RELEVANCE AND CONTRIBUTION

OF ENTREPRENEURSHIP AND
ENTREPRENEURS TO THE
ECONOMY & SOCIETY
LESSON 3
 RELEVANCE AND CONTRIBUTION TO THE
ECONOMY & SOCIETY

Entrepreneurship is important to economic development.

The benefits to society will be greater in economies where
entrepreneurs can operate flexibly, develop their ideas, and reap the
rewards.
To attract productive entrepreneurs, governments need to cut red tape,
streamline regulations, and prepare for the negative effects of layoffs in
incumbent firms that fail because of the new competition.
 RELEVANCE AND CONTRIBUTION TO THE
ECONOMY & SOCIETY

Entrepreneurs often challenge incumbent firms.

Unchallenged, established firms tend to become complacent, content to take
their profits without investing in research and development to improve their
business.
These stagnating firms are the first to suffer when imports arrive—withering
rapidly, unable to respond to the competition.
Challenging incumbents to do better during good economic times is a
benefit of entrepreneurship.
 RELEVANCE AND CONTRIBUTION TO THE
ECONOMY & SOCIETY
When unemployment is high and the economy is contracting or stagnating, dynamic
entrepreneurship could help turn the economy around.
By developing novel products or increasing competition, new firms can boost demand,
which could in turn create new job opportunities and reduce unemployment.
Entrepreneurs are the fresh blood that keeps economies healthy and flourishing even as
some individual firms fail.
Entrepreneurial activities, once viewed as a threat to the established system, are crucial
for maintaining economic competitiveness and for achieving long-term success.
 THE POSSIBLE PROS AND CONS OF
ENGAGING INTO ENTERPRISE
Pros
• Entrepreneurs boost economic growth by introducing innovative technologies,
products, and services.
• Increased competition from entrepreneurs’ challenges existing firms to become
more competitive.
• Entrepreneurs provide new job opportunities in the short and long term.
• Entrepreneurial activity raises the productivity of firms and economies.
• Entrepreneurs accelerate structural change by replacing established, sclerotic
firms
 THE POSSIBLE PROS AND CONS OF
ENGAGING INTO ENTERPRISE
Cons
• Only a few people have the drive to become entrepreneurs.
• Entrepreneurs face a substantial risk of failure, and the costs are sometimes
borne by taxpayers.
• In the medium term, entrepreneurial activities may lead to layoffs if existing
firms close.
• A high level of self-employment is not necessarily a good indicator of
entrepreneurial activity.
• Entrepreneurship cannot flourish in an over-regulated economy.
 IMPORTANCE OF ENTREPRENEURSHIP IN
THE ECONOMY

Entrepreneurs are frequently thought of as national assets to be

cultivated, motivated, and remunerated to the greatest possible extent.
If successful, their innovations may improve standards of living, and in
addition to creating wealth with entrepreneurial ventures.
 IMPORTANCE OF ENTREPRENEURSHIP IN
THE ECONOMY
Entrepreneurs Spur Economic Growth
New products and services created by entrepreneurs can produce a cascading effect,
where it stimulates related businesses or sectors that need to support the new ventures.
Entrepreneurs Add to National Income
New and improved products, services or technology from entrepreneurs enable new
markets to be developed and new wealth to be created.
 IMPORTANCE OF ENTREPRENEURSHIP IN
THE ECONOMY

Entrepreneurs Create Social Change

Through offering unique goods and services, entrepreneurs break away from
tradition and reduce dependence on obsolete systems and technologies.
Community Development
Entrepreneurs invest in community projects and provide financial support to
local charities.
 ROLE OF ENTREPRENEURSHIP &
ENTREPRENEURS IN ECONOMIC DEVELOPMENT
& SOCIETY
Creates employment – when entrepreneurs put up their business, they employ people who
possess different competencies and personal values to help them operate the enterprise.

Develops new markets – entrepreneurs are opportunity seekers, creative, and resourceful.
They seek new buyers or customers of their product and services.

Introduces innovation – entrepreneurs innovate, this innovation is done for the product,
service or technology towards commercialization and generates economic wealth.
 ROLE OF ENTREPRENEURSHIP &
ENTREPRENEURS IN ECONOMIC DEVELOPMENT
& SOCIETY
Generates new sources of materials – entrepreneurs are always inconstant, search for
better and cheaper sources of materials they need.

Stimulates investment interest in the new business ventures being created –

when entrepreneurs engage in new business, it stirs curiosity to other people to invest in the
business because of the benefits it offers.

Improves the quality of life – the new products and services developed by the entrepreneurs
contribute to the increase in personal benefit and convenience of the people in society.

Serves as role-models – the attitude, behavior and personality traits, like pro-activeness,
opportunity recognition, risk-taking, alertness and creativity are some of the characteristics that
will also make them successful entrepreneurs in their life.
 ROLE OF ENTREPRENEURSHIP &
ENTREPRENEURS IN ECONOMIC DEVELOPMENT
& SOCIETY
Brings social benefit to the people – entrepreneurs pay taxes for every product or
service sold in the market. They also pay for the licenses and permits to operate their business.

Utilizes and mobilizes indigenous resources - small and medium enterprises will always
look for cheaper and local materials to supply their needs.

Provides more alternatives for consumers – the stiff competition in the market for
quality and cheaper products and services requires the entrepreneurs to come up with more
products and services consumers can choose from.