Impact of entrepreneurship and innovation

Muhammad Mahboob Ali | Published: August 03, 2018 21:17:09 | Updated: August 03, 2018 22:19:40


An entrepreneur is a person who has control over an innovative enterprise, venture or idea and is accountable for the inherent risks and outcomes of the company. These companies are normally in the process of expansion and they explore opportunities for markets, starting from the grassroots to domestic, regional and global levels. Today, 'Entrepreneurship' is a buzzword. Entrepreneurship and innovation can lead to economic growth plus change. More and more people are applying entrepreneurial skills for building a sustainable future for Bangladesh. However, Bangladesh needs to progressively shift from dependence on primary products and commodity-based industries to open up to international trade and building capacity in knowledge-intensive industries.

Competitiveness refers to a set of factors, policies and institutions that determine the level of efficiency of a country by taking into account its level of development. Entrepreneurial attitude refers to the individual's mindset, particularly the risk-taking nature and level of perseverance, qualities identified as essential for entrepreneurs. Entrepreneurial skills refer to the set of job-related and behavioural skills required for success in a fast-growing, innovative organisation. Cultural/social framework refers to the set of social and cultural factors that either support or inhibit an individual's decision to engage in the entrepreneurial ecosystem instead of other occupational pathways.

Regulatory framework refers to the administrative processes and rules required to start and operate a company, including licensing, tax and labour market regulations. Market framework refers to the availability of necessary inputs, transformation processes and customer demands necessary to operate and develop the venture. Network access refers to the availability of supporting partners, advisers and enablers who transfer know-how and create opportunities for growth. Innovation and entrepreneurship offer potentials for transformational impact. This transformation should be driven by a growth-oriented agenda that leverages import-substituting and export-oriented SMEs having strong growth potentialities; development-oriented start-up companies; industry-oriented research and development activities.

During the 18th century, French economist Richard Cantillon used the word 'Entrepreneur' for people who pay known costs of production, but earn uncertain incomes, due to the speculative nature of pandering to an unknown demand for their products. Jean-Baptiste Say pointed out that it was entrepreneurs who sought inefficient resources and capital, and moved them into more productive, higher yielding areas. According to Joseph Schumpeter, "Carrying out innovations is the only function that is fundamental in history". Peter F. Drucker wrote that purposeful innovation results from analysis, systemic review and hard work, and can be taught, replicated and learned. Innovation is both conceptual and perceptual. The Nobel Laureate Theodore W. Schultz argued that although farmers differ for reasons of schooling, health and experience in their ability to perceive, interpret and take appropriate actions in response to new information, they provide an essential human resource, which is entrepreneurship.

Clayton M. Christensen classified new technology into two categories: sustaining and disruptive. Cassimet (2014) argued that stimulation of entrepreneurship and small business is important as the global competitiveness race requires hastening towards the development and adoption of policies that encourage innovation and entrepreneurship. Nobel Laureate Amartya Sen argued that the business community plays a unique role, but they should not engage in making quick money; they have to think big, not just in terms of money, but also in terms of remedies for the society. Littlewood and Holt (2015) depicted social entrepreneurship by considering a framework of new institutional theories and writing on new venture creation. Their research explored the significance of environment for social entrepreneurship, social enterprises, and social entrepreneurs.

The steps in the entrepreneurship process are as follows: 1) Idea generation; 2) Conceptualisation; 3) Invention; 4) Implementation; 5) Sales services. Links between innovation and entrepreneurship, the role of institutions for entrepreneurship, and the tendency of national accounts to under-record the social value of innovation and entrepreneurship are facing implementation challenges. If the measures used do not capture the full social value of innovation and entrepreneurship, we are likely to underestimate their actual contribution.

A country like Bangladesh suffers from the problem of informal sectors, where entrepreneurship grows but is not properly counted. Factors affecting entrepreneurship include infrastructure - both physical and social; institutional aspects; financial access; economic factors; education; gender balance; empowerment of people; R&D; participation in global value chain; capacity development, farming and non-farming activities; conducive policies at national and local levels; technological advancement; social mobilisation; attracting professionals to social enterprise sector; and providing legal assistance.

Entrepreneurial learning does not stop, say, five years after starting a firm. It will continue to develop depending on the initiatives employed by managers and their employees, as well as the specific situational challenges the firms face. Entrepreneurship as a career path for young learners has gained importance and should be given its due share of consideration. Entrepreneurial companies can contribute to economic welfare as they increase the innovative capacity of the economy. Building linkages between the enterprises and import-substituting cum export-oriented SMEs could be an important way to facilitate integration with global value chains and new markets.

Muhammad Mahboob Ali, PhD, is Professor, Dhaka School of Economics.

mahboobalidsce@gmail.com

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