A context in mutation: How the gig economy is changing the rules of the game for entrepreneurship?

In his seminal work, Baumol (1996) develops the idea that regardless of time, the allocation of entrepreneurship in society is fairly stable but will yield different ratios of productive, unproductive, or even destructive entrepreneurs depending on the “rules of the game” within the institutional framework. What Baumol further argued is that the institutional dependency of entrepreneurship is twofold: not only does the behavior of entrepreneurs depend on rules, but also, the creation of social value by means of productive entrepreneurial activity largely depends on the institutional framework and the various prevailing regulations. This was recently addressed and further problematized by Lucas and Fuller (2017), related to the power of rules in helping predict the entrepreneurship-driven social value that benefits society. As such, Lucas and Fuller (2017) explain that we cannot say ex-ante if an entrepreneur will engage in productive or unproductive forms of entrepreneurship because the outcome of her/his engagement can only be understood ex-post. While it may indeed be difficult to state ex-ante whether entrepreneurs’ engagement in positive value-creation activities will benefit society, the distinctions among productive, unproductive, and destructive entrepreneurship have been found critical for understanding social value creation by the means of entrepreneurship (Acs et al. 2013; Baumol 1996; Murphy et al. 1991) as social value constitutes the main difference among these three types of entrepreneurship (Acs et al. 2013).

Building on Baumol’s understanding, we propose that the lack of social value in the movement from a pre-gig to a gig economy has severely challenged the rules of the game as we knew them. Consequently, the well-known and simple differentiation among productive, unproductive, and destructive entrepreneurship has developed into a form of evasive entrepreneurship (Elert and Henrekson 2016) that has occupied the space within which the entrepreneurial gig activities operate. Elert and Henrekson (2016: 96) define evasive entrepreneurship as “profit-driven business activity in the market aimed at circumventing the existing institutional framework by using innovations to exploit contradictions in that framework.” In other words, it is a profit-driven activity that introduces technological or organizational innovations to work around the existing rules and regulations. A typical example of evasive entrepreneurship is cryptocurrency (such as Bitcoin, enabling peer-to-peer transactions that avoid many of the restrictions imposed on banks and other financial institutions). In the gig economy realm, an example of evasive entrepreneurship is Uber, operating in the area between less regulated private ownership and the heavily regulated taxi industry.

The environment where the rules of the game have started to mutate has brought a deeper division between the entrepreneur and the self-employed into the equation with implications for both the form of entrepreneurship and the social value it produces. A main difference that can be identified is the reduced social value creation that trickles down to society in the gig economy, where platform owners take on the role of arbitrageur, thus limiting the potential profit for the service provider and, in the long term, for the service receiver (the customer). At the same time, the gig economy and the large platform intermediaries have brought an abundance of business model innovations and new business models (Calderon-Monge and Ribeiro-Soriano 2024; Felicetti et al. 2024; Kraus et al. 2019), but these innovations have so far failed to provide a dual societal value for both the service provider and the customer (Richter et al. 2017; Wegner et al. 2024) since the potential living wage of the service provider has been severely questioned in recent studies (Ravenelle 2017; Woodcock 2020). We attempt to address the divisions between the entrepreneur and the self-employed in the contextual change of the gig economy by conceptualizing the relationship between opportunity- and necessity-driven entrepreneurship, as presented in the next section.

Since the Global Entrepreneurship Monitor (GEM) introduced the concept of opportunity- and necessity-driven entrepreneurship in 2001, researchers have attempted to identify factors underlying their variation and their consequences for economies and societies as well as for individuals. The core difference between these two entrepreneurship groups rests on the entrepreneurs’ motivation (Bosma et al. 2012). In the first case, individuals choose to become entrepreneurs and are willing to exploit their ideas, while in the second, they are pushed into becoming entrepreneurs and feel forced to start up their own businesses (Emami et al. 2022). Opportunity-driven entrepreneurs take advantage of a business idea they find promising, whereas necessity-driven entrepreneurs decide to start up a business as they see no other option to obtain an income for themselves.

