The Relationship Between Entrepreneurship, Innovation and Economic Development

2181 Words Nov 14th, 2012 9 Pages
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.

Date of submission: 26 November 2010

Name: Chen Wanxin
School: the University of Nottingham, Ningbo, China

Module convenor’s name: Maris Farquharson
Module title: Entrepreneurship and Business
Module code: P11440 (2010)

Length: 1885 words
Entrepreneurship, which was a notion put forward approximately three centuries ago and soon becomes a contentious topic, contributes positively to economic development mainly through innovation. Whilst creativity and problem solving are required at all points
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From the writer’s point of view, the former two theories are relatively intellectually imperfect due to their limit of time horizon, while Schumpeter’s theory is far more sophisticated as well as complete, in spite of its restriction to some extent.

The term innovation is much more frequently used in people’s daily life. Despite that, it is necessary here to clarify what innovation exactly is in the economic context. Lumsdine and Binks (2007) regarded innovation as ‘a valuable skill in demand by employers who recognize the ability to innovate as a key for remaining competitive in the global marketplace’. While innovation was conceptualized as the key to economic development in any enterprises or even countries, by Hisrich, Peters and Shepherd (2010). They also categorized innovation into three types shown as follows:

Moreover, Johnson (2007) pointed out that innovation could be both introduction of a novel production method or product as well as the development of a new geographical market for an existing product. While Bessant and Tidd (2007: 29) summarized innovation as: ‘the process of translating ideas into useful-and used-new products, processes and services’. Their idea
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