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Economic Development Is Caused by Entrepreneurship and Innovation Has to Be Sustainable

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Submitted By JacobGee
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ECONOMIC DEVELOPMENT IS CAUSED BY ENTREPRENEURSHIP AND INNOVATION HAS TO BE SUSTAINABLE

Economic development is separate to entrepreneurship and innovation as it is usually the result of both products together. It refers to changes in living standards or welfare over time. Entrepreneurship and innovation are interlinked and if one of them is achieved, the other must also be. Entrepreneurship is defined as one who introduces “the carrying out of new combinations,” (Schumpeter, 1934, p.74) whereas, innovation is the introduction of a new good or service into the market and can be split into two types: “the first refers to a gradualistic movement as tastes and populations change and refinements in business are developed. The second refers to spontaneous, discrete or discontinuous, internally generated changes which cannot be progressively associated with other causes,” (Binks & Vale, 1990, p.23) therefore, the first is gradual and is described as incremental innovation and the second is spontaneous which would be regarded as radical innovation.
Radical innovation is classed as more significant for economic development. It is the idea of a discrete product that changes living standards more so. For example, for the camera industry in 2004: “Kodak and Fuji were among the first to embrace digital imaging technology and currently dominate the digital camera industry. Polaroid, on the other hand, faltered in the introduction of a digital camera.” (Danneels, 2004, p.252) So, this links how entrepreneurship from radical thinking is able to discretely produce economic development, and is also a good example of the gale of creative destruction by Schumpeter, which I will address in more detail later on.
However, “according to Schumpeter, i.e. the potential instigator of the economic activity may be reluctant to pursue the event for the very reason that the outcome is…...

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