History of Entrepreneur

History of Entrepreneurship

A History of Entrepreneurship is a brief survey of what several well-known, and several less-well-known, economists have had to say about the role of the entrepreneur in the economy. Hébert and Link have collaborated on the history of entrepreneurship before.  Besides some papers, their 1988 monograph is substantially the same as the current monograph and their 2006 monograph appears identical except for new versions of the very brief Preface, Introduction and Conclusion.  (If you decide the monograph is useful to you, you may want to buy the 2006 version available for download through SSRN for a mere $19.) Since this is a very slight revision of their 1988 monograph, it is not surprising that almost all of the literature cited is from the mid-1980s or earlier.  Much recent literature is ignored (e.g., Mark Blaug’s insightful 1998 paper).

Economic writings on entrepreneurship are organized, mainly by time and geography, into ten brief chapters – Schumpeter is given his own chapter.  Chapters are devoted to French economists, English economists, the neo-classicals, and American economists.  Among twentieth-century economists, besides Schumpeter, significant attention is devoted to Frank Knight, Israel Kirzner, and Ronald Coase.

The monograph does not aim to make a contribution to economic history, and none is made.  Economic historian Arthur Cole's Harvard workshop on entrepreneurship receives a couple of pages (pp. 78-79) of discussion, but almost entirely in terms of the theoretical stance of the workshop participants.

In the Introduction and Conclusion, the authors try to justify their efforts by claiming that investigation of the history of thought on entrepreneurship will provide insights to current questions on entrepreneurship.  For instance, they are curious “why is capitalism reviled in Western Europe?” (p. xix).  Their brief answer in the Introduction is:  “the inability of many intellectuals to escape Marxist patterns of thought” (p. xix).  The question is of interest, and their answer is worth considering, but the body of the monograph holds no elaboration.

Another current question raised by the authors is why “the entrepreneur was squeezed from economics” (p. 104).  Their answer is the mathematization of the discipline.  This is a plausible conclusion, but one that has been reached by others before, without having to rehearse all of the details of early economic writings on entrepreneurship.

Mainly what the monograph actually does is to catalog what position a variety of economists took on a few issues that are important to the authors.  The primary issue of interest is to identify which roles the economist emphasized for the entrepreneur.  One of the most useful features of the monograph is a resulting compendium of twelve roles that an entrepreneur can have, with a parenthetical listing of the economists who mentioned each role.  The twelve roles are:  assumer of risk, supplier of capital, innovator, decision-maker, industrial leader, manager, organizer of resources, owner of firm, employer of inputs, contractor, arbitrageur, and allocator of inputs.

The authors give special emphasis and praise to those economists who saw the entrepreneur as a dynamic assumer of risk or innovator.  I share an interest in the entrepreneur as innovator and believe the monograph will be useful for giving credit where credit is due.  For instance, I had never heard of Abbé Nicholas Baudeau, and so was interested to learn (pp. 14-15) that he had anticipated Schumpeter in emphasizing the role of entrepreneurs as innovators.  Bentham is much better known, but I had not known that Bentham (pp. 28-32) also appreciated the role of entrepreneur as innovator.


In concluding, the authors’ main prediction is that:  “In the future ... Knight may be more relevant to the subject of entrepreneurship than Schumpeter, at least among management specialists who study entrepreneurship” (p. 103).  They reach this prediction by extrapolating the academic theorizing in an article by Alvarez and Barney (2005).  An alternative approach would be to identify which entrepreneurs have mattered most for achieving the spectacular economic growth of what McCloskey (2010, p. 48) has called the “Great Fact” of economics; and then to study carefully the history and biography of those innovative entrepreneurs.  Following that approach, Schumpeter’s continued relevance is assured.

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History of entrepreneur 

The entrepreneur is a factor in microeconomics, and the study of entrepreneurship reaches back to the work of Richard Cantillon and Adam Smith in the late 17th and early 18th centuries, but was largely ignored theoretically until the late 19th and early 20th centuries and empirically until a profound resurgence in business and economics in the last 40 years.
In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek.

