Innovation and Creative Desruction

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Introduction

This lecture video is analyzing 3 main points of the book “The Essential Joseph Schumpeter.” This book explains three topics and analyzes ideas behind them. The three topics are Entrepreneurship, Innovation and Discovery, and Creative Destruction. How can we define entrepreneurship, and what kind of impacts have we seen through the emergence of advancements within the society? This paper is going to reflect each of these topics, how they can contribute to everyday society, and what kind of questions we can ask to analyze them.

The Role of Entrepreneurship in Innovation

The first topic is entrepreneurship. I agree with the idea that entrepreneurship is hard to define so where can we even start with it? I think it is important to know all the different types of entrepreneurship styles and the startups that can come from them. Of the three possible definitions of entrepreneurship, I believe that the broad definition is the most correct. Though all of these are right, I really like the phrase, “agent of change.” Entrepreneurship has so many paths it can take, and I think “agent of change” accounts for any and all of them. I do think, though, that this definition is missing a component of entrepreneurship. I think it misses the component of innovation and discovery. This is one, if not the, most important part of entrepreneurship that separates them from business owners and managers. Entrepreneurship would not be a thing without the concept of innovation. I* think one way you could revise this definition is someone who is an “agent of change through discovery and innovation.”* Motivation is key to innovation. I agree with Sobel’s statement about how the higher the reward, the higher incentive we have to create and think of new things. As humans, we like to see results and we like revenue. Entrepreneurs also thrive in competitive atmospheres. They are continuously creating and innovating to make the next best thing with competitive pricing. They want to be the first to ever do it. I believe that they can really thrive in a Capitalist or free market economy. With the encouragement of private ownership, economic freedom, and less government regulation, discovery and innovation increases. The United States leads in entrepreneurship because of the abundance of inventors and innovators compared to the rest of the world. Though inventions and innovations are different, inventions can pave the way for innovations.* Innovations are started through a new invention, and I could argue that innovation does not happen without invention. An invention starts an idea of something new, while innovation makes that idea something marketable and profitable. So where do entrepreneurs fall in these categories? I believe that entrepreneurs can wear both hats of being the inventor and the innovator. These obviously occur at very different stages of the execution of the idea, but they engage in both sides. I like and agree with Schumpeter’s ideas about what an entrepreneur is. He claims that entrepreneurs combine resources to create something new. *Innovation is important because it advances our society, and entrepreneurs have to use this approach and make good resource combinations to have profits. Without the value of marketing, we are losing more than we are gaining. *

Impacts of Creative Destruction

When first looking at the definition of creative destruction, I looked at how often it happens in the United States. I think it is important for the economy for the emergence of new and better processes to replace the old ones. This helps progress the United States economically, socially, technologically, etc. Looking on the other end of the spectrum, when can creative destruction become harmful and not necessary for progress? Some may argue and look at creative destruction from an ethical standpoint. One criticism could include that if you are constantly changing an industry’s processes and programs, you are putting a ton of people at risk. You are first engaging in job losses in communities, with employees that have probably worked there for a while. This leads to a lot of community displacement and feel pressured by the economy. These communities are now vulnerable with no safety net to fall back on in this time of displacement. Another criticism is that it is also really hard for small businesses to thrive because of the constantly changing atmosphere. *It almost hurts the communities that thrive with small businesses, because with creative destruction, the amount of monopolies begins to increase. *This can hurt a community’s identity and social ties within their community. Do these negatives outweigh the positives? Without creative destruction we would not be anywhere close to where we are now as a society and country, and we wouldn’t thrive in the way that we do now. I believe it is critical for creative destruction, the threat of entry is key to economic prosperity, and you need innovation for that!

Conclusion

Overall, advancement is important! In the United States, we thrive on new inventions and innovation within our economy. Entrepreneurs play a key role in this idea and are very needed for the trajectory of our society. We have changed a lot since we were first established as a country, and I don’t think we would be nearly as prosperous as we are now without the use of innovation and creative destruction. This is the entrepreneur’s job!