Protectionist policies and diversity of entrepreneurial types

Nachiket Bhawe, Shaker A. Zahra, Chen Chao, Garry D. Bruton

Research output: Contribution to journalArticlepeer-review

4 Scopus citations


In recent years, there have been vigorous debates on whether restricting the operations of foreign multinational enterprises (MNEs) through various protectionist policies would allow local entrepreneurs to flourish. Research suggests that, although knowledge spillovers from MNEs can provide positive impetus to local entrepreneurship, MNE may also crowd out entrepreneurial firms. In this study, we examine how policies restricting MNEs’ entry affect local entrepreneurship, especially the diversity of the new firms being created. Using an agent-based simulation of an ecosystem, we model the dynamic interplay between MNEs’ knowledge spillover and diversity of local entrepreneurship and how two protectionist policies—tariffs on imports and subsidies for local entrepreneurs—impact this dynamic. We develop a fine-grained understanding of how such policies can both enhance and constrain different types of local entrepreneurship.

Original languageEnglish (US)
Pages (from-to)789-807
Number of pages19
JournalSmall Business Economics
Issue number2
StatePublished - Dec 6 2019

Bibliographical note

Funding Information:
The fourth author is grateful for support from the National Natural Science Foundation of China [grant number 71620107001].

Publisher Copyright:
© 2019, Springer Science+Business Media, LLC, part of Springer Nature.

Copyright 2021 Elsevier B.V., All rights reserved.


  • Diversity of local entrepreneurship
  • Local entrepreneurship
  • MNE
  • Protectionist
  • Subsidy
  • Tariff


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