Towards an entrepreneurial welfare state? A conceptual perspective

Abstract The recent turn towards “challenge-driven” or “mission-oriented” or “transformative” innovation policy has emphasized that governments must proactively shape and cocreate market and innovation processes to address grand societal challenges of the twenty-first century. The so-called “entrepreneurial” state is tasked with steering economic development towards socially and environmentally desirable outcomes. These new tasks derive from the idea of a state that is both innovative and redistributive. In this sense, it differs from the idea of a traditional welfare state that mainly carries out redistributive functions. An entrepreneurial state proactively shapes, steers, and incentivises market activities, meeting societal needs and increasing welfare. By reviewing key literature and drawing on empirical data from Finland, we first contrast the entrepreneurial state and the welfare state as two distinct governmental rationalities in terms of (a) goals and aims, (b) tools and techniques, (c) epistemological frames, (d) bureaucratic values and operating principles, and (e) legitimacy bases of public action. We then highlight specific tensions and trade-offs in the entrepreneurial welfare state’s policies towards addressing grand challenges. These tensions and trade-offs take place in challenge design, implementation, coordination, evaluation, and funding. We argue that public bureaucracy cannot ignore such tensions in the design of concrete industrial and welfare policies. Instead, it should acknowledge and mitigate them wherever possible. Our purpose is to make an empirically informed conceptual contribution to the ongoing debate about the entrepreneurial state in the context of Western liberal democracies.