In his paper entitled, “Entrepreneurial Law,” Viktor Mayer-Schönberger makes the following statement:
I’m going to offer some thoughts, and then I’d like to hear opposing views. My take on this is that it is the same confusion about the difference between “legal risk” and “business uncertainty,” but in reverse. Now, Professor M-S is suggesting that what we need is more legal uncertainty. I fail to see how this helps.
In class yesterday, we discussed the fact that the “rules” entrepreneurs do not feel constrained by are largely the “way things are being done” in the particular area in which they want to do business. There is nothing – except for market demand – that says they have to follow those rules. If they disregard them, or do things differently, it’s a risk – but only a business risk. They might be hugely successful, moderately successful, or they might founder – and for any number of reasons.
The point is that they are free to disregard the business “rules.”
That is NOT true of laws. Entrepreneurs are not free to disregard the law, any more than anyone else is. Having one regulatory structure in which entrepreneurs are trying to operate, and then changing that structure “iteratively,” “adaptively” and “repeatedly” would simply mean that one’s business was (potentially) lawful one day, heavily regulated the next, and illegal the day after that. (And yes, I realize that even the most ambitious legal system does not change that quickly, but you take my meaning.)
In such a system, the only actors who would benefit are those who have influence with lawmakers. This will almost never be entrepreneurs and innovators – particularly disruptive ones, who are seeking to launch a product or a new business model for which the market is unknown, or apparently very small.
An entrepreneur who operates outside of established business parameters is a renegade. An entrepreneur who operates outside the law is a criminal. (And of course, we do have those. Think about it …)
But perhaps I am giving Professor Mayer-Schönberger’s article too “crabbed and literal” a reading. I welcome thoughts from the class. Can you perhaps think of examples where the ability to change the legal structures quickly would be beneficial to existing and aspiring entrepreneurs?