create economic development, innovation plays a key role as the appearance of new ideas to smaller less mature companies, especially in less economically developed countries. This is due to the fact it helps to promote the gap between a less economic developed countries and more economic developed countries. In their book ‘Entrepreneurship, Innovation, and Economic Development’, Adam Szirmai and Wim Nadue view innovation as ‘intimately tied in with changes in structure of the economy, technological increases in production and eventually more added value for global gain’ Common components such as product and process advancements through technology, as well as lowering cost barriers, innovations have become an important asset to firm success and competitiveness. Innovation through technological change proves to be embodied within machinery, equipment, and more specialised work forces. Other advances in research and development, and improved efficiency working environments have also helped to improve total economical productivity, ultimately leading to increases in development.
Increases and development in the above not only improves the quantity of output within an economy, it also helps to advance the quality, delivery, and nature of a good or service. The continued increase of economic development creates higher output abilities for business that is ultimately fed back into the economy starting from the bottom and working its way to the top. An example of how entrepreneurship, innovation and economic development are linked can be shown from the internet site/service, Amazon created by the American Entrepreneur Jeff Bezos – offering an internet based approach, allowing customers to purchase books online. The radically innovative idea led to many traditional bookshops being put out of business, and its ability to hold a larger amount of books to a high street store, decreasing book store sales by 40%. Jeff Bezos saw the growing use and development of the internet, and decided to use this as a platform to launch his risky yet transformational idea of Amazon. The fact that Bezos saw this gap in the market and took the risk to launch his innovation makes him and the business entrepreneurial. The core competencies of Amazon allowed it to contribute it to economic development. One reason is due to the fact that it allows business and consumers to save time by being able to look and purchase for products on Amazon quickly and efficiently without having to go to stores or spend time search for them. It also contributes to economic efficiency due to the fact it allows companies to find goods at the most competitive prices and hence drives out firms that are uncompetitive. Going back to my emphasis on the increasing importance of sustainability, the ‘World Commission on Environment and Development’ say that ‘Sustainable Development meets the needs of present without compromising the ability of future generations to meet their own needs’ – A vital consideration in this link is the goal or guide at which business as well as whole industry produce a good or service to a sustainable degree.
Sustainability in this sense ties in with two concepts; meeting the needs of the poorer countries economically, and secondly the thought of limitation created by new technology and social footprint within the environment and its ability in the future. The obvious link between the former subject topics of this essay relate significantly to the topic of sustainability in the sense that each rely on future generation for further development, and also must maintain sustainability one way or another. Within his book ‘Beyond growth: Economics of Sustainable Development’ – Herman E. Daly saw sustainable development as ‘development without growth, that is without throughput growth beyond the regeneration and absorption capacities of the environment’ (pg13, 1997) – this view of sustainability sees economic development in a different category to that of growth. Therefore, the initial entrepreneurial idea that may have been developed through either incremental or radical innovation will need to maintain being sustainable in order to create development economically in both the short, but more-so the long run.
In conclusion it seems evident that without the inherent relationship that exists between the three main ideas of entrepreneurship, innovation and economic development none of them would completely flourish. The involvement of sustainability also plays a key role in this tightly knit relationship – the direct influence that sustainability has it extremely important as business in today’s world have a focus point on developing economically whilst being sustainable for themselves, and investors. I feel that in the future especially in the near future firms that do not involve themselves sustainably will find it difficult to compete within the market not having prejudged future needs and wants from consumers. This will evidentially create a firm to be less competitive in the long-run. Schumpeter stated ‘A firm can never be perfect in any sense, yet it in time approaches a relative perfection having regard to the surrounding world and social conditions’ – The ability of entrepreneurs and business’ to understand that sustainability is vital at an early stage will enable them to source information and models to follow. I feel that even though the symbiotic relationship between entrepreneurship, innovation, and economic development must tie in subsequently with sustainability it is a process that can be adapted throughout the innovation stage, and well as during economic development, and that entrepreneurs must not take away wholly from the prospect of growth and profit in such a way that may eventually negatively impact an idea, or a firm in the long-run. This fundamental relationship demonstrates the need of positive conductivity between each other, and I think that unless this is not achieved then economic development and market retention will not be held. Thus evidently I feel the focal communication between each stage must remain if an ultimate goal is to be reached economically and in terms of sustainability.
