The Relationship Between Entrepreneurship And Innovation Commerce Essay

The Relationship Between Entrepreneurship And Innovation Commerce EssayWhat is the kinship between enterprisership and mental hospital? Depending on which model you be looking at enterprisership has a differing alliance with excogitation. in that location atomic number 18 definitions out on that point that make an enterpriserial deportment almost identical to that of figure. Is in that location more to trigger than being entrepreneurial? Can entrepreneurship be defined by change? These be some questions I intend to respond doneout the essay and I bequeath examine and determine how the two are related, besides freehanded or small(a) the relationship is. Up to 1 in 3 business start-ups fail at heart the first three years and with the amount of start ups, 3 per minute in 2001, there is a lot of prospective, hopeful entrepreneurs aiming to follow in business exclusively fail. What is the difference in characteristics between those that succeed and fail, is ther e a clear diverseiation and can the amount of innovation used by the entrepreneur effect the success of the business? I aim to come to a conclusion and answer all of these questions throughout and critically analyse differing theories.Both of the terms are often used interchangeably with comminuted to a lower placestanding of the differentiation between the two (David Johnson, 2001). My interpretation of innovation is that it has a lot to do with the cheat of a crossway or a process and is a change in the norm, which then stimulates the norm. A good typesetters case which would manoeuver innovation would be the movement from the floppy disk to the CD ROM, this is a clear move with a totally different design and then became the norm, till further innovation happened and the USB flash drive has become the most common for file storing and transfer. The question of defining entrepreneurship and linking it to innovation is harder than it sounds. There are many studies of entrepr eneurship stock-still there is no specific definition as it can non be summed up into unmatchable single statement. There are various models showing a differing correlation between innovation and entrepreneurship. I see the link between the two as matchless in which, if worked together in harmony there can be a prefect outcome in terms of the success of an entrepreneur. non every iodine and only(a) who starts up a business is an entrepreneur it is the one who makes the best outcome of any luck disposed throughout the life of a business that willing be a triple-crown entrepreneur. There are different characteristics and different circumstances surrounding each successful entrepreneurs story but each do it down their route to become successful.A good paper is nothing more than a incision in the hands of an entrepreneur.(Jeffry Timmons 1977) This humor shows that innovation, or the idea is just one single aspect of the processes of the entrepreneur in the do of, and contin uing the success of a business. Therefore this means there is a relationship visible but it cannot be said it is one that says that entrepreneurship is more than just an idea, or innovation but it is using that idea.Innovations are the composite of two worlds, namely, the technical, and the business so when only a change in technology is complex, this is just an invention but as soon as the business world is involved, it becomes an Innovation. (Schumpeter 1934). An entrepreneur is an individual who establishes and manages a business for the principle purposes of profit and offshoot. The entrepreneur is characterised principally by mod conduct and will employ strategic management practices in the business this explanation is very relevant to what I am trying to explain and the link with business shows how entrepreneurs in business can be innovative. (Carland et al, 1984). These are how innovation and entrepreneurship can be defined in 2 different models. They can both be associa te into each other visibly due to the idea of business in innovation and the innovative behaviour. However they can also be criticised due to saying entrepreneurs are only in hobbyhorse of profit but this would depend on the personality of the individual. The founder of Oxfam, Joe Mitty, was solely interested in making money for charity and was a volunteer.Schumpeters view of creative wipeout (1934) refers to the entrepreneur introducing a bran-new idea that abridges all over a market and links entrepreneurs to economic addition and development. This could be an idea of shifting occupation processes, reducing the size of the workforce to increase productivity or indeed the introduction of a new product. The reason the introduction of the new idea has such an effect is, because of the unpredictability of the introduction, meaning there is no chance to prepare and lessen the impact of the new idea. Therefore Schumpeters theory was very much in line and the link innovation has w ith the entrepreneur is clear and represented by the fact that this creative ravaging often leads to the overhaul of a market and takes over the old idea. For example the DVD, taking over VHS, and at present they do not sell VHS in HMV and most other leading electronic