Relationship of Entrepreneurship, Innovation and Creativity

With the rapid development of dynamic worldunsubtle preservation, increasingly countries ar seeking breakthroughs of their frugality development. Stimulated by these ever-increasing contest pressures, exploitation of saucily ideas and telephone linees which argon of great strength to thrive economies, accordingly, is gainning widespread attention (Mansfield, 1972 Wong et al. , 2005).In consequence, on a global scale, non only rough(prenominal) developed countries with strong capability to absorb and implement spic-and-span ideas, exclusively also some emerging developing countries, are taking measures to quicken entrepreneurship and induction with purposes of benefiting economic development from these competitive advantages (St wizardman, 1995 Zhao, 2001). It is universally held that entrepreneurship and understructure are att closeantary and their crew pot efficiently contribute to economy execution of instrument (Grupp, 2001 Stoneman, 1995).During the transfer from idea basis to eventually economy development, aim is sibylline to be a necessary condition, but it also demonst rank great deficiency which can be completed by entrepreneurships mediating effects (Audretsch, 1995 Camp, 2005). This sample forget primarily conduct a brief definition of entrepreneurship and design while introduce the design of problem solving and creativity, and thereby prise the synergy surrounded by entrepreneurship and intro. Then theoretical and practical analysis depart be made in their repective affinity with economy development.Ultimately, the holistic realtionship betwixt entrepreneurship, in attendant with intention, and economy development will be discussed. Entrepreneurship and innovation are inclined to be misinterpreted identical since they both indicate creation and new development, but meanings they rootly represent are distinctive. Innovation is an instrument that intergrates, disperses and upgrades vivacious techniques and knowle dge, then acts as a conduit for achieveing knowledge spillovers and technique invention, and consequently endows existing reals with a new capacity (Drucker, 1985 Drucker, 1994).Creativity, which represents generating new ideas, is the foundation of innovation, since innovation originates from creaticity (Amabile, 1996 Lumsdaine and Binks, 2007). In the initial stage of development, creativity is implemented to generate a wide range of ideas, and in a later period, innovation will substitute on these creative ideas and merely develop their potential. Entrepreneurship, however, is a type of organisational behavior focusing on opportunities rather than materials (Miller, 1983 Stevenson and Gumpert, 1991).It primarily consists of exploiting opportunities from various innovations, switch overing them into dish up or products, thereby commercializing it into market (Johnson, 2001). Problem solving spreads through their relationship and is connected with entrepreneurship in even ever y situation. It is the basis of generating ideas and then choosing the beat out for initiating and operating a prosperous business (Lumsdaine and Binks, 2007). In its definition stage, age is spent on searching for root causes and how the problem is inside correlated.Then in the discovery stage, energy will be concentrated on seeking plenty of ideas. In the following determination phrase, possible consequences will be considered by using criteria for success, and convert possibilities into practical application (Kirkham, Mosey and Binks, 2009). Arising from studies dealings with relationship between entrepreneurship and innovation, the synerty between them is generally received (Zhao, 2005). Firstly, entrepreneurship and innovation complement with each other (Zhao, 2001 Michael, 2005).On one hand, as Legge and Hindle (1997) create observed, innovation is the limited-purpose cats-paw of entrepreneurship. Entrepreneurs exploit opportunities and seek commercial success resting o n creative ideas selected and provided by innovation (Zhao, 2001). Herbig and his colleagues (1994) take similar view and hold that entrepreneurship is one of ternary primary components of innovation, and presence of entrepreneurship can to some extent guarantee prospering manipulation of another two.Entrepreneurship, on the other hand, enables innovation to flourish (Zhao, 2001 Michael, 2005). Schumpeter (1934) primitively endeavors to associate innovation with entrepreneurship by identifying innovators as entrepreneurs. Entrepreneurship enables innovation to realise further value by marketing them as products or services. Second, the development of entrepreneurship and innovation, and correlative effect between them for the successful practicality of innovation, demand support of innovative finis and management (Drucker, 1985 Zhao, 2001).The success of McDonalds can be taken to hold up this point. Products sold in McDonalds are not originally invented, virtually, they are ju st what had been produced in respectable restaurants many long time ago. Nevertheless, by adopting a set of innovative management techniques and notions, McDonalds has standalized its products and designed specific working process based on which production can be analysed (Drucker, 1985). In consequence, McDonalds opened up a new area and substantially increase revenues.Before considering the relationship between entrepreneurship together with innovation and economy development, it is essential to on an individual basis observe their relationship with economy development. Firstly, innovation is a racy contributor to economic development albeit with its inferior nature (Grupp, 2001 Stoneman, 1995 Camp, 2005). In the perspective of necessity, Lichtenberg (1993) and Engelbrecht (1997) admit this by pointing out that inovation can be regarded as a vital source of economy development.Another scholar, Porter (1979), confirms the view in terms of promoting the concept of value-base d competitiveness, where innovation initially outgrowths in improved productivity, then the enhanced productivity creats higher competitiveness which eventually leads to better economy. For instance, 3M Company is famous for its distinction of gaining process through innovation. The family stimulates innovation by setting up the 15% rule-employers are encouraged to utilize 15% of working while to research their own ideas which may convert into new products in the future.As a consequence, a quarter of incomes of the Company are generated by products no more(prenominal) than six years old (Burns, 2005). In addition to the study bread and butter the necessity of innovation to foster economy development, there are some investigations demonstrating that innovation is not sufficient for continuously economy development (Grupp, 2001 Stoneman, 1995 Camp, 2005). any(prenominal) scholars criticise that the map of innovation is overlooked and state that tolerateing only in the spher e of innovation can not bring qualitative leap out to economy (Allen, 1988 Audretsch, 1995).Camp (2005) approves of the view and he maintains that many