Handbook of Research on Entrepreneurship Policy
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Handbook of Research on Entrepreneurship Policy

Edited by David B. Audretsch, Isabel Grilo and A. Roy Thurik

This unique Handbook provides a solid foundation for essential study in the nascent field of entrepreneurship policy research. This foundation is initially developed via the exploration of two significant propositions underpinning the nature of entrepreneurship policy research. The first is that entrepreneurship has emerged as a bona fide focus of public policy, particularly with respect to economic growth and employment creation. The second is that neither scholars nor policy makers are presently equipped to understand the public policy role for entrepreneurship.
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Chapter 4: Policymakers Beware!

Simon C. Parker


Simon C. Parker Introduction This chapter casts a skeptical eye over pro-entrepreneurship public policies. I explain why intervention might backfire or be rendered ineffective by the responses of entrepreneurs and financiers. In addition, I discuss why some apparently innocuous pro-entrepreneurship policies are actually misguided. Some examples of inappropriate and ineffective entrepreneurship policies are given; and a case for discouraging rather than promoting entrepreneurship is made. In this short chapter, I do not offer a detailed survey of pro-entrepreneurship and small business policies. This task has been performed elsewhere: see, for example, Storey (2003) and Parker (2004, Chapter 10). Nor is it my aim to discredit the viewpoint that entrepreneurship might generate positive spillovers (though it seems likely that negative externalities from entrepreneurship will exist as well). I simply want to discuss important drawbacks to public policy interventions in this area, in the interests of stimulating a more balanced debate about the merits of public policies that take a (sometimes instinctively) pro-entrepreneurship stance. The chapter has the following layout. The next section focuses on two logical fallacies involved with policies that target particular groups of entrepreneurs. The third section discusses five examples of pro-entrepreneurship policies that are either misguided or frustrated by private sector responses. The fourth section makes a case for discouraging support for start-ups, and the fifth section concludes with a discussion of some of the practical dangers of government intervention in entrepreneurship. Two problems with policies that target entrepreneurial groups I make two points...

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