Home Can Positive Entrepreneurship Policies Always Improve Social Welfare?
Article
Licensed
Unlicensed Requires Authentication

Can Positive Entrepreneurship Policies Always Improve Social Welfare?

  • Xiang Li EMAIL logo and Yanmei Xu
Published/Copyright: May 17, 2020
Become an author with De Gruyter Brill

Abstract

The entrepreneurship has positive and significant connection with economic growth. Competition would be increased by new entrants in the market; then, social welfare would be improved. Thus, positive entrepreneurship policies are often linked to increased social welfare by authorities. In this paper, we focus on a certain case where potential entrepreneurs are employees of existing firms to test the above ideas. The purpose of our research is to assess the variation of social welfare in the context of employer-restricted separation. Therefore, the model of Cournot competition where employees constitute the only entry threat was used in this paper. The results demonstrate that social welfare would not always be improved even in a good entrepreneurial context. If the deterring strategy is present, the relationship between positive entrepreneurship policies and increased social welfare might not hold, or would depend on the different strategies adopted by the incumbent. Therefore, the sustainability of a positive entrepreneurship policy would be impaired by incumbent firms.

References

[1] Wiklund J, Davidsson P, Audretsch DB, et al. The future of entrepreneurship research. Entrepreneurship Theory and Practice, 2011, 35(1): 1–9.10.1111/j.1540-6520.2010.00420.xSearch in Google Scholar

[2] Shane S, Venkataraman S. The promise of entrepreneurship as a field of research. Academy of Management Review, 2000, 25(1): 217–226.10.5465/amr.2000.2791611Search in Google Scholar

[3] Audretsch D B. Research issues relating to structure, competition, and performance of small technology-based firms. Small Business Economics, 2001, 16(1): 37–51.10.1023/A:1011124607332Search in Google Scholar

[4] Bruton G D, Ahlstrom D, Obloj K. Entrepreneurship in emerging economies: Where are we today and where should the research go in the future. Entrepreneurship Theory and Practice, 2008, 32(1): 1–14.10.1111/j.1540-6520.2007.00213.xSearch in Google Scholar

[5] Sutter C, Bruton G D, Chen J. Entrepreneurship as a solution to extreme poverty: A review and future research directions. Journal of Business Venturing, 2019, 34(1): 197–214.10.1016/j.jbusvent.2018.06.003Search in Google Scholar

[6] Acs Z J, Estrin S, Mickiewicz T, et al. Entrepreneurship, institutional economics, and economic growth: An ecosystem perspective. Small Business Economics, 2018, 51(2): 501–514.10.1007/s11187-018-0013-9Search in Google Scholar

[7] Audretsch D B, Bnte W, Keilbach M. Entrepreneurship capital and its impact on knowledge diffusion and economic performance. Journal of Business Venturing, 2008, 23(6): 687–698.10.1016/j.jbusvent.2008.01.006Search in Google Scholar

[8] Agarwal R, Echambadi R, Franco A M, et al. Knowledge Transfer through Inheritance: Spin-out generation, development, and survival. The Academy of Management Journal, 2004, 47(4): 501–522.10.2307/20159599Search in Google Scholar

[9] Buenstorf G, Klepper S. Heritage and agglomeration: The akron tyre cluster revisited. Economic Journal, 2009, 119(537): 705–733.10.1111/j.1468-0297.2009.02216.xSearch in Google Scholar

[10] Klepper S, Thompson P. Disagreements and intra-industry spinoffs. International Journal of Industrial Organization, 2010, 28(5): 526–538.10.1016/j.ijindorg.2010.01.002Search in Google Scholar

[11] Srensen J B, Fassiotto M A. Organizations as fonts of entrepreneurship. Organization Science, 2011, 22(5): 1322–1331.10.1287/orsc.1100.0622Search in Google Scholar

[12] Yeganegi S, Laplume A O, Dass P, et al. Where do spinouts come from? The role of technology relatedness and institutional context. Research Policy, 2016, 45(5): 1103–1112.10.1016/j.respol.2016.02.004Search in Google Scholar

[13] Anton J J, Yao D A. Start-ups, spin-offs, and internal projects. Journal of Law Economics & Organization, 1995, 11(2): 362–378.Search in Google Scholar

[14] Klepper S, Sleeper S. Entry by spinoffs. Management Science, 2005, 51(8): 1291–1306.10.1287/mnsc.1050.0411Search in Google Scholar

[15] Chatterji A, de Figueiredo R, Rawley E. Learning on the Job? Entrepreneurial spawning in the asset management industry. Academy of Management Proceedings, 2014, 2014(1). http://doi.org/10.5465/ambpp.2014.258.10.5465/ambpp.2014.258Search in Google Scholar

[16] Adams P, Fontana R, Malerba F. Bridging knowledge resources: The location choices of spinouts. Strategic Entrepreneurship Journal, 2017, 11(2): 93–121.10.1002/sej.1241Search in Google Scholar

[17] Klepper S. Employee startups in high-tech industries. Industrial and Corporate Change, 2001, 10(3): 639–674.10.1093/icc/10.3.639Search in Google Scholar

[18] Wezel F C, Cattani G, Pennings J M. Competitive implications of interfirm mobility. Organization Science, 2006, 17(6): 691–709.10.1287/orsc.1060.0219Search in Google Scholar

