The Relationship between Entrepreneurship and Economic Development - Coursework Example

ENTREPRENEURSHIP and Section # of Entrepreneurship is the pursuit of being an entrepreneur. (Baron, Shane, 2007). Although there are numerous ways in which one can define who an entrepreneur is, in a nutshell, an entrepreneur is a person who conceives an innovative business idea, plans the entire venture along with all the intrinsic and extrinsic details and then carries it forward managing it effectively and efficiently, ideally building a firm enterprise. (Aidis, 2008). Although normally entrepreneurship refers to an entirely new business venture, even revitalizing an existing business could be an entrepreneurial task. (Jesselyn, 2006). Moreover, bringing up and executing a new idea in an existing organization (like a new function or a new area of expertise) can also be referred to as entrepreneurship (however, that is commonly referred to as intrapreneurship). (Hisrich, et al, 2009). Some say entrepreneurs are born, others say they are made. (Sternberg, et al, 2004). However, reality suggests that it takes a bit of both in order to give rise to a successful entrepreneur. (Jesselyn, 2006). The most important characteristic that needs to be there in a person in order for him to become a successful entrepreneur is a flair for creativity and innovation. (Bessant, Tidd, 2007). If a person is creative and innovative, he can come up with things that are not there. (Carr-Ruffino, 2006). He can conceive ideas that others cannot think of. This is one of the main qualities that set an entrepreneur apart. They can look at a problem from an angle that non-entrepreneurs cannot and can envision a much bigger picture in order to come up with a solution. (Greene, 2008). It is this creative problem solving nature of theirs that makes people look up to them in times of trouble and otherwise, which in turn develops further entrepreneurial and leadership skills in the person. (Wickham, 2006). Although this creativity and innovation is what lies at the core of entrepreneurial mindset (Bessant, Tidd, 2007), there are many other qualities that combine together to give rise to a successful entrepreneur and it would be better for our understanding if we briefly look into the prominent characteristics of entrepreneurs, some of which are as follows: Highly Motivated: Entrepreneurs are always highly motivated and passionate about their venture. (Bytheway, 2003). They always have a drive to accomplish something colossal and a passion to prove themselves. (Wiklund, 2006). They have a very energetic nature and are always on the go. (Audretsch, et al, 2009). Risk Taker: Entrepreneurs are not afraid of taking risks. (Kuratko, 2008). They know that in order to accomplish something big, the stakes have to be kept higher. (Bruin, Dupuis, 2003). However, successful entrepreneurs are those who take calculated risks and make informed decisions (Runco, 2007) because if one would just jump into the stormy ocean without a life jacket, he is most likely to drown even if he knows how to swim. Confident: Entrepreneurs have a high level of self-confidence and they believe in themselves. (Wiklund, 2006). If they know they can do it, they do manage to do it. It is very difficult to demotivate a true entrepreneur or to bring his confidence level down. (Swedberg, 2000). Leader: Entrepreneurs are leaders. They possess people skills and have strong work ethics. They know how to take people along, keeping them motivated as they go. (Bytheway, 2003). They have an organized and disciplined way of working that is easy going and are not intimidating for those around them. (Hisrich, et al, 2009). Usually, successful entrepreneurs are the one who are loved by their subordinates and are exemplary leaders. (Wickham, 2006). Examples could be Bill Gates of Microsoft and Steve Jobs of Apple Computers. Integrity: For a true entrepreneur, his integrity and reputation is worth more than everything. (Weisberg, 2006). He would rather suffer from a loss than tamper with his name since for him, there is no such thing as “little” dishonesty that could be permissible under dire circumstances. (Runco, 2007). Now that we know what entrepreneurs and entrepreneurship really are, let us now look into creativity and innovation and their relationship with entrepreneurship. Creativity and innovation are two terms that are usually used interchangeably. (Carr-Ruffino, 2006). However, there is a slight difference between the two. Creativity is coming up with an entirely new idea, a new way of doing something, a new product, a new solution to a problem or anything else that is entirely new and did not exist before. (Swedberg, 2000). On the other hand, innovation refers to “renew” or “redefine” a product, idea, process or ways. (Carr-Ruffino, 2006). However, innovation is also unique and it may or may not pertain to something that existed before. Both creativity and innovation have very close linkages with entrepreneurship and go hand in hand together. (Sternberg, et al, 2004). Although the first thing that comes to one’s mind when creativity is mentioned is art (Weisberg, 2006), we can find creativity and innovation everywhere around us; in science and technology, in engineering and construction, in business, in medical procedures and even in carrying out different daily life tasks. (Runco, 2007). For example, mobile phones were a creative product, while phones with built-in cameras are an innovation making the product better and enhancing its usability. When Newton proposed his theories of motion or gravity, even he was being creative, or when Steve Jobs developed the iPod, it was an innovation of the regular mp3 player. (Bessant, Tidd, 2007). If we look around, almost everything is a result of creativity or innovation (Lumsdaine, Binks, 2006) and this has its direct linkages to entrepreneurship since it’s the entrepreneurs who are daring enough to put the creative ideas in action to come up with such products and processes. (Baron, Shane, 2007). Thus, successful entrepreneurship can also be referred to as a creative response to a problem/opportunity in the right way, at the right place and the right time. (Audretsch, et al, 2009). Entrepreneurship and creativity go hand in hand together. Entrepreneurs look at an existing problem as an opportunity to develop something new and create an