Monday, 29 July 2013

The Importance of Entrepreneurship

Entrepreneurship has a tremendously positive impact on the economy and on society. They describe the importance of entrepreneurship in terms of its impact on the economy on society and on larger firms. With regard to economic impact three reasons have been identified with entrepreneurial behaviour has a strong impact on an economy’s strength and stability. The reasons include innovation,
job creation and globalization. Innovation is the process of creating something new, which will either solve a problem or satisfy a need in a new cost-effective way. Many innovations help individuals and businesses work more smoothly and efficiently and this enhances performance and business returns. Enhanced performance and returns will in turn positively impact on Gross Domestic Product (GDP) and economic growth.
        The growth in smaller entrepreneurial firms enhances job creation as young people generally obtain their first job with a small firm. Furthermore, the development of small and medium sized businesses that create products that can be exported enhances globalization. In addition increased exports will affect the balance of payment of countries favourably. The innovations of entrepreneurial firms also have a dramatic impact on society as a whole. New products and services enhance the standard of living as well as the productivity in workplaces. In addition to the impact that entrepreneurial firms have on the economy and society they also have a positive impact on the effectiveness of larger firms. This is because many entrepreneurial firms have built their entire business around producing products and services that help larger firms be more efficient and effective.
        Mare (1996) summarized the importance of entrepreneurship in the following four advantages:
1.  Advancement of economic prosperity;
2.  Combating unemployment;
3.  Improved future perspectives; and
4.  The advancement of own initiatives.
The establishment of new ventures through entrepreneurship fuels economic prosperity and leads to job creation that will combat unemployment. In addition the prospect of establishing a new venture provides alternatives to job seeking individuals and could enhance creativity and innovations through the advancement of their own initiatives

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