Innovation and Entrepreneurship - Assignment Example

Essay on Entrepreneurship Name Instructor’s Name Course Number Date Introduction To become an entrepreneur, one needs to possess clear forecasting skills, clear knowledge and understanding regarding the activity being carried out as well as clearly outlined responsibilities. Over the years, there has been a problem in defining what really entrepreneurship is. The entrepreneurship concept has been in use for long, and according to Smith and Chimucheka (2014), entrepreneurship is as old as economics. Ideally, the concept of entrepreneurship is originally derived from the French concept” “entreprendre”, which when translated to English, means “to undertake”. From a business perspective, undertaking means starting up a business (Smith and Chimucheka, 2014). Long ago, wars were often carried because of economic reasons and many a times, entrepreneurs could be mostly found among the merchants (Oncioiu, 2012). However, in the modern world, entrepreneurs are supposed to spot changes and exploit the changes converting them into business opportunities (Abouzeedan, Hedner, and Klofsten, 2010). An entrepreneur plays a number of roles in the development of the economy. However, various theories hold different views regarding who an entrepreneur is. On one hand, the economic theorists argue that an entrepreneur is an agent of economic growth whereas on the other hand, the non-economic theorists hold the view that an entrepreneur is a risk taker. This essay therefore seeks to unravel the mystery surrounding entrepreneurship, trying to establish what entrepreneurship really is, the role it plays in the economy and society and how its concepts are relevant in the modern business world. Evaluate the complexity and importance of entrepreneurship in economy and society In spite of the limitation of resources, entrepreneurs counter challenges on a daily basis and act differently, with an aim of bringing about impact in the society. According to Mason and Harvey (2013), there would be no social and economic impact in the society if entrepreneurs never acted differently. Therefore, the complexity in entrepreneurship arises due to availability of different perceptions regarding what entrepreneurship really is and what activities mound to entrepreneurship. Entrepreneurship contributes more to the development of the economy and society (Siemon, 2007). A number of issues have been raised regarding the contribution of entrepreneurship to the development of the society. Importance of entrepreneurship to the economy and society i. Establishment and development of managerial skills and capabilities The greatest importance of entrepreneurship entirely lies in its ability to identify, establish and develop managerial skills and capabilities (Oncioiu, 2012). An entrepreneur is ideally known for critical identification of business problems, identification of alternatives, comparison of the selected alternatives and lastly choosing the best alternative. Comparison of alternatives involves undertaking a cost benefit analysis of various business alternatives (Kawalec, 2015). Entrepreneurship therefore, through this process, helps in the development and enhancement of business decision making skills. Besides, managerial capabilities are used by entrepreneurs in developing new technologies and consequently new products, to replace old and dilapidated technologies (Oncioiu, 2012). Therefore, the development of new technologies and products enhances increased business performance and in the long run, leads to economic development. ii. Organizations creation Entreprenual activities lead to the establishment of organizations. This is only possible when entrepreneurs put together their resources, both human and financial, and channel them towards the achievement of organizational objectives (KOVEOS, 2011). For the achievement of organizational objectives, all resources ranging from physical, monetary and human should be put together. Therefore, entrepreneurship helps to attain economic development though creation of organizations. iii. Improvement of standards of living Through the creation of active and productive organizations, entrepreneurs help in the development of various goods and services available for consumption by the society which contribute to increased standards of living. The current developments seen, like new buildings coming up and possession of luxurious vehicles, is an indication of improved economy and all these are owed to entrepreneurs (Kawalec, 2015). iv. Means of attaining economic development For economic development to be achieved, a number of factors should be observed. Entrepreneurship leads to innovation of new ideas and output maximization from available resources (KOVEOS, 2011). Discuss and evaluate the role of innovation, invention and intervention in entrepreneurship Innovation and entrepreneurship According to Abouzeedan, et al (2010) there should be a distinction between invention and innovation. Whereas the former refers to a manifestation of an idea, the later implies a successful application of an idea. Peter Ducker further gave a different view of what innovation is. According to him, innovation refers to a tool which entrepreneurs use to exploit change as a business opportunity. He additionally made an argument that the concept of innovation can be learned and practiced at the same time. Therefore, from Peter Ducker’s perspective, innovation involves the need to change, and the subsequent search for opportunities new changes might have to offer (Abouzeedan, Hedner, and Klofsten, 2010). Various forms of innovation have been advanced, for instance, there is what is referred by William Lazonick as “indigenous innovation”. This type of innovation refers to the establishment and development of learning in an organization, which is collective in nature. According to him, innovation from this context is driven, socially and doesn’t have to follow a specified process as urged by Ducker (Abouzeedan, Hedner, and Klofsten, 2010). Another form of innovation is systematic innovation. According to Ducker, this form of innovation is ideally based on the concept of “accidents happen.” According to this approach, it is always not necessary that innovations are planned and organized. Innovation can a times be a byproduct of accidents. For instance, there are various popular innovations like, Cellophane and penicillin whose discovery were out of