Schumpeterian entrepreneurship

A look back in time

Tahira Islam | Published: December 07, 2018 19:05:24

Being a recent graduate of computer engineering in the field of digital technology, my aspiration is directly linked to the digital revolution of the late 20th century. Digital revolution marks the transformation from analogue to a digital era which his radically changed the world. Such transformation took place when new technological advancements replaced traditional production and business processes. Mainframe computers got replaced by personal computers, whose market was later disrupted by more convenient smartphones and tablets. Vinyl records were replaced by compact discs which later turned obsolete by online streaming. Digital revolution is a perfect notion of Schumpeterian theory of socio-economic development.

Joseph A. Schumpeter, an economist, already described "the process of innovation as a driver of economic growth" in his theory of economic development. Schumpeter gives the entrepreneur paramount importance to lead such growth. According to him, an entrepreneur is a socially distinct individual who introduces successful innovation by exploiting the commercial potential of an invention. The trait of entrepreneurs as innovators can be traced back in history when we consider historical icons such as Edison and Wedgewood. Pioneers in their respective fields, they are the key players who changed the world by introducing successful innovations. Their examples are still relevant when we look at contemporary entrepreneurs.

Schumpeter described, entrepreneurs give rise to a dynamic system by introducing innovations. Steve Jobs, the founder of Apple is the perfect example of a Schumpeterian entrepreneur. When he came across the invention of Graphical User Interface (GUI). Jobs immediately spotted its commercial potential. GUI is the visual way people interact with a computer or digital device. In Jobs own words, "I thought it was the best thing I've ever seen in my life. Within 10 minutes, it was obvious to me all computers would work like this someday". Jobs vision for a "computer for the rest of us" has proved his own saying "People with passion can change the world". By challenging the existing ways of doing things, Jobs transformed personal computers into a mass market product. The result? Apple became the icon of digital revolution.

Schumpeter described many decades ago, entrepreneurial function of fostering innovation is fundamental to economic development. Just like Edison and Wedgewood, Jobs created opportunities for other entrepreneurs by means of technological innovation. Suddenly, anyone with an idea began initiating companies in their own garage. Software and other digital companies bloomed, giving rise to a multi-trillion dollar industry. People's way of living changed completely, as did the industrial processes which became digitalised. Catalysed by innovation, digital revolution is remembered as one of the pivotal moment in the history of human civilisation.

One of the motivation of a Schumpeterian entrepreneur has been the desire to create his "own kingdoms". Edison, Wedgewood, Jobs created their own kingdom by exploiting the true potential of an invention. They have shown innovation to be the key driving force of an economic growth. The digital revolution solidified, if not proved the universal nature of Schumpeter's theory of entrepreneurs promoting innovation-driven growth. Schumpeter's entrepreneurs have never seemed as relevant as they seem today.

Tahira Islam is a graduate student at the Alliance Manchester Business School, University of Manchester. tahiraislam.du@gmail.com

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