This distinction soon became one of the key topics of entrepreneurship, with the junction of entrepreneurship and economics being especially developed (Acs 2006; Wennekers and Thurik 1999). Studies applying this approach investigate economic and institutional conditions that are more favorable to the development of entrepreneurship and its links to growth and job creation (Angulo-Guerrero et al. 2017; Carree et al. 2002). They search for a relationship between economic development and the rate of startups (Wennekers et al. 2005) or seek the link between the entrepreneur’s contribution and an economy in its phase of economic development (Gries and Naudé 2010). Systematically conducted research has found that opportunity-driven entrepreneurship leads to more successful, innovative, and growth-oriented enterprises (Acs 2006; Acs and Varga 2005; Wong et al. 2005) as well as more satisfied entrepreneurs (Larsson and Thulin 2019).

However, the idea of opportunity versus necessity entrepreneurship has recently started to receive growing skepticism. What is mainly questioned is the limited and reductionist differentiation between these two types of entrepreneurship based solely on the motivation aspect as opposed to viewing it as a heterogenous and multi-level concept that has contextual implications (Angulo-Guerrero et al. 2017; Dencker et al. 2021; O’Donnell et al. 2021; Shantz et al. 2018). The literature challenges this simplified approach, pointing out the importance of autonomy as a vital component of entrepreneurial orientation (Lumpkin et al. 2009; Carsrud and Brännback 2011) and noting the fact that entrepreneurs are motivated by both internal factors (such as mastery needs, work orientation, the need for stimulation, the need for achievement, and fear of failure) and external factors (such as economic profit, prestige and social status, power, and social influence). It also seems that necessity-driven entrepreneurship has historically been more connected with its role of distinguishing itself from opportunity-driven entrepreneurship than being an empirically verified standalone phenomenon (O’Donnell et al. 2021). Given that the concept of necessity-driven entrepreneurship has been seen as an add-on to explain the other side of opportunity-driven entrepreneurship and is usually not treated as a separate and distinct concept (Dencker et al. 2021; Fairlie and Fossen 2018; Nikiforou et al. 2019), there is also the growing interaction with opportunity-driven entrepreneurship that becomes more evident when starting to discuss the changes in the rules of the game given the emergence of the gig economy context.

Consequently, it must be noted that from 2019 onward, the GEM expanded the Adult Population Survey to better capture the nuances of entrepreneurial motivations, beyond the traditional opportunity vs. necessity framework (Bosma et al. 2020: 44). The updated survey acknowledges that individuals start businesses for a variety of complex reasons and often a combination of them. The new motivations include making a difference in the world, achieving significant financial success, continuing a family tradition, or earning a living because of the scarcity of jobs (which is the closest idea to the necessity-driven entrepreneurship concept). Nevertheless, new GEM reports still provide information that can be aggregated to analyze necessity-driven entrepreneurship (“earning a living because jobs are scarce”) and opportunity-driven entrepreneurship (“becoming wealthy or earning a high income” or “making a difference in the world”).

Therefore, we follow previous research calls questioning the simplistic dichotomous view of opportunity versus necessity entrepreneurship (e.g., Puente et al. 2019). However, we do not argue against its existence and call for other concepts but rather seek to problematize the rising complexities with their interdependence in the gig economy context. As explained in the next section, with the birth of the gig economy, the rules of the game for these two types of entrepreneurship have changed because of the deviation from the basic assumptions of what entrepreneurship implies, such as being the bearer of risk or uncertainty, taking on individual responsibility, and reaping potentially unlimited profits (Ahsan 2020; Knight 1921; McClelland 1961). As the two sides of the entrepreneurial coin collide, the rules of the game start to mutate for both sides, which also changes the way we should approach the concept of opportunity and necessity entrepreneurship.

