Governments, entrepreneurs, and positive externalities: A real options perspective

► This article extends the real options view from the firm level to the societal level. ► Government policies combat the anti-failure bias related to entrepreneurial initiatives. ► Government policies generate positive externalities from entrepreneurial initiative. ► Government’s favorable taxes spu...

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Bibliographic Details
Published in:European management journal 2013-08, Vol.31 (4), p.333-347
Main Authors: Lee, Seung-Hyun, Peng, Mike W., Song, Sangcheol
Format: Article
Language:English
Subjects:
Assets
Bankruptcy
Debt management
Entrepreneurs
Entrepreneurship
Entrepreneurship development
Externality
Foreign investments
Government policies
Government policy
Industry
Legislation
Markets
Public policy
Real options
Real options analysis
Small and medium sized enterprises
Social policy
Studies
Tax policy
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Summary:► This article extends the real options view from the firm level to the societal level. ► Government policies combat the anti-failure bias related to entrepreneurial initiatives. ► Government policies generate positive externalities from entrepreneurial initiative. ► Government’s favorable taxes spur more entrepreneurial initiatives. ► Governments’ efforts to lower entry barrier boost entrepreneurship development. This article extends the real options view from the firm level to the societal level, by exploring how government policies facilitate entrepreneurship development. Governments can focus on generating positive externalities, as opposed to avoiding failure for individual firms. Treating the bundle of productive assets within a country as entrepreneurial options, government policies concentrated on maximizing the variance of such a bundle would facilitate entrepreneurship development. Propositions are generated for six policy domains: (1) tax policies, (2) industry structure and entry barriers, (3) foreign direct investment, (4) opening foreign markets, (5) bankruptcy legislations, and (6) moving away from traditional industrial protection.
ISSN:0263-2373
1873-5681
DOI:10.1016/j.emj.2013.01.006