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Entrepreneurship: Productive, unproductive, and destructive—Relative to what?

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  • Lucas, David S.
  • Fuller, Caleb S.

Abstract

We identify an ambiguity surrounding institutions and entrepreneurship. While entrepreneurship creates social value at the economy level in the appropriate institutional environment, individual entrepreneurs may create or destroy value in any institutional environment. This raises the question: under what conditions does entrepreneurship create social value? Social value creation depends on the entrepreneur's next best alternative, and institutions are constraints on the relevant alternatives. Hence, society is better off when entrepreneurs navigate poor institutions relative to reduced entrepreneurial activity. Furthermore, entrepreneurs engaging in seemingly “productive” activity need not create social value. We illustrate the argument with two examples.

Suggested Citation

  • Lucas, David S. & Fuller, Caleb S., 2017. "Entrepreneurship: Productive, unproductive, and destructive—Relative to what?," Journal of Business Venturing Insights, Elsevier, vol. 7(C), pages 45-49.
  • Handle: RePEc:eee:jobuve:v:7:y:2017:i:c:p:45-49
    DOI: 10.1016/j.jbvi.2017.03.001
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    References listed on IDEAS

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    1. repec:spr:jglont:v:8:y:2018:i:1:d:10.1186_s40497-018-0103-9 is not listed on IDEAS
    2. Elert, Niklas & Henrekson, Magnus, 2018. "The Collaborative Innovation Bloc: A New Mission for Austrian Economics," Working Paper Series 1222, Research Institute of Industrial Economics.

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