The Relationship Between Entrepreneurship, Innovation and Economic Development
Entrepreneurship firstly arise from Richard Cantillon’s Essai sur la Nature du Commerce en Général, originally refers to the behavior people aim to become an entrepreneur. Currently, it is an increasingly heated issue worldwide because its power on driving innovation, productivity, job creation and economic development (Fisher, 2010). Schumpeter (1934) defined entrepreneurship as a creative response to potential opportunity and innovation means creating something original, innovative and significant that makes difference in a market or society (Frankelius, 2009).
With respect to the relationship between entrepreneurship, innovation and economic development, Schumpeter (1934) highlights the role of entrepreneurship is the catalyst of economic development through innovation. However, recent research discovered that the level of economic development, in turn, has significant influence on entrepreneurship and innovation. Hence, in my opinion, entrepreneurship has important positive effects on economic development in terms of innovation, whereas economic development also affects entrepreneurship and innovation.
At the same time, sustainability, which is always combined with entrepreneurship, innovation and economic development frequently arises in government policies or academic research, is another popular topic now. This essay will elaborate the relationship between entrepreneurship, innovation and economic development respectively with theoretic literature and business cases in section 2, and then in section 3, the role of sustainability in this relationship will be illustrated.
2. The relationship between entrepreneurship, innovation and economic development.
2.1 Entrepreneurship and innovation
Numerous theses are put forth to clarify the relationship between entrepreneurship and innovation. Shane (2003) claims that the primary issue for an entrepreneur is create new ventures while innovation is a secondary consideration. Hindle (2009) also views innovation as an entrepreneurial process to generate economic benefits. Both these two views reflect that entrepreneurship is the centre of the relationship and the role of innovation is limited.
However, Drucker (1985 cited in Lumsdaine and Binks, 2007) points out a more reasonable relationship between innovation and entrepreneurship that innovation is a specific and unique tool of entrepreneurs. Schumpeter, as cited in Westhead, Wright and McElwee 2011, also explicitly concludes that innovation is a pre-requisite for genuine entrepreneurship. These two points clarify that individuals who can become entrepreneurs have the capacity to combine creative ideas in novel way and create something original, initiative and significant. Thus, in this way, innovation is a must for entrepreneurship. A suitable example of this is non-bag vacuum cleaner designed by James Dyson.
Noticing a phenomenon that when the bag of vacuum is full, the suction became inefficient, Dyson devised the idea of producing a non-bag vacuum cleaner that promotes efficiency and convenience. He put this innovative idea into effect, established new business and launched the product in 1993, and eventually his product dominated the British vacuum cleaner market (Westhead, Wright and McElwee, 2011).
In this example, it is evident innovative non-bag vacuum cleaner will not be obtainable in absence of innovation. In addition, Schumpeter (1936 cited in Lumsdaine and Binks, 2007) also emphasizes the issue that an entrepreneur cannot combine existed products and create new industry without innovation. For these reasons, innovation is the premise of entrepreneurship.
2.2 Entrepreneurship and economic development.
In current several decades, theoretical literature and empirical evidence have been put forth to illustrate the relationship between entrepreneurship and economic development. Among these various theories, the role of entrepreneurship is to recognize opportunities, ensure resources efficiently and eventually enhance economic development (Casson, 1982) has been widely accepted. Recent research conducted by Audretsch and Keilbach (2004) demonstrates the vital factor accounting for the GDP variations between the former Soviet Union (USSR) and the USA.
