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Module 3 - Objective 3 Lecture Notes - Role & Importance of Innovation

Innovation is the creation of improved products, processes, or ideas that are available to the market, differing from invention which focuses on the creation of ideas. It plays a crucial role in entrepreneurship by fostering new ideas, enhancing competitiveness, and driving economic growth. Innovation is essential for financial performance and the development of differentiated products in competitive markets.

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Module 3 - Objective 3 Lecture Notes - Role & Importance of Innovation

Innovation is the creation of improved products, processes, or ideas that are available to the market, differing from invention which focuses on the creation of ideas. It plays a crucial role in entrepreneurship by fostering new ideas, enhancing competitiveness, and driving economic growth. Innovation is essential for financial performance and the development of differentiated products in competitive markets.

Uploaded by

Antonia Pierre
Copyright
© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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Entrepreneurship Unit 1

MODULE 3 – Objective 3
Lecture Notes – The Role and Importance of Innovation in Entrepreneurship

Definition of Innovation
Innovation is the creation of better or more effective products, processes, services, technologies,
or ideas that are readily available to markets, governments, and society.
Innovation differs from invention in that innovation refers to the use of better and, as a result, a
novel idea or method, whereas invention refers more directly to the creation of the idea or method
itself. Innovation differs from improvement in the innovation refers to the notion of doing
something different rather than doing the same thing better.
Innovations are defined more narrowly as the ideas, the products, the services, and processes that
(a) are perceived as being new and different and (b) have been designed, built, and commercialized.
Innovation thus includes both creative idea generation and the actual implementation of the idea.
An invention is an innovation that is not ready for prime time. Inventions are ideas that have been
built or conceptualized, but not widely used and available and usually not commercialized.

Role of Innovation
Innovation plays a vital role in entrepreneurship by fostering new ideas, enhancing business value,
and improving competitiveness. It allows entrepreneurs to create unique products or services,
adapt to market changes, and ultimately drive economic growth. Essentially, innovation helps
entrepreneurs differentiate themselves, attract customers, and stay ahead of the competition.
The importance of Innovation
Innovation is an important driver leading to organizational financial performance. It is after all the
catalyst for developing differentiated products and services for competing in monopolistic
competitive markets. Research and development are driven by the diffusion of science and the
translation of basic science into commercially viable products and services. R&D by entrepreneurs
may not involve basic scientific research, but it does involve searching for ideas that will lead to
differentiated and marketable products and services.

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