The term ‘unicorn startup’—describing ventures valued at over $1bn—has only been around since 2013. These unicorns are often celebrated as symbols of progress and economic vitality. However, research from Cambridge Judge Business School suggests that the pursuit of unicorns needs to be tempered with better governance to manage unintended consequences.

“Our paper challenges the assumption that entrepreneurial disruption is purely beneficial, highlighting its often overlooked negative impacts,” the researchers explain.

Focus on disruption

While entrepreneurial disruption has driven market reforms and transformed legacy institutions, it has also displaced professions, industries, and livelihoods, and caused various societal and environmental issues.

The paper advocates for “guardrails” such as financial incentives and monitoring systems to ensure that these high-growth ventures benefit society more broadly.

“Disruption has long been linked with innovation and reform through entrepreneurship, and it can be useful in some cases,” the researchers note.

The research shows how tech-based innovations and unicorns have led to the belief that disruption is a natural outcome of the rapid commercialization of new technologies. Unicorns, valued at over $1bn by private investors or public market exits, are often celebrated by policymakers as valuable ventures.

Unintended consequences

However, the study highlights that the disruptions caused by these ventures can have significant unintended consequences for economic, societal, political, and natural systems.

“Market reform involves improving the relationships between production, distribution, and consumption within a market and its institutions, while ‘unmanaged externalities’ refer to the negative societal and ecological impacts often resulting from insufficient oversight of innovation,” the authors explain.

The researchers attribute these negative externalities to an emerging neoliberal entrepreneurship ideology (NEI), which prioritizes financial returns over other societal factors. This ideology, they argue, has sometimes been treated almost like a religious doctrine.

Instead, the paper calls for a shift toward a responsible entrepreneurship ideology (REI) that addresses these negative impacts, creating a balance between reform and responsibility.

“Our theory suggests that entrepreneurial disruption can be both productive and destructive. We propose a new framework for societies to harness the benefits of disruption while managing its downsides,” the authors conclude.