High‐tech Start‐ups in Europe: The Effect of Regulatory Competition on the Emergence of New Business Forms

Abstract

This paper will examine the theoretical arguments for and against the importance of new business forms for the growth of start‐ups. Part I briefly reviews the recent history of business organisational law and reform within Europe. Our review of extant European business forms reveals that the absence of new business entities (and structural reforms) may be due to status quo bias and other network effects. Turning to the importance of new business forms, Part II addresses the question which organisational and legal structures are favourable for the growth of start‐ups. It is suggested that the introduction of an efficient organisational form for start‐ups is crucial to further stimulate the development of a successful venture capital market in Europe. In Part III we give consideration to the possibility of developing new business forms, based on US mechanisms, which could lead to an increase in the level of high‐tech start‐ups. The prospect for the emergence of new business forms depends in part on the removal of legal and non‐legal barriers. The final section evaluates whether we can project a pattern of regulatory competition in the business organisation context that could prompt lawmakers to innovate by introducing new legal entities.