How Should the Government Be Involved in Entrepreneurship?

Many economists prefer minimal government intervention in the market. Obviously, though, some intervention is necessary. The government functions as the officiall alocator of resources and so for that reason alone it will affect the economy. However, it also becomes its role to protect workers and consumers. Navigating government oversight is challenging in traditional business models and even more so in entrepreneurship. Redemptive entrepreneurship, or social entrepreneurship, is a unique part of the business world. It aims to create social change while achieving financial success, but it also interacts with the government.

Redemptive Entrepreneurship

In order to understand how entrepreneurship and redemptive entrepreneurship interacts with the government we need an understanding of redemptive entrepreneurship. While similar in a lot of the principles of entrepreneurship, redemptive entrepreneurship has some key differences. Redemptive entrepreneurship focuses on making a positive difference, not just maximizing profit. It tackles social issues like post-prison integration and its main goal is people over profit. These entrepreneurs create innovative solutions that benefit communities and the planet. Their business model is built on values, focusing on people, the planet, and profit.

Government Oversight and Regulation

As an overseer for business, the government is tasked with protecting workers. Its often the case that in the pursuit of profit business owners lose sight of the humanity of their workers. Because of this the government, at its best, ought to provide regulations and restrictions in order to protect those workers. The government faces a challenge: promoting entrepreneurship without stifling innovation. A 2014 study by Colin Mason and Ross Brown, commissioned by the OECD, provides insights. They distinguish between “traditional” and “growth-oriented” policies. Traditional policies aim to increase the number of firms through start-up programs and financial incentives. This “pick the winner” model has limitations, however.

A “growth-oriented” approach tends to show more promise though. It emphasizes relationships within entrepreneurial ecosystems. This means nurturing leadership and connecting growth-oriented firms with customers, suppliers, and support organizations. By creating a supportive environment, the government can foster innovation and economic growth.

The Role of Government

Based on Mason and Brown’s study and other research, several recommendations emerge for government involvement:

– Prioritize Entrepreneurship: Make it a key government focus.

– Holistic Policies: Create more opportunities for startups, without arbitrarily assigning money. This may be better delineated by private companies, but because of the presence of grants, it’s already in effect.

– Encourage Natural Growth: Avoid top-down solutions.

– Provide Leadership: Offer guidance while allowing entrepreneurs to make decisions.

– Tailor Ecosystems Locally: Adapt to local needs instead of copying models like Silicon Valley.

– Involve the Private Sector: Leverage resources and expertise from the start.

– Celebrate Successes: Highlight entrepreneurial achievements and challenge norms that hinder entrepreneurship.

– Use Financial Support Sparingly: Promote resilience and avoid fostering dependence.

– Remove Regulatory Barriers: Create a regulatory environment that supports entrepreneurship.

By adopting these principles, the government can create a supportive environment for entrepreneurship. This will drive innovation, create jobs, and foster sustainable economic development. The government’s goal should be to help build a prosperous society which is the same initiative as redemptive entrepreneurs. Therefore, laws should incentivize and support these ventures.