innovative solution. (Bruin, Dupuis, 2003). We can easily understand the connection between creative problem-solving and entrepreneurship by studying the stages of both. The process of creative problem solving consists of four steps. (Drucker, 2007). Problem finding: When one detects a problem in the system Idea generation: When one generates all possible ideas that could possibly be the solution of the problem at hand through brain storming and other techniques. Idea evaluation: When one evaluates all the possible ideas generated and sorts out feasible and non-feasible options. Recognition: Finally, when one recognizes the one solution or set of solutions to the problem and put it into action. Similar to this process is the process of entrepreneurship consisting of four stages that coincide with each of the stages of creativity. (Drucker, 2007). Opportunity recognition: When the entrepreneur detects a problem and recognizes it as an opportunity. This coincides with the Problem finding stage of creative problem solving. Entrepreneurial design: When the entrepreneur thinks of and considers all possible business ventures that could address that particular opportunity. This coincides with the Idea generation stage of creative problem solving. Business formation/planning: When the entrepreneur evaluates all the possible ventures, shortlists the feasible line of action and plans accordingly for its implementation. This coincides with the Idea evaluation stage of creative problem solving. Legitimacy: Finally when the entrepreneur rolls out the plan into action and implements the idea. This coincides with the Recognition stage of creative problem solving. We just discussed that entrepreneurship and creativity/innovation tend to go together. We are yet to explore how this is connected to economic development. The answer is simple. When entrepreneurs create a new business venture it is usually of economic value. (Kuratko, 2008). There might be some exceptions like ventures of social or environmental nature, (Jesselyn, 2006), for e.g. the projects related to saving the environment etc, however, most entrepreneurial ventures are of economic value. When and if these businesses are successful, they create a boost for the economy they operate in. (Aidis, 2008). Let us explore this with the help of examples. If we look at innovation in technological products like computers and mobile phones, continuous innovation is taking place and the industry is in a continuous boom. New technologies are coming up every single day making the older products obsolete. (Harvard Business School, 2003). There is immense competition and this is creating huge economic value in the market. (Bruin, Dupuis, 2003). It is all because of the constant entrepreneurial activities that are going on in the market. Similarly, if we look at the clothing, apparel and fashion industry, there is constant innovation going on in the system. New brands and designers come up every now and then with a load of innovative entrepreneurial ideas and are pulling more and more people towards this industry creating more economic value every passing day. (Hisrich, et al, 2009). Same goes with the food industry, music industry, service industry and every other conceivable aspect of the economy. However, a lot of thought needs to be put in before actually starting a venture or it might just result in the economic downturn. (Greene, 2008). A very evident example could be the innovative financial products, which implemented in haste and without much deliberation, played a huge role in the recent economic meltdown all around the world. Concluding the discussion, it can rightfully be stated that there is a very close relationship between entrepreneurship, innovation and economic development. (Drucker, 2007). They behave like the counterparts of one another and one cannot exist without the other. (Bytheway, 2003). Moreover, creative problem solving is one of the most important aspects of the entrepreneurial process (Garcia, et al, 2007); in fact it is the starting point of an entrepreneurial venture and no doubt one of the most important factors behind the success of an entrepreneurial enterprise. (Audretsch, et al, 2009). REFERENCES Aidis, R. (2008). Innovation and entrepreneurship: successful start-ups and businesses in emerging economies. Edward Elgar Publishing. Audretsch, D.; Falck, O.; Heblich, S. (2009). Innovation and Entrepreneurship. Edward Elgar. Baron, R.; Shane, S. (2007). Entrepreneurship: a process perspective. Cengage Learning. Bessant, J.; Tidd, J. (2007). Innovation and entrepreneurship. John Wiley and Sons. Bruin, A.; Dupuis, A. (2003). Entrepreneurship: new perspectives in a global age. Ashgate Publishing Bytheway, C. (2003). FAST creativity & innovation: rapidly improving processes, product development and solving complex problems. J. Ross Publishing. Carr-Ruffino, N. (2006). Creativity and Innovation. Pearson Custom Publishing. Drucker, P. (2007). Innovation and entrepreneurship: practice and principles. Elsevier. Garcia, A.; Cuervo, A.; Rebeiro, D.; Roig, S. (2007). Entrepreneurship: concepts, theory and perspective. Springer. Greene. (2008). Entrepreneurship: Ideas in Action. Cengage Learning. Harvard Business School. (2003). Managing creativity and innovation. Harvard Business Press. Hisrich, R.; Peters, M.; Shepherd, D. (2009). Entrepreneurship. McGraw Hill. Jesselyn, M. (2006). Entrepreneurship: fresh perspectives. Parson South Africa. Kuratko, D. (2008). Entrepreneurship: Theory, Process, and Practice. Cengage Learning. Lumsdaine, E.; Binks, M. (2006). Entrepreneurship from Creativity to Innovation: Effective Thinking Skills for a Changing World. Trafford Publishing. Runco, M. (2007). Creativity: theories and themes: research, development, and practice. Academic Press. Sternberg, R.; Grigorenko, E.; Singer, J. (2004). Creativity: from potential to realization. American Psychological Association. Swedberg, R. (2000). Entrepreneurship: the social science view. Oxford University Press. Weisberg, R. (2006). Creativity: understanding innovation in problem solving, science, invention, and the arts. John Wiley and Sons. Wickham, P. A. (2006). Strategic Entrepreneurship. Harlow: Prentice Hall. Wiklund, J. (2006). Entrepreneurship: frameworks and empirical investigations from forthcoming leaders of European research. Emerald Group Publishing. Read More