1. The Impact of Entrepreneurship as Linkage
to Economic Growth
Shaikh T. Alamin-Khashoggi
Charles G. Adams
Shaquon Bell
Takiya D. Bennett
Ishmael U. Blount
BUS-260-01
April 24, 2014

2. Economic growth refers to an increase in income and productivity. The impact of
entrepreneurship as linkage to economic growth is premised upon knowledge of entrepreneurial
opportunities that are recognized as an important ingredient for growth, in addition to physical
capital and labor. While transforming knowledge into products and processes it is exploited
commercially. Nevertheless, the existing knowledge stock and the absorptive capacity of actors
like employees at firms are conditional for the ability to produce, identify, and exploit
knowledge. Since incumbent firms do not exploit new knowledge to the full extent, realized
entrepreneurial opportunities may arise. This research paper conveys whether or not there is an
impact of entrepreneurship as a linkage to economic growth.
As contended by Paul A. Romer in his article, “Increasing Returns and Long-Run
Growth” and Robert E. Lucas in his lecture, “On the Mechanics of Economic Development”
under the new growth theory, knowledge is recognized as an essential driver of economic growth
stating that “this focus on knowledge as the basic form of capital suggests natural changes in the
formulation of the standard aggregate growth model (Romer 1003).” Moreover, that knowledge
may increase productivity by stimulating progress through the accumulation and spillover of
knowledge. The spillover creates the vital linkage on the impact of entrepreneurship to economic
growth.
In discoursing the impact of entrepreneurship on economic growth, we contend that the
ideas and concepts that emerge from entrepreneurs increase our knowledge and what consumers
may prefer through introducing variations of existing products and services in the market. This
speeds up innovation of new products in the market as a result of the longer working hours and
more efficient nature of entrepreneurs as their income is directly linked with their working input.

3. An entrepreneur is someone who is willing to bear the risk of a business venture where
there is a significant chance for making profit. Entrepreneurship is basically the practice of
starting a business in order to earn profit on new found opportunities. Entrepreneurship is a
challenging task as many businesses which start, fail to take off. Entrepreneurship has many
uncertainties especially when new products are created for which there is no existing market.
Entrepreneurship affects economic growth in various ways.
Entrepreneurship has been an essential part of economic growth since the beginning of
time. The King James Version of the Holy Bible states that “the things that have been, it is that
which shall be; and that which is done is that which shall be done: and there is no new thing
under the sun (Ecclesiastes 1:9).”
In the Holy Bible we are shown how Adam was in charge of tilling the land, working in
the Garden and even giving names to each animal in the world. His innovational way to doing
his job brought us (The World) to where we are today.
God gave us Adam who had work to do. Adam thought of ways to get the job done. He
started our work ethics and our way to economic growth. Adam was considered an entrepreneur
because in the Garden of Eden, as an example, he was a farmer. The way he turned over the soil
and planted the seeds gave the farmers their growth. In today’s society, farmers are more
innovational in turning over the soil and planting seeds than Adam was by using modern day
technology, which can be considered a linkage to economic growth.
Through the entrepreneurship of Adam, new sources of supply were discovered and other
men followed his example. In doing so, they created new organizational skills that directly
affects the economy. For example, John Deere tractors, and the Tillman tractors, just to name a

4. couple, all started from the knowledge of Adam working in a job that was ineffective. Being
ineffective, man invented new ways to do an old job and made it simpler, more effective, and
easier to sell causing not only one man’s growth, but the growth of the whole world. This
thereby shows a linkage to economic growth and can be reiterated through lifetime stories (e.g.,
Holy Bible) that we have been told and taught our whole lives.
It is through entrepreneurship that important innovations enter the market leading to new
products or production process which eventually increases efficiency through bringing
competition in the market. Entrepreneurship additionally leads to the introduction of new goods
with new quality and value. Their innovativeness introduces new ways of production and new
markets that have not been exploited. It is through entrepreneurship that new sources of supply
are discovered and there is the creation of new business organizations that directly affect the
economy. The creation of new business opportunities through entrepreneurship, productivity and
innovation leads to economic growth. This therefore means that when there is more
entrepreneurship in an economy, more growth is expected.
Starting an entrepreneurial venture is the realization of the opportunity that the
knowledge has been diffused and that such knowledge needs to be exploited. Due to many
entrepreneurs having previously worked for other businesses before commercializing their new
knowledge and/or ideas; ideas which they have inherited from their previous employers (i.e., a
knowledge spillover).
As a linkage to economic growth, Romer contended that “the creation of new knowledge
by one firm is assumed to have a positive external effect on the production possibilities of other
firms because knowledge cannot be perfectly patented or kept secret. Most important, production

5. of consumption of goods as a function of the stock of knowledge and other inputs exhibits
increasing returns; more precisely, knowledge may have an increasing marginal product (Romer
1003).” This has been proposed by Franco and Filson (2000) that such spillover “characterized
by know-how and continuous innovation provide a training ground for future entrepreneurs ( ).”
This is because the entrepreneurs recognize opportunities from the underexploited knowledge
that exists, which may spur economic growth if it is commercialized.
Our aim at the beginning of this paper was to convey whether or not there is an impact of
entrepreneurship as a linkage to economic growth. In the first link we recognized knowledge to
be the essential driver of economic growth. In the second link, the starting of an entrepreneurial
venture is the realization of the opportunity that the knowledge has to be diffused and exploited.
In the third link, the innovativeness of entrepreneurs brings competition into the market leading
to new goods with quality and value that directly affects the economic growth in various ways.
We have shown through these connective links that the features of economic growth are central
to the internal as well as external human capital. Premised thereupon, we have found that
according to Lucas, “economics that are initially poor will remain poor, relatively through their
long-run rate of income growth will be the same as that of initially (and permanently) wealthier
economies. A world consisting of such economies, then, each operating autarchically, would
exhibit uniform rates of growth across countries and would maintain a perfectly stable
distribution of income and wealth over time (39).” As such, since economic growth is an
increase to income and productivity, allowing a country to enjoy high standards of living as the
GDP (e.g., Gross Domestic Product) increases, there is an impact of entrepreneurship as a
linkage to economic growth since the days of Adam to that of the current day.

6. References
Franco, A.M. and D. Filson, “Knowledge Diffusion Through Employee Mobility,” Iowa City:
Working Paper, University of Iowa (2000), pp.
Lucas, R.E., “On the Mechanism of Economic Development,” Journal of Monetary Economics
22(1), (1988), pp. 3, 42.
Romer, P.M., “Increasing Returns and Long-Run Growth,” Journal of Political Economy
94(5), (1986), pp. 1002, 1037.
www.diva-portal.org/smash/get/diva2
www.entrepreneur.com/magazine/index.html
KJV Bible, Ecclesiastes 1:9