The Relationship between Entrepreneurship, Innovation and Economic Essay

The Relationship between Entrepreneurship, Innovation and Economic Development - Essay Example Economic theory provides a set of thoughts and methods for examining the distribution of limited resources. Unless entrepreneurship ultimately develops products from limited resources, it can be of minimum economic interest, even though it may possess greater social significance. The idea of selection and therefore decision making is essential to economic theory. Entrepreneurship acts as an individual quality which allows certain persons to make decisions with long run outcomes. When economic development is viewed from historical viewpoint, the role of an entrepreneur arrives into central focus. By acting in different ways, entrepreneurs can achieve success which causes other people to change their thoughts and therefore help to alter the historical economic progression. Entrepreneurial efforts are needed for developing an enhanced distribution of resources and transmitting their significant experience to other nations. If two nations differ in their talents of entrepreneurship, then there will be a propensity for developments to invent new things with the copious ability of entrepreneurs. If there is lack of native entrepreneurs in any nation, then foreign entrepreneurs from economically prosperous nations enter the backward country and develop new innovation through proper distribution of resources. At a macroeconomic level, an entrepreneur plays a vital role in the establishment of organizations. Economic theory suggests that there is close relation between personal qualities of entrepreneur and economic success of organization. One of the most exciting aspects of successful entrepreneurs is that they are often drawn from marginal groups in society which try to find alternative possibilities of social progression near them. Thus, it is evident that society and its traditions have a significant impact on the development of entrepreneurs (Casson, 2003). Schumpeter had defined the â€Å"entrepreneur as innovator† as one who drives economic development. A ccording to Peter F. Drucker, â€Å"Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service.† The innovative activity of entrepreneur nourishes the pioneering procedure of creative destruction by initiating continuous instabilities to the economic system and by generating prospects for economic growth. Schumpeter’s theory expects that an entrepreneur can contribute in economic development (Wong & Et. Al., 2005). He was of the view that an entrepreneur can innovate, motivated by competition to develop technology, business and organizational structure. He characterized innovation as an â€Å"industrial mutation† which continuously transforms the financial structure and destroys the existing ones. The procedure of creative destruction is a vital element of entrepreneurship (McCraw, n.d.). Creative destruction is made on dynamic, cautious and commercial efforts to modi fy market arrangements and can be favourable for further innovations and revenue opportunities. Schumpeter’s business cycle is viewed as the outcome of innovation which involves the development of new thoughts and its application in a new product, procedure or service. It can result in the dynamic development of a national economy,

Corporate Governance and Revised Combined Code Essay

Corporate Governance and Revised Combined Code - Essay Example This was damaging both to the British economy and to the City of London as a market for investors. This series of situations prompted the Stock Exchange to launch the Cadbury Inquiry into the financial aspects of corporate governance in 1990. Corporate governance had become important. The Cadbury Committee Report of December 1992 defines corporate governance (CG) as 'a system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders' role in governance is to appoint the directors and the auditors and to satisfy themselves that the appropriate governance structure is in place.' The Higgs Report, 10 years later, however, defined CG as, 'a system that provides an architecture of accountability - the structures and processes to ensure companies are managed in the interests of their owners.' The OECD Report of April 1998 provides an international view of corporate governance. It says that 'Corporate governance comprehends that structure of relationships and corresponding responsibilities among a core group consisting of shareholders, board members and managers are best designed to foster the competitive performance required to achieve the corporation's primary objective.' A number of best practices code in CG has emerged as a result ... andard good practices for all company related matters such as board composition and development, remuneration, accountability and audit and relations with shareholders. The Cadbury Committee (1992) recognised that the board of directors in a company should be free to drive their companies ahead but at the same time function within a framework of accountability. The Code was updated by the Hampel Committee in 1998, embracing the recommendations of the Cadbury and Greenbury committee, as well as the Hampel committee. The Combined Code was updated in 2003 with the recommendations of the Higgs Report about the role of non-executive directors and the role of the audit committee (the Smith Report). During this time the UK Government also confirmed that the Financial Reporting Council (FRC) was to have the responsibility for publishing and maintaining the Code. In 2006, further changes were made by the FRC to the code. The latest consultations on a proposal to revise the Combined Code will end in March 2010, after which the UK Corporate Governance Code, as it will be known, will apply to financial years beginning on or after 29 June 2010. First introduced in 1998, The Combined Code has been updated at intervals. The current version of the Code isthe June 2008 edition, which applies to accounting periods beginning on or after 29 June 2008. CG is important as it contributes both to business prosperity and to accountability. A Few Best Practices of CG in the UK United Utilities - Company of the Year 2009 The largest listed water company in the UK, United Utilities, owns, operates and maintains utility assets such as water, wastewater, electricity and gas. The company's commitment towards corporate social and environmental responsibilities has been demonstrated through its