Entrepreneurship, Innovation and Economic Development

Discuss the relationship between entrepreneurship, innovation and economic development. What role do creativity and problem solving play in this relationship? Refer to both theory and examples from the business world to support your discussion.

The general relationship between innovation and entrepreneurship in organization is universally believed as complementing and interacting with each other. From perspective of innovation, it is the base of entrepreneurship. Just as the theory put forward by Ireland, Hitt, Camp and Sexon, that “the successful entrepreneurial venture is usually based on a significant innovation.” It can be proved by a simple model of the entrepreneurial process presented by Brazeal and Herbert revealing that innovation is the foundation of entrepreneurship.In this model, authors considered the ultimate entrepreneurial event is driven by psychological innovation, which is the consequence of creativity plus technical innovation. Meanwhile the original change leading to technical innovation is environmental change (Brazeal Herbert, 1999). From perspective of entrepreneurship, it is the inspiration of innovation. A significant problem that an increasing number of companies have realized is that a strong entrepreneurial approach to innovative activities is necessary to their external market and internal organization (Ortt and Smits, 2006). Obviously, it is a manager rather than an entrepreneur who lacks of entrepreneurship contributes to this problem due to changeless organizational routines combined with entrepreneurial awareness. Consequently, Thornpson accentuated that “if we want more innovation, we need more entrepreneur”. However, consider above all, based on much controversy about “who is the first”, the relationship between both of them is concluded as interacting and complementing with each other.For instance, Zhao (2005) insists that “a combination of entrepreneurship and innovation holds the key to organization sustainability in...