Review of Business and Management Studies
Added on 2020-10-22
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Incentive effects oninnovativeentrepreneurship
TABLE OF CONTENTSINTRODUCTION ..........................................................................................................................3THEORIES AND ASSUMPTIONS ...............................................................................................3LITERATURE REVIEW................................................................................................................6EVIDENCE....................................................................................................................................11PERSONAL COMMENTS...........................................................................................................11CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................15APPENDIX....................................................................................................................................17
INTRODUCTION Creativity or innovation is considered to be as important business activities of smallfirms. Entrepreneurs are those people who have high capability to bear risk. Profit is consideredto be as important factors which encourages people to take risk. In addition to this, taxationpolicy implemented by the government in the nation have direct as well as significant influenceon the decision of an entrepreneur to facilitate innovation. Increase in tax rate by the governmentin the nation can have lead to the decline in profit earned by entrepreneur. Entrepreneurs of smallbusiness widely believe in facilitating innovation and they make significant contribution ondevelopment of society. Promotion of an entrepreneurial venture is considered to be as good forgrowth of nation. Therefore, it is required by government in the country to support entrepreneursby developing an effective taxation policy. As profit or revenue earned by small businessentrepreneur can be utilised for betterment of society. In addition to this, government bysupporting as well as positively influencing entrepreneur for innovation can easily attractinvestors. There are various types of incentives which might encourage entrepreneur to facilitateinnovation these are monetary incentive and non-monetary incentive, pierce rate incentive andcompetitive incentives. All these incentive can have direct as well as significant effect on thecreative performance on entrepreneur. There are mainly two components which generallyencourages entrepreneur to facilitate innovation includes legal environment as well as easer ingetting funds for creativity. The essay will have focus on analyzing the role of governance in promotingentrepreneurial innovation. Study will have emphasizes on analyzing the view of differentauthors about Effect of incentives on innovative entrepreneurship. THEORIES AND ASSUMPTIONS Entrepreneurial innovation and taxation:In this present era, it has been analyses that innovation and entrepreneurship plays aneffective role in economy of UK and it also improved the standard of living by lowering theprices, pay high wages and provide facilities to their healthcare. Further it is the responsibility ofentrepreneurs and their management to brought some effective innovation practice in theirworking area (Antonelli, 2019). Apart from this, it has been analyzed that by using open funnelinnovation theory whose main concept is to grow the business in order to maximizes the profitand increases the sales. Therefore, it is quite necessary for the managers of an organization to
develop those strategies which is quite beneficial for the firm to sustain their brand image inmarket. Further, it has been realized that an open innovation model is a progressive model inwhich the ideas are further moved through different stages and this Is also link with the strategyso that it will help to monetize and licensing the end result through the innovation.Another theory is Gate process which is project management technique which is dividedinto several stages and each gate is decided by the manager that helps in forecasting such asbusiness case, risk analysis. This theory basically involves quality of execution, businessrationale and provide the best output that further helps to maximizes the profit and sustain itsbrand image in market.The crowding out hypothesis related to creativity argues that it is the intrinsic motivationwhich encourages entrepreneur for facilitation innovation rather than incentives as well astaxation policy of government. Other theory associated to creativity dictates that extrinsicmotivation might undermine intrinsic motivation. The author also states that undermining ofintrinsic motivation can have adverse effect on the creativity of an entrepreneur. According to the Baumol theory, rate on return which an entrepreneur perceives havedirect as well as significant influence on their decision related to facilitating innovation. Thishypothesis is based on the assumptions that there are many variables such as fair as well asbalanced Judiciary, legal authority providing secure property right, effective limits ofgovernment ability to redistribute wealth through taxes as well as regulations encouragesentrepreneur to facilitate innovation. According to the four stage model, at first phase, businessowner invest as well as select the project considering the nature of risks and return in context ofdeveloping the invention. At the second phase, entrepreneur reveals the success of the projectand then investors those who have made investment decides to sell inventions in the market. Byentering into the market, entrepreneur will benefit from lower taxes and additional governmentsupport only the situation when project is successful. Incentive for innovation can be studied by using the multi task principal agent hypothesis.In multi task principle model the agents does not develop the understanding about thedistribution of pay off which is considered to be as crucial in context of procedure of exploration.The author argues that the major limitation of multi task principle hypothesis is that thishypothesis does not incorporate experimentation, adaptation as well as learning all which areconsidered to be as important features of innovation.
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