The gig economy refers to a work environment in which temporary jobs are commonplace and companies tend to hire independent contractors or freelancers instead of full-time employees. Although “doing gigs” is not a new phenomenon (see, for example, Gawer and Srnicek 2021), its presence is continuously increasing all over the world, and since the financial crisis of 2008, it has been the subject of growing interest in the public arena. The gig economy is also related to fast-growing, successful, global-level companies with innovative business models (Parente et al. 2018) that popularize their services through online platforms. Its unprecedented rise is connected to the development of information technology (IT) (Hamari et al. 2016) and the Internet boom, resulting in the shift from products to services (Murillo et al. 2017). While the gig economy has revolutionized the labor market, offering flexibility and new opportunities for workers, it also raises significant ethical and social concerns. Despite the initial admiration when it was seen as a vehicle for entrepreneurial activity as well as a path to a decentralized economy (Martin 2016) and societal progress, the gig economy raises more and more questions, in particular from an ethical perspective. Its values—such as economic progress, work flexibility, and better resource exploitation efficiency—become problematic when considering the employment conditions that it creates, contributing altogether to an increase in poverty and inequality in societies (De Stefano 2016; Spigel 2020). In this regard, one of the central ethical dilemmas is the responsibility of platform owners to ensure the welfare of their workers (such as health and social security or minimum wage guarantee) when these are not guaranteed by the laws of the country where platform operators work. In practice, they have failed to do so; many have found that gig economy platforms prioritize profitability over fair treatment of workers. Additional issues that the gig economy has raised include a lack of adequate regulation (leading to the disruption of markets) and how it contributes to increasing income inequality in society (Churchill et al. 2019) as well as the low level of social value that the gig economy startups create (Spigel 2020). Income disparities within the gig economy are stark, with platform owners earning very high incomes, while lower-skilled workers struggle to earn for living. Additionally, Gawer and Srnicek (2021) discuss in their report for the European Parliament whether the gig economy is supplementing existing work or may be seen as a primary job. Gawer and Srnicek (2021) argue with support from prior work that the gig economy may be seen as a symptom of a broader dysfunctional labor market where gig platforms provide supplemental job opportunities for workers who take on multiple jobs and gigs to make a living. A brief conclusion that can be made is that there is a new complex reality that has developed with the rise of gig platforms that act as supplementary functions for workers to make ends meet, but the platforms also reshape labor markets that challenge employee–employer relations and more stable systems seen in welfare states.

As a contextual lens, the gig economy provides a foundation to problematize how the rules of the game in entrepreneurship have mutated and the potential ripple effects this might have on the relationship between opportunity-driven entrepreneurs and the necessity-driven self-employed. The gig economy (and, in particular, its entrepreneurial side) involves not only the owners of the platform but also the actual service provider, the self-employed gigger who is often portrayed as an equal partner who is independent and potentially prosperous as an entrepreneur rather than an employee. The relationship between the platform provider and the giggers is the foundation of the gig reality, without which the economy would not exist in its current form. However, through the abandonment of employees and the increase in independent contractors and freelancers, a majority of whom are self-employed entities, the platform providers—such as Uber, Lime, and TaskRabbit—decrease their individual responsibilities (e.g., McClelland 1961) and labor costs. They also reduce their risk and the uncertainty associated with the entrepreneurial process (e.g., Knight 1921), previously described as key parts when viewing entrepreneurs as drivers of societal development and job generators (Birch 1979), where productive forms of entrepreneurship could create positive social value for society at large through entrepreneurs’ innovation (Baumol 1996).

The birth of Airbnb and Uber radically changed the rules of the game for how to address what entrepreneurship might imply in this largely unregulated new space—the gig economy. Prior to 2007, the entrepreneur, regardless of whether she/he was opportunity- or necessity-driven, saw no ceiling for potential profits (Ahsan 2020), only differences in the ability to actually go past the ceiling. There also appeared to be no dependent relationship between these two types of entrepreneurs.

Currently, the two sides of the entrepreneurial coin seem to collide within the gig economy, where the rules of the game have mutated for both sides. This mutation explains how the notion of individual responsibility and risk that an entrepreneur assumes for reaping a potentially unlimited profit is slowly being pushed from the opportunity-driven entrepreneur (often the platform provider) toward the necessity-driven entrepreneur (often portrayed as either a gigger or self-employed). The gigger (the necessity-driven self-employed individual, often with a sense of being a first-time entrepreneur) becomes the bearer of risk and dependent on the rules set by the opportunity-driven entrepreneur but is deprived of unlimited profit potential (Ahsan 2020; Knight 1921). Within this mutation, promoted by a neoliberal governing structure (Harvey 2005), two parallel processes have been turned into an intertwined relationship, where the potential profit ceiling is decided by the opportunity-driven entrepreneur. In this manner, neoliberal policy enhanced through the gig economy has started to contribute to changing the initial productive form of entrepreneurship toward a more unproductive distribution of entrepreneurialism. Baumol (1996) implies this by the arbitrage seeking unproductive and less innovative entrepreneurial pursuits that do not benefit and create societal value. The emergence of the new context of the gig economy and the digital platform as task providers has also brought increased use of gig work by entrepreneurs to reduce staff (Cherry and Aloisi 2017; Prassl 2018).

