Public Policy Impacts on Entrepreneurial Entry and Exit: A Real Options Framework

This article proposes a simple and parsimonious theoretical framework that generates predictions about the impacts of several prominent public policies on entrepreneurial entry and exit choices. These predictions are then compared with published empirical evidence. In addition to checking the external validity of the framework, this article makes sense of prior findings about public policy impacts on entrepreneurship, bringing a theoretical coherence to what formerly resembled a fragmented and scattered set of unrelated findings. The article furnishes the reader with a comprehensive overview of recent empirical literature on entrepreneurship policy, and identifies several limitations in previous empirical work that future research needs to address.