Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1395: Schumpeterian Entrepreneurship: Coveted by Policymakers but Impervious to Top-Down Policymaking

Magnus Henrekson (), Anders Kärnä () and Tino Sanandaji ()
Additional contact information
Magnus Henrekson: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Anders Kärnä: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Tino Sanandaji: Institute for Economic and Business History Research, Postal: Stockholm School of Economics

Abstract: Differentiating various types of entrepreneurs provides clues to the puzzle of why top-down policies often fail to create Schumpeterian entrepreneurship and the ecosystems where it thrives. Schumpeterian entrepreneurship is intrinsically contrarian, whereas public policy has a bias toward incremental innovation and replication of past success. If central planners knew what the next radical innovation would be, there would be no need for Schumpeterian entrepreneurs. Schumpeterian entrepreneurs create not only companies but also institutions in the entrepreneurial support system. These ever-evolving structures are too complex to design, and central planning instead reduces the space for organic institutional innovation.

Keywords: Entrepreneurship policy; High-impact entrepreneurship; Innovation; Institutions; Schumpeterian entrepreneurship

JEL-codes: M13; O31; P14

26 pages, June 24, 2021

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