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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