The phrase as used by Schumpeter has very little similarity with the one that was used by Marx. Therefore, the phrase became popular within the neo-liberal and free-market economics as it was employed to describe processes like downsizing in order to enhance the efficacy and dynamism of an organization.
Therefore, creative destruction can be described as a process whereby something new results in the destruction of what had been in existence before it. The phrase is employed in a number of areas like economics, development of products, corporate governance as well as marketing and technology. For instance, creative destruction in product development is almost similar to disruptive technology and a common example is the smartphone that has ended the life of the regular phone, mp3 players, cameras and watches among other devices in the market. In relation to marketing, creative destruction can be identified in the advertising campaigns that focus new and lucrative markets while risking alienation of the markets that had been in existence.
According to the theory development by Schumpeter, creative destruction will result in consequent failure of capitalism as an economic system, but in the present business use, the phrase refers denotes unpleasant options that are perceived necessary for sustainability. In regard to business, the corporate executives regularly describe solutions to reduce costs that are not popular with the rest of the employees such as downsizing and outsourcing as form of creative destruction. The consequence of this is that even though these actions may be considered as injurious particularly to the affected employees, the business will be transformed for the better. This paper seeks to understand the theory that was developed by Schumpeter concerning creative destruction and it has affected capitalism in the current economy.
Schumpeter’s main message is that the