Joseph Schumpeter described entrepreneurship as creative destruction. People have argued about what this means. Some people think it means that the entrepreneurial process is dangerous. What do you think Schumpeter actually meant by this?
Entrepreneur refers to the person who start a business with the goal to make profit by taking financial risk. Entrepreneurial thinking is nothing but the way by which opportunities are recognized in the marketplace and make planning to act upon those opportunities which can be beneficial for business.
Entrepreneurial thinking plays important role in strategic planning because
- entrepreneurial thinking requires actions that is very much essential for strategic planning.
- entrepreneurial think different possibilities and how to deal in different situations. Strategic planning is a dynamic process and entrepreneurial thinking is essential for making effective plans.
- entrepreneurial think in an ambiguous way and cope up with conflicting views of different people. They also focus on innovation.
- entrepreneurial thinking focus on adding value thus they make the strategic planning process more effective by providing innovative ideas and knowledge.
- entrepreneurial thinking gives more importance to internal factors that is very much essential for long term planning.
Owning a business can be good and a new entrepreneur can make his or her business successful by his or commitment to perform the task, planning and executing appropriately and making strategies in order to be successful in the long run.
Entrepreneurship is considered as creative destruction by Joseph Schumpeter because it has the following characteristics: –
- Need for achievement – This is an important psychological characteristic that is very important for entrepreneur. This include taking personal responsibility at work, focus on performance as well as take risk, creating high performance work teams, etc. High need for achievement will make the individual to manage their business effectively in order to meet their business goals.
- Internal locus of control – An entrepreneur has the ability to control its work environment through his or her actions or behavior. A person can manage his or her business effectively if he or she manages the business environment appropriately.
- Coping up with uncertainties – An entrepreneur has the ability to deal with challenging situation, adapt to change and make strategies to deal with uncertainties. They can handle multiple assignments irrespective of their difficulty level.
- Risk-taking ability – Entrepreneur has the ability to take risk and are more aggressive in terms of making business decisions.
- Work-style – An entrepreneur’s orientation towards work depends on his or her abilities, interest, values, talents and knowledge. So a person will want to accomplish the goals based on these factors by creative thinking, overcoming obstacles and take risks.
- Demographic and background factors – Parent’s occupation, parent’s socio-economic status and birth order of entrepreneur are important demographic and background factors that makes the entrepreneur different from others.
The greatest risk in starting a business is financial risk. It would be risky for the new entrepreneur to be financially stable at the initial stage. The greatest reward’s include you being the boss, setting up things as per your convenience and having control on your earnings. Thus, entrepreneurship is a creative destruction.