Schumpeter is considered one of the most influential economists of the 20th century. However, he also feared the end of capitalism, as the innovation process would weaken, primarily due to bureaucratization in companies and an increased role for the state. Schumpeter thus made an important contribution to business cycle theory. This process of “creative destruction” enables growth and technical progress. These changes are based primarily on “dynamic entrepreneurs” who push through innovations, achieve pioneering profits, and bring about the economic upswing. Schumpeter developed a theory of the economic development of the capitalist economic system, which he explained by intra-economic changes. Joseph Alois Schumpeter is an Austrian economist and social scientist, He was a professor since 1909, among others in Graz (1911 to 1919), Bonn (1925 to 1932) and since 1932 at Harvard University. Much more about innovation strategies and approaches to innovation you will find in our brand-new FREE book “How to Create Innovation”. What sounds contradictory at first glance becomes clear at second glance.

Schumpeter, an Austrian economist in the first half of the 20th century. For reorganization to occur, creative destruction is necessary.Ĭreative destruction is the basis for innovation, entrepreneurial growth, and prosperity, according to the economic philosophy of Joseph A. It states: Every economic development relies on creative or creative destruction, Old structures can be dismantled and destroyed by a new mix of production factors. Good examples of Creative Destruction include smartwatches replacing wristwatches, cars with improved gas mileage, and streaming replacing CDs and DVDs.Ĭreative Destruction, a term that comes from macroeconomics, is the core statement. New products meet customer needs better, making previous versions inadequate or obsolete. Creative Destruction is the ongoing process of innovating new products and services to replace old ones.

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