Innovation and Growth: How Business Contributes to Society
14 Pages Posted: 15 Aug 2015
Date Written: September 1, 2010
Abstract
Milton Friedman once argued that profits are the chief purpose of business. Profits do matter, but today we know more about how business contributes to society. Good firms bring innovation to the marketplace, which facilitates their growth. Innovative, growing firms generate economic growth and employment, which, in turn, greatly improves people’s lives. In this paper I argue that the main goal of business is to develop new and innovative goods and services that generate economic growth while delivering important benefits to society. Steady economic growth generated through innovation plays a major role in producing increases in per capita income. Small changes in economic growth can yield very large differences in income over time, making firm growth particularly salient to societies. In addition to providing growth, innovative firms can supply important goods and services to consumers, particularly those at the base of the pyramid. Through innovation and growth firms can do untold good for society.
Keywords: Economic growth, Economic development, firm growth, innovation, base of the pyramid
JEL Classification: B00, O31, O32, O40, O14
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