Entrepreneurship

Innovation is often, and correctly, thought of as the source of productivity growth and thus of increases in material well-being. But innovation does not occur in a vacuum, it occurs in firms and organisations that bring together resources – people, knowledge, physical and financial capital – to undertake projects with uncertain outcomes. The people that bring together these resources, and take risks in doing so, are entrepreneurs, though not all of them successfully innovate. This chapter notes that entrepreneurship is useful in the private and public sectors and in both small and large firms, new and old. With its wealth, generous welfare system and even income distribution, Norway might not be a fertile ground for entrepreneurial risk taking. Indeed self-employment and new firm creation are relatively low in Norway, although the survival rate of start-ups is higher than in many countries. Policy in Norway avoids pursuing too specific industrial or employment targets. It mostly refrains from protecting uncompetitive industries, with the notable exception of agriculture. And judging by continuing productivity growth and fairly healthy rates of firm creation, outcomes are satisfactory, even though some countries appear to do better. Best practices for policy are often not clear, but policy can move incrementally towards improvement in the education and research systems, as well as re-evaluating the role of competition policy and public ownership.