accidents (Abouzeedan, Hedner, and Klofsten, 2010). . Therefore, innovations lead to the development of Entreprenual activities Invention and Entrepreneurship According to (Abouzeedan, et al (2010), invention is a clear manifestation of an idea. Invention is known to be development of something new, something which had no existence previously and whose recognition is owed to a certain intuition or thinking. Entrepreneurship, being the process of coming up with new businesses, involves both invention and innovation. An entrepreneur is defined as an individual who spots a new business opportunity, and marshal resources for its successful implementation. Therefore, when there is a successful implementation of an idea by an entrepreneur, the act is termed as an innovation and not invention. Additionally, invention always comes before innovation (Kawalec, 2015). A perfect example of the invention is the development of the modern LCD screens. The idea went through a number of distinct tests and procedures before it was finally successful. An invention can develop slowly over time. Therefore, invention leads to innovations, which both contribute to the success of entrepreneurship (McGowan, 2012). Intervention and entrepreneurship Intervention refers to the rules and regulations developed and implemented by a government, governing a group of individuals and organizations (TIDD, 2014). Government rules and regulations can either kill or develop entrepreneurship. Therefore, through proper government intervention, entrepreneurship can be fully developed. Explain the history of concepts of entrepreneurship and their relevance today Entrepreneurship, though a business oriented term, can be best clearly understood using historical terms. According to Dahlstrand and Stevenson (2010), to become an entrepreneur, one has to fully accept to take risk in a business venture and entirely dedicate his or her resources to fully develop the business to ensure that there is a return, particularly on capital employed. A number of scholars and researchers have written on the concept of the origin of entrepreneurship. However, interestingly, most of these entrepreneurship scholars are either historians or even economists. Ideally, the concept of entrepreneurship is originally derived from the French concept” “entreprendre”, which when translated to English, means “to undertake”. From a business perspective, undertaking means starting up a business (Smith and Chimucheka, 2014). Richard Cantillon, a re-known French economist, is said to have been among the first people to introduce the concept of entrepreneurship (Storti, 2014). Richard Cantillon described an entrepreneur as a person who takes calculated risks. However, various scholars have developed a different view that it was Jean-Baptiste, an economist who undertook an advanced analysis on the concept of entrepreneurship in is 1821 work, where he regarded an entrepreneur as an economic venture. Therefore, conclusively, an inference is made that the concept of entrepreneurship is as old as economics, especially owing to the fact that re-known economists like Adam Smith, Ricardo and John Mill have elaborately written on entrepreneurship. However, of the three economists, Mill’s emphasis was that entrepreneurship is important for economic development and growth. A different famous economist known as Alfred Marshall, however, had a different view, different from that held by John Mill. According to Marshall, entrepreneurship is a very crucial and important factor of production (Smith and Chimucheka, 2014). Relevance of entrepreneurship concepts today Most of the entrepreneurship concepts that were developed long time ago by historians and economists like Adam Smith, John Mill, Ricardo, Alfred Marshall and Peter Ducker are applicable today (Obrecht, 2011). Similarly, most traits that were advocated for in most theories are equally applicable in the 21st century. For instance, the notion that an entrepreneur is a risk taker, as viewed by Max Webber is real. Additionally, Schumpeter’s theory that an entrepreneur is an innovator is applicable in the modern world where a lot of innovations alike the iPod have emerged. Further, Peter Drucker’s view that an entrepreneur is an individual who spots change an exploits the change into and economic venture is practically applicable in the modern world. For instance, in the 21st century, a number of changes do occur in the business world and entrepreneurs are tasked with that responsibility of identifying these changes and turning them into business opportunities (Kawalec, 2015). Therefore, entrepreneurship concepts that were developed then, in the 17th century, are applicable today. Compare and contrast the main features of economic and non-economic theories of the role and function of the entrepreneur, identify the questions addressed by each theory and appraise the results obtained; Theories of entrepreneurship Various theories of entrepreneurship have been advanced by various scholars and researchers. These theories are classified as either Economic or non-economic theories. Non-economic theories include both sociological and cultural theories (Kawalec, 2015). Economic theories of entrepreneurship. One of the economic theories of entrepreneurship is the theory of innovation that was advocated for by Schumpeter’s, commonly known as “Schumpeter’s theory of innovation” (Kawalec, 2015). According to this theory entrepreneurship is regarded as an agent of economic development. This theory therefore views an entrepreneur as an innovator. An innovator, according to Schumpeter, undertakes a combination of development of new goods and provision of new services, development of better methods of production, establishment of new markets, establishment of new sources of raw materials and establishment of new organizations (Smith and Chimucheka, 2014). Harvard school of business similarly regards entrepreneurship as a product of a combination of both internal and external forces. Internal forces are personal traits which include skills, experience, exposure, knowledge and different forms of thinking. External forces are regarded as surrounding factors beyond the control of an individual, factors like political factors, environmental factors, economic factors, legal factors and socio-cultural factors (Smith and Chimucheka, 2014). Non-economic theories of entrepreneurship One of the non-economic theories of entrepreneurship is the one