Scientists are not the only people who invent and come up with creative solutions; entrepreneurs also contribute to the economic development through innovation and creativity. An entrepreneur, as described by Joseph Schumpeter, is often seen as innovator who brings new goods and technologies to markets thereby opening up new markets, developing new processes and ideas. Entrepreneurship is described as a hot policy issue; the increase in the number of entrepreneurs is directly proportional to the increase in flexibility and productivity of the economy. Entrepreneurship and innovation are known to complement each other; according to Hitt, Camp and Sexon, significant innovation is the success of any entrepreneur venture. The challenge lies with those that are involved in income inequality, where a sense of insecurity is developed by the reemergence of self-employment. On the contrary, innovative entrepreneurship develops job creation, competitiveness and economic growth. Economics policy makers should, therefore, be aware of the two sides of the coin and draft their policies accordingly.
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The word “entrepreneur” comes from the French words “entre” (to enter) and “prendre” (to take) and they can be described as any person who starts a new project or tries a new opportunity. Creation of a new economic activity in the market is referred to as entrepreneurship. An entrepreneur is someone who is innovative and creative, can carry out a risk and venture into new market. They can either bring a new product or business to the market or use skills and knowledge to improve on the products and services that are already in the market. The characteristics of an entrepreneur is introducing something new or improved in the market, creating of new methods of production, identifying of new market and venturing into that business, exploration of new sources of supply and is also reengineering an organization or a company (Cruikshank, 2005).
Helping an organization to grow is known as innovation. An organization growth can be measured by the growth made by the organization turnover and profit acquired, experience, efficiency and quality. Basically being innovative is to install changes to something that is already established by introducing a new idea. This can be applied at any and all levels of an organization: management, departments, and individual level. The introduction of the new idea must be of value to the consumers. The change can either be large or small, incremental or something that is of radical nature. The key factor to consider when being innovative is not only to add value to the consumers but also to add value to the knowledge tank of the company. It is basically about development growth and can be used to achieve a positive change within the organization.
2.2 Economic development
Economic development is described using terms of objectives; it is when the living standards and also self-esteem are improved. The appropriate method to use when measuring self-esteem is Human Development Index, which includes literacy rates and life expectancy. Both of these factors affect the level of productivity and are a path way of economical growth. Economical growth gives birth to the creation of more opportunities and in the long run can lead to increase of the per capita income of every citizen. It is concerned with the economy structural changes, and it brings change to the economy both qualitative and quantitative (Nafziger, 2012). When the economy of a country goes up, then there is wealth distribution and the poverty level reduces. Developing of the economy means that infrastructure, including medical area, education and trade will be better serviced and improved.
3.0 The relationship between entrepreneurship and innovation and economic development
Just like personal development, entrepreneurship is an important element that needs to be developed and nurtured even at a young age (Szirmai, 2011). For there to be more innovation, there needs to be more entrepreneurship spirit in the society. In this day and time most people have innovative ideas and the ultimate key to open the door of entrepreneurship. Knowledge nurtures innovation, which hatches high technology intensity, and the changing of old fashion system to something more modern is what leads to economic development. An example that innovation is the door way to economic development is China. Investment was relocated to research and demand, creating new and improved ideas, thus nurturing innovation, which lead to an increase in economic development.
3.1 Innovations is the essence of entrepreneurship
The relationship between innovation, entrepreneurship and economic development are intertwined by creativity and problem solving. Invention is the fruit of creativity. Starting point of innovation is creativity. McFadazean in 2005 had created a model that clearly indicates that creativity is the basis of innovation, and innovation is the pivot point of problem solving. Based on the relationship between creativity, problem solving and innovation, it is evident that innovation is the central point. There has to be a problem so that a creative entrepreneur can come up with an innovative idea that will solve the problem. Therefore, for successful economic development, creativity is the right hand, while problem solving is the left one; the two are connected to one body, which is entrepreneurship, and the head, which is innovation.
