Entrepreneurship and Innovation

Problem Set 4
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Problem Set 4
Answer 1
Entrepreneurship is a crucial driver of economic growth. Policymakers should encourage it at all levels. They should develop and implement policies that motivate individuals to start and operating small, medium, and large organizations. Many of the largest corporations in the world were started by entrepreneurs who risked their resources to get where they are today. Some of the renowned entrepreneurs, such as Elon Musk and Jeff Bezos, would not have begun businesses if there were no policies to support their firms’ growth and expansion. Consequently, encouraging entrepreneurship is one of the best ways to foster economic growth and expansion and reduce the unemployment rate.
Answer 2
Entrepreneurship and innovation are different but interdependent. In particular, innovation entails applying a person’s creativity to develop an effective solution to an existing problem, which can be commercialized to make profits. The commercialization of innovation is called invention. On the contrary, entrepreneurship involves using innovation to start an enterprise. For example, Musk identified the need to replace conventional vehicles with electric cars to address global warming. His entrepreneurship skills made him start Tesla to commercialize the production and sale of electric cars.
Answer 3
Firms innovate for various reasons. First, they do it to gain and sustain a competitive advantage. When a company innovates, it modifies its existing products and services. Second, a firm might innovate to improve its core competencies, which include tangible and intangible resources. Core competencies enable a company to differentiate itself from its competitors. Third, an enterprise innovates to reduce competition so that it can gain a significant market share. A company like Apple Inc. has remained relevant for a long period due to its ability to innovate and improve its produc...