In the following section, we will seek to conceptualize the aforementioned parts in relation to risk, profit, uncertainty, and responsibility as well as the contextual changes that the gig economy has brought to opportunity and necessity entrepreneurship.

In the introduction, we posed the following question guiding our problematization: How and why does the gig economy change the rules of the game for entrepreneurship and, in particular, the relation between opportunity- and necessity-driven entrepreneurs? To answer it, we illustrated how the new context may potentially change “the rules of the game” in entrepreneurship. We argue that the meaning of who an entrepreneur is has largely mutated through the redefinition of the previously held boundary conditions when discussing what entrepreneurship entails. We introduced the idea of the gig economy as the playground in which opportunity-driven entrepreneurs (usually owners of digital platforms) and necessity-driven self-employed individuals (the gig workers fed by the vision of being entrepreneurs) are intertwined.

The resulting relationship has been fostered through the lack of formal employment regulations and, in general, the legal vacuum within which the gig economy operated and still does in many geographical contexts (e.g., Friedman 2014; Ravenelle 2017). In this relationship, the opportunity-driven entrepreneur, as a holder of capital, has been freed from many risks and responsibilities at the expense of the necessity-driven gigger while, at the same time, capturing most of the profits (Peticca-Harris et al. 2020; Woodcock 2020). On the other hand, the amount of profit the self-employed gigger can capture is limited by the size of the gig market and the physical conditions bound by time and space, even though she/he assumes a disproportionate risk and huge responsibility in the uncertain environment (Mazzucato 2021). In this paper, we take this one step further and argue that we are in the gig economy facing a situation where the bearer of risk is denied the potential profits that previously followed acceptance of future uncertainty. Here, the idea of transformative digitalization as explained by Fossen and Sorgner (2021) might not only be as productive as they acknowledged since the efficient use of technology in the gig economy has created a more efficient connection between underutilized services and potential customers (the intermediate platform technology) but also simultaneously create closer ties between opportunity- and necessity-driven entrepreneurship. Since the ones performing the services are often being claimed as independent contractors, the platforms seek to argue the case of being a technology platform that mainly connects the two parties and charges a fee for that intermediate service.

Our paper contributes to entrepreneurship theory in the following manner. First, we are initiating research to address the encounter and clash between opportunity-driven entrepreneurs and necessity-driven self-employed individuals in the gig economy context influenced by neoliberal policy. Our problematization relates to the insights addressed by Fossen and Sorgner (2021) and, in a similar argument, calls for scholarly work on how platform entrepreneurship alters the rules of the game based on the efficiency promoted through digitalization. Second, by following the shift from the pre-gig to the gig economy, we demonstrate the transformational power of context and illustrate how context in mutation is influencing entrepreneurship. It also exemplifies the complexity of the interplay between agency (entrepreneurs) and structure (created by the gig economy). Third, we combine research on entrepreneurship, economics, and ethics to address the complexities of the modern entrepreneurial landscape that is increasingly located in a platform economy that warrants further exploration to understand the relationship between workers and owners (e.g., Kerikmäe and Kajander 2022; Peticca-Harris et al. 2020). The discussion led us to the conclusion that the problem is also tied to the entrepreneurial responsibility that entrepreneurs are supposed to assume, which, if one follows the growing inequalities (e.g., Friedman 2014; Piketty 2014), is not only very relevant but also alarming in the current political, social, and economic situation in many countries.

It is difficult to determine whether it is already a disturbance of a classic entrepreneurship theory or just a temporary and marginal phenomenon, but the rapid growth of gig workers and the platform economy (see, e.g., European Union 2024; Gallup Institute 2018) provides empirical evidence that it is not merely a disturbance but a growing context where business activity takes place. However, the consequences in terms of increasing social and economic inequalities as well as the deepening asymmetry of information and capital accumulation might be long-term and, if persistent, could lead to social dissatisfaction or even revolt. Moreover, with the changed relationships among different actors on the entrepreneurial stage, our understanding of entrepreneurship as a phenomenon is mutating, and these potentially new mutations warrant further scrutiny as, in the long run, they might alter how we view and address the overarching phenomenon of entrepreneurship. Going back to early discussions by Knight (1921), Schumpeter (1934), and Kirzner (1979), entrepreneurship is often described as a capitalistic function. Today the capitalistic function is specified as contributing to the rising economic inequalities (Piketty 2014), where a division can be seen between those who prosper and those who engage in low-paid and precarious work (e.g., Friedman 2014; Ravenelle 2017). We notice that the analogous division might be visible within entrepreneurship, where entrepreneurship is labeled opportunity- or necessity-driven depending on the entrepreneurs’ motivation to start a new venture (Bosma et al. 2012; Larsson and Thulin 2019).

