NOTRE DAME OF MIDSAYAP COLLEGE

MIDSAYAP, NORTH COTABATO

Name: Camille George R. Olarte Date: February 10, 2022

Course & Year: BSA – 1

EXPLAIN THE INNOVATION THEORY. Give 1 example of innovation in the economy.

Joseph Schumpeter coined the innovation theory where he emphasized innovation as an

essential element for economic reform. By innovation, he refers to the process of “creative
destruction” in which old ways of doing things are repeatedly destroyed and replaced by new,
better ways. For instance, changes in manufacturing and transportation methods, the creation of a
new product, changes in industrial structure, and the creation of a new market. He identified the
entrepreneur, either an individual or collective, as the agent of innovation. Wherein,
entrepreneurs are responsible for reforming or revolutionizing the production pattern by utilizing
an invention or, more broadly, an untested technological option for creating a new commodity or
an existing one in a new way. To further explain his innovation theory, Schumpeter devised a
model in two stages, namely first approximation and second approximation. The significant
influence of innovative ideas is highlighted in the first approximation, whereas the secondary
approximation focuses on the subsequent responses resulting from their application.
One great example of innovation in the economy is the Nestle: Powering Agile Ideation
with Startups. According to Medley (2019), Nestlé has used a two-pronged approach to internal
and external innovation in order to generate growth. Nestlé used Qmarkets innovation software
to launch the “InGenius” global innovation accelerator in 2014, which was created to allow
Nestlé employees to collaborate and provide solutions to business challenges without being
constrained by geographical or language barriers. A wide range of disruptive ideas submitted to
the site have already been adopted as firm initiatives, ranging from the usage of drones and new
apps to speed inventory tracking to irrigation projects in impoverished countries.

Reference:

Medley, S. (2019, January 8). Five Outstanding Examples of Innovation in Business.

https://www.qmarkets.net/blog/titans-of-transformation-5-outstanding-examples-of-
innovation-in-business/