Entrepreneurship and Innovation

These flashcards cover key concepts, definitions, and influential theorists from the lecture on entrepreneurship and innovation.

Entrepreneurship

The process of starting and managing a new business in order to seek profit. Joseph Schumpeter highlighted the entrepreneur's role as an innovator and disruptor, while Israel Kirzner emphasized their alertness to opportunities found in disequilibrium.

Innovation

The introduction of something new, such as a new idea, method, or product. For Joseph Schumpeter, innovation is the driving force of economic development and creative destruction.

Risk and Reward

The potential for financial loss or gain associated with entrepreneurial ventures; a fundamental aspect of entrepreneurship.

Factors of Production

Resources used in the creation of goods and services, including land, labor, capital, and entrepreneurship as a key driver.

Joseph Schumpeter

An economist known for his theories on economic development and entrepreneurship, particularly introducing the concept of creative destruction. His ideas are important because they highlight how Radical Innovation by entrepreneurs drives economic evolution, constantly disrupting established markets through 'Creative Destruction' and the 'Gales of Creative Destruction', thereby fostering economic growth and progress by replacing old industries with new ones.

Creative Destruction

An economic process described by Joseph Schumpeter where old ways are destroyed to make way for new innovations, leading to economic evolution.

Gales of Creative Destruction

Schumpeter's concept describing the intense and transformative process through which radical innovation causes the demise of old industries and the birth of new ones.

Radical Innovation

A significant change that represents a breakthrough or major shift in the marketplace, fundamentally altering industries, a concept often central to Joseph Schumpeter's work on entrepreneurs.

Entrepreneurial Vision

The ability, as described by Joseph Schumpeter, to see potential in new combinations of resources to create value and drive innovative change in the market.

Incremental Innovation

A continuous, iterative process of improving existing products, services, and processes, leading to industry standardization over time. These iterative changes differentiate or revive a product, typically occurring over a short to medium-term period. While often contrasted with Joseph Schumpeter's radical innovation, an entrepreneur, through Israel Kirzner's concept of alertness, identifies and exploits opportunities for such continuous improvements.

Economic Equilibrium

A state where economic forces are balanced. Joseph Schumpeter's theories focus on how entrepreneurial innovation disrupts this state, while Israel Kirzner's work addresses how entrepreneurs act by discovering opportunities that emerge in disequilibrium.

Disequilibrium

A state where economic forces are out of balance, leading to market inefficiencies. Israel Kirzner's theory of alertness highlights the entrepreneur's role in discovering and exploiting opportunities created within such states.

Israel Kirzner

An economist who introduced the idea of alertness in entrepreneurship, emphasizing the ability to identify unexploited opportunities within market disequilibrium.

Alertness

According to Israel Kirzner, the entrepreneur's capability to recognize opportunities that others overlook, particularly in states of market disequilibrium.

Social Entrepreneurs as Innovators

Individuals who apply innovative, entrepreneurial approaches to address societal issues.