Relationship between Entrepreneurship, Innovation and Economic Development Free Essay Example, 1750 words

One of the most significant attributes of Schumpeter s theory is the idea of entrepreneurial profit in the theory of economic development. According to Schumpeter, entrepreneurial profit falls in the purview of temporariness. By applying new aspects of production, entrepreneurs earn the advantage of being the first mover. For example, through the innovation of a more effective production procedure, the entrepreneur will be the only manufacturer to gain the advantage of related lower expenses only for a certain period of time. As information is shared, other organizations will try to compete with the new innovation of the entrepreneur. The gain of an entrepreneur lies in uncertainty because the demand for new innovation or new production procedure is clearly unpredictable. Entrepreneurs are also unacquainted with the period of their risk-taking profit. Thus, Schumpeter had strengthened his refusal of the marginalism in explaining economic development and progress as these factors are incapable to clarify or accommodate the innovation process i. e. how many entrepreneurs can gain from an innovation (Arena, 2002). Entrepreneurship acts as a motivating force for economic development. Schumpeter stated that every person who carries out new inventions is an entrepreneur. We will write a custom essay sample on Relationship between Entrepreneurship, Innovation and Economic Development or any topic specifically for you Only $17.96 $11.86/page