Magnus Henrekson

Research Institute of Industrial Economics | IFN · Entrepreneurship

Professors Robert A. Baron and Michael Frese are the joint recipients of the 2024 Global Award for Entrepreneurship Research. Their research contributions have helped establish the disciplinary foundation necessary to explore entrepreneurship from theoretical and applied psychological perspectives. From a theoretical psychological perspective, Prof...

This open access book raises some central questions: Do we need moonshot policies to spur innovation and economic growth? What are the risks associated with such policies? Economic turbulence, the COVID-19 pandemic, and mounting environmental concerns have paved the way for a renaissance of targeted industrial policy. In particular, the idea that...

In this comprehensive evaluation of existing economic research, we find that in wealthy countries, where government size is measured as total taxes or total expenditure relative to gross domestic product (GDP), there is a negative correlation between government size and economic growth--where government size increases by 10 percentage points, annua...

Understanding Entrepreneurship provides a comprehensive description of entrepreneurship, and explores how it plays a decisive role in creating growth, employment and prosperity. The book is based on a wide-ranging study of current research, and discusses entrepreneurship in a real world context, looking at how it influences contemporary society....

Mission-oriented innovation policies are becoming increasingly popular among policymakers and scholars. We maintain that these policies are based on an overly mechanistic view of innovation and economic growth, suggesting that a more bottom-up approach is called for. By invoking an entrepreneurial ecosystem perspective, we point out that innovative...

This chapter integrates findings from several different case studies on mission-oriented innovation policies (MOIPs) and makes use of the existing literature to briefly describe three other missions: The War on Cancer, homeownership in the United States, and the Swedish Million Program. Together with the analyses in the other chapters of this volum...

The notion that society should be organized around large so-called missions has gained momentum in public debate, and the reemergence of active industrial policy across the world has been inspired by academic scholars promoting the idea of mission-oriented innovation policies (MOIPs). Besides this introductory chapter, this collective volume consis...

In the previous chapters, we have discussed the future challenges faced by the European welfare states, in particular Sweden. We have also presented the theoretical and empirical foundations for a restructuring of innovation policies in order to handle an uncertain and demanding future. The issue at stake is how well-equipped countries will cope wi...

In the previous chapters, we have consistently emphasized the importance of entrepreneurship for innovation, renewal, growth, and job creation. However, these beneficial forces do not automatically reflect the individual entrepreneur’s aims. Even if factors such as social recognition and testing one’s ideas influence the desire to become an entrepr...

Taxation, undeniably one of the most influential tools at a policymaker’s disposal, plays a pivotal role in stimulating innovation and entrepreneurship. As such, we dedicate here a separate chapter to tax policy and the effects it can have. The tax structure influences not only the overall volume of innovative entrepreneurship, but also the channel...

One of the most important—and most difficult—areas of research in economics concerns the mechanisms that cause higher growth and increased prosperity. Economists base their work on theoretical models that are expected to capture the complex relationships of real-world behavior. Policy conclusions are then derived from these simplified models. Howev...

During recent years, challenges have emerged on an unprecedented scale, affecting nearly all the countries of the globe: climate change, energy supply, geopolitical tensions, protectionist measures, demographic changes, and a seemingly infinite demand for human capital, to mention but a few. Until recently, the most compelling challenge seemed to b...

Most advanced industrialized countries today justify their innovation policies on the basis of the dominant knowledge-based growth paradigm—primarily investment in R&D and education, as we saw in Chap. 2 . However, in terms of how growth policy should be formulated, this provides an incomplete guide which even borders on the misleading. The reason...

Professor Per Davidsson is the recipient of the 2023 Global Award for Entrepreneurship Research. Throughout an extraordinarily productive career, he has made invaluable contributions in building the field of entrepreneurship. His early studies on entrepreneurship and culture and his studies on the growth of small businesses played an important role...

