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The costs of entrepreneurship

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  • Simon C. Parker

Abstract

Entrepreneurship is popularly regarded as an unmitigated boon that can solve a wide variety of organisational and economic problems while benefiting its practitioners. In contrast, this article provides a different perspective by drawing on a diverse body of theory to explore the costs of entrepreneurship. I propose two broad categories of costs: those that chiefly affect entrepreneurs themselves, and those that impact on society as a whole. Both types of cost can be monetary and non-monetary in nature. After categorising the most salient types of costs associated with entrepreneurship, I discuss various ways they might be mitigated, by entrepreneurs as well as third parties. A particular role is proposed for public policies, which may seek to: moderate entrepreneurial mismanagement based on over-optimism and dysfunctional business decision-making; strengthen intellectual property rights protection for university researchers and private-sector entrepreneurs; and curtail unproductive lobbying by powerful business interests, inter alia. Future researchers are challenged to develop further strategies to minimise the costs of entrepreneurship, while preserving their benefits.

Suggested Citation

  • Simon C. Parker, 2012. "The costs of entrepreneurship," International Journal of Entrepreneurial Venturing, Inderscience Enterprises Ltd, vol. 4(4), pages 330-350.
  • Handle: RePEc:ids:ijeven:v:4:y:2012:i:4:p:330-350
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