In search of a fertile entrepreneurial landscape: how to keep it on the level

Abstract

PurposeRecent analysis suggests entrepreneurship is in decline. If so, some argue that the appropriate policy response is to devote even further government intervention to nurture both fledgling ventures as well as entirely new undertakings, lamenting the fact that much current economic policy caters to already-successful firms – thereby creating a decision-making environment that stacks the deck against would-be entrepreneurs. While it is indeed true that entrepreneurial ventures lead to value creation over time, this paper argues that the answer to any slowdown in entrepreneurship is not to add even more policy Band-Aids to an already broken system of carve-outs, exemptions, subsidies and tax breaks. Instead the solution to bad policy is to unwind bad policy that favors Goliaths over Davids, thereby creating a level playing field for all. Any attempt to use government initiatives to spur entrepreneurship will, over the longer term, only serve to distort the economic outcomes society would have observed as the product of a system of rule-of-law, clearly defined and enforced property rights and freely functioning markets that permit entrepreneurs, investors, consumers and savers to make the most sensible choices available to them.Design/methodology/approachThis essay cites fundamental pieces of existing entrepreneurial research to make its argument.FindingsRather than adding even more policy initiatives to address any slowdown in entrepreneurship, policymakers should aspire to create the most fertile environment possible to foster entrepreneurial activity. Adding more policies on top of existing ones presumes to know which policies are better than others. Even when perceived as neutral, policy incentives cannot improve upon the outcomes of the unseen price system.Originality/valueThis paper reminds readers that entrepreneurship is vital to economic flourishing, while reminding readers that even policy actions presumed to be beneficial likely bear unintended consequences because they bring their own disruptions to the decision-making environment.