History's 10 greatest entrepreneurs

How many entrepreneurs have there been in the history of the world? Millions, certainly, probably even billions. These are the men and women who take capital -- their own or somebody else’s -- and use it to beget more capital. Some fail, some succeed, some excel.
With so many candidates to choose from, any list of the 10 greatest entrepreneurs of all time will necessarily be somewhat arbitrary. It will also be top-heavy with Americans, just as a list of great chefs would be disproportionately French or of great eccentrics dominated by the British.
Business is what America does. If that sounds chauvinistic, get over it.
Here, without further ado but with tongue occasionally in cheek, are history’s 10 greatest entrepreneurs.
1.  King Croesus. A pick by our veterans committee, Croesus, who ruled the Asia Minor kingdom of Lydia in the sixth century B.C., is owed a huge debt of gratitude for minting the world’s first coinage, thereby creating in a single stroke the lifeblood of every business: liquidity and cash flow. Moreover, his opulent lifestyle has given entrepreneurs throughout history something to shoot for. Is there a greater distinction for the commercially inclined than to be deemed “as rich as Croesus”?
2.  Pope Sixtus IV.  Sixtus gets the nod for realizing that the “wages of sin” meant more than unpleasant repercussions. There was money to be made in damnation, and Sixtus mined it by opening up a new market -- the dead -- for the indulgences the church had been selling for years. Relatives of the deceased quickly filled the Vatican’s coffers with payments intended to lessen the time their loved ones spent in purgatory. In 1478 Sixtus “grew his market” by authorizing the Spanish Inquisition, which swelled purgatory’s ranks by 100,000 souls in 15 years. He also was the first pope to license brothels.
3.  Benjamin Franklin. In a real sense, Franklin was America’s first entrepreneur. Unlike other of the Founding Fathers -- the hypermoral Washington, the prodigiously intellectual Jefferson -- whose virtues and attainments are seen today as anachronisms, Franklin truly was a model of what many of us would become. Beneath the statesman’s mantle resided a popular author, a printer, an inventor (the lightning rod, bifocals) and a very savvy businessman who knew how to commercialize the fruits of his fertile mind.
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4.  P.T. Barnum. Americans have always loved a good scam and Phineas Taylor Barnum took the art to new heights. He played on our fascination with the bizarre and freakish with sideshow acts ranging from the midget Tom Thumb to Jumbo the giant elephant. In between was a host of more dubious curiosities. He created the Barnum and Bailey Circus as a showcase for all this wonderment, and dubbed it “the Greatest Show on Earth.” Along the way he invented modern advertising and became rich. For the record, he never said “There’s a sucker born every five minutes,” but he left behind plenty of other bon mots. Among them: “Every crowd has a silver lining.”
5.  Thomas Edison. What do you say about the man who gave the world the electric light, the phonograph, talking motion pictures and more than 1,300 other patented inventions? That he was the world’s greatest inventor, certainly.  But he was also able to exploit the profit potential in his creations, an entrepreneurial bent that asserted itself when Edison was a teen-ager, printing a newspaper in the baggage car of a rolling train and then selling copies to passengers. His impact on the way people live was and is pervasive. As a combination of inventive genius and entrepreneurial flair, he stands alone.
6.  Henry Ford. Ford also fundamentally changed human lifestyles by making available a vehicle, the Model T, that vastly extended people’s range of movement. The automobile would allow America’s masses to fulfill their Manifest Destiny to populate every corner of the continent. But his more profound impact was on industry. The moving assembly line he designed to build his cars was the signal breakthrough of the Industrial Age. Appropriately, Ford earned the seed capital for his enterprise by working as an engineer at the Edison Illuminating Company in Detroit.
7.  Benjamin Siegel. Known as “Bugsy” to his friends,Siegel was a notorious mobster with a touch of the visionary. Legend has it that he single-handedly invented Las Vegas, and that’s a stretch. But he was the first to see what the town could become: a lush oasis of pleasure where gambling was just one of the attractions. He also proved adept at attracting other people’s money to build his iconic resort, The Flamingo. Trouble was, some of those other people belonged to an outfit called Murder Inc., and Siegel was gunned down in 1947 amid rumors he had stolen from his partners. But give the devil his due: Before there was the Bellagio, there was Bugsy.
8.  Ray Kroc. Nothing says entrepreneur like persistence, and nothings says persistence like Ray Kroc, the kitchen wares salesman who in 1954, at age 52 and in poor health, had his imagination hijacked by a family-run restaurant in the desert outside Los Angeles. Once he had bought out the McDonald brothers, Kroc proceeded to take their concept of a limited menu, fast service and low prices and expand it nationally, in the process creating the fast-food industry and dramatically affecting America’s lifestyle and, sadly, collective health.
9.  H. Ross Perot. Within every entrepreneur lurks a touch of the cowboy, and there’s no better example of the strain than Perot, the diminutive Texan who has become best known in recent years as a political gadfly. Before that, though, he was all business, using a $1,000 loan from his wife in 1962 to launch Electronic Data Systems. Perot’s winning idea was that large corporations and organizations needed data-processing help if they were to take full advantage of computer technology. When in the mid-’60s he won contracts with  two new federal health-care programs -- Medicare and Medicaid -- EDS was off and running and Perot was on his way to being one of America’s richest citizens.
10.  Jobs & Wozniak. Apple Computer’s two Steves weren’t the first Silicon Valley entrepreneurs to launch a billion-dollar business from a Palo Alto garage -- Hewlett and Packard were there before them -- but they were the first to democratize computing by creating a machine whose use was so wonderfully intuitive that even technophobes embraced it. Combine the elegance of Wozniak’s operating system design with Jobs’ marketing savvy (remember Apple’s “1984” ad?) and the result was a true phenomenon. Yes, the Apple was eclipsed by the PC, but only after Microsoft (behind the vision of two other notable entrepreneurs, Bill Gates and Paul Allen) developed Windows to ape its rival’s ease of use.