Many people are unaware of the effectiveness of entrepreneurship as a source for innovation. Perhaps they believe entrepreneurs run businesses, while innovators are people who invent things. This belief is also backed by some experts and academics in the field.
However, it is important to understand that these two concepts coexist and feed off one another in order to produce successful innovation. Entrepreneurship can be defined as an innovative function that creates and manages new business ideas or ventures, based on factors such as available resources and market conditions.
The insights we garner from this definition allow us to better understand what entrepreneurship does for innovation — which is plenty!
Entrepreneurship takes many forms, which include intrapreneurial entrepreneurship (i.e. launching new businesses within a larger corporation), social entrepreneurship (i.e. using entrepreneurial skills to address issues such as poverty), knowledge entrepreneurship (i.e. identifying and implementing innovations within an academic environment), and technology entrepreneurship (i.e. applying entrepreneurial skills with technology).
Entrepreneurs are the catalysts of innovation by applying the concept of creative destruction to business firms, which means they make better business practices in place of inferior ones in order to survive competition and thrive in the marketplace.
It is important to understand that entrepreneurs are not driven by profit maximization — rather, they are motivated by profit opportunities. This is because profit maximization is a powerful motivator, but it can also stifle creativity in a business.
Entrepreneurs are the innovators who take on the risk of bringing new things to market. Innovators are necessary within organizations that rely on entrepreneurship, as they help create and innovate new services or products while entrepreneurs handle the majority of operations. For example, an entrepreneur may come up with a concept for a new product or service that he then needs an innovator to develop and implement.
Innovation requires a significant amount of change in order for it to be effective, which is why many organizations resist it and stick with what they already know works. But without new ideas or improvements, a company will not be able to compete in the market, which is what many entrepreneurs and innovators are trying to achieve.
Entrepreneurs typically innovate in areas of the market that have not been addressed yet or have yet to be expanded. This could mean taking a product and selling it to new markets, or developing a new product that appeals to consumers who may have previously been ignored by other businesses.
These innovations can also include improving existing products/services and implementing processes that enhance efficiencies, which further motivates business owners and managers by promising them more profits due to less expenses.