14International Studies in Entrepreneurship 53, https://doi.org/10.1007/978-3-030-94273-1_1 K. Wennberg and C. Sandström

4recession in 2008–2009, the Euro crisis of 2011–2012, as well as the ongoing pandemic and its repercussions. These crises have resulted in several rapid shifts in economic policy. Low interest rates, quantitative easing, and a myriad of public stimulus packages have followed on top of each other. While available venture capital and new digital startups reach record figures from year to year, public and private debt is mounting, yet productivity growth and job creation have been sluggish. Populist and nationalist agendas have emerged and with them calls for the protection of national interests and industries, as well as well-founded worries of increasing economic inequality and global climate change. This intellectual and economic milieu has become a fertile ground for the rebirth of top-down industrial policies. Mariana Mazzucato’s book The Entrepreneurial State (2011) has become a best seller that has fueled the renaissance of industrial interventionism. As policymakers around the world were looking for answers and ways to deal with issues such as global climate change, sluggish economic growth, and increasing inequality, Mazzucato’s book was perfectly positioned to go viral. Her follow-up book, Mission Economy (2021), expands on Richard Nelson’s work on innovation missions and moonshots from the 1970s and 1980s to argue that governments should formulate missions by which to spur innovations seeking to solve great societal challenges—from green energy to national security to building resilient health systems. Mazzucato provided an intriguing and simple argument: the state had been the main agent behind innovation and industrial renewal, and independent entrepreneurs and large companies have merely followed and capitalized upon the efforts of courageous governments over the years. Economic policy, and innovation policy in particular, has therefore been misguided. Innovation and renewal do not happen through independent entrepreneurial endeavors and innovations launched in a free market economy. On the contrary, Mazzucato argues, prosperity instead comes from large government efforts aimed at solving grand challenges faced by humanity.

The aim of this book is to take a serious look at Mazzucato’s ideas. As policymakers were, and are, desperate in their search for solutions, few scholars or politicians have scrutinized or questioned the idea of the entrepreneurial state. Scholars have tended to ignore these ideas since they emerged from a popular science book and not in peer-reviewed academic journals, and arguably they were not subject to much academic debate. On the other hand, policymakers have tended to uncritically accept these ideas as the next big thing, for several potential reasons. After the great recession, the need for fresh ideas and perspectives in public policy was great. Further and perhaps most importantly, by propagating the need for public direction and coordination, especially that governments should be driven by large missions, The Entrepreneurial State and Mission Economy provided public officials with a sense of importance and authority. For these and other reasons, the message was accepted rapidly throughout Europe and elsewhere. Mazzucato has served as an advisor to the European Commission and numerous governments across the world. More cautious policymakers seeking empirical evidence or detailed theoretical rationale for redirecting public investments into large, top-down industrial policy Introduction

5schemes have not been equipped with arguments or evidence to critically examine the story that was advanced. As a consequence, the ideas of The Entrepreneurial State and Mission Economy have been put into practice and rolled out across Europe over recent years, without much prior analysis. Notwithstanding the increasing number of policy reports and theoretical papers on missions, to date there have been hardly any empirical evaluations or studies of how such missions are designed and executed, or when they work or do not. As foundational innovation scholars Foray, Nelson, and Mowery argued in a special issue on “a new generation of policy instruments to respond to the Grand Challenges,” mission-oriented innovation policies “are not the right models for new programs aimed at the challenges we now face” (2012, p. 1697). They argue that regarding proposals for a new Manhattan or Apollo project focusing on issues such as climate change, such challenges “are all very different than the challenges faced and met by Manhattan and Apollo. These programs were aimed to develop a particular technological capability, and the achievement of their technological objective signaled the end of the program.” Also currently leading innovation economists such as Bloom, Van Reenen, and Williams (2019, p. 179) write that moonshot examples “lack a counterfactual example” and are by design geared toward political decision-making which “may be more likely to favor sectors or firms that engage in lobbying and regulatory capture, rather than the most socially beneficial.” This point is also emphasized in several contributions to this book (see e.g. the chapter “Third-Generation Innovation Policy: System Transformation or Reinforcing Business as Usual?” by Bergkvist et al.). In short, while the idea of aiming high and leveraging large portions of society’s resources to address some fundamental human challenges may sound appealing to many, such ideas have limited scientific credibility. Currently, ideas emanating from The Entrepreneurial State and Mission Economy are being implemented in large state initiatives in order to accomplish what are currently seen as vital outcomes. The European Union’s Green Deal amounts to investments of around €1000 billion over the next ten years, including €430 billion on hydrogen gas. What do we know—really—about the theoretical logic behind these ideas, and what empirical support is there for the idea that such massive top-down initiatives will bring about the innovative capacity to address global climate change and other missions? Over the past few years, some scholars have reviewed and discussed different arguments related to The Entrepreneurial State and Mission Economy and have thereby contributed to both scholarly and policy discussions (Aspromourgos, 2018; Brown, 2021; Mingardi, 2015; Pradella, 2017; McCloskey & Mingardi, 2020). However, we are not aware of any systematic effort to scrutinize the raison d’être of The Entrepreneurial State and Mission Economy, their theoretical validity, or empirical support. Hence this book. We address the core ideas behind the entrepreneurial state and related innovation policy agendas, discuss contrasting and complementary perspectives, showcase empirical evidence, and articulate a new, and in our view better founded, direction for innovation policy.

6K. Wennberg and C. Sandström

This book is in many ways a warning. Grand schemes toward noble outcomes have a disappointing track record in human political and economic history. Conventional wisdom regarding authorities’ inability to selectively pinpoint certain technologies, sectors, or firms as winners, and the fact that large support structures for specific technologies are bound to distort incentives and result in opportunism, seems to have been forgotten. This book serves as a theoretical and empirical reminder.

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The Contributions to the Present Volume

While each chapter in the current volume can be read as one distinct piece, there is also an overall idea and logic to the book. Chapters “The Entrepreneurial State and the Platform Economy”, “An Effectual Analysis of Markets and States”, “The Entrepreneurial State: An Ownership Competence Perspective”, “Innovation Without Entrepreneurship: The Pipe Dream of Mission-Oriented Innovation Policy” discuss theoretical perspectives that complement and contrast the theories underpinning the entrepreneurial state. These chapters demonstrate that ideas about top-down innovation policies often fail to consider central aspects of human individual and collective decision-making, idea ownership, and the nature of digitalization. In “The Entrepreneurial State and the Platform Economy”, Sinclair Davidson and Jason Potts (2022) explain how value is created in the platform economy and how Mazzucato’s description of the platform economy essentially misses out on value creation by employing outdated theories of value creation in the network economy. In “An Effectual Analysis of Markets and States”, entrepreneurship scholar Saras Sarasvathy (2022) outlines how theories of entrepreneurial decision-making that incorporate creativity, genuine uncertainty, and docility may be fruitfully leveraged to study markets and market design. In “The Entrepreneurial State: An Ownership Competence Perspective”, organizational economists Samuele Murtinu, Nicolai J. Foss, and Peter G. Klein (2022) discuss how several of the key ideas underpinning The Entrepreneurial State are at odds with notions of economic competence and ownership competence. As government actors lack the owner’s responsibility and incentives, the state is also bound to be less entrepreneurial, as are top-down initiatives governed by public actors. The first section of the book concludes with Johan P. Larsson’s “Innovation