From the entrepreneurial to the ossified economy

Abstract

Entrepreneurship in advanced economies is in decline. Instead of becoming 'entrepreneurial', as was anticipated in the 1990s, today, these economies are better described as ossified. This paper starts by documenting the decline in entrepreneurship. It then critically discusses extant explanations for the decline. While having merit, these explanations are restricted to proximate and supply-side causes. Given these shortcomings, an additional perspective is contributed: it is argued that adverse scale effects from rising complexity, and long-run aggregate demand changes, account for the ossification of advanced economies. Implications for entrepreneurship scholarship are drawn.