Plain English Summary The winner of the 2022 Global Award for Entrepreneurship Research, Saras Sarasvathy, has improved our understanding of how entrepreneurs make decisions and has developed new concepts and ideas about the entrepreneurial process. Professor Sarasvathy introduced the term “effectuation” to emphasize how (expert) entrepreneurs oper...

Based on a review of 700+ peer-reviewed articles since 1990, identified using text mining methodology and supervised machine learning, we analyze how neo-Schumpeterian growth theorists relate to the entrepreneur-centered view of Schumpeter Mark I and the entrepreneurless framework of Schumpeter Mark II. The literature leans heavily toward Schumpete...

Differentiating various types of entrepreneurs provides clues to the puzzle of why vertical or top-down policies often fail to create Schumpeterian entrepreneurship and the ecosystems where it thrives. Schumpeterian entrepreneurship is intrinsically contrarian, whereas public policy has a bias toward incremental innovation and replication of past s...

Why are there fewer women at top positions in the private sector in Sweden than in the private sector of many other industrialized countries, in short, why do women have so little economic power in Sweden? In an attempt to answer this question Magnus Henrekson takes the analysis of last years's final report from the Swedish government commission de...

Little is known about self-employment as a career choice for women who marry a high-income spouse. Using rich Swedish register data, we show that Swedish women who are married to a high-income spouse are, on average, highly educated and more likely to pursue self-employment than those married to a spouse in the middle of the income distribution. Ou...

In the wake of the Covid-19 crisis, the European Union must regain lost ground and create more favorable conditions for inclusive and sustainable economic growth. The best way to achieve this goal is by increasing the Union’s innovativeness. This effort requires extensive and broad-based institutional reforms aimed at strengthening the incentives f...

Among contemporary economists, Mariana Mazzucato stands out for her emphasis on the importance of innovation to solving pressing challenges and achieve a greater quality of life. However, the type of mission-oriented innovation policies she promotes usually rely on an overly mechanical view of innovation and economic growth. We employ an ecosystem...

Foreign observers of Sweden have attributed the country’s socially inclusive economic growth, which was sustained during nearly one hundred years, to the expansion of the Social Democratic welfare state. However, this analysis overlooks the fundamental causes of Sweden’s economic takeoff. The crucial feature that Sweden exhibited was its uniquely l...

The chapter summarizes our main findings and examines the effects of “post-truth” schooling in combination with marketized education on students and teachers in Sweden. It does this in three parts. First, it discusses the deteriorating academic performance, including the gender difference in knowledge attainment and the rise of grade inflation. The...

A significant drop in students’ knowledge and skills is not the only problem facing Sweden’s schools. The chapter discusses the emergence of a systemic malaise that includes grade inflation, increasing gender differences in performance, and declining civic mindedness. Moreover, the work environment is marred by rising levels of bullying, unacceptab...

The chapter outlines two conflicting visions of knowledge: the classical view and the postmodern social constructivist view. According to the classical view, the purpose of schooling is to give students the kind of valuable knowledge and skills, including relevant knowledge of the wider culture in which they are expected to spend their lives as adu...

There has never been a golden age in Swedish education. However, there was a “silver age” that began approximately in the second half of the nineteenth century and ended around 1960. The chapter outlines this history. It demonstrates that the established view of the previous school system is deeply misleading. In fact, an increasing share of young...

The chapter describes the evolution of the view of knowledge in the Swedish school system. It begins in the immediate postwar years and ends in the mid-1990s with a discussion of the radical national curriculum enacted in 1994. This curriculum consolidated the paradigm of “post-truth” schooling. It expresses, explicitly or implicitly, many of the n...

In many Western countries, school systems are in deep crisis. Average results are disappointing, differences across schools and neighborhoods are increasing, and a student’s family background and gender have become more decisive for how well he or she fares. The chapter provides some reflections on the way forward for Sweden and Western education i...

The chapter shows how the educational trend of “post-truth” schooling continued in Sweden into the twenty-first century. It offers a close reading of the national curriculum that was in force at the time of writing (in 2021). The chapter also discusses how the Swedish school system in just a few years went from being very strictly regulated to bein...

