Relationship between Entrepreneurship Innovation and Economic Development

As technological change permeates our lives, it is essential for each individual to understand the forces underlying and unleashed by technological change in order to become better decision makers, managers, policy analysts, and researchers. As Braunerhjelm points out, economists have undoubtedly made considerable advances during the last decades in understanding the relationship between entrepreneurship, innovation, and growth, and have brought in more profound insights on how entrepreneurship, innovation, and growth are interrelated. According to him, the relationship between entrepreneurship, innovation, and economic development can be identified from its most immediate foundation in simple perception, common sense, and a clear economic observation that performance to convert proposals into economic opportunities lies at the very core of entrepreneurship (2). Entrepreneurship can be stated as the foundation of innovation and revolution, and as such stimulates the development in efficiency and profitable competitiveness. Knowledge and flexibility are the two significant factors that are closely linked with entrepreneurship and have been noticed for their importance as measures for achieving competitiveness in this rapidly developing globalized economy. In the same way, development and growth of upcoming entrepreneurship bring chances for a country’s development within an intensified global competition due to the phenomena like globalization and liberalization, and modern technological innovations. According to Pirich et al, most economic, psychological and sociological research focus on the fact that entrepreneurship is a process, and not just a stagnant phenomenon and it is more than just a mechanical economic factor. Moreover, entrepreneurship is associated with choice-related issues and has a wide range of functional roles which involves coordination, innovation, uncertainty-bearing, decision making resource allocation, capital supply, and ownership (14). Schumpeter holds the view that innovative entrepreneurs are the vehicles that can move the economy into development from a stagnant equilibrium, depending on the blending abilities of entrepreneurial individuals. In his opinion, “whatever the type, everyone is an entrepreneur only when he actually carries out new combinations and loses that character as soon as he has built up his business, when he settles down to running it as other people run their business” (Schumpeter, 78). Likewise, there has been a great deal of attention focused on studying various models of innovation throughout recent decades to identify the significance of innovation with various institutions. The Economist (1999) (as cited in Pirich, et al) reports that innovation has turned out to be the industrial religion of the late 20th century, where business considers it to be the key to increase profits and market share and Governments generally select it while trying to fix the economy. moreover, the rhetoric of innovation has substituted the post-war language of welfare economics (15). The entrepreneur takes the place of the most essential agent in almost all of the production, distribution, and growth theories. Entrepreneurship is the driving force of economic growth and this concept suits best with the long waves theory of Joseph Schumpeter.