[19] Campbell B A, Ganco M, Franco A M, et al. Who leaves, where to, and why worry? Employee mobility, entrepreneurship and effects on source firm performance. Strategic Management Journal, 2012, 33(1): 65–87.10.2139/ssrn.1484926Search in Google Scholar

[20] McKendrick D G, Wade J B, Jaffee J. A good riddance? Spin-offs and the technological performance of parent firms. Organization Science, 2009, 20(6): 979–992.10.1287/orsc.1090.0480Search in Google Scholar

[21] Agarwal R, Audretsch D, Sarkar M B. The process of creative construction: Knowledge spillovers, entrepreneurship, and economic growth. Strategic Entrepreneurship Journal, 2007, 1(3): 263–286.10.4337/9781783476923.00014Search in Google Scholar

[22] Somaya D, Williamson I O, Lorinkova N. Gone but not lost: The different performance impacts of employee mobility between cooperators versus competitors. The Academy of Management Journal, 2008, 51(5): 936–953.10.5465/amj.2008.34789660Search in Google Scholar

[23] Allen D G, Bryant P C, Vardaman J M. Retaining talent: Replacing misconceptions with evidence-based strategies. Academy of Management Perspectives, 2010, 24(2): 48–64.Search in Google Scholar

[24] Walter S G, Heinrichs S, Walter A. Parent hostility and spin-out performance. Strategic Management Journal, 2014, 35(13): 2031–2042.10.1002/smj.2201Search in Google Scholar

[25] Burke A E, To T. Can reduced entry barriers worsen market performance? A model of employee entry. International Journal of Industrial Organization, 2001, 19(5): 695–704.10.1016/S0167-7187(00)00089-8Search in Google Scholar

[26] Janjgava B. Free entry and social effiency under unknown demand parameters. 2013.10.2139/ssrn.2347123Search in Google Scholar

[27] Randhawa G. Relationship between job satisfaction and turnover intentions: An empirical analysis. Indian Management Studies Journal, 2007, 11(2): 149–159.Search in Google Scholar

[28] Ng T W H, Eby L T, Sorensen K L, et al. Predictors of objective and subjective career success: A meta-analysis. Personnel Psychology, 2005, 58(2): 367–408.10.1111/j.1744-6570.2005.00515.xSearch in Google Scholar

[29] Guan Y J, Wen Y R, Chen S X, et al. When do salary and job level predict career satisfaction and turnover intention among Chinese managers? The role of perceived organizational career management and career anchor. European Journal of Work and Organizational Psychology, 2014, 23(4): 596–607.10.1080/1359432X.2013.763403Search in Google Scholar

[30] Vetrakova M, Hitka M, Potkany M, et al. Corporate sustainability in the process of employee recruitment through social networks in conditions of slovak small and medium enterprises. Sustainability, 2018, 10(5): 17.10.3390/su10051670Search in Google Scholar

[31] Bain J S. Barriers to new competition. Cambridge: Harvard University Press, 195610.4159/harvard.9780674188037Search in Google Scholar

[32] Weizsäcker C C. Barriers to entry: A theoretical treatment. Berlin: Springer, 1980.10.1007/978-3-642-46426-3Search in Google Scholar

[33] Yeganegi S, Dass P, Laplume A. Spinouts: A multilevel review of the emerging literature. Academy of Management Annual Meeting Proceedings, 2017, 2017(1). http://doi.org/10.5465/AMBPP.2017.13041.10.5465/AMBPP.2017.13041abstractSearch in Google Scholar

[34] Mankiw N G, Whinston M D. Free entry and social inefficiency. The RAND Journal of Economics, 1986, 17(1): 48–58.10.2307/2555627Search in Google Scholar

[35] Cabral LsMB. Simultaneous entry and welfare. European Economic Review, 2004, 48(5): 943–957.10.1016/j.euroecorev.2003.11.001Search in Google Scholar

[36] Nielsen P S. Entrepreneurship orientation in policy making: A determinant of collaboration and organizational adaptability in entrepreneurship policy delivery. The International Journal of Entrepreneurship and Innovation, 2016, 17(1): 43–54.10.5367/ijei.2016.0210Search in Google Scholar

[37] Klyver K, Bager T. Entrepreneurship policy as institutionalised and powerful myths. International Journal of Entrepreneurial Venturing, 2012, 4(4): 409–426.10.1504/IJEV.2012.049816Search in Google Scholar

[38] van Praag C M, Versloot P H. What is the value of entrepreneurship? A review of recent research. Small Business Economics, 2007, 29(4): 351–382.10.1007/s11187-007-9074-xSearch in Google Scholar

[39] Robinson A M, Zhang H. Employee share ownership: Safeguarding investments in human capital. British Journal of Industrial Relations, 2005, 43(3): 469–488.10.1111/j.1467-8543.2005.00365.xSearch in Google Scholar

[40] Antoncic B, Hisrich R. Clarifying the intrapreneurship concept. Journal of Small Business and Enterprise Development, 2003, 10: 7–24.10.1108/14626000310461187Search in Google Scholar

Received: 2019-09-01
Accepted: 2019-11-26
Published Online: 2020-05-17
Published in Print: 2020-05-26

© 2020 Walter De Gruyter GmbH, Berlin/Boston

Downloaded on 20.11.2025 from https://www.degruyterbrill.com/document/doi/10.21078/JSSI-2020-148-11/pdf
Scroll to top button