Even though these two countries have similar technological sophistication, USSR’s economic development significantly lagged behind the USA. With further research into it, they discover that the USA has a large number of entrepreneurs but it is not the same to USSR. This example highlights that negative effects on economic development in absence of entrepreneurs. Furthermore, Organization for Economic Co-operation and Development (1998) points out that a country that has a large number of entrepreneurial activities is likely to constantly acquire original or advanced goods and experience considerable economic benefits. For these reasons, it is clear that entrepreneurship stimulates economic development.
However, contemporary research highlights the point that the level of economic development also influences entrepreneurship. That is the popularity of entrepreneurship varies at different economic development stages. First, in the early economic development stage, there is a negative correlation between economic development and entrepreneurship. Schuultz (1990) and Yamada (1996) based on their research proved that low level of economic development usually results low self-employment rate.
This probably because manufacturing industry which takes advantage of economies of scale, standardization and massive production dominates the market and the cost for individuals to establish a new business is unaffordable. In addition, the will of individuals to take risk to be an entrepreneur is reduced because of the improvement of secured income (Iyigun and Owen, 1998). In other words, few people take entrepreneurship during this period. Nevertheless, with the further development of economies, service industry which needs little capital to start-up gradually takes the place of manufacturing industry and becomes the key component to boost economies and dominates the market, providing more opportunities to entrepreneurs.
Simultaneously, advanced information and communication technologies and further process of globalization increased the economic uncertainties in turn offer an area for new enterprises founded (Acs, Audretsch and Evans, 1994) such as a large number of SMEs in IT industry arise and grow in a high speed. As a result, further economic development in this period promotes entrepreneurship. For these reasons, economic development influences the popularity of entrepreneurship.
2.3 Innovation and economic development
Innovation is the action of putting creative ideas into effect, which involves introducing creative ideas and unique way to implement. Drucker (1957) views innovation as the purposeful search for changes and the opportunities that such changes might offer. Similarly, Schumpeter (1934) 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. 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 41,000 jobs worldwide in 2006, creating job opportunities and boosting global trade (Linden, Kreamer and Dedrick, 2007). Furthermore, Boston Consulting Group (Collaborative Economics, 2008) 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.
Nevertheless, the level economic development affects the function of innovation. According to the Artadi and Xavier (2004), the 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: innovation become the crucial engine boosting economic development. Furthermore, Romer’s endogenous model also documents the diverse innovation performance in different levels of economic development (Romer, 1990). For these reasons, economic development has crucial impacts on innovation’s function.
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. 3. The role of sustainability
Sustainability is the concept that “maintaining, or fostering the development of, the systematic contexts that produce the goods, services, and amenities that people need or value, at an acceptable cost, for as long as they are needed or valued” (Allen, Tainter and Hoekstra, 2003, P26).
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, 1959 cited in Kor and Mahoney, 2004). Hart (1995 cited in Paton, 2000) 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 1996.
This unsustainable behaviour incurred criticisms from several society groups and damaged its brand image, resulted numerous people refused to purchase its products. In order to address this problem appropriately, NIKE formulated new policies and required its contractors must minimize potential negative environmental effects, offer a hygiene and comfortable work place and improve the health conditions of all employees (Wright, 2013). These measures reflect NIKE’s behaviour of social responsibility that meets the society’s expectation for sustainable behaviour, which maintain a superior brand image and strengthen competitive position. 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 (2010) 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’s success in Fluorine-Free Energy-Saving Air Conditioner is a suitable example of this. The process of producing new air conditioner is similar to Schumpeter’s creative destruction. 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, 2010).
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.
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. It is because that large number of entrepreneurial activities can constantly allocate resources efficiently and acquire original goods. At the same time, the popularity of entrepreneurship varies during different level of economic development.
Similarly, innovation, serves as the engine of economic development, also behaves differently in different economic development phases. In addition, the role of sustainability in innovation, entrepreneurship and economic development is vital. That is sustainability helps entrepreneurship generate competitive advantages and promotes innovation and economic development. Furthermore, it is suggested that an entrepreneur should concentrate on innovation and perform sustainably in order to generate competitive advantages and boost economic development.