The Negative Consequences To Productive Entrepreneurship Business Essay

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In my opinion, productive entrepreneur is a person who set up a business with products which is good for the society and also helps to increase the economic level of the country (e.g. grow the GDP level).

For example, Richard Reed and his friends found a business called Innocent, which sells fruit smoothie, juices and vegetables & fruits pot. They products use 100% fresh fruits, natural and healthy, so they products are good for the human body and good for the society. They also designed the fruit towers which use green energy to run, again, it is socially friendly and environmental friendly. They business also helps the GDP growth, as they business can sell more than 2 million drinks every week and that tells us that it help to grow the productivity of the whole country also help to increase the purchase activity growth in the market and those can help the country's GDP growth. According to those evidences, Innocent Company is socially friendly and supports the GDP growth. Therefore we can say Innocent is productive company and Richard Reed and his friends are productive entrepreneurs.

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In contrast with the productive entrepreneur, unproductive entrepreneur is a person gain profit through rent seeking or other various form of corruption which is harmful to the society and also impedes or not help the economic growth.

For instance, people who rent sinking with the parking space. As Hong Kong Government carried out a new policy to control the rising housing prices, however this policy is just for the housing price but not the other non-tenement property, therefore the parking space is the new favorite for those rent seeking people. According to the news, one land agent has 514 parking spaces for placing sold to the households; some households who do not need a parking space still attend to the draw, because as they get a parking space, then they can rise the parking space price by $20 thousands to $30 thousands and resell it to the other households who in need. By doing this, they can gain profit for their own from the price difference. Some households may use higher price to bride the parking space owners, then as he got the parking space, he will resell it with a higher price to gain a markup. Those activities definitely is unproductive, and those people who did it, are unproductive entrepreneurs, as they use the limited allowance to arise the price of the parking spaces to gain their money by destroy the market rule and their gains will not flow out to the economy but store into their own welfare, so this will reduce the money flow in the economy, reduce the economic growth. It is also harmful to those people who really in need, therefore this kind of rent seeking will bring a negative impact to the society; again, it shows that they are the unproductive entrepreneur.

Q2 Answer: Explain whether or not he/she is a Kirzner type of entrepreneur or a Schumpeter type. Why?

To my point of views, the Schumpeter type of entrepreneur needs to fit into three stages, first is create a new product or create a new way to process a product, secondly, the innovation has created destruction in the market or industry and the last is disequilibrium in the economy.

Maxwell Bogue and Peter Dilworth are the founders of Wobble Works LLC. In December, 2012, they launched a product called 3D Doodler, which is a 3D pen, use ABS plastic as the ink of the pen and you can use this 3D pen not just draw the image on a piece of paper but also off the paper. This is the first 3D pen in the world, and it creates a new way for the artist to express their imaginations. It does create certain level of destruction to the 2D pen industry, and the industry that manufacture decoration and artwork, because people can use this pen to make their own decoration for their office or house. The jewelry industry may be also destructing, as people also can make their own jewelry at home with this 3D pen. This innovation can charge high price in the market, and create disequilibrium in the economy as it is the only and first 3D pen, which has monopoly power in the market. According to those evidences, it can prove that Maxwell Bogue and Peter Dilworth are Schumpeter type of entrepreneur as they fit to the three important stages of Schumpeter.

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In my mind, the Kirzner type of entrepreneur is the entrepreneur who buys low materials or products then sell it in a much higher price to consumers and their just use the exist information in the market than create new information from the outside. The example I will use to show the Kirzner of entrepreneur is the Li & Fung Ltd., which is a famous global trading company in Hong Kong.

Fung Pak-liu and Li To-ming are the founders of Li & Fung company, at the beginning, they business based in Guangzhou, as Guangzhou had cheaper workforces and cheaper material to produce the products like silk, Jade handcrafts and so on, then exported those products to United States in a higher price and got the benefit between the price difference. Now, Li & Fung based in Hong Kong, as Hong Kong has more experience and information and a well trade connection within different countries, so Li & Fung as a middleman help their clients to find the cheapest raw material to produce their products and charge higher service's price from the clients. It also finds the cheapest products from the other developing countries and sell in the other countries or to its clients charge in a higher price, again, they gain profit from the price difference. Therefore, obviously, Fung Pak-liu and Li To-ming (and William Fung, the present CEO of Li & Fung) are Kirzner type of entrepreneur, as they gain profit through the "buy low sell high" process and they have not create any new products or innovate any new way to produce a product by using new information or idea.

Q3 Answer: Can there be possible negative consequences to productive entrepreneurship? (Hint: think about the unnoticed stakeholders and the long term effects. You should be able to answer in what sense is it negative, to whom is it negatively impacting, what is the time frame of this impact, and how much of a negative impact).

I agree that productive entrepreneurship can have negative consequences.

For instance, the Facebook that found by Mark Zuckerberg. As the Facebook set up, hundreds and thousands of people opened an account and start to use Facebook as a platform to contact and keep the relationship with their friends. By using Facebook, people can make lots of new friends that with same interest and hobbies, so it can bring happiness to people through the internet. They also can post their own photos or videos on the Facebook to share with their friends enable their friends to know more about themselves. Therefore, Facebook have social benefits for the society. As many people are using Facebook, many companies will use Facebook as a platform for promoting their products or the activities the companies will hold in these days, Thus, Facebook can help the companies to attract more customers to buy the products which will help to increase the economic activities in the economy and this may help the country to have higher economic level. Consequently, the Facebook is an example for productive entrepreneurship, as it helps to develop the economy and benefit to the society.

However, there are some negative impacts of Facebook through the day by day using. Firstly, people started to additive with the Facebook, some serious users need to spend more than 10 hours per day on the Facebook without using those hours to do more productive activities. If more and more people become additive, then more people will well use the time and will bring a bad impact to the productivity and will lead a slow or down grow of economy. Secondly, it has security issue. The Facebook is established in the internet, so it is harder to control or solve all the security issues, such as hacking, as the Facebook cannot control what people will do and talk online so is hard to avoid this happen. Also there is no barrier when open an account in Facebook, so every type of people can use it, and this will bring the danger into the Facebook group as well. Moreover, as people using more time on the online communication, they may be lost the ability to communicate to the others face to face as they can express themselves in the Facebook than in the real life, especially the diffidence people, so this will bring a social problem to the society.

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Thus, even though a productive entrepreneurship also will bring a negative result to the economy or the society. The negative impacts may not be occurred immediately, by during a long period, the negative will appear due to the users' action and the social value at that period.