In the 2000s, Swedish elementary and secondary school students’ scores in international assessments began to fall, which suggests both a long-term and substantial weakening of the Swedish school system. The chapter provides a detailed presentation of what is known about the performance of Swedish students before the first TIMSS assessment in 1995 a...

Plain English Summary The winner of the 2020 Global Award for Entrepreneurship Research, John Haltiwanger, has pioneered research showing that it is mainly firm age, not size, that matters for job creation. Through analyzing the relationship between employment, growth, and firms, he has advanced our understanding of how the economy works. He has do...

Based on a review of 700+ peer-reviewed articles since 1990, identified using text mining methodology and supervised machine learning, we analyze how neo-Schumpeterian growth theorists relate to the entrepreneur-centered view of Schumpeter (1934) and the entrepreneurless framework of Schumpeter (1942). The literature leans heavily towards Schumpete...

Amidst considerable debate on the relationship between entrepreneurship and economic inequality, scholarship only indirectly addresses how entrepreneurship informs individuals’ relative well-being. We theorize on the nuanced relationship between entrepreneurship and equality of eudaimonic well-being through the lens of New Institutional Economics....

Amidst considerable debate on the relationship between entrepreneurship and economic inequality, scholarship only indirectly addresses how entrepreneurship informs individuals' relative well-being. We theorize on the nuanced relationship between entrepreneurship and equality of eudaimonic well-being through the lens of New Institutional Economics....

Sweden is often described as a country where intergenerational social mobility is high, but research also shows that social mobility decreases the closer one gets to the extreme top of the income distribution. We study the occupational mobility for the CEOs of Sweden’s 30 largest public firms since 1945. The study is based on a data set consisting...

Differentiating various types of entrepreneurs provides clues to the puzzle of why top-down policies often fail to create Schumpeterian entrepreneurship and the ecosystems where it thrives. Schumpeterian entrepreneurship is intrinsically contrarian, whereas public policy has a bias toward incremental innovation and replication of past success. If c...

We examine the conceptualization of entrepreneurs in neo-Schumpeterian growth theory, which has reintroduced entrepreneurs into mainstream economics. Specifically, we analyze how neo-Schumpeterians relate to the contradiction between the entrepreneur-centered view of Schumpeter (1934) and the entrepreneurless framework of Schumpeter (1942), with th...

We examine the conceptualization of entrepreneurs in neo-Schumpeterian growth theory, which has reintroduced entrepreneurs into mainstream economics. Specifically, we analyze how neo-Schumpeterians relate to the contradiction between the entrepreneur-centered view of Schumpeter (1934) and the entrepreneurless framework of Schumpeter (1942), with th...

Entrepreneurship plays a pivotal role for institutional change and economic development in transition and developing economies. Formal and informal institutions in such countries are often sub-par, but rather than being constrained by them, entrepreneurship can often affect institutions and contribute to their evolution. We highlight three entrepre...

Entrepreneurship makes a vital contribution to economic prosperity. However, this activity is difficult to measure and compare between countries. One reason is that current metrics fail to distinguish between small-scale entrepreneurs without growth potential or ambition, which are common to developing nations – such as taxi drivers or street vendo...

Policymakers in several countries have recently taken steps to promote the rapid export expansion of small- and medium-sized enterprises (SMEs). The goal of these policies has been to create successful export-intensive startups, which are often referred to as born globals. These measures are motivated by studies claiming that born global firms are...

In the wake of the corona crisis, the European Union must regain lost ground and create more favorable conditions for inclusive and sustainable economic growth. The best way to achieve this goal is by increasing the Union’s innovativeness. This effort requires extensive and broad-based institutional reforms aimed at strengthening the incentives for...

We examine the conceptualization of entrepreneurs in neo-Schumpeterian growth theory, which has reintroduced entrepreneurs into mainstream economics. Specifically, we analyze how neo-Schumpeterians relate to the contradiction between the entrepreneur-centered view of Schumpeter (1934) and the entrepreneurless framework of Schumpeter (1942), with th...