3.2 Entrepreneurship plays an important role in technology innovation
There are factors that make innovation not to be possible, including short-term focus. Most people do not have the patience required to start a new development in the market. It requires patience and persistence before consumers can get into the idea. Fear of facing and dealing with competition is another thing that ills innovation, but if all resources are channeled into the right path, there will be enough resources to invest in innovation. Lack of confidence is another aspect that brings down innovation; without confidence and belief there is no innovation.
3.3 Entrepreneurship is the engine of innovation
The major producers of economic growth, prosperity and development are the entrepreneurs. They are also the ones who are responsible for a large share of technology and the process of innovation in production processes. They do not only establish new forms of organization, but also employ new types of business methods. Entrepreneurs play an important role in the economy since they are the film makers; they are contributing to the economy equilibrium. Most people tend to think that firms are responsible for all the development that happens today, though that might be true, but the dynamic theory of the entrepreneur opens new possibilities to this fact. According to the theory, it is an individual with innovation and entrepreneurial skills that establishes a firm, and becomes the firm owner. Firms are responsible for all the economic activities; and since a firm is the initiative of an entrepreneur, the chain indicates that engine of all developments is an entrepreneur.
3.4 The relationship between entrepreneurship and economic development
Entrepreneurship is a business that policy makers should support in order to move forward so as to generate economic growth. Not all the cases of entrepreneurship yields results, for entrepreneurship to yield results, a number of researches has to be done and numerous attempts have to take place, some of which may not root. On one hand, innovation brings forth economic development, and entrepreneurship is the father of all innovation. Hong Kong is an example of a dying city that rejuvenated after innovations by entrepreneurs. This does not mean that every entrepreneur’s innovation will bring sunshine, some entrepreneurs venture into business because of the lack of a better option. The latter type tends to bring the economy down; this is because they are not innovative but passive. An economy that is developing is the one that has opportunity entrepreneurship and not entrepreneurs by necessity. The report by Gem in 2004 shows that there was growth per capita as opportunity entrepreneurship increased in number.
4.0 Entrepreneurship promotes economic development
It is entrepreneurs that promote capital development; this is done by using the funds that are idle in the economy and mobilizing it. Create large scale employment opportunity, which is a challenge in the underdeveloped nations, entrepreneurs eliminate this by providing employment. They eliminate regional disparities by setting up business in less developed areas, which leads to improvement of infrastructures (Wennekers, 2010). Entrepreneurs reduce the concentration of economy power by giving competition to monopoly businesses. They stimulate an equitable distribution of wealth and income; increase the living standard of people by developing the economy of the country. Finally, they promote trade export in a country, and act as a catalytic agent for change that results to chain reaction.
4.1 To advocate entrepreneurship will become the focus of economic development
In regards to history and the role that entrepreneurship has played in the past, entrepreneurship is the center of economic development. The West has managed to develop economically since they put emphasis on entrepreneurship since the early 1970s. Another example is in countries like Brazil, Russia, India and China (BRICs). These countries have managed to sustain the economic growth by putting emphasis on entrepreneurship. In developing countries that rely on donor aid, emphases are being put on the development of private sector. Entrepreneurship is also stated as one of the foundation of globalization. They do not only increase level of aspiration in terms of wealth, but also people aspiration goes up.
Just like donors are advocating for entrepreneurship in developing countries, according to Diochon, (2003), every institution should also strive and put emphasis on it. Students in colleges should be natured and curved not to go and seek for employment, but they should learn how to create job opportunities. Innovation is something that needs to be stirred out or else it would never be put into practice. This is the way forward for economic development, innovation and new ways to create funds will be the way forward to increase the economic growth in both developing and developed countries. Most people are afraid to venture into self-employment as they feel that they are not up to the task and the risks involved are too high. These fears should not be left to stand in the way, since without entrepreneurship there is no innovation and ultimately there is no economic growth.
There is no economic growth without innovation, and there is no innovation without entrepreneurs. Entrepreneurs and innovation are the key elements for development growth. In this time and age many people are being asked to strive and come up with their creation rather than hunting for employment. With innovation, areas, which are not developed yet, get the chance to be developed and enjoy infrastructures, funds that are not being used are put into use and people, who have no employment, get jobs. It is the way forward for the economy and for globalization. It is not easy starting something but if innovation is not kept in mind then there will be no economy development.