1/ Why is it critical that entrepreneurs and all businesses innovate? What are t

Question

1/ Why is it critical that entrepreneurs and all businesses innovate? What are the reasons that make it difficult for enterprises to simply stand still and accept the status quo? Note that these are not puny little notions. The reasons are based on large-scale changes in the economy and “macro” changes in the business environment.

2/ Why does your author stress “Successful innovation” and not just innovation for the sake of “newness”?

3/ There are two major types of innovation discussed in your text. Name them accurately and be able to identify their key differences

Explanation / Answer

Solution :

1) Innovation and Entreprenuership are intimately related concepts of economic dynamcis . Innovation refers to the new products , processes and business models representing new sources of economic value and Entreprenuership refers to the activities of agents generating creative new combinations of value. Hence Entreprenuership is about business formation ; it is the critical link between investments in new knowledge and economic growth .

Entrepreneurs and all businesses should innovate because it is of particular importance for economic and long term business competitiveness and wealth creation . In the absence of vibrant entreprenuership the flow and quality of innovation would be hampered

Innovations are important sources of productivity growth . They are considered as major means through which not only organizations, but also countries can sustain competitive advantage in globally competitive marketplaces . First they represent a critical dynamic force in economic systems as they continously bring flows of innovative ideas into the experimental economy . Hence these reasons make it difficult for enterprises to simply stand still and accept the status quo .

2) Successful Innovation refers to the ability of the organizations to turn ideas into products that can ultimatley sold to its consumers . For organizations to sustain competitive advantage they must have the ability to continously innovate by turning their ideas into successful products that can be embraced by the consumers of such products . The products should reflect a radical shift in their final utility to consumers and not just make superficial changes for the sake of newness .

3) The 2 types of innovations are Incremental innovation and Radical Innovation .

Incremental Innovation : The feature of this type of innovation is making small improvements in product development and these improvements take incremental form . The products get better with each innovative improvement added to them and this type of innovation is slow and gradually increasing towards making better products .

Radical Innovation : This type of innovation incorporates radical changes in the products and a fundamental shift in how the products are developed and used. This kind of innovation is sudden and not well planned and leads to new areas of Research and development that can stimulate a major economic development .

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