Is there really any difference between entrepreneurship and innovation? In a book that attempts to link two research traditions on respectively entrepreneurship and innovation, we need to clarify the relationships between these concepts. In the Schumpeterian tradition, the entrepreneur is the hero of dynamic capitalism. The entrepreneur typically creates new combinations: new products, new markets, new materials, and new forms of organization (Schumpeter 1934). Entrepreneurship and innovation are almost synonymous. However, on the basis of Schumpeter’s later work (Schumpeter 1943), one needs to distinguish between two types of competition, often referred to as Schumpeter Mark I and Schumpeter Mark II. In Mark I, it is the entrepreneurs and the smaller enterprises that are responsible for innovation. In Schumpeterian competition Mark II large oligopolistic firms predominate. Innovation takes place in R&D laboratories and the entrepreneurial function has become routinized in a managerial bureaucracy. Innovation has become divorced from entrepreneurship. Innovation is central to modern theories of growth and development (Verspagen 2005). Along with the traditional factors such as costs, technological product, and process, innovations have become the key to competitiveness and business success. Competition in the global economy has increasingly become knowledge-based. Even in supposedly traditional economic sectors such as textiles, leather, or food processing innovation and technological advance has become the key to growth (c.f. Mytelka 1999). The same holds for service sectors such as distribution and retailing, financial services, and ICT services. Innovation is also intimately tied up with changes in the structure of the economy, technological upgrading in
Is there really any difference between entrepreneurship and innovation? In a book that attempts to link two research traditions on respectively entrepreneurship and innovation, we need to clarify the relationships between these concepts. In the Schumpeterian tradition, the entrepreneur is the hero of dynamic capitalism. The entrepreneur typically creates new combinations: new products, new markets, new materials, and new forms of organization (Schumpeter 1934). Entrepreneurship and innovation are almost synonymous. However, on the basis of Schumpeter’s later work (Schumpeter 1943), one needs to distinguish between two types of competition, often referred to as Schumpeter Mark I and Schumpeter Mark II. In Mark I, it is the entrepreneurs and the smaller enterprises that are responsible for innovation. In Schumpeterian competition Mark II large oligopolistic firms predominate. Innovation takes place in R&D laboratories and the entrepreneurial function has become routinized in a managerial bureaucracy. Innovation has become divorced from entrepreneurship. Innovation is central to modern theories of growth and development (Verspagen 2005). Along with the traditional factors such as costs, technological product, and process, innovations have become the key to competitiveness and business success. Competition in the global economy has increasingly become knowledge-based. Even in supposedly traditional economic sectors such as textiles, leather, or food processing innovation and technological advance has become the key to growth (c.f. Mytelka 1999). The same holds for service sectors such as distribution and retailing, financial services, and ICT services. Innovation is also intimately tied up with changes in the structure of the economy, technological upgrading in