Q.Why is entrepreneurship regarded as a creative activity?

Entrepreneurship is regarded as creative because it involves the creation of value through innovation.

Entrepreneurs introduce new products, discover new markets and new sources of supply, achieve technological breakthroughs and adopt newer organisational forms for doing things better, cheaper and faster. By combining the factors of production in fresh ways, they turn mere 'matter' into a useful 'resource', generating income and wealth.

Entrepreneurship is regarded as a creative activity for the following reasons:

1. It creates value. In the absence of entrepreneurship, 'matter' does not become a 'resource'. By combining land, labour, capital and technology, entrepreneurs produce goods and services that meet the needs and wants of society, and every entrepreneurial act results in income and wealth generation.
2. It involves innovation. Entrepreneurship shows itself in the introduction of new products, the discovery of new markets and new sources of supply of inputs, technological breakthroughs, and newer organisational forms for doing things better, cheaper and faster — and, increasingly, in ways that cause the least harm to the environment.
3. Even 'creative destruction' adds value. Sometimes innovation destroys existing industries — as the photocopier displaced the carbon-paper industry — yet the net gain to the economy makes such creative destruction commendable.

Because it continually creates value in these ways, entrepreneurship is fundamentally a creative activity.