What Is the Importance of Entrepreneurship?
Entrepreneurship is important because it results in the creation of employment, improved national income, community development while facilitating research and development. Moreover, entrepreneurship promotes innovation, which may lead to social change and better living standards.
Creation of Employment Entrepreneurship firms are one of the largest employers in the world. Small business ventures often provide entry-level jobs and experience for young talents. In addition, the availability of job opportunities increases consumer spending and hence improves the standards of living.
Moreover, the introduction of new goods and services can have a ripple effect on the economy by stimulating the growth of related industries. This in effect results in economic development and creation of employment. For example, the invention of smartphones resulted in job creation in various industries such as retail outlets, phone repair, Internet service provision, software development and manufacturing.
Improved National Income New and improved products, services and technology facilitate the development of new markets in the economy. This translates to more employment opportunities and higher income thus resulting in the collection of more taxes. Increased revenue collection by the government may lead to better service delivery, improved security, and infrastructural development.
Innovation and Social Change Entrepreneurship goes beyond research and discovery by commercializing innovation for the greater benefit of the society. Through the provision of unique solutions, entrepreneurs break away from tradition and hence reduce dependence on obsolete systems and technologies. This results in improved quality of life, economic freedom and greater morale for further innovations. For example, the development and commercialization of electric cars may help to reduce carbon emissions and, in essence, manage climate change.
Improved Productivity Entrepreneurship may lead to the development of better methods of production. It enables maximum use of resources, reduces wastage and enables the free flow of labor and raw materials. In this regard, entrepreneurship promotes production efficiency thus resulting in improved productivity. For example, through entrepreneurship, the assembly line was conceptualized and developed. This enabled division of labor and specialization and led to improved industrial productivity.
Community Development Entrepreneurs often nurture entrepreneurial ventures by other like-minded individuals. In addition, they invest in community development projects and local charities in a bid to promote economic development. For example, famous entrepreneurs like Mark Zuckerberg and Bill Gates invest heavily in education, public health and several charities. This sets an example for other upcoming entrepreneurs who would follow suit when they become successful people in the society.
Promotes Research and Development Since entrepreneurship may need innovation, innovative ideas of goods and services have to be tested by experimentation. In this regard, businesses and entrepreneurship firms provide universities and research institutions funds for research and development. Funding of such institutions is important for comprehensive research and nurturing of ideas.
Political and Economic Integration The idea of a plural society can only be achieved if all stakeholders are involved in nation-building. In this regard, entrepreneurship is an avenue for minorities and migrants to be included in the economy. Such integration of different groups in the society is essential for economic development, political stability and social harmony.