advocated for by Peter F Drucker, which is classified as a cultural theory. According to Drucker, an entrepreneur is viewed as an individual who looks for change, and exploits the change as a business opportunity (Abouzeedan, Hedner, and Klofsten, 2010). Drucker places a lot of emphasis on innovation and proper allocation of resources, therefore regarding an entrepreneur as an innovator and an efficient allocator of resources. Another non-economic theory which is classified as a sociological theory is the Max Weber’s theory of entrepreneurship. According to this theory, an entrepreneur is viewed as a risk taker and an individual who emphasizes on the capitalism spirit. Similarly, this theory advocates for profit inducement (Oncioiu, 2012). Contrast between economic and non-economic the two theories Whereas economic theories view an entrepreneur as an agent of economic development, non-economic theories old the view that an entrepreneur is a pure risk taker (Frese, 2009). For instance, Schumpeter regards an entrepreneur as an innovator and an important agent of economic development. Similarly, the view that Harvard school of business has regarding entrepreneurship is in line with Schumpeter’s view. In contrast, non-economic theorists of entrepreneurship have a different view all together. Both the cultural and sociological theorists view an entrepreneurship as a risk taker and an individual who looks for change and exploits the given change into a productive business opportunity (Kawalec, 2015). Discuss the difference between enterprise, innovation and invention, and compare their impact in a variety of non-high street business settings such as agriculture, as well as not-for-profit and public sector settings. Enterprise An enterprise refers to an establishment which is formed by an entrepreneur, which provides goods and services, creates employment, makes a contribution to national income and largely contributes to economic development. Therefore, an entrepreneur is someone who comes up with an enterprise (Kawalec, 2015). Invention According to Abouzeedan, et al (2010), invention is a clear manifestation of an idea. Invention is known to be a development of something new, something which had no existence previously and whose recognition is owed to a certain intuition or thinking. For instance, Tim Berners-Lee invented the World Wide Web (www), whereas Thomas Edison invented the light bulb. Innovation According to Abouzeedan, et al (2010), innovation is the successful application of an idea. Innovation happens if there is an additional contribution to an existing service or product. For instance, Steve Job’s iPod is an example of innovation. The iPod ideally was not the first portable music device because Sony had the idea 22 years earlier that apple, through their product “the Walkman”. Therefore, Apple only came in to improvise on an idea that was there before, by introducing an online platform where people can share music (Dahlstrand and Stevenson, 2010). Impacts of Enterprise, Invention and innovation in the Agriculture setting Agriculture is seen as an enterprise because it provides goods for consumption, creates employment and contributes to national income (Bhadauria, 2014). Most of the raw materials used in business are agricultural in nature, and therefore, agriculture being an enterprise provides an avenue for entrepreneurs to startup businesses. If a comparison is made between the kind of agriculture in the 21st century and the times of agrarian revolution, agriculture has undergone tremendous changes (Bhadauria, 2014). A number of inventions have been made that impact agriculture differently. For example, the invention of various chemicals used in agricultural products has increased productivity, as compared to agriculture in the past. Innovation, being an implementation of an existing idea, has impacted agriculture a great deal. It is worth noting that most of the agricultural implements have just been innovated, the original idea tracing back to the agrarian revolution. For instance, the kind of plough that is in use in the 21st century owes its idea to the plough that was in use then, in the era of agrarian revolution. Therefore, inventions have impacted agriculture (Bhadauria, 2014). Impacts of Enterprise, Invention and innovation in not-for profit and public settings For a long period of time, there has been a commitment from a number of people to improve and better the environment and living standards of people in the society who are regarded as less fortunate (Howieson, 2013). Therefore, these acts have led to the establishments of organizations, which are not-for profit in nature, with an aim of improving the livelihoods of others in the society. However, most of these acts, which are entirely inventive and innovative, have not been regarded as entrepreneurship because the initiators of such acts are not motivated by profit but rather, by a commitment to social undertaking and objectives. For instance, when Bob Geldof, through the Live Aid concert raised millions to help famine victims based in Africa, he is said to have behaved entrepreneually (Howieson, 2013). Ideally, the public sector is full of inventions and acts of innovations, which have led to the development of various enterprises that have contributed to national income and, subsequently, to economic growth (Sheth, 2010). This is possible, especially when governments offer financial aid to inventors and innovators. Therefore, development of enterprises, inventions and innovations has impacted both the not-for profit making organizations and the public sector and have contributed to economic growth. Conclusion With the development of enterprises, inventions and innovations, entrepreneurship really contributes to economic development. Entrepreneurs are risk takers and agents of economic development as argued by both non-economic and economic theorists of entrepreneurship respectively. Additionally, the concepts of entrepreneurship, whose existence can be traced back to the ancient times during the times of barter trade, have its application in the modern times. In conclusion therefore, entrepreneurship is applicable today and contributes to economic development. However, the complexity of entrepreneurship lies in the attempt to discover the role it plays in social and economic change. Therefore, this essay proof that entrepreneurship is difficult. 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