We demonstrate how successful entrepreneurship depends on a collaborative innovation bloc (CIB), a system of innovation that evolves spontaneously and within which activity takes place through time. A CIB consists of six pools of economic skills from which people are drawn or recruited to form part of a collaborative team, which is necessary for in...

Forskning av hög kvalitet vid våra högskolor är en av grundpelarna för framtida tillväxt och välfärd. En statlig utredning föreslår flera åtgärder för att högskolornas forskning ska komma till nytta i form av innovationer. Förslagen saknar stöd i forskningen och förslag som skulle kunna stärka drivkrafterna till innovation och kommersialisering sak...

Little is known about self-employment as a career choice for women who marry a high-income spouse. We show that Swedish women who are married to a high-income spouse are, on average, highly educated and more likely to pursue self-employment than those married to a spouse in the middle of the income distribution. Using rich Swedish register data, we...

We demonstrate how successful entrepreneurship depends on a collaborative innovation bloc (CIB), a system of innovation that evolves spontaneously and within which activity takes place through time. A CIB consists of six pools of economic skills from which people are drawn or recruited to form part of a collaborative team, which is necessary for in...

Using data on all Swedish startups in the computing sector founded 2007-2015, we find a systematic positive relationship between the propensity of a computing firm to reach customers globally via digital platforms and its long-run employment growth relative to domestic-oriented computing firms. We also find positive, yet weaker, evidence that born...

Beginning in the interwar period, industrial foundations became a vehicle for corporate control of large listed firms in Sweden. In the 1990s they were replaced by wealthy individuals who either directly own controlling blocks or who own them through holding companies. We study potential explanations for this change and propose two tax-related cand...

Beginning in the interwar period, industrial foundations became a vehicle for corporate control of large listed firms in Sweden. In the 1990s they were replaced by wealthy individuals who either directly own controlling blocks or who own them through holding companies. We study potential explanations for this change and propose two tax-related cand...

We present the theory of the collaborative innovation bloc (CIB), an evolving system of innovation within which activity takes place over time. We show how the application of the CIB perspective can help make institutional and evolutionary economics more concrete, relevant, and persuasive, especially regarding policy prescriptions. Such policy acti...

This chapter discusses the European Union’s refugee policy. It shows that the common treaties leave considerable discretion to the individual member countries, which allows them to regulate refugee migration while still upholding international treaties. Member countries have authority over border controls, the processing of asylum applications as w...

Economic growth requires factor reallocation across firms and continuous replacement of technologies. Labor market institutions influence economic dynamism by their impact on the supply of a key factor, skilled workers to new and expanding firms, and the shedding of workers from declining and failing firms. Growth-favoring labor market institutions...

Entrepreneurship plays a pivotal role for institutional change and economic development in transition and developing economies. Formal and informal institutions in such countries are often sub-par, but rather than being constrained by them, entrepreneurship can often affect institutions and contribute to their evolution. We highlight three entrepre...

We demonstrate how successful entrepreneurship depends on a collaborative innovation bloc (CIB), a system of innovation that evolves spontaneously and within which activity takes place through time. A CIB consists of six pools of economic skills from which people are drawn or recruited to form part of a collaborative team, which is necessary for in...

We argue that scholars in the Austrian tradition of economics should incorporate the notion of a collaborative innovation bloc into their study of spontaneous market orders. We demonstrate how successful entrepreneurship depends on an innovation bloc of this kind, a system of innovation that evolves and within which activity takes place through tim...

We are grateful for the comments to our article, and for the opportunity to respond to them. In our original contribution, we argued that the application of the EOE perspective could help make Austrian economics more concrete, relevant and persuasive, especially regarding policy prescriptions. At the heart of this perspective is the idea that entre...

Property rights protection and the rule of law are arguably the most fundamental economic institutions of any society. They form the foundation of any entrepreneurial ecosystem and affect the effectiveness of collaborative innovation blocs. To promote an entrepreneurial society, there is therefore no alternative but to ensure that these foundationa...