multi media stores.The view of Kirzner (1973) is that entrepreneurs are individuals that recognise opportunity and find spreadings in the market and test the viability of new business by rivulet and error and feedback from the market. Therefore these two views are contrasting with Kirzners view of entrepreneurship related more markets and gaps within them, and the responsiveness of an individual to react and make the most of this opportunity, rather than seeing the opportunity for a new product or idea, rather than simply moulding or adapting what is there already to gain market share. by and by this an entrepreneur differentiates from just an opportunist introduction and realisation of the idea by carrying on t he idea and move it into a viable business.These two ideas give a different level of linkage with innovation, rather than the destruction of Schumpeters model which creates the market for the product, Kirzner believes it is about adapting the idea to fit into the market, so the innovation may be seen as more lapse and less extreme in Kirzners case.OECD (1998) states that (they) accelerate the generation, dissemination and application of innovative ideas this sums up one particular idea of the relationship between the two it implies that entrepreneurship is innovative however, innovation is not eer entrepreneurial. Innovation may only be one aspect in the beginning, or perchance innovation should happen throughout and be act through the life of the business to attempt to keep up of competition. Innovation is not always a radical destruction of a current process or product and it can just be a small alteration to current product or process. E.G. Sir Stelios Haji-Ioannou, an entre preneur and the founder of easy jet, took an idea and used his business mind and talents to create and exploit the market, however did not invent any new innovative product, or production process but he spotted an opportunity for a budget airline which opened air travel up to the masses, whom perhaps could not afford what was there before it.Schere (1982) sums up an entrepreneur by giving their characteristics, it states they have a tolerance for stress and uncertainty, a real life example here can be the entrepreneur I interviewed, John Russell, who had to support a family at the same time as remortgaging his house and watch up a business. To get through the stress of this whilst setting up and pursuing a successful business would take a lot of tolerance and self belief. The tolerance of uncertainty could be linked to innovation, if it is a new process or product and it has not been tried and tested in a market as is discussed by Kirzner (1973), the entrepreneur is taking a big ri sk even if the gap in the market it there in theory, there is no certainty due to the irrational behaviour of consumers. Schere gives a characteristic of entrepreneurs that they are open minded and can react quickly to change. The nature of innovation is that however prepared or quickly entrepreneurs can react they are often powerless to proscribe a total overhaul of a market, due to the action of another entrepreneur (Schumpeter 1934).Timmons et al (1985) gives one of the self-aggrandizingst sets of characteristics in the field. The trait of having the drive to achieve and grow is one of them. The drive to grow is one trait of interest and can be linked in to what has already been discussed, due to the distinction between innovation and entrepreneurship, with innovation being the starting point of a process and the entrepreneurial side leading to the growth of the business, however innovation would be needed throughout the life of the business to lead to a growth in the idea, an e xample is Simon Cowell who from X factor went on to expand using entrepreneurial prowess to take it into other countries and then went on and created Britains got talent, which introduced a new idea and process to the TV industry. Simon Cowell, just one example can already counter the idea of Timmons et al, of they have Low need for status and power, as it is visible that this interests him.Theories giving traits of entrepreneurs, however, is a generalisation of all entrepreneurs and can be easily criticised as there are so many different types and individual entrepreneurs that cannot be segmented and categorised. The studies give traits of entrepreneurs and do not take into account the background. For example, one entrepreneur may be a university graduate, whilst another could be a middle aged worker who has found a way doing what their business is doing more efficiently. Therefore it is in all likelihood that the traits they show are not all identical to each other. If all the t raits an entrepreneur is said to portray in journals and articles are true then entrepreneurs would be close to perfectly efficient and functioning mankind beings.People can also be innovative but cannot make the step up to become entrepreneurial, the BBC television programme (2. The Age of Plenty, The Foods that make Billions 2010) it shows us the story of how business has turned grain into one of the biggest success stories of the modern food industry. In the beginning it was one of the Kellogg brothers who invented the product however it was the other one of