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Entrepreneurship

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					  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
• Favored by Laws of
                          Skills
  usury
                        • Was forced to
                          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 18th &19th Century France
• 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 20th Century
• 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 20th Century
• 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.