Entrepreneurial Business and Society
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Entrepreneurial Business and Society

Frontiers in European Entrepreneurship Research

Edited by Friederike Welter, Robert Blackburn, Elisabet Ljunggren and Bjørn Willy Åmo

Entrepreneurial Business and Society summarizes contemporary research in the field of entrepreneurship and small business and explores the interplay between the entrepreneur, the entrepreneurial firm and society.
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Chapter 2: How does counterproductive entrepreneurship undermine social wealth creation?

Frontiers in European Entrepreneurship Research

Shaker A. Zahra, Rakesh K. Pati and Liman Zhao


The study of entrepreneurship has advanced rapidly over the past decades. A vast body of literature now exists on the nature, antecedents and outcomes of the entrepreneurial act. This literature touts the varied contributions entrepreneurs and entrepreneurship make to a community and society. This rich stream of research has invited communities and governments to craft policies to stimulate and promote entrepreneurship. One glaring gap in the literature is systematically ignoring the dysfunctions of entrepreneurs and the socially undesirable by-products of the entrepreneurial process. The pervasiveness of these dysfunctions and their potentially negative effects on individuals, families, organizations, communities and societies are the focus of this chapter. To be sure, entrepreneurship is a powerful source for good. Yet, it can be a socially costly activity in terms of the use of human and natural resources, wealth distribution, access to institutions, amassing political and other types of powers, and controlling the direction of a nation’s development trajectory. The field’s tendency to accentuate the positives of entrepreneurship has had several drawbacks, specifically ignoring the associated social costs of entrepreneurship. Social cost is defined as the harmful consequences to communities, societies, and even individual citizens of a nation (Kapp 1950). Entrepreneurs, for example, have contributed to a wealth gap that has magnified a sense of social injustice; they have abused labour, and damaged natural resources and environment without being held accountable. Even though a few scholars have acknowledged that entrepreneurship might have negative influences on entrepreneurs and their families, the social costs and ills have not been subjected to careful study (Zahra and Wright 2011).

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