From static to processual analysis: how insights from Austrian economics can advance research on public policy and entrepreneurship

Abstract

PurposeThe purpose of this paper is to illustrate how research on the intersection of public policy and entrepreneurship has been bounded by its static approach and how a processual analysis based on Austrian economics can advance the understanding of the subject matter.Design/methodology/approachRooted in the Austrian school of economics, this conceptual paper adopts a processual approach in order to unveil the effects that public policy exerts upon entrepreneurship and the market process.FindingsThe authors argue that by interfering with the market process, public policy detrimentally alters what otherwise would have been the market's natural evolution reflecting acting individuals' subjective valuations. It causes progressively self-reinforcing market distortions which result in comparatively lower levels of both capital accumulation and societal wealth.Research limitations/implicationsThe paper urges future research to rethink public policy's effects on entrepreneurship and to explore them more comprehensively, utilizing market process analysis.Practical implicationsThis research suggests that public policy can never be neutral but necessarily comes with distortive and often detrimental effects. That is, public policy comes at the innate expense of hampering the entrepreneurial process. Thus, new public policies and those already in place should be carefully reconsidered in light of these effects.Originality/valueThis paper offers a novel take on how to best understand the effects public policy has on entrepreneurship and the market process.