Entrepreneurship is increasingly in the news. Governments all over the world extolits benefits and implement policies designed to promote it. There are several reasons for this interest in, and enthusiasm for, entrepreneurship. Owner-managers of small enterprises run the majority of businesses in most countries. These enterprises are credited with providing specialised goods and services that are ignored by the largest firms. Entrepreneurs generate productivity gains from dynamic entry and exit, which spurs economic development. This comes about either by selection or by competition. Selection involves replacing incumbents who are inefficient or do not satisfy consumer demand by entrants who are more efficient or better meet demand by offering new or better-quality products. Entrants intensify competition and thereby discipline incumbents to provide cheaper or more innovative goods.

The most dynamic entrepreneurs pioneer new markets for innovative products, creating jobs and enhancing economic growth. As a striking example, four of the largest US companies by market capitalisation in 1999, accounting between them for about one-eighth of US GDP (Microsoft, Dell, Cisco Systems and MCI), did not exist twenty years earlier (Jovanovic, 2001).