This title challenges the conclusions that link entrepreneurship to lower employee compensation. This challenge is based on theories of entrepreneurship, which view the role of small firms as existing in a dynamic context rather than a static framework. The evolutionary theory of entrepreneurship views the startup as an endogenous response to economic knowledge and suggests that new firms are a diverse manifestation of the search process.

The role that small firms and entrepreneurship play in economic development has been particularly contentious. Joseph Schumpeter (1911), in his early work, argued that through a process of "creative destruction," small and new firms would serve as agents of change and a catalyst for innovation and growth. But, he later rescinded this view, instead concluding that large corporations were the engines of growth. Just as it seemed that a consensus had emerged among scholars and policy makers that small business was at best superfluous and at worst a drag on growth and economic development, David...