In innovation contributes to the economic development. What is

In this report,
I am going to compare different economic theories of entrepreneurship and use
some examples of innovations and analyse how the entrepreneurship and innovation
contributes to the economic development.

What is an entrepreneurship?
The basic definition of entrepreneurship that I can think of is a process of
creating and managing a new business venture in order to breakeven and make a sustainable
profit. Entrepreneurs are individuals or group of people who have an innovative
business idea and who want to benefit from the opportunities of launching new
business venture. Entrepreneurs are responsible for the risks of implementing
the idea and are willing to take all the financial risks associated with the
business, they want to benefit from the opportunities of launching a new
business.

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However, entrepreneurship
is not just about making the business profitable, but is also about changing
our planet and solve global problems. Social entrepreneurship focuses on making
a positive impact on society – whether social, cultural or environmental. This
includes issues or poverty, inequality or global warming. An example

 

 

 

 

 In simple terms, Innovation can be defined as
the process of introducing something new or more effective, such as new
products, services, ideas or methods. From the business
prospective, innovation does not only means inventing something new, this could
simply mean changing the way that the business operates or adapt to changes in
the market to end up with better performance that will provide some commercial
benefits to the business. “In
economic terms, innovation describes the development and application of ideas
and technologies that improve goods and services or make their production more
efficient” (European Central Bank, 2017). Innovation can not only
improve the overall productivity of the business but also helps to become more competitive on the market, reduce some
operational costs and establish new partnerships with other businesses. It is
important to state that “Innovation is not same as entrepreneurship, however, successful
entrepreneurship requires Innovation” (Dr Hannah Hoke, 2017).

Innovation
brings many benefits to businesses, society and the economy as a whole. When
businesses implement innovation into their operations, it helps them to produce
more products and services. High productivity can benefit workers by increasing
wages. As workers produce more, businesses are able to pay them more. This
increases their disposable income; therefore, people are able to afford more
products and services. At the same time, businesses generate more money, which
gives them an opportunity to expand further and build new manufacturing factories,
warehouses and stores. All that requires higher labour force, so more people
are being hired. This reduces unemployment rate and there are more people in
the society with some kind of income to spend on goods and services. High
employment rate enables the government to collect more money from the employers
and workers. Both have to pay National Insurance, which go towards state
benefits and services, such as the National Health Service, different sickness
and disability allowances, unemployment and support allowances and the State
Pension. Employees also have to pay Income Tax, whereas businesses need to pay Value
Added Tax, Corporation Tax and others. All that positively impacts on the
governments’ budget and tends to increase economic activity.

Moreover, Innovation and productivity growth enables
businesses to produce goods and services at a lower cost. Low production costs
allow businesses to reduce their prices on many goods.