The study offers several implications for both platform-based companies and policymakers within the gig economy. Platform owners and gig economy entrepreneurs can apply these insights to balance risk, uncertainty, profits, and responsibility by designing business models that integrate both economic efficiency and ethical considerations. Following the insights from other scholarly work on the development of the gig economy and its role as either supplementing other work or acting as the primary job (e.g., Gawer and Srnicek 2021; Ravenelle 2017), an implication toward policy is to carefully consider the interdependent relation that this study acknowledges and how it changes the independence of the weaker part in the platform and gig economy compared to the traditional market where network effects and the intermediary position that platform owners play were not as evident. Here, regulations to safeguard the necessity-based entrepreneur are key, and with the new EU platform workers directive (European Parliament 2025), steps are taken, but they are mainly to help precarious workers become employed and not to create autonomy for those who want to stay self-employed. Hence, measures are being taken, but the heterogeneity of the gig economy context also needs to be acknowledged by new regulations to not decrease flexibility for those who need and want it.

Our research also emphasizes the importance of understanding how changing social and economic contexts affect the entrepreneurial landscape. Platform managers and policymakers should continuously assess and respond to these contextual changes by modifying business models, policies, and practices to meet economic and societal expectations. A main issue emanating from this study is how to understand the growing evasiveness that is being seen in entrepreneurial pursuits today in a more and more digitalized economy as well as its impact on both necessity and opportunity-based entrepreneurs. Although the definition of evasive entrepreneurship and its focus on circumventing existing institutional frameworks (Elert and Henrekson 2016) are illustrative for the growth of the gig economy and platform owners’ attempt to leverage arbitrage opportunities (Kirzner 1979), it has practical implications for those attempting to enter these markets either as service providers or as new entrants when developing new intermediary platforms. Here, alternative forms of economic models, such as cooperative, may be visible as a means to balance the four constructs of risk, uncertainty, profits, and responsibilities among opportunity- and necessity-based entrepreneurs.

We recognize some limitations and simplifications in the reasoning presented in this article. First, we are aware that regulations to improve the status of employment of the giggers start to be seriously discussed and even executed in some European countries such as Germany or the Netherlands and that there is a lawsuit in California related to Uber drivers’ right to be employed. However, the regulations and laws are still very much debatable, and there is an ongoing discussion in the EU on how to regulate the gig and sharing economy (Kerikmäe and Kajander 2022). Also, the increasing size of the gig economy and loopholes that still exist and enable to circumvent the system, with no adequate public attention to the changes in the entrepreneurial landscape and social value of entrepreneurship, may result in further attempts to strengthen evasive entrepreneurship (Elert and Henrekson 2016). The upcoming economic crisis can only increase societal consent for the further development of less ethical forms of entrepreneurship. Second, we are aware of the simplistic equating in the text “self-employed” with giggers and necessity-driven entrepreneurs. We realize that these terms do not always share the same meaning and appear under different names in different countries. However, this simplification helps illustrate a wider phenomenon of potential deviation in entrepreneurship and the undesired increase of its evasive form. Moreover, we noticed that in the context of the gig economy, the self-employed are a sought-after workforce; therefore, to increase its uptake, the vision of the gigger as an independent entrepreneur is being spread.

The above limitations suggest future directions of scholarly work. Future research could explore the evolving legal frameworks and regulations regarding the gig economy. Understanding how these regulations impact gig workers’ rights and their entrepreneurial behavior would be valuable. Additionally, studies could delve deeper into the distinctions among self-employed individuals, gig workers, and necessity-driven entrepreneurs to clarify their roles and experiences across different countries and industries. As the gig economy continues to grow, research might also focus on how ethical forms of entrepreneurship (e.g., Fairbnb.coop, Green Taxi Cooperative) in the platform and gig economy might work to prevent the exploitation of workers and the rise of evasive entrepreneurship.