Joseph Schumpeter (1934) an eminent economist described entrepreneur as “one who seeks to reform or revolutionist the pattern of production by exploiting an innovation or more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of material or a new outlet of products.” Thus, Schumpeter’s theory proposed that an entrepreneur sees the potential profitable opportunities and exploits them. He was of the view that an entrepreneur does not only desire to rise his consumption standard by earning handsome profits but aspires to find private dynasty also. Therefore, according to Schumpeter, an entrepreneur is one who innovates, raises money, collects input, organizes talent, provides leadership and sets the organization.

Schumpeter assigned an important role of innovation to the entrepreneur He did not equate entrepreneur with an inventor. An inventor creates a new product while Schumpeter’s entrepreneur exists if the factors of production are combined for the first time. A distinction between an inventor and innovator has also been made by Schumpeter. Inventor discovers new methods and raw materials and an innovator utilizes discoveries in order to make new combinations. According to Schumpeter, innovation, leads to the following change:

1.    Introduction of new goods, that is one with which consumer are not yet familiar, or new quality of goods;

2.    Introduction of a new method of production, that is, one not yet tested by experience in the branch of manufacture concerned, which need by not means be founded upon a discovery scientifically new. and can also exist in a way of handling a commodity commercially;

3.    Opening of a new market, that is, a market into which that particular branch of manufacture of the country in question has not previously entered, irrespective of whether or not his market has existed before;

4.    Finding a new source of raw materials or half-manufactured goods, again irrespective o whether this source already exists or whether it has to be created; and

5.    Reorganization of Process of enterprise Schumpeter purposed that innovation is guided by the following principles:

(i)    Innovation must be purpose oriented and systematic.
(ii)    t must be conceptual and perceptual.
(iii)    It should be easy, simple and subjective.
(iv)    A successful innovation flows towers creation of leadership.
(v)    It exerts influence on economy and society.
(vi)    It is to be organized on the basis f innovating knowledge and capacity.

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