Entrepreneurs challenge those in power—until they themselves become powerful

Entrepreneurship can spread economic power and give more people the opportunity to influence decision-making, thereby strengthening democracy. But over time, successful challengers may themselves begin to protect their own power. Entrepreneurship policy needs to take this paradox more seriously, according to Professor David Audretsch.

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During a webinar on entrepreneurship and democracy organized by Esbri earlier this week, David Audretsch, a professor at Indiana University, highlighted a perspective that is often overlooked. Entrepreneurship is not just about innovation, technology, and economic growth, but also about people’s ability to act independently and challenge established power.

– Entrepreneurship is a cornerstone of democracy, but democracy is also essential to entrepreneurship. In both cases, it’s about independence—people being able to make their own decisions and act on them.

That connection is put to the test when a handfull of companies gain so much influence that they can limit others’ ability to compete, finance new ideas, and make independent decisions.

– I don’t think it’s a matter of good and bad companies. It’s about power. When companies, organizations, or people gain power, they use it.

David Audretsch cited Sonos as an example. The company’s founder has described how large technology platforms can create a so-called “kill zone” around themselves: an area where smaller companies find it difficult to grow because they risk being copied or squeezed out. If investors believe that a young company cannot compete with a dominant player anyway, funding may also dry up.

Spotify found itself in a similar dispute with Apple and reported the company to the European Commission for anti-competitive behavior. Spotify was later found to be in the right.

When the upstart becomes the establishment

When a company transitions from challenger to market leader, what it has to gain and lose also changes. Apple, Microsoft, and Google were once upstarts that challenged established companies and business models. Today, they themselves are among the world’s most powerful companies.

– A company that hasn’t yet created much doesn’t have much to protect either. But once the company becomes successful, it suddenly has a market position and revenue to defend. At some point, the company therefore becomes more interested in protecting what has already been created. What once challenged the status quo begins instead to defend it, said David Audretsch.

– The companies that are entrepreneurial today will become tomorrow’s established companies. That is why society must constantly create opportunities for a new generation of entrepreneurs to emerge.

More than just tech, AI, and high-growth companies

For a long time, entrepreneurship policy has primarily sought to promote innovation, technology, growth, and new jobs. Those goals remain important. But if entrepreneurship is also viewed as a matter of democracy, it’s not enough to ask which companies are growing the fastest. It also becomes important to ask how many people and companies actually have the opportunity to make their own decisions and challenge established players.

– We’ve almost arrived at a view where all entrepreneurship is considered equal, but some forms are more equitable than others. It’s seen as better if a company is innovative, if it’s a scale-up, or if it works with AI. But if we’re concerned about democracy, something else becomes important: that there are many independent companies and people who can make their own decisions.

This independence is also why entrepreneurship and authoritarian systems clash. Entrepreneurs act on their own ideas and can thus challenge the order that those in power try to maintain.

Technology and innovation still play a major role, and at the same time, this presents a new societal challenge.

– Twenty or twenty-five years ago, much of the focus was on how we could foster more innovation and bring new ideas to market. That need remains. But now we also face a challenge that concerns the very foundation of our societies. Democracy is under pressure.

Those without power must be given a chance

Entrepreneurs are often in a weak position when the rules of the game are being shaped.

– Entrepreneurs are generally people without much power. They usually lack significant financial resources and are therefore not particularly well represented. At the same time, there are other interests that are established, organized, and considerably stronger, said David Audretsch.

Because established interests have more resources and stronger representation, entrepreneurs’ needs risk being given less consideration when policy is formulated.

According to Audretsch, there is often a strong belief in Europe in the “managed economy,” where regulations, institutions, and established players wield significant influence. This model can create stability, but it can also give those who already hold a strong position greater opportunities to shape the rules of the game. This makes it more difficult for new companies to challenge the status quo.

– Entrepreneurs want to challenge the status quo. They need to be supported and given the opportunity to act.

For David Audretsch, entrepreneurship policy is therefore not just about more startups, patents, or fast-growing tech companies. New and independent companies must also be able to challenge those who already hold power.

Democracy is slow—the entrepreneur is in a hurry

Democratic processes take time. Decisions must be built on broad support, different interests must be weighed against one another, and rules must be followed. Entrepreneurs often need to act quickly and test the waters while uncertainty is still high.

A centralized system can sometimes make decisions faster because fewer stakeholders need to be consulted. But that same concentration of decision-making power can limit the ability of people and companies to test their own ideas. There is a clear conflict of objectives here: faster decisions can mean less room for independence.

– Perhaps this is the great challenge of our time. We value democracy, but we also value prosperity. And we need entrepreneurship for that prosperity.

According to David Audretsch, the challenge is therefore not to choose between democratic processes and vibrant entrepreneurship. It is to design rules and institutions that both distribute power and give new companies the opportunity to act quickly, test ideas, and challenge established players.

– Investing in entrepreneurship is investing in democracy.

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