Entrepreneurship is dangerously obsessed with growth

Entrepreneurship scholarship and policy support are based on two intertwined myths of growth. There is the myth of firm growth as an entrepreneurial imperative and the related myth of perpetual economic growth. These are related because firms’ growth is widely hailed as a critical determinant of economic growth. Hence, much entrepreneurship scholarship is concerned with understanding and facilitating firm growth, and governments worldwide are trying to promote high-growth entrepreneurship in the quest for perpetual economic growth. 

These myths have turned into obsessions that have caused significant damage to the planet’s biophysical systems, social stability, and justice. Even sustainable growth and the fashion for sustainable entrepreneurship or eco-entrepreneurship have become, to borrow the words of Richard Douthwaite, “dangerous contradictions in terms.” 

Being addicted to these growth myths has blinded most entrepreneurship scholarship to the extent to which entrepreneurship is implicated in ecological overshoot and what has been described as the polycrisis. Moreover, it has resulted in neglect of the nature and role of entrepreneurship in a post-growth economy.

Firm growth and economic growth are only temporary phenomena, and, from an increasing number of perspectives, becoming less desirable as the ecological and social costs of continuing  to scale up human economic activity accumulates.  Clive Spash  has warned  that “The capital-accumulating economies of the world have a growth fixation that is both environmentally devastating and socially undesirable. They are in fact not growing at all, when assessed in terms of standard economic externality theory, due to the level of damages they create.” 

Ever since the Limits to Growth (LtG) study was published in 1972  a growing scholarship - and social activism - has raised concerns about the consequences of the obsession with growth that has defined global capitalism.  However, these concerns are hardly noticeable in the literature on entrepreneurship and have yet to affect the fields adherence to its growth myths. 

For one, the entrepreneurship literature seems oblivious to any other conceptualization than the necessity of firm growth and the importance of firm growth  for broader economic growth and job creation. It also seems oblivious to any possibility other than perpetual firm growth and economic growth. For example, in surveying the field of firm growth scholarship, entrepreneurship scholars Per Davidsson and Johan Wiklund do not question the underlying assumption that growth is necessary and neither do they recognize growth as an obsession. And in identifying an agenda on future research on entrepreneurship and economic growth, scholars David Urbano and David Audretsch do not consider a post-growth society as part of the agenda. The assumption is that economic growth is a permanent state of affairs and that it is merely a question of understanding the relationship between entrepreneurship and growth better, implicitly to create faster economic growth. With the belief that economic growth is unbounded, it is just a matter of better entrepreneurial ecosystems, better institutions, and better entrepreneurs, and voilà, the outcome is economic growth forever!

The obsession of entrepreneurship scholars and policymakers with firm and economic growth reflects the broader societal acceptance of economic growth as both an institution and an ideology.  As an institution, economic growth is embedded in a Growth Spiral- a "grow or die golden rule"   which means capitalism as system either has to continue growing, or it will collapse. As an ideology, economic growth is a core tenet of neoliberalism, “capitalism on steroids” as  George Monbiot and Peter Hutchison describes it.  Neoliberalism’s beliefs, premised on a view of human society characterized by competition, perpetuate a false narrative that the wealthy are deserving because they became rich through their own efforts and hard work. Consequently, it subscribes to and implies the perverse view that the poor and marginalized have only themselves to blame - that they are failures and losers. It supports the twisted belief that the entrepreneur is an inevitable hero who deserves super-wealth as a reward for their remarkable efforts and ingenuity.  

George Monbiot explains how this entrepreneur-as-deserving hero ideology of neoliberalism has motivated public policies and corporate decision-making and culture which has played a major role in a remarkable variety of crises from the global financial crisis in 2007 to the climate crisis and beyond. Thus, a destructive ideology had become deeply entrenched because it convinced society that economic growth is the outcome and just reward of the hard work of praiseworthy individuals.

Where some strands of entrepreneurship scholarship have recognized the real dangers of economic growth, it has either not linked it with entrepreneurial growth ambitions, or the limits of economic growth, but have rather searched for ways in which growth can be pursued in such a way that countries and entrepreneurs can “eat their cake and have it” i.e. continue growth but without ecologically disastrous consequences. In fact, sustainable entrepreneurship, eco-entrepreneurship, sustainable entrepreneurial ecosystems, social enterprise, impact investment, ESG compliance, and sustainable finance are often sold as new opportunities for growth. 

These "green" notions of entrepreneurship are all examples of reform environmentalism, which is an environmentalism that considers technological and organizational innovations in production methods and markets as sufficient to avoid ecological overshoot and mitigate climate change, without abandoning economic growth.   As one recent paper described this, it is as “the prefix ‘sustainable’ magically resolves any contradiction between economic growth and ecological wellbeing.”

However, the reality is that under the ideology and institution of growth, sustainable entrepreneurship has come to be marked by association with a green growth industry that is furthering capitalism’s expansion imperative by aiming to monetize, financialize and commodify nature as far as possible.  A new trend is to “make biodiversity conservation profitable and scalable.” These include sustainable and eco-entrepreneurial innovations such as biodiversity banking, offsetting, green/blue bonds, species credits, extinction futures markets, and climate catastrophe bonds. It also includes “tokenizing the planet to save it” which is the latest green growth and sustainable entrepreneurship growth and profit enabler. It uses blockchain technology to create “nature-backed financial instruments” - digital tokens. According to the entrepreneur behind a start-up in this field “nature is the new gold.”. 

At the extreme, sustainable entrepreneurship could amount to a deception. As Clive Spash asked,  “What higher form of deception could you request than enlightened Green Capitalists doing favours for the proles while improving their personal bank balance and smoothing over the corporate image?” 

Even where the proponents of sustainable and green entrepreneurship have no sinister attentions to profit from the ecological crisis, or to deceive via ESG strategies, the myth of economic growth is so ingrained that it has resulted in a “Achilles’ Lance” myth, which is the belief that economic growth would, like the mythical lance of Achilles, “heal the wounds that it inflicts.” 

Given that economic growth cannot be decoupled from material resource use and given that entrepreneurship has not been decoupled from growth, green growth and sustainable entrepreneurship are oxymorons. Perpetual growth cannot be green or sustainable, and hence neither can notions of entrepreneurship obsessed with growth. 

Clearly, what needs to change is the addition to growth. In this regard, it is time for entrepreneurship scholarship to engage with ideas from other disciplines, such as anthropology, ecological economics and biophysics, on how a post-growth society can function and what - if at all - place there is for entrepreneurship in such a post-growth society. 

Economic growth rates and entrepreneurship start-up rates have been declining in the West, at least since the 1970s, and the entrepreneurial economy has been making way for the ossified economy. Furthermore, entrepreneurship scholarship has matured and is arguably reaching a state of diminishing returns. From this, the conclusion can be made that a post-growth economy is increasingly becoming reality, despite the obsession with growth. Entrepreneurship scholars are hardly ready for it.