Question

How have the ideas & beliefs of Joseph Schumpeter influence entrepeneurship & economic thought? in depth explaination

Answer 1

Without the contributions of Schumpeter, the concept of entrepreneurship can not be fully understood, being probably the first scholar to develop his theories. Schumpeter argued that a nation's innovation and technological change comes from businessmen, or wild spirits. He came up with the German word Unternehmergeist, meaning "entrepreneur-spirit." He believed these people were the ones who made things work in the country's economy. Later, in the United States, he pointed out that the big companies that have the resources and capital to invest in research and development are the ones that really move innovation and economy. Nonetheless, one can see both points as complementary. Walrasian equilibrium in Schumpeter's theory is not adequate to understand the main mechanisms of economic development. Schumpeter also believed that the institution enabling the entrepreneur to buy the resources needed to realize his vision was a well-developed capitalist financial system, including a whole range of credit-granting institutions.

The arguments of Schumpeter deviated sharply from the dominant tradition. He highlighted the fact that, until profit margins are wiped out, markets do not passively tend towards equilibrium. Alternatively, technological creativity and development is continually replacing the old and creating new equilibrium, making higher living standards possible. In many cases, within the social and economic system, Schumpeter saw capitalism as a form of evolution. To create dynamic change, the entrepreneur becomes the revolutionary, upsetting the established order.