Answer

Which of the following is the BEST example of entrepreneurial innovation

A) launching the first Starbucks store
B) expanding a landscaping business to serve more clients
C) buying a McDonald’s franchise
D) providing financing for a start-up business
E) opening a second location of a cafe


AExplanation: A) Entrepreneurial innovation happens when entrepreneurs see problems to be solved or opportunities that aren’t being addressed in the marketplace. Although Starbucks is a large company now, it was initially a new idea created by entrepreneurs who took the risk that people would pay premium prices for inventive coffee drinks that they could enjoy in a comfortable environment. Someone who expands a landscaping business, buys an existing franchise, or opens a second location of a cafe is an entrepreneur, but is not as innovative because they are offering products and services for which there is an established demand in the marketplace. Providing financing for a start-up is not an example of innovation, although the company that is receiving the financing may be engaged in an entrepreneurial innovation.