The European Union suffers from an innovation deficit, which must be remedied if the EU is to improve the quality of life of its citizens and remain competitive in the global marketplace. We explain why productive entrepreneurship is a way towards restoring inclusive, innovative, and sustainable growth in Europe before presenting the theoretical fr...

To promote innovation and economic growth in the European Union, we have outlined a reform strategy with respect to the institutions and policies that matter the most for fostering a productive entrepreneurial economy. Here, we conclude by summarizing all the previous chapters and discussing how the 50 proposals presented can be used as building bl...

New, innovative business venturing hinges on the creation and mobilization of human capital and knowledge. The proposals in this chapter aim to strengthen and expand the European knowledge space in which Europe’s entrepreneurs build their ventures. Reforms to improve the production and flow of knowledge touch on educational systems, research instit...

In providing incentives and rewards, the tax system matters greatly for innovative entrepreneurial venturing. Because a host of different taxes affect entrepreneurship, we discuss reforms in several areas, including labor, capital, corporate, and private wealth taxation. The most important principles an entrepreneurial tax system should enshrine ar...

Increasing the availability of skilled labor to small and innovative ventures is imperative if entrepreneurship and innovation are to flourish within the European Union. Building up a qualitatively and quantitatively fitting labor force is always a challenge for new, growing ventures, but Europe’s labor market and social security systems tend to cr...

Opening up European markets for goods and services would put European entrepreneurs at an equal footing with incumbent firms. For entrepreneurial venturing both market entry and exit are of crucial importance and the European Union has strong legal competencies in these areas, following the treaties to build the European Common Market. However, esp...

To promote an entrepreneurial society, many of the institutions that mobilize and allocate savings and financial resources in the European Union must be reformed. The proposals in this area seek to address the bias against small, innovative, and young ventures in Europe’s financial markets, dominated by banks and large pension funds. These intermed...

We compile four hand-collected measures of high-impact Schumpeterian entrepreneurship (venture capital-funded IPOs, self-made billionaire entrepreneurs, unicorn start-ups, and young top global firms founded by individual entrepreneurs) and six measures dominated by small business activity as well as institutional and economic variables for 64 count...

The Swedish school system suffers from profound problems with teacher recruitment and retention, knowledge decline, and grade inflation. Absenteeism is high, and psychiatric disorders have risen sharply among Swedish pupils. In this pioneering analysis of the consequences of combining institutionalized social constructivism with an extensive market...

We study to what degree authors who publish in the five most prestigious journals in economics have previously published there and in which world region they are based. Although still high, the concentration of United States‐based and previously published top‐five authors has decreased. This trend is driven by increased co‐authorship between USA an...

The European Union officially proclaims to have a common asylum policy. However, the common treaties leave a great deal of discretion to the individual member countries, which allow them to regulate refugee migration while still upholding international treaties. Member countries have authority over border controls, the processing of asylum applicat...

This open access book builds on the European Union’s (EU) Horizon 2020 project ‘Financial and Institutional Reforms for an Entrepreneurial Society’ (FIRES). The authors outline how Europe can move towards more inclusive, innovative and sustainable growth through reforms that will rekindle its entrepreneurial spirit. Based on decades of research and...

Europe continues to lag behind the USA in venture capital (VC) activity and in the creation of successful startups, and has recently been surpassed by China. This is despite the fact that many European countries have deep financial markets, strong legal institutions, and high R&D spending. We point to the tax treatment of employee stock options as...

In this paper, we introduce the special issue on Financial and Institutional Reforms for an Entrepreneurial Society in Europe. There are many reasons for Europe to want to make the transition to a more Entrepreneurial Society. And for decades now, policy makers are trying to bring that transition about with variations on the “educate, deregulate an...

Little is known about self-employment as a career choice for women who marry a high-income spouse. We show that Swedish women who are married to a high-income spouse are, on average, highly educated and more likely to pursue self-employment than those married to a spouse in the middle of the income distribution. Using rich Swedish register data, we...