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What entrepreneurship is really “productive”? An alternative view on Baumol's typology

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  • Trubnikov, Dmitrii

Abstract

The paper aims to contribute to the discussion on “productive, unproductive, and destructive” entrepreneurship started by William Baumol. It supports the position that all three categories in Baumol's typology are important to understand how institutions affect entrepreneurship but advocates for an alternative approach to distinguish among them. While the traditional demarcation is often based on the net effect on productivity, the proposed approach focuses on the public choice reasoning that not only distinguishes between “rent-seeking” and “profit-seeking,” but also emphasizes that rent-seeking should not be considered a pure transfer. Rent-seeking not only affects regulatory decisions, it also generates activities in the sphere that is traditionally perceived in the productive side. It is important to take this sphere into account when welfare implications of regulatory initiatives are discussed and when policymakers aim to stimulate “productive” entrepreneurship.

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  • Trubnikov, Dmitrii, 2021. "What entrepreneurship is really “productive”? An alternative view on Baumol's typology," Journal of Business Venturing Insights, Elsevier, vol. 16(C).
    • Handle: RePEc:eee:jobuve:v:16:y:2021:i:c:s2352673421000366
    DOI: 10.1016/j.jbvi.2021.e00258
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    Cited by:

    1. Dmitrii Trubnikov, 2022. "Rethinking the pandemic narrative: An ordoliberal perspective," Economic Affairs, Wiley Blackwell, vol. 42(2), pages 327-343, June.

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