The Value of Creativity and Innovation in Entrepreneurship - Literature review Example

Entrepreneurship With the increasing levels of globalization resulting from market liberalization, efficient flow ofinformation, and integration of economies, the level of competition in the market has increased tremendously. This has mainly resulted from the entry of multinational companies which have a huge financial base to segment the market, position themselves strategically in the market, and attract customers towards their products and services (Gustafsson and Johnson, 2008). Therefore, innovation has become very important in ensuring that the businesses remain competitive. This paper will discuss how entrepreneurs use creativity to develop business ideas and innovations. Entrepreneurs are able to use creativity through managing risks and uncertainties. This is through analyzing ideas and determining whether they are worth investing in. They then determine the best strategies to use and how to maximize returns through the use of scarce resources. This plays a significant role in enabling them to capture value from innovation (Van and Becker, 2004). Entrepreneurs are able to use creativity through identifying the opportunities for change. Currently, the market has become dynamic. Different aspects keep on arising thereby, creating gaps that can be used to develop ideas (Hoang and Antoncic, 2003). Entrepreneurs are able to manipulate these opportunities to come up with creative ideas. For instance, they are able to observe the tastes and preferences of the customers and note when the customers are changing their consumption behavior. Entrepreneurs pinpoint such opportunities and taps them, thereby coming up with a business idea. Through brainstorming and enquiring from relevant sources, they are able to come up with innovative ideas which attract the interests of the target market (Knutsen, 2002). According to Van and Becker (2004), entrepreneurs calculate the costs of taking up a bright idea forward against the potential gains if that idea succeeds. They know clearly that failure is an intrinsic part of the process. However, they always calculate the risks in order to minimize it completely. In addition, they ensure that they have all materials required to exploit the opportunities in order to gain the necessary benefits (Van and Becker, 2004). Entrepreneurs are able to come up with creative ideas through being alert to changes in the external environment (Voudouris et al., 2007). Whether entering a new market, introducing new products or services, or initiating innovative technologies, they always think of novel ways of propelling their ideas to prosperity. Therefore, they do not concentrate on limits but focus on opportunities. On the other hand, they are not comfortable with unknown and unfamiliar ideas. Instead, they always look for new ways to combine recombine resources in order to create innovative solutions for the customers (Ulwick, 2005). Creativity enables the entrepreneurs to manipulate the existing conditions in order to come up with a new idea or improve the existing ones. Innovation results from seeing the connection between unrelated components (Bowdin et al., 2012). Once entrepreneurs identify such connection, they go ahead to study it, improve it, and ensure that it fits with the interests of the targeted population. Through creative means, they ensure that they remain focused to the course and seek guidance from the relevant personnel. This plays a significant role in ensuring that the idea is incubated until it matures to be released to the market (von Stamm, 2008). According to componential theory, creativity identifies three main individual characteristics, intrinsic motivation, domain-relevant skills, and creativity cognitive processes (Gartner, 2007). Through the three aspects, entrepreneurs are able to understand all dimensions of innovation. Therefore, they are able to have internal source of motivation which drives them towards the goal of coming up with innovative ideas. As a result, they look for the necessary resources to drive their business ideas. This is unlike people who seek motivation from external sources. In many cases, they get discouraged and end up leaving the idea before it gets to maturity stage. This has been one of the major aspects that have differentiated entrepreneurs from the rest of the population (Carsrud and Brännback, 2007). Creativity entails the ability to generate novel solutions to the relevant problems (Gallouj and Djellal, 2008). Entrepreneurs use creativity as a stimulus for opportunity discovery and investment creation. This is through conceiving new products-market opportunities and unique value proposition. They are able to listen to the grievances of the target market and identify the source of the problem (Bessant and Tidd, 2007). Through creative means, they come up with an idea which will solve the existing problem. This is able to divert the attention of the customers towards their products or services. This is one of the aspects that lead to the success of entrepreneurs (Rumelt, 2005). According to Alvarez and Busenitz (2001), the current market keeps on changing. Each business keeps on introducing new products to counter the substitutes by the competitors. For entrepreneurs to thrive in this environment, they need to be flexible and adaptable. This is significant in developing their business and innovation. They achieve this aspect by using creative means to identify a niche in the market which makes it possible to improve the idea in order to fit the market requirements. Furthermore, through creativity, they are able to identify links that may make their ideas not to penetrate into the competitive market. Through such strategies, they are able to address these issues before launching the innovative ideas to the market (Tidd and Hull, 2003). Entrepreneurship is all about building a business from scratch while managing limited resources. This is a long commitment and planning in advance is a noble impulse. Planning is a common spectrum that any investor can do (Edvardsson et al., 2000). However, entrepreneurs are able to develop their business ideas and innovations through ensuring that they incorporate all required components for the business to thrive in a dynamic and competitive market. Through being creative, they are able to draft all possible risks and uncertainties that are likely to face the innovation and draft the necessary solutions once such challenges arises (Libecap, 2009). They are also able to conduct a feasibility analysis to identify time and capital thresholds required in order for the idea to succeed. This makes them unique in the market (Drucker, 2007). Entrepreneurs develop creative business ideas. Currently, the market is full of businesses that produce the same products or offer similar services. However, entrepreneurs still find their way in the market (Ács and Audretsch, 2005). This is through coming up with an idea that creates memorable impression on the target market. This plays a significant role in developing customer loyalty towards the business. References Ács, Z. J. and Audretsch, D. B. (2005). Enterpreneurship, innovation and technological change. Boston: Now Publishers. Alvarez, S. A. and Busenitz, L. W. (2001). The entrepreneurship of resource-based theory. Journal of Management, 27(6), 755-775. Bessant, J. R. and Tidd, J. (2007). Innovation and entrepreneurship. Chichester, England: John Wiley & Sons. 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