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Another very famous and interesting definition of an entrepreneur was provided by J. Schumpeter where he said, Whatever the type, everyone is an entrepreneur only when he actually carries out new combinations and loses that character as soon he has built up his business. Entrepreneurs are people who will do unusual things which result to social and economic benefit. Entrepreneurs are people who are confident, dedicated towards their work and most importantly they are not afraid of risk or success. R. G. McGrath defines entrepreneurs as follows, "In my view, entrepreneurs capitalise on uncertainty rather than avoid it, they create simplicity where others see complexity and they embrace learning that comes from taking calculated risks".
Innovation is a term which is often linked to entrepreneurs. It is to say that entrepreneurs are people who innovate and bring into practice new ideas. Roberts defines innovation as the successful commercial exploitation and implementation of a new idea or invention. (Roberts 1998). Innovation of a new product can take place in two ways. One of them is incremental innovation and the other is radical innovation. Incremental innovation refers to small improvements to an existing product which puts us in a more competitive position. A good example of incremental innovation is the Apple company which produces iPhones and iPads. They have moved gradually from iPhone 1 to the latest iPhone 5 and every newer version of the iPhone has had small improvements and newer features. Radical innovation is bringing something new to the world which replaces existing products and technologies. J. Schumpeter (1911) suggests that radical innovation is a change in a product which cannot be traced back to the previous gradual version. To succeed in a business today demands constant innovation.
As mentioned above, entrepreneurs are risk takers and they are people who look for opportunities to succeed and thrive in business. One important characteristic which binds entrepreneurship and innovation is creativity. It is the driving force for innovation. In general English context, creativity is defined as the use of imagination or original ideas to create something. (Oxford dictionary). However, entrepreneurial creativity has been defined as the generation and implementation of novel, appropriate ideas to establish a new venture. (Ambaile 1997)
Creativity is necessary when it comes to generating ideas. These ideas help us innovate. Creativity plays a vital role in innovation. The extent of the relationship between creativity and innovation was well explained by Sir George Cox who said, "while creativity is the generation of new ideas, which we have in abundance, innovation is the successful exploitation of them". This clearly explains that for innovation to occur, creativity should have played its part. It is the combination of creativity and innovation that entrepreneurs practice and so it is all the result of entrepreneurship. The quality of solutions that we come up with when solving problems expresses creativity. Creativity means thinking out of the box and innovation is putting creative ideas into practice.
Innovation and creativity are seen to be two overlapping tracks and both are necessary for a successful business. Both creativity and innovation are linked to entrepreneurship and cannot be separated from it. According to J. Schumpeter (1911), a person is an entrepreneur only when he carries out new combinations. This clearly tells us that entrepreneurship means trying out new, or even never tried combinations. Hence to have these new combinations, we need to be creative! When thinking of a new product, the following four points are considered by an entrepreneur:
Does the product satisfy market demand?
Is the product unique?
Is the product useful?
Will the product be sold?
A good example of the application of these points was shown by Adolf Dassler. Adolf Dassler formed the company Adidas. Although Adidas came into existence much later on, Dassler had begun his work of designing shoes much earlier. He wanted to design sports shoes with moulded rubber studs. The product was indeed unique as these were the first ever sports shoes with rubber studs. The usefulness of these was shown by the triumphant German soccer team who won the 1954 world cup wearing these shoes by Adidas. Since the soccer world had seen the enhanced performance by wearing these shoes, there were massive sales of these new shoes by Adidas.
An entrepreneur is a business leader who puts his creative ideas into practice to promote economic development. The decisions of an entrepreneur trigger economic activities which in turn lead to economic development. Economic development can be defined as the increase in the standard of living of a nation's population. In addition to their own investment, entrepreneurs also use public savings in form of shares to finance their business. As a result of the investment, economic activity rises and wealth is generated. Individual living standards rise promoting economic development.
Entrepreneurship is viewed as a major contributor to economic development and employment creation (Banmol 2002). Entrepreneurs are a nation's driving force to generate employment. Unemployment is a major setback to economic development. Entrepreneurs help get rid of this problem by providing job opportunities to highly skilled as well as lowly skilled workers.
Problem is a general term given to difficulties faced when trying to achieve something. Since difficulties are numerous we feel problems are persistent. Unlike some people, entrepreneurs are not put off by these problems, in fact they look to solve their problems using creative problem solving models.
Problem solving plays an important role in entrepreneurship. Entrepreneurs are seen as people who brought something new to the public. However, we need to consider where it all starts. Entrepreneurs identify problems by observing their surroundings and try to come up with solutions. Therefore, problem solving is the starting point of entrepreneurship and creativity refers to the solutions. We refer to entrepreneurship as a starting point because finding a problem can give rise to a solution which in turn becomes an innovation. The creative problem solving model begins by problem definition, followed by idea generation and then comes idea implementation. (Prof M. Binks & Prof E. Lumsdaine). Thus, the starting point is problem solving. Solutions can only be brought about creatively when problems are known.
There are many famous companies and designer brands around us today. The existence of these designer brands is the result of the hard work of entrepreneurs. One such example is Anita Roddick. Roddick, is a famous entrepreneur and the owner of the company named 'THE BODY SHOP'. Roddick had to pass through tough times to get to such success heights. She worked at her father's café at a very young age. Roddick admits that she had very little leisure time in the café. As mentioned above problem solving is an important part of entrepreneurship, in fact the starting point, Roddick knew her problem and wanted to get rid of it- She had to earn money for herself and her two daughters, while her husband was away.
Having known her problem, she deduced an idea of opening a cosmetics store. Roddick, courageously took her first step and opened a small company in Brighton, England in 1976. From here on, she went on achieving milestones of success. Slowly she opened her second store and by 1990's she had over 700 stores world-wide. Today, more than thirty years from opening her first store, she has a massive two thousand stores which she owns and her company has become one of the leading cosmetics shops. All this was a result of the dedication and the never ending spirit of Anita Roddick.
In this era where information technology (IT) is helping people in various ways, one major component without which it would be impossible to reach this stage is the memory and storage device. One of the major companies and undoubtedly the first in this line is the Kingston Technology Corporation. Founded by Chinese and Taiwanese, David Sun and John Tu, the company has achieved a great deal of success. They designed the single in- line memory module (SIMM). Their products continued to amaze and surprise the IT world from the SIMM to the memory card. Their creativity in providing solutions to the problem of the memory devices not being able to store much, saw the production of the USB flash drive. This went on till the recent USB external hard disk. Though they did face a debt of one million US dollars, they managed to rescue themselves with their new products amounting to a sale of twelve million US dollars. Currently, it is the biggest memory device supplier in the world and has been ranked as the fastest growing private company in USA.
J. Schumpeter (1911) highlights the role of an entrepreneur as a catalyst for economic development. Entrepreneurs face resistance when trying to come up with something new. This resistance can sometimes be severe when it affects a large population. The main reason for this resistance is people being unfamiliar with new concepts. However, according to Prof M. Binks & Prof E. Lumsdaine (2007), a successful entrepreneur is one who breaks the log jam of resistance and allows innovation to occur. Such an innovation will replace the existing product. J. Schumpeter (1911) describes this process as creative destruction.
The idea behind creative destruction is that a new product replaces an existing one because it is better suited to fulfil current demands. When creative ideas are applied through innovation, it results to economic development. Hence, an increase in the rate of applied creativity will lead to an increase in the rate of economic development. (Prof M. Binks & Prof E. Lumsdaine).