6th Market Economy Colloquium: The Decline and Recovery of Entrepreneurship—For a Free and Dynamic Society

6th Market Economy Colloquium

Date and Time: 11:00 a.m., May 15, 2025

Venue: Yeollim Hall

Topic: The Decline and Recovery of Entrepreneurship_For a Free and Dynamic Society

Presenter:

Ho-gyeong Lee, Researcher, Center for Free Enterprise (CFE)

Discussants:

Jae-wook Ahn, Chairman, Center for Free Enterprise (CFE),

Sung-no Choi, President, Center for Free Enterprise (CFE), and six others

The Decline and Recovery of Entrepreneurship: For a Free and Dynamic Society

Ho-gyeong Lee

Researcher, Center for Free Enterprise (CFE)

The Reality of Declining Entrepreneurship in Korean Society

Today, entrepreneurship in Korean society is gradually declining. In the past, entrepreneurs who founded Samsung, Hyundai, LG, and SK blazed new trails in the market through entrepreneurship and became the driving force behind national economic growth. Today, however, a social atmosphere that values stability over challenge and preserving the status quo over creativity is spreading. This change is difficult to explain by individual choice alone; rather, it can be seen as the result of a complex interaction of institutional, cultural, and educational factors.

First, a rigid, regulation-centered institutional environment is a major cause of the decline in entrepreneurship. In the process of starting and operating a business, excessive licensing and permit procedures, an opaque tax system, and rigid labor regulations act as barriers to entry that block innovation. In particular, in emerging industries, regulations often move ahead of the market and fundamentally block new attempts.

Second, the social stigma attached to failure and the lack of opportunities to try again are also serious problems. Korean society has a strong tendency to view failure not as “experience” but as “disqualification.” As a result, entrepreneurs are not given a foothold from which they can rise again, and failure often leads directly to social exit.

Third, the uniformity of the education system and a culture of avoiding challenges hinder entrepreneurship. Education today is still centered on finding the “right answer” and on entrance exams, making it difficult to foster voluntary problem-solving and creative thinking. This leads the younger generation to pursue stable paths and internalize a fear of failure.

Fourth, negative perceptions of entrepreneurs also suppress entrepreneurship. As cases of unfair practices by some companies spread into distrust of entrepreneurs as a whole, entrepreneurs are placed in a position where they are easily misunderstood as “vested interests” or “symbols of unfairness.” This weakens the spirit of challenge among young people and prevents entrepreneurs from being seen as deserving of social respect.

The Social Need to Expand Entrepreneurship

Despite this reality of decline, the recovery and expansion of entrepreneurship are key to breaking through the problems Korean society now faces. It is a core condition for increasing the dynamism and resilience of society as a whole.

From an economic perspective, entrepreneurship creates new businesses and provides the driving force for continuous innovation. Entrepreneurship connects innovative ideas to the market. When multiple innovations accumulate, our society can create more large corporations on its own.

From a social perspective, entrepreneurship contributes to restoring social mobility—that is, rebuilding the “ladder of opportunity.” It is a key condition for moving toward a vibrant society. Today, the ladder of opportunity in our society is gradually disappearing. This is because rent-seeking behavior, which pursues profit by parasitically relying on institutions and regulations rather than creating value through effort and creativity, has become widespread. Rent-seeking distorts competition and produces a culture that settles for preserving the status quo instead of embracing challenge and innovation.

Entrepreneurship is also important from a cultural perspective. A truly free society becomes possible when a culture spreads in which members of society take the initiative to solve problems and take responsibility for the paths they choose for themselves.

Conditions for Expanding Entrepreneurship

For entrepreneurship to spread throughout society, an integrated environment must be created across multiple levels, including law and institutions, education, and culture. In particular, the key lies in establishing a market order in which the free and responsible actions of individuals are protected.

First, easing regulations and making institutions more flexible are prerequisite tasks. For entrepreneurs to act freely, unnecessary barriers to entry and administrative obstacles must be removed, and predictability and autonomy in the business environment must be guaranteed. At the same time, protection of property rights and freedom of contract are the most basic preconditions for entrepreneurship. If ownership of the fruits of one’s efforts is unstable or arbitrarily infringed upon by government power, any kind of creative destruction becomes difficult to achieve.

Second, an environment in which free competition is possible is necessary. Entrepreneurship can truly display its power only when it can compete in an open market. All firms seek to earn as much profit as possible. They compete to win and strive to do better. If political favoritism or oligopolistic structures undermine the dynamism of the market, entrepreneurs seeking to enter anew will find it difficult even to begin.

Third, the state’s role should be to provide law and institutions. When the state tries to replace the market or excessively restrict the choices of entrepreneurs, it instead suppresses creativity and the spirit of challenge. The state must remain in the role of supporting the institutions that allow the market to function fairly and must not infringe upon the autonomy of the market.

Fourth, it is necessary to build capital market infrastructure to reduce fear of failure. A financial environment that can institutionally absorb investment risk must accompany this effort. In particular, sufficient capital must be invested so that capital itself can absorb business risk. With smooth capital raising and investment, an environment can be created that reduces the burden on entrepreneurs when failure occurs.

A market-based capital market infrastructure, not a government-led one, must be formed autonomously. The free flow of capital and a dispersed investment structure are precisely the foundation that reduces the burden of failure and allows entrepreneurship to function actively.

Fifth, stronger entrepreneurship education is needed. This should go beyond startup skills and focus on cultivating problem-solving ability, independent thinking, and a sense of responsibility. Opportunities to experience both the philosophy and practice of entrepreneurship should be provided not only in elementary, middle, and high school curricula but also in universities and civic education. At the same time, education should also teach that entrepreneurship, through innovation, has contributed not only to consumer welfare but also to the welfare and safety of humanity and to the development of civilization.

Finally, improving social perceptions of entrepreneurs must proceed in parallel. Entrepreneurs should be recognized not as symbols of unfairness but as social innovators who create new order and value, and this must be connected to changes in attitude across the media, culture, and political discourse as a whole.

A Society Where Entrepreneurship Is Alive

Entrepreneurship is the key to breaking through the stagnation, imbalance, and innovation slowdown that Korean society now faces. It is more than a mere willingness to start a business; it is an attitude of identifying and solving problems and creating new businesses responsibly. Yet in our society today, entrepreneurship is unable to play its proper role amid rigid institutions, the stigma of failure, education that suppresses creativity, and distorted perceptions of entrepreneurs.

Added to this are the protection of vested interests and a culture of rent-seeking, which are undermining fair competition and severing the ladder of opportunity. To change this trend, entrepreneurship must take root not as something exceptional but as a culture that anyone can practice in everyday life.

Property rights must be firmly guaranteed, anyone must be free to compete, and institutions must have consistency and predictability. Above all, an environment must be created in which innovation can continue naturally.

The spread of entrepreneurship provides a foundation that can bring vitality to society as a whole, beyond individual growth and autonomy. Now we must move toward a society in which everyone can live creatively, and the starting point is precisely the social expansion of entrepreneurship.

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Original title: 제6회: 기업가정신의 위축과 회복_자유롭고 역동적인 사회를 위하여

Author: Market Economy Colloquium

Date: 2025-05-15

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=collo&pn=1&idx=27650