54goals through strategies based on good quality predictions, we feel at the mercy of idiosyncratic preferences and the vagaries of power politics. Effectual entrepreneurship offers practical guidance based on cumulated evidence on how idiosyncratic preferences can be transformed step by step into productive and innovative governance mechanisms that in the process, allow us to arrive at new goals worth pursuing. In fact, functioning markets and states that we take for granted rest on underlying microfoundations of effectual action and interaction. Uncovering the movement beneath reveals not chaos, but a set of systematic principles and a learnable logic that propels the process forward.

History shows uses for both markets and states. Both have arguably been important for humans to survive and thrive. Yet history also offers cautionary tales of presumptions about what constitutes thriving. It may be time to realize that we need principles and processes that can design and reshape markets and states without deﬁning a priori which goals lead to thriving and are therefore worth pursuing. The freedom to design purpose itself. Coming full circle, is not that why we invented markets and states in the ﬁrst place?

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66The Entrepreneurial State: An Ownership

Competence Perspective

Samuele Murtinu, Nicolai J. Foss, and Peter G. Klein

Abstract Academics, pundits, and policymakers have recently called for a stronger governmental role in the economy to tackle social issues such as inequality and grand challenges like global warming. Despite a general recognition among economists and management scholars that government efforts to guide and control innovation or subsidize private entrepreneurs have failed to yield results, these calls also describe an entrepreneurial state in which bureaucrats, not entrepreneurs, direct not only basic research but also applied technological development. Building on the notions of economic competence and ownership competence we argue that even well-intentioned and strongly motivated public actors lack the ability to manage the process of innovation, especially under Knightian uncertainty. As stewards of resources owned by the public, government bureaucrats do not exercise the ultimate responsibility that comes with ownership. Moreover, government ownership of ﬁrms and labs and government intervention in the management of privately owned assets hampers the competitive process of putting ownership of innovative ﬁrms and projects in the hands of individuals and groups with higher levels of ownership ability. We suggest that ownership competence differs systematically between public and private actors, particularly around innovation, with important implications for innovation policy.

Keywords Ownership · Competence · Innovation · Knightian uncertainty · Market for corporate control: Public choice

S. Murtinu (*) Utrecht University, Utrecht, Netherlands e-mail: s.murtinu@uu.nl N. J. Foss Copenhagen Business School, Frederiksberg, Denmark e-mail: njf.si@cbs.dk P. G. Klein Baylor University, Waco, TX, USA e-mail: peter_klein@baylor.edu