organisations are learning this lesson by experience. Their copious investment paid for innovation does not convert into seat and can not continuously sustain economic development. Secondly, entrepreneurship is broadly accepted as a prominent driver of economy development (Schumpeter, 1912 Camp, 2005). As fall in Kindom Her Majestys Treasury (2005) declared, entrepreneurship and its profound cushion on entreprises have been one of five driving forces of the Nations remarkable strategy to go on economy development for the last ten years.Drucker (1985) also accepts the major role of entrepreneurship and he even indicated that present businesses could hardly survive if they do not secure entrepreneurial capacity. In addition, a positive relationship between economic development and entrepreneurship is captured by Braunerhjelm et al . (2009). They examed 20 countries in Organisation for stinting Co-operation and Development for 21 years and eventually came to the conclusion that entrepreneurship could positively doctor economic development, with remarkable improvement in the perspective of competitiveness and new firms establishment.Wennekers and Thurik (1999) are in the same line with Braunerhjelm and state that entrepreneurship makes contribution to economy development by some process such as enhancing competitiveness, creating new firms and new jobs, and improving productivity. Besides, with increasingly practice, Schumpeters notion (1912), where economic growth and employment are provided and motivated by new businesses and existing firms which result from entrepreneurship, is widely accepted (Reynolds, 1999 Fritsch and Muller, 2004).In addition, statistical research of manufacturing sector by United Kindom Her Majestys Treasury (2005) demonstrated the essential role of innovation for British economy. As t heir research result shows, 1. 2 million employments were provided by newly set up businesses from 1997 to 2005. However, according to Hoffmann and Junges research (2006), UK has still rough 18 percentage less businesses than America, and he maintains that much higher entrepreneurial activity rates in America may interpret this to some extent.Having considered entrepreneurship and innovations separate relationship with economy development, it comes to conceive entrepreneurship and innovation as a whole and discuss their holistic relationship with economy development. As have been discussed, innovation and entrepreneurship are complementary. This can also apply to economy development. With the insuffiency of innovation, entrepreneurship plays a mediate role between innovation and ecocnomic development, which will more fully realize the commercial value of innovation and enhance the overall impact (Camp, 2005).Some scholars such as Allen (1988) approve that entrepreneurship should be reagrded as the pricinpal mechanism to convert preliminary-phase innovation into economic development. For example, in the 1980s, in the create industry, a potential market gap existed between conventional printing and office photocopiers. A famous German company, acetylsalicylic acid, responsed to the problem with the development of an innovative technology which can provide quality, price-efficient and small-quantities colour printing for office uses.Nevertheless, the traditional chemical company did not plan to expand into printing area, so no material measures were taken to fill in the gap. But a few years later, the market gap expanded to a striking scale which in the end attracted Bayers attention. In 1988, based on the innovation mentioned above, Bayer established a new enterprise, Xeikon, to produce printers especially for office. Consenquently, by the end of 1998, 160 jobs had been created and the company had captured winnings of 45 million pounds (Burns, 2005). En trepreneurships mediating role is apparent in this case.If Xeikon were not founded, the innovative technology might stay in the innovation stage for much longer time and the printing industry might not be able to experience the rotation in that age (Burns, 2005). With the necessary yet insufficient nature of innovation and postitive impact of entrepreneurship on economic development, many regions which have invested a large amount of money in innovation begin to learn the subjective role of entrepreneurship and find that they need entrepreneurship to further thrive economies and these investments ecomoic return (Camp, 2005).Innovation alone can only yield limited economic influence (Camp, 2005). done the generative process of entrepreneurship, however, more significant economic gains can be captured. For instance, in an investigation by Camp (2005), a rise of approximately 60 percent in average wages was acturalized in the about innovative regions among 382 regions they research ed, by enhancing innovation capability through entrepreneurship. The Table 1 below, extracted from Camps (2005) another research, also indicates entrepreneurships mediating effects on innovation.Table 1 Tesing the Mediating Effiects of Entrepreneurship on Innovation and Regional Employment (Camp, 2005). Regression feignings correlation Coefficient t-stat R2 Model1Total Employment 0. 723 512. 8 4. 67 81. 1% Innovation Entrepreneurship 0. 716 121. 1 26. 03 Model2 Entrepreneurship 0. 611 16. 4 18. 95 48. 0% Innovation Model3Total Employment 0. 723 2,494. 6 19. 02 48. 2% Innovation The difference between Model 1 and Model 2, especially the value of R2 which represents impact on employment, indicates that the direct effect of innovation alone (48%) is much lower than the combined effect with the mediating process of entrepreneurship (81. 1%). In other words, the mediating effect of entrepreneurship can provide extra profits for businesses as well as covering the investment on innovation capability (Camp, 2005). In conclusion, this essay has disscussed the relationship between entrepreneurship, in conjunction with innovation, and economy development, utilizing theories and examples in business.Attention is devoted to the positive relationship between the triplet issues. Innovation originates from creativity and endows materials with new capacity. Entrepreneurship utilizes innovation as a special tool, and it explores innovations potential economic value by selecting and commercialising innovation into market. Entrepreneurship and innovation are thus complementary and the synergy between them importantly benefits each other. Problem solving exists throughout the process from ideas generation to business estabilishment converting possibilities into practical application.In addition, innovation and entrepreneurship are respectively vital contributors to economy development, whereas the insufficient nature of innovation calls for mediating effect of entre preneurship. Many theories and examples have illustrated this mediating effect which will more comprehensively realize the commercial value of innovation. With good combination of entrepreneurship and innovation, in consequence, economy can be effectively thrived and overall economy development will be achieved. Word Count 1904