Technological Change

RUNNING HEAD: TECHNOLOGICAL CHANGE
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Technological Change
Essay
System 0032
[Pick the date]

Technological Change 1
Introduction
Creative destruction is a process that is related to dismantling the old processes that are
followed from a longer time and finding innovative ways to solve a problem or to do older things
with a newer way. Creative destruction is considered as the way to come up with new
technologies by applying various business and economic models. This concept has downsides
and upsides in relation to economic repercussions and technology. Businesses use this concept
for survival and growth in the market and to earn profits most entrepreneurs gain an edge in the
market on the basis of creative destruction (Bowman, 2018). This essay contains all the aspects
and pros and cons of creative destruction and the points that highlights whether it is an automatic
process or natural one or done by entrepreneurs. Further, opinions of different authors are given
in order to support the research and a conclusion is drawn from the evidences whether
entrepreneurs boost up the creative destruction or it is a natural process that could be happen
with time.
Creative Destruction: Natural process or caused by Entrepreneurs
Creative destruction is a process of destroying old technology with the newer one or by
creating more innovative solutions than previous one. Schumpeter described creative destruction
as a process that is essential for capitalism (Cunningham, 2010). This concept according to
different authors leads to various advantages and disadvantages. From the positive side, creative
destruction helps in economic expansion as through that people get more job opportunities and
leads to technological advancement. “This progression resultant in transformation of economies
and improve standard of living”. Just look at the transformation that automobile sector did for
transportation all that helped in job creation and supported the development of steel and oil

Technological Change 2
industry. But on other side, due to creative destruction many industries got affected in negative
way that includes agriculture industry (Tuluce & Yurtkur, 2015).
Caballero (2008) said that creative destruction is a typical concept and is considered as
important aspect of doing business because “as long as we live in a capitalist society,
competition and innovation will force businesses to progress to develop the ideal product or
service” and later this concept will reward those who adapt and plan these innovations and
transformations in business and it will hurt those who will remain constant and stagnant. Further,
“the landscape of business will undeniably change, but how it evolves will be an intriguing
course to behold”.
There are evidences that supported the Schumpeterian view, that “the process of creative
destruction is a major phenomenon at the core of economic growth in market economies”.
Crespo, Hlouskova & Obersteiner (2008) clearly stated that businesses create new ideas and due
to that old things or technology gets outdated and proved that overall creative destruction process
account for 50 percent of productivity growth and further added that around 10 percent of jobs
are created and destroyed in a year because of technological change.
In the words of Noyes & Deligiannidis (2010) on Schumpeterian theory they stated that
entrepreneurs enforce innovation in the society and they are the main sources that implement
new ideas in order to survive in the market. Entrepreneurs are heroic figures with different vision
and actions that enforce new innovations which help in creation of new industries and new
market and resultant in creative destruction.
However, Endres & Woods (2010) argued that creative destruction is harmful for society
and other businesses that are running in the industry. Creative destruction creates hardship and it

Technological Change 3
is a cycle that destroys old orders on a constant basis and creates new orders to do a thing. Due to
that many organizations face problems especially those who are not able to cope up with these
technological advancements and skills for running businesses. Creative destruction is important
for those entrepreneurs who can take advantage of these opportunities or participate actively in
this process of destruction. Let understand this with help of an example, success of Netflix is the
best example of creative destruction. Netflix a startup affected the disc rental and video tape
industry, this industry provided jobs to more than 80,000 employees in 1985 and this was
doubled to 170,000 in 1999.But because of creative destruction by Netflix, employment in disc
rental and video tape industry collapsed from 153,000 jobs that was 93 percent decrease in a
decade and considered as the largest employment decline in the industry. After that Netflix also
destructed the cable network industry, pay TV services and traditional TV networks. This
creative destruction negatively affected the media industry (Perry, 2015). Entrepreneurs are the
key drivers who implement creative destruction and gain advantage from it for longer run.
The entrepreneur is taken as the leader in the process of innovation and it is stated that
innovation is not confined to technical progress or invention rather innovation is termed as the
social function that facilitate economic development. Creative destruction impacted
organizations and some of the entrepreneurs negatively it is sometimes considered as natural
process and in some situation created by entrepreneurs. The issues that get researchers attention
are creation of an organization, generation of new resources, development of an idea, and new
skills or expertise (McGranth & Desai, 2010). McGraw (2007) researched and stated that
“entrepreneurs develop new ideas and innovative products and that innovation makes the old
products obsolete in relation to mechanical aspect”.
“every act of creation is first an act of destruction.” (Picasso, 2011)