by Schumpeter
[Front Matter and Table of Contents]: Front matter for the 1949 publication 'Change and the Entrepreneur', including the title page, copyright information, and a detailed table of contents. The table of contents outlines reports on meetings, analyses of the area of entrepreneurship by key figures like Schumpeter and Cole, and various research projects. [Preface by Arthur H. Cole]: Arthur H. Cole, Executive Director of the Research Center in Entrepreneurial History, describes the intellectual and financial origins of the Center. He emphasizes the interdisciplinary nature of the field, drawing from economics, sociology, and history, and outlines the Center's goal to refine theories of entrepreneurship through collaborative research. [Report Upon the Meetings of the Center: Foreword and Speaker List]: R. Richard Wohl provides a foreword to the summaries of the Center's 1948-49 meetings. He explains the thematic organization of the discussions—covering the nature of entrepreneurship, its role in different countries, and the time-dimension of the phenomenon—and notes that the summaries are his own interpretations of the speakers' remarks. [The Entrepreneur and Formal Organization by Chester I. Barnard]: Chester I. Barnard defines the entrepreneur as an innovator within a formal organization. He argues that economic behavior is often non-rational, driven by a desire for prestige and a fear of personal failure rather than simple profit maximization. He distinguishes between invention and contrivance, identifying the corporate form as a major social invention. [The Approach to Business Policy in the Harvard Graduate School of Business Administration]: Professor George Albert Smith explains the 'Business Policy' course at Harvard, which uses the case method to develop student judgment from a top-management perspective. He outlines four key administrative concepts: diagnosis, planning, organization, and control, while arguing that modern business leaders are increasingly motivated by a professional desire for community service. [The Entrepreneur and the Decision-Making Process by Robert A. Gordon]: Professor Robert A. Gordon examines how entrepreneurial decisions are made in large-scale enterprises where management is separated from ownership. He critiques classical economic theory's assumptions about profit maximization and perfect information, suggesting that entrepreneurs often pursue 'short-cuts' or subordinate objectives like maintaining market share to ensure survival in a world of dynamic uncertainty. [Observations on Entrepreneurship in Agriculture by Clarence H. Danhof]: Clarence H. Danhof presents a typology of entrepreneurship based on his study of 19th-century American agriculture. He defines the entrepreneurial function as determining the 'formula of production' and categorizes individuals into four types: innovating, imitative, 'Fabian' (cautious), and drone (refusing change). He argues entrepreneurship is a spasmodic departure from routine management. [Innovation, Entrepreneurship and the Learning Process by Karl W. Deutsch]: Karl W. Deutsch proposes applying communication theory and cybernetics to the study of innovation. He suggests measuring 'innovation rates' across different countries and industries to quantify entrepreneurial performance. He models innovation as a learning process involving drive, cue, response, and reward, emphasizing that an organization's learning capacity is proportional to its uncommitted resources. [The "Daimonic" Entrepreneur by Fritz Redlich]: Fritz Redlich introduces the concept of the 'daimonic' entrepreneur, drawing on the theology of Paul Tillich to explain how entrepreneurial creation inherently involves destruction. He explores 'daimonic' destructiveness (e.g., the obsolescence of old crafts and capital) and 'daimonic' self-destructiveness, where the success of the entrepreneur alters the institutional environment (e.g., inviting government regulation) in ways that undermine the entrepreneur's own position. [The Nature of Entrepreneurial Activity by W. T. Easterbrook]: W. T. Easterbrook critiques the broad definition of entrepreneurship, arguing it should be strictly limited to market-oriented activity. He contrasts the 'entrepreneurial' form (response to market forces) with the 'bureaucratic' form (control of the market by power aggregates like states or corporations). He suggests that entrepreneurial freedom is a rare historical phenomenon dependent on specific 'securities' (physical, technological, institutional, and ideological). [Entrepreneurship in Latin America by Philip D. Bradley]: Professor Philip D. Bradley begins a discussion on entrepreneurship in 'backward' Latin American economies. He notes a prevailing view in the region that economic development is primarily a task for government, viewing private entrepreneurial activity as uncoordinated and wasteful. [Critique of State-Led Development: The Case of Chile]: Professor Bradley examines the fallacy that economic development is primarily a task for government, using Chile as a primary example. He details how Chile's numerous 'Fomento' corporations, despite controlling a majority of the national income and increasing the money supply, failed to increase real per-capita income or industrial output, resulting instead in proportional price increases and stagnation. [Capital Abundance and Technical Skill: The Case of Venezuela]: The segment analyzes Venezuela to challenge the notion that a sufficiency of capital and technical skill automatically ensures economic development. Despite vast petroleum royalties and the ability to command massive loans, the real standard of living in Venezuela likely fell during the period of peak resource exploitation, suggesting that capital alone is insufficient for flourishing development. [Foreign Entrepreneurship and Nationalism: The Case of Mexico]: This section contrasts Mexico's rapid industrial and agricultural progress under Diaz with its subsequent 'arrested development' following the revolution and the rise of xenophobia. The author argues that Mexico's early spurt of progress was directly attributable to foreign entrepreneurs and that the subsequent distrust of foreign capital halted this march. [The Social Milieu and the Heart of Entrepreneurial Activity]: Professor Bradley concludes his discussion by arguing that bureaucratic centralization and nationalism are poor foundations for economic betterment. He highlights that significant entrepreneurial activity in South America is often sparked by foreigners who bring a different outlook and intensity, contrasting this with native cultural definitions of profit that may favor social status over economic efficiency. [The British Entrepreneur: 1899 to 1949 - The Zenith and Decline]: Howard Whidden traces the trajectory of the British businessman from the late 19th century through the early 20th century. He notes that while the mid-19th century was the zenith, the late Victorian period saw a trend toward industrial combination to arrest falling prices, followed by a brief return to prosperity before World War I characterized by heavy overseas investment and light taxation. [Inter-war Stagnation and the Rise of Restrictionism in Britain]: Whidden describes the inter-war period in Britain as one of stagnation in heavy industries, rising taxation, and a shift toward restrictionism. He highlights exceptions like Lord Nuffield and Lord McGowan who succeeded through new industrial formulas, and explains how the lack of a capital-gains tax allowed some entrepreneurs to build fortunes despite high income taxes. He argues that socialization of industry occurred because capital could no longer be found for aging sectors. [Post-War British Business and the Shift in Social Ethic]: This segment covers the state of British business