Docent Kobina L.A.,
Candidate for a Master's Degree Churikova K.S.
South Federal University, Russia
Innovation activity as an entrepreneurial function.
Innovativeness is one of the entrepreneurial business’ basic characteristics, which requires development and introduction of various innovations. Those innovations in their turn cause significant changes in social practice.
Innovative way of thinking is very characteristic of businessman’s cognitive style. Cognitive and motivational approaches consider entrepreneurial business a complex process; businessman is described as an intelligent person with analytical thinking and unique cognitive abilities.
Nowadays, there is no such thing as a commonly-accepted definition of business and businessman (see in works written by R. Cantillon, J. B. Say, F. Walker, J. Schumpeter, F. Hayek, R. Hisrich, etc.). However, we can certainly say that entrepreneurship is always associated with innovations. A number of ranking economists, such as J. Schumpeter and A. Marshall, paid great attention to that aspect of economic activity. The way, in which A. Marshall defined businessmen’ social function, is the following: it is not only about them creating a new way of things, but also acceleration of certain processes, which have been maturing in the society . Schumpeter pointed out that business and innovation are actually the selfsame concepts. Businessman is destined to break down former production practice and forms of social organization, for he or she is revolutionary energy in economy; businessman is permanently carrying out “constructive destruction” into practice; it would not be exaggeration at all to say that entrepreneur is a leading figure having an impact on economic progress.
All of this leads to an idea that in the modern society business and innovations are concepts strongly interconnected to each other. Business is a specific form of economic activity (which in its turn is an activity carried out in order to absorb interests), based on independent initiative, responsibility and innovative business idea. So-called “innovation moment”, such as production of new goods, changing activity profiles or setting up new companies, is one of the main characteristics of business; new ways of managing business, quality control and also development of industrial engineering techniques or novel technologies are innovation moments as well.
Innovative function of entrepreneurship is dictated by business nature itself: by the aspiration to score a success in the competitive struggle and expand its own market segment. In the environment of tough competitive business, putting into practice various achievements of scientific and technological progress is almost the only way to reach that goal.
Innovative function of entrepreneurship and pioneer work are strongly connected. Businessman creates new goods by previously unknown means of combining and using traditional economic forces – land, labour and capital. This forward-looking function is gradually becoming the leading one, for businessman tries to foresee future requests. Rates of scientific and technological progress are constantly accelerating, assortment of producing goods is permanently expanding; those who produce goods try to stay in touch with their consumers in order to be aware of their needs and be able to fill them, (and, consequently, introduce and spread various innovations).
Consequently, «one of the main aims of every businessman is to reform and revolutionize production method by introducing inventions; in more general sense, such kind of restructuring is carried out by using new technologies in order to produce goods (both new and previous ones) with the help of new methods, which are the following: discovering a new source of raw materials or new market of output production; as a result, current industrial sector can be reorganized, or the brand new sector can take place in economy» .
Innovative business function is all about constant search of new approaches: challenging ideas, products, services, as well as the ways of developing and introducing innovations. Therefore, the role of business in society becomes dominating since innovations become the drive for growth and progress. Thus, it is relevant to evaluate economy in terms of spreading innovations in all its sectors.
Both trends, which are growth of technology and scientific and technological revolution with its personal use machines, provide business with an opportunity to spread innovations. Informatization of society as well as the role of information services has been enhanced.
Individual and social needs are constantly becoming more complicated, which helps business remain one of the main providers of innovations in the whole society. This process is based on technological progress: these times not only tools of trade differ from the previous ones, but also produced goods. Needs of modern society are so many-sided, that only business with its flexibility and responsiveness is capable of satisfying them properly. Field of business activity expands due to the requests of society that have to be satisfied.
Serving consumers is one of the most important business characteristics. P. Drucker, qualified specialist in business, pointed out the following: «There is the only one reliable definition of business goal – “creating” of the consumer. Thoughts concerning your own production are not “alpha and omega” for the future business and its success. What your consumer thinks about goods you produce, why he or she considers it valuable – this is what is actually critical for its chances of success and what determinates its nature» .
Commitment to the consumer makes the manufacturers pay more attention to innovations. If consumer is not content with the product or service, businessman changes all his strategies, behavior on market and conception of product or service, but not only selling process.
Consequently, entrepreneurship is not routine, but creative activity for those, who make business; in such a manner, businessman is a person having a special view on the world and philosophy.
1. Marshall A. Principles of Economics. M., Progress. 1983.
2. J. Schumpeter. Theory of Economic Development. Capitalism, Socialism and Democracy. EKSMO. 2007.
3. J. Pidlitch. Consumer Behavior and Marketing Action. M., Progress. 1991.