the brothers that took it forward as a business. The person who created the idea is the brother of the entrepreneur and he could be seen as innovative. His brother was the one who took the idea further, by increasing the product range and adding sugar to it where his brother chose not to. Therefore a differentiation is shown here between the two thought processes of simply just an spotter and then an entrepreneurial mind th at has increased the size of the company, and its remuneration, significantly.Apple, in recent times, is a great example to use when referring to both entrepreneurial expertise and new innovative products. Before the IPod was launched on October 23rd 2001, there were there means of personal media players which bouffant number were satisfied with. However the idea of 1000 songs in your air pocket came by surprise and nobody could have predicted it. People used portable CD players and walkmans without realising the potential and they were afterwards deemed clunky and useless. However, The IPod has become a household name, and despite not being the first mp3 player they revolutionised the MP3 and now people call them IPods rather than mp3 players. Here the iPod can be seen to be in line with Schumpeters idea of creative destruction (1934) because it is an example of how a new introduction (of the iPod) effectively destroyed the ideas that came before it, e.g. people dont use walk man anymore, due to the intro of the iPod. The reason Apple is a near perfect example of a complementary relationship between both innovation and entrepreneurship is because of their actions after the initial introduction, and the way in which they continued to use innovative strategies and keep up the level of innovation and did not settle on the idea. merely developments on the IPod were brought to the market, for example the mini, shuffle, nano and the touch were all further innovations, and then they continued to create other products under the Apple brand. They made the new Mac books, the air and the pro, Apple Macs which further competed with other computer companies than they did in the past. Then more recently they have made the I Phone, which has 4 different models, and potentially more, iPad and in the future they are also looking into moving into a new (for them) form of media, TV. These innovative ideas, along with the fact that they are becoming a market leader in elec tronics and making huge profits year on year, whilst banging nails into past leader of the portable media industry (with the walkman) Sonys coffin (Naughton, 2010). They demonstrate perfectly why innovation has such a relationship with entrepreneurship. The reality of it is, however, one day there will be innovation, not by apple, and perhaps not by any of the current firms in the electronics market, that will kill off apple and lead to a new market leader. Due to the nature of innovation, however much Apple prepare they will not be able to prevent this happening.Druckers source of opportunity (1985) is a model in which the opportunities for an entrepreneur come about both internally and externally. Internally through inadequacy, changes in market or coming about through chance or externally through perception and mood, demographic changes and new knowledge, from individuals or chance revelations.Small firms are more innovative than their large firm counterparts, being less bound by convention and more flexible (Carter Jones-Evans 2006) This suggests that in large firms which have set policy and running to it, would be more ridged, and therefore less reactive to a change in the market and could be pushed out of the market due to new innovative firms taking over. Therefore for a business to succeed in the long term they may need innovative ideas to survive and prevent being overtaken by the more innovative smaller firms.To sum up the relationship between innovation and entrepreneurship is not a simple thing to do with a single prison term answer. What I can conclude is that there is a differing relationship between the two in different fields of study. A common idea of the relationship is that it is a dependant one, in which both are needed in an economy to stimulate economic growth. The idea that innovation is a part of the entrepreneurial process is one that I agree with, there can be innovation without an entrepreneur involved however there cannot be a suc cessful entrepreneurial venture without the input of innovation. This is because innovation is what will be the distinction between ideas, without innovation there may be change or procession and this could lead to a stagnant economy. The examples I have given of entrepreneurs are ones that I believe show a differing amount of innovation, but similar amounts of success, Stelios had merely a change in the pricing and system of airline firms which when compared to the example of apple is only a small change, however, innovation is still shown and is still important. general in most cases it is not just an individual entrepreneur people may be exalt by an individual innovative idea and create entrepreneurial flow of a business over time as a team which can lead to great success with the right intermingle of both innovation and entrepreneurial processes.