shumpeters innovation theory

1. Entrepreneurship Innovation Theory
Presented By
Ambulgekar Ketan Pandurang

2. Entrepreneurship Innovation Theory
In 1934 he assigned the
role of Innovation to the
Entrepreneur in his book Theory of Economic
Development.
According to him Innovation a discrete dynamic
change brought by entrepreneur by starting new
combinations of factors of production.

3. Entrepreneur
Entrepreneur is an innovator & develops untried
technology.
According to him Entrepreneur is a creative
destructor.
An entrepreneur is a person who is willing & able
to convert a new idea or invention into a
successful innovation
Entrepreneurs are innovators who use the process
of entrepreneurship to shatter the status quo of the
existing products & services to set new products
new services.

4. Innovation
1.Introduction of a new product.
E.g. Virgin Galactic
2.Introduction of a new method of production
E.g. line production system in food
3.Opening of a new market.
E.g.Travelkhana.com
4.Discovery of new source of supply of raw
materials
E.g. moving from coal to petroleum to nuclear
energy sources.
5.Carrying out of the new form of organization of
any industry.

5. Inventor
Vs
Innovator

6. Assumptions
Existence of sufficient availability of capital.
Existence of developed banking system to
avoid scarcity of capital.
Existence of a high level development of
technology.
Existence of private Initiative and broad based
entrepreneurial process.

7. Criticisms
A person is an a entrepreneur when he
innovates but he ceases to be so when he
settles down and runs the establishment.
Schumpeter’s theory ignores risk taking and
organizing aspects of entrepreneurship.
Schumpeter’s entrepreneurship is large scale
businessman who creates something new . An
entrepreneur can’t have large scale operation
from very beginning.
Business cycle

8. Thank you