Why Is Entrepreneurship Important?

Entrepreneurship is, and continues to be, important to every industry sector in most advances countries. Its importance can be shown in three areas; innovation, number of new start ups, and job creation.

Innovation: Innovating is a process of changing, experimenting, transforming, revolutionizing, and a key aspect of entrepreneurial activity. The “creative destruction” process that characterizes innovation leads to technological changes and employment growth. Entrepreneurial firms act as “agent of change” by providing an essential source of new and unique ideas that may otherwise go untapped. Statistics back this up.

Number of new Start Ups: Because all businesses whether they fit the definition of entrepreneurial ventures or not were new start ups at one point in time, the most suitable measure we have of the important role of entrepreneurship is to look at the number of new firms over a period of time. Data collected by the U.S. small business administration shows that the number of new start ups has increased every year since 2002.

Job Creation: We know that job creation is important to the overall long term economic health of communities, regions, and nations. The latest figures show that small businesses accounted for most of the net new jobs. In fact, over the last 15 years, small businesses have created some 65 percent of the new jobs. Small organizations have been creating jobs at a fast pace even as many of the worlds largest and well known global corporations continued to downsize. These numbers reflect the importance of entrepreneurial firms as job creators.

Global Entrepreneurship: What about entrepreneurial activity outside the United States? What kind of impact has it had? An annual assessment of global entrepreneurship called the Global Entrepreneurship Monitor (GEM) studies the impact of entrepreneurial activity on economic growth in various countries. The GEM 2009 report covered 54 countries that were divided into three clusters indentified by phase of economic development; Factor Driven economies, Efficiency Driven economies, and Innovation Driven economies. What did the research find? One of the principal aspects that GEM examines is “total early stage entrepreneurial activity (TEA)”, or the proportion of people who are involved in setting up a business. Generally, as economic development increases, the overall levels of TEA declines. The GEM report concludes, “There is wide agreement on the importance of entrepreneurship for economic development.”

The Entrepreneurial Process:

       Entrepreneurs must address four key steps as they start and manage their entrepreneurial ventures.

       The first is exploring the entrepreneurial context. The context includes the realities of today’s economic, political/legal, social, and work environment. It’s important to look at each of these aspects of the entrepreneurial context because they determine the rules of the game and which decisions and actions are likely to meet with success.

       Next important step in the entrepreneurial process is identifying opportunities and possible competitive advantages. We know from our definition of entrepreneurship that the pursuit of opportunities is an important aspect.

       Therefore, the next step in the entrepreneurial process is starting the venture. Included in this phase are researching the feasibility of the venture, planning the venture, organizing the venture, and lunching the venture.

       Finally, once the entrepreneurial venture is up and running, the last step in the entrepreneurial process is managing the venture, which an entrepreneur does by managing processes, managing people, and managing growth.

Importance of Entrepreneurship in Industrialization:

  1. To Establish New Industries
  2. To Innovate New Technology and Apply thus
  3. To Gather Natural Resources
  4. Utilization of Resources
  5. Change in Attitude
  6. Creation of New Market
  7. Financing
  8.  Develop Skilled Worker