290A. Coad et al.

Conclusion

We conclude with a discussion of broad themes that cut across various policy instruments and policy areas.

4.1

Critical Listening

Public policy is not as easy as giving stakeholders what they want. Instead, stakeholders should be given what they need to contribute more effectively to the economy and society. Hence, policymakers should be wary of focus groups, communications from industry associations and lobby groups, and survey responses. For example, entrepreneurs and investors may want guarantees against downside losses, or tax cuts, but these have not always been effective ways to encourage investments in high-ambition entrepreneurship. Lowering tax rates for entrepreneurs has not always led to an increase in entrepreneurial performance in the past, and continuing a policy of further tax cuts in our current low-tax era will probably (due to the law of diminishing marginal returns) be even less effective. When Bill Gates started Microsoft in 1975, the top tax rate on income was 70%, and tax rates on capital gains and corporate income were much higher than they are now (The New York Times, 2019). No doubt his calculus for starting Microsoft was not beholden to speculation about the evolution of tax rates. We might even suggest that, in the life cycle of entrepreneurs, initial investments and decisions are made early, and lobbying and grumbling about tax rates are done late in the day (e.g., at the time of retirement and trade-sale), at a stage when changes in tax rates have a weaker effect on incentives or entrepreneurial commitment.

Firms may be keen to see the enforcement of no-compete agreements, but this kind of rational (at the firm-level) yet short-sighted and self-interested (at the ecosystem level) stance may well have stifled the emergence of Silicon Valley (Gilson, 2003; Fallick et al., 2006). Investors may ask the government for downside protection and guarantees against losses, but this risk gives the wrong signals to investors—the danger of losing money if they fail to monitor their investments keeps them sharp and hence adds value (Gilson, 2003). A number of studies of the barriers perceived by firms have shown that barriers include factors such as high levels of competition—but clearly this is not a mandate for policymakers to seek to remove competition. Entrepreneurs often ask for less regulation (e.g., Ferrando et al., 2019),