Entrepreneurship

Professor Josef Mittlemann

Brown University
 A Brief History of
Entrepreneurship

• Break activity into two camps: Leaders and

Followers. Entrepreneurship camp =
– Leader Camp: Royalty - Military
– Entrepreneur Camp: Merchants - Adventurers

• Mid 18th Century –

A zero sum game- ones gain another’s loss
This resulted in Negative connotations for
the business person
 Differences between the Capitalist
vs. Merchant
• Capitalist: • Adventurer
• No risk to Life and Actively trading and
limb voyaging, resulted
in
Development of Skills
• Favored by Laws of
• Was forced to
usury
survive. Use of new
tools and skills
 The word “Entrepreneur”
Definitions

Dictionary in France (1723)

“one undertaking a project, a manufacturer, a master builder”

England (18th Century)

An “adventurer, projector, or undertaker”
 Richard Cantillon
• “L’Essai sur la nature du commerce en
general” – published 1755 first clear
definition of an entrepreneur
• Market as a place vs.market as
Mechanisms
• An equilibrating mechanism
• The entrepreneur is a key player -Market
Maker
 Cantillon continued
• Focuses on function: Risk is
confronted in search of Profit

• Broke population down into Fixed vs

Variable Income earners.

• Product emphasis versus marketing

Later 18 &19 Century France
th th

• Quesnay, Baudeau and Turgot in mid 18th

Century France: Focused on:
– The ability of the entrepreneur to
Innovate and Organize
• J.B Say in late 18th and early 19th said:
– Entrepreneur is not a force in
invention but rather the
Commercializer of the Invention
– Thus the planner for its production
 Adam Smith
“Inquiry into the Nature and Causes of the
Wealth of Nations” (1776)
• Capital is the Driver of Profit

• People are naturally Industrious versus

entrepreneurial

• The Entrepreneur lost standing

 Early 20 Century
th

• Francis Walker, Frederick Hawley, and

John Clark

• Resurrected the entrepreneur’s role

• Individual versus source of capital

 Joseph Schumpeter in the early 30’s-50’s
resurrected more completely the entrepreneur.

• Saw the Entrepreneur as Combining

existing goods

• He referred to the Entrepreneurs as

“Creative destroyers.”

• Disrupters of equilibrium.
 Later 20 Century
th

• Entrepreneur is viewed as a Change

Agent

• Leaders as Change Makers

• Entrepreneurship as Process
 Entrepreneurship as Process
• Concept encouraged in U.S. by T.W.
Schultz in 1970’s

• Entrepreneurial activity goes beyond

the borders of business.

• Education can be a source of

entrepreneurial learning.

• Entrepreneurs: a somewhat scarce

and limited resource.
 General Consensus
on Entrepreneur
• Creative

• Innovative

• Promoter and marketer

• Assumes risk which others see as

greater than they do.
 Entrepreneur
• Decision maker

• Organizer but special type of Manager

• Re-allocator or accessor of various

resources.

• Both Leader and Proprietor

Entrepreneurship Myths
 Myth no. 1 is that an entrepreneur
is one who Starts and Runs a
Business.

Versus: Plan for Growth and Expansion

Myth 2: Entrepreneurship Happens
at one given point in time,

The phenomenon is not Fixed

and takes place as a Process over Time
 Next myth is that You are or you
are not an entrepreneur.

• I think it more generous to say that the

Entrepreneur enters Periods of dormancy
• In the long run, it can be an on/off
phenomenon
• But not really an either or phenomenon.
 Here is a popular one, the E is a
BIG Risk Taker
• My experience is that while any
innovation is somewhat risky, the
Entrepreneur takes his or her Analysis
quite carefully:
– does research, and
– manages the risk, through
• experience,
• special knowledge or
• enlisting the aid of others
 An entrepreneur is Born to Be

• Popularization of a Cult Concept:

– Richard Branson, or
– Ted Turner, also enlists the arguments found
in the
• Nature vs. nurture discussion.
• Our Environment plays a large role
So too, that the entrepreneur is in
it Only For Money’s Sake

Entrepreneurs are excited by acting as

Change agents and

Are motivated as much if not more by

Achievement than money.
 It’s only about the Individual
• I think it fair to say that the notion of
individual success in today’s global
economy is bankrupt if not romantic.
• Teams can and do exhibit the
entrepreneurial spirit.
• While the entrepreneur is a potentially
dynamic leader- but short of teamwork, the
innovation of ideas will fall flat.
 It Only Exists in Business

• Suffice it to say that entrepreneurial

activity is showing up everywhere.
• Even now in social work where there are
some cities that are investigating
entrepreneurship class requirements for
their workers.
 It Takes Luck and Money

• No more than any other endeavor,

perhaps we can say that the resource here
is idea and opportunity generated not
capitally generated.
• Of course there is an abundant measure
of Hard Work and Application of Skills
 And finally, is the world of the E.
Unstructured and Chaotic

• The world is Chaotic

• The Entrepreneur usually finds opportunity
in that arena and is quite good at dealing
with uncertainty.