Policy for innovative entrepreneurship: Institutions, interventions, and societal challenges

Abstract

Research Summary Innovative entrepreneurship, defined as the creation of new products, services, production methods, or business models, is critical for firm, industry, and economic growth and a key determinant of societal well‐being. This special issue explores the roles of institutions and government policies in promoting or impeding innovative entrepreneurship. In this introductory editorial, we review theory and evidence on entrepreneurship at the macro‐institutional and micro‐policy levels, highlighting costs and benefits of alternative institutional environments and targeted policy interventions, as well as interactions within and across levels. We summarize the six papers in the special issue, discuss their contributions to the literature, and suggest how future work can build upon these and other papers to advance our understanding of the conditions and mechanisms underlying successful entrepreneurial innovation. Managerial Summary Innovation and entrepreneurship bring new products and services to market, help firms and industries to grow, and generate improvements in social and economic life. The papers in this special issue explore the background conditions—laws, political processes, regulations, tax policy, subsidies, training programs, and more—that make entrepreneurship and innovation successful. Both “macro” and “micro” policies can stimulate successful entrepreneurial and innovative outcomes, but can also become politicized, be ineffective, and generate unintended consequences. The papers offer lessons to researchers, policymakers, and practitioners about making entrepreneurship and innovation more successful.

The impact of the institutional environment on entrepreneurial activity: an analysis of developing and developed countries

“…Hence, understanding the connections between institutional frameworks and the emergence of productive entrepreneurship can be insightful for public policies aiming to achieve sustained economic growth and development (Urbano et al, 2019). Literature has recognized as productive types of entrepreneurship: innovative new firms (Arabiyat et al, 2019;Bradley et al, 2021), new ventures with high-growth expectations (Giotopoulos et al, 2017;Bosma et al, 2018), as well as new companies where the founders are motivated by perceived opportunities, rather than by necessity to provide for their living (Amor os et al, 2019a;Fuentelsaz et al, 2019;Galindo-Mart ın et al, 2019).…”

“…These three dimensions are pivotal in shaping organizational behavior and influencing enforcement mechanisms, which will provide stability and meaning to social habits. Accordingly, further clarification on the theme concerning institutional impact of entrepreneurship is key for policymakers (Chowdhury et al, 2019;Galindo-Mart ın et al, 2019;Tomizawa et al, 2020;Bradley et al, 2021), since our knowledge on how institutional quality drives productive entrepreneurship remains incomplete (Bosma et al, 2018).…”

Social insurance and entrepreneurship: The effect of unemployment benefits on new‐business formation

“…Finally, my article is related to a growing literature that studies the policy determinants of firm entry and entrepreneurial outcomes (Autor, Kerr, & Kugler, 2007; Bradley, Kim, Klein, McMullen, & Wennberg, 2021; Castellaneta, Conti, & Kacperczyk, 2020; Stevenson, Kier, & Taylor, 2021). The closest article to mine is Starr, Balasubramanian, and Sakakibara (2018), who show that greater enforceability of noncompete agreements screens out lower‐quality entrants, and is then associated with lower entry rate, but larger initial size and a higher survival rate of within‐industry spinouts.…”

Regional Entrepreneurship, Business Environment, and High-Quality Economic Development: An Empirical Analysis of Nine Urban Agglomerations in China

“…Scholars view the business environment as an institutional policy environment and quantify its essential role in entrepreneurship and economic development ( Davari et al, 2018 ). On the national level, since the implementation of China’s reform and opening up, the economic system has been reformed continuously to promote innovation and entrepreneurial development taking China’s economic development to an unprecedented level and promoting continuous rapid growth ( Bradley et al, 2021 ). At the enterprise level, the optimization of the business environment is mainly reflected in the reduction in the tax burden on companies and the increase in companies’ property rights protection.…”