Buying & Merchandising Project - Essay Example

In propounding such a vision of capitalism, Schumpeter extrapolated the business model framework for competitive markets, stating “capitalism, then is by nature a form or method of economic change” (Schumpeter, 1942). Furthermore, Schumpeter argued that innovation was the key to success and survival in a capitalist state and Reinert refers to the fact that the term highlights how failure to be innovative in business results in a “vicious circle where developing countries, lacking the necessary technological and institutional infrastructure, fall further and further behind” (Reinert, 2004:11).

Therefore according to Schumpeter’s model, capitalism is the central change embodied in technological advancement and innovation as a form of economic evolution (Aghion, P., & Howitt, P., 1992). From a retailing perspective, it is evident that proliferation of the multi-channel retailing paradigm as required retailers to “innovate” in order to maintain position in the marketplace (Levy & Weitz, 2008). Schumpeter further argues that internal innovation within a business operational framework produces lower costs, which in turn permits companies to sell products at lower prices, which is referred to as dynamic efficiency (Utterback, J. 1996). This in turn highlights a key element of Schumpeter’s model that competition for innovation as opposed to competition for customers is the most important, which arguably underpins contemporary multi-channel retail strategy (Diamond & Pintel, 2004).

Innovation in the context of multi-channel retail strategy essentially becomes essential to effective capitalism, providing the foundation of dynamism in line with Schumpeter’s theory that the evolution and sustainability of a successful business model is not dependant on how capitalism administers existing models, but rather with how it destroys them through creativity to survive long term growth (Metcalfe, J.S. 1998; Levy & Weitz,