In the Name of Entrepreneurship? The Logic and Effects of Special Regulatory Treatment for Small Business

In the Name of Entrepreneurship? The Logic and Effects of Special Regulatory Treatment for Small Business

In the Name of Entrepreneurship? The Logic and Effects of Special Regulatory Treatment for Small Business

In the Name of Entrepreneurship? The Logic and Effects of Special Regulatory Treatment for Small Business

Synopsis

What are the differential effects of regulation and policy on small businesses? What is the impact of special regulatory treatment for small businesses? This book sheds light on these issues through analysis of the regulatory and public policy environment with regard to small businesses, including focused studies in four key areas: health insurance, workplace safety, corporate governance, and business organization.

Excerpt

Small businesses are an important feature of the U.S. political and economic landscape. Small businesses (defined as firms with fewer than 500 employees) account for almost half of all gross revenues generated by U.S. businesses, employ half of all private-sector workers, and generate between 60 and 80 percent of net new jobs. Entrepreneurship is generally viewed as an engine of technological progress and economic growth. It is also an important element of the American dream: a means for those who have little more than ambition and a good idea to improve their lot in life. Not surprisingly, the interests of small businesses and entrepreneurs are frequently mentioned in policy debates.

Every day, policymakers at the federal, state, and local levels make decisions that have important implications for the livelihoods of entrepreneurs and small-business owners. There is ongoing concern that some regulations, rules, and government policies place a disproportionate burden on small businesses. For example, there is empirical evidence that some regulations place higher costs of compliance on small businesses than on other entities, since many of these costs do not vary by firm size and are incurred on an ongoing (rather than one-time) basis (Bradford, 2004). the tort system can affect small businesses differently as well, though the precise nature of that effect is less clear: in some cases, customers, employees, and government agencies might be less likely to punish or sue small businesses, because the perceived payoff is low; on the other hand, customers or employees might be likelier to sue a small business if they perceive that it cannot afford to mount an effective legal defense.

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