Entrepreneurship and economic progress
Discovery and development of improved products and production methods propel economic progress. Think of the new products that have been introduced during the last fifty years; microwave ovens, videocassette recorders, color television sets, personal computers, fax machines, cellular telephone service, DVD and MP3 players, and better coronary artery bypass techniques come to mind. Innovations like these have had an enormous impact on our lives. But no one knows what the next innovative breakthrough will be or precisely which production techniques will minimize per-unit costs. Better ways of doing things do not just happen; they must be discovered and developed by entrepreneurs.
Is the entrepreneur’s new, visionary idea the greatest thing since the development of the fast-food chain? Or is it simply another dream that will soon vaporize? In a market economy, it is relatively easy to try new business ideas. A person needs only to win the support of a few investors willing to finance the innovative new product or production technology. How- ever, competition holds entrepreneurs and the investors who support them accountable: their ideas face a “reality check” imposed by production costs and consumers’ willingness to pay. Consumers are the ultimate judge and jury. If they do not value an innovative new product or service enough to cover its cost, that product or service will not survive in the marketplace.
Furthermore, today’s successful product may not pass tomorrow’s competitive test. Therefore, entrepreneurs must be good at anticipating, identifying, and quickly adopting improved ideas, be they their own or others’. They must constantly face the ongoing reality of dynamic change in a competitive world.