Niklas Elert, Magnus Henrekson and Joakim Wernberg
Evasive entrepreneurs innovate by circumventing or disrupting existing formal institutional frameworks. Since such evasions rarely go unnoticed, they usually lead to responses…
Abstract
Purpose
Evasive entrepreneurs innovate by circumventing or disrupting existing formal institutional frameworks. Since such evasions rarely go unnoticed, they usually lead to responses from lawmakers and regulators. The paper aims to discuss this issue.
Design/methodology/approach
The authors introduce a conceptual model to illustrate and map the interdependencey between evasive entrepreneurship and the regulatory response it provokes. The authors apply this framework to the case of the file sharing platform The Pirate Bay, a venture with a number of clearly innovative and evasive features.
Findings
The platform was a radical, widely applied innovation that transformed the internet landscape, yet its founders became convicted criminals because of it.
Originality/value
Applying the evasive entrepreneurship framework to this case improves the understanding of the relationship between policymaking and entrepreneurship in the digital age, and is a first step toward exploring best responses for regulators facing evasive entrepreneurship.
Details
Keywords
Magnus Henrekson and Mikael Stenkula
The purpose of this paper is to show that entrepreneurship can be fruitfully analyzed by positing that entrepreneurs are searching for rates of return exceeding the risk-adjusted…
Abstract
Purpose
The purpose of this paper is to show that entrepreneurship can be fruitfully analyzed by positing that entrepreneurs are searching for rates of return exceeding the risk-adjusted market rate of return, i.e., they try to create or discover economic rents.
Design/methodology/approach
A conceptual paper trying to bridge the gap between neoclassical economics and the entrepreneurship field by seeing entrepreneurship as the search for and creation of (entrepreneurial) rents.
Findings
In the short to medium term the search for and creation of entrepreneurial rents give rise to supernormal profits if successful. In the longer term these rents are dissipated and accrue to society at large as cheaper and better products. Entrepreneurial rents are crucial for bringing about the innovation and continuous structural change required to generate economic growth.
Practical implications
The search for entrepreneurial rents is crucial for economic development. Without the possibility to earn entrepreneurial rents, no entrepreneur would be willing to exercise entrepreneurship and exploit entrepreneurial opportunities. Successful entrepreneurship attracts imitating firms that push back profits to normal levels and the benefits of the innovation will be diffused to consumers.
Social implications
Understanding the role of entrepreneurship and its compensation is crucial for analyses of potential policy measures. High ex post compensation for successful entrepreneurship cannot be taxed harshly without affecting entrepreneurs’ willingness to supply effort.
Originality/value
The entrepreneurial function and its compensation are often neglected in neoclassical economics. This is a major shortcoming, as the presence of and search for entrepreneurial rents are necessary for bringing about the innovation and structural change that result in economic growth.