Entrepreneurship and Innovation

Numerous entrepreneurs take risks to start their own businesses, work hard to realize their dream. They try to identify new opportunity and then seize the opportunities to develop something new to make their companies become more competitive. And these new ideas and innovations can force the development of new economic activities (E.Esra 2006). As Dejardin (2000) indicates that accessing these entrepreneurial innovations in terms of economic influences at a regional level, it might indicate positive effect on economic growth. However it does not mean entrepreneurship and innovation will boom economy in all regions. This essay will discuss the relationship between entrepreneurship, innovation and economic development. The definitions of entrepreneurship, innovation which is mentioned below are all related to economic or business issue. This essay will firstly introduce the definition of entrepreneurship and innovation. Then the second part will demonstrate the relationship between problem-solving, creativity and innovation. In the next part, it will illustrate two roles of entrepreneurship in economic development--innovation and competition enhancement. The final part will focus on what resultant reward entrepreneurs will receive.

The first part will explain the definition of entrepreneurship and innovation. As Schumpeter (1934) illustrates, entrepreneur is an innovator who identified problems and turned them into opportunities of inventing new technologies, processes or products which lead to new businesses. These entrepreneurial actions reflect entrepreneurship. Entrepreneurship is defined as the process of creating something new and valuable by devoting time and effort; assuming the accompanying risks and uncertainties; and receiving the final rewards (Hisrich, Peters, and Shepherd 2010). In details, entrepreneurship is divided into four parts. The first part is the creation process which means creates something new. In addition these creations must have value to its target audience. Secondly, entrepreneurship requires entrepreneurs to devote certain time and effort into the entrepreneurial process to create something new. The third part is assuming the necessary uncertainties and risks since the world is changing rapidly. Once producing a new creation, entrepreneurs need to take the risk for its future. The final part of entrepreneurship is receiving the rewards of being an entrepreneur no matter good or bad. The final rewards include personal satisfaction and the monetary rewards.

The definition of Innovation is the process of transformation from new idea into a new product or service (Dennie, 2006). The process of innovation is divided into 6 steps: definition, discovery,