There is a sort of creative destruction that happens when entrepreneurs develop and introduce new products and technologies. Overtime, it makes current products and technologies obsolete, which replaces the old with an availability of seemingly improved products. Customers then demand the new products, which increase productivity in all components of a society. Companies that employ this strategy of innovation are called, well, “innovators”. However, these innovations are solely tied to the products and technologies, but also to pricing models, distribution, layouts, packaging, and more.
Economic Impact
Economically, entrepreneurship stimulates innovation and job creation. With innovation, small businesses create a significant share of the new growth that takes place in the United States. By developing new services, products, and technologies, businesses need to employ more people. In turn, this accelerates economic development. When public policy encourages and supports entrepreneurship it drives both innovation and creates more positions, as the total employment of a country largely depends on new business formation. Additionally, utilizing existing resources in the most effective way, innovation enhances production and produces new markets.
Societal Impact
Innovation fosters a society that tends to make our lives easier, increases our productivity, improves our health, and creates more engaging forms of tailored entertainment. Ride-share apps makes it easier to get from point A to point B. Powerful computers enable employees to work more efficiently. Research companies are able to find cures to rare diseases quicker. Video games are becoming increasingly more exciting and designed for user preference and experience. Although, innovations create moral and ethical challenges within society, such as privacy concerns, technological reliance, and the health implications of bioengineering food. It’s a double edged sword that is carefully teetering on the contrast between cost and benefit for society.
Competitive Impact
Entrepreneurship advances a functioning capitalistic society forward, it is also a key aspect in generating a great level of output and efficiency. Young, innovative businesses usually have limited capital, human, and technological assets, which means that the startups need to wisely allocate resources to most productively suit the growth of the company. Big organizations that are fundamentally safe, calculated, and bureaucratic take longer to make decisions, but have the assets to make major strategic plays. If the larger organizations don’t make sound and swift decisions, entrepreneurial-type companies can start to eat away market share. Indeed, the continual erosion of market share can lead to a company that loses its grapple and becomes an obsolete company. Eventually, the entrepreneurial company becomes the big organization and will run into the same process of birth, growth, decay, death.
In Closing
Entrepreneurship creates a competitive and cyclical process of out with the old and in with the new. It keeps markets lively, fresh, replenished, and full of new ideas. It’s particularly crucial in economic, societal, and competitive progression and is one of the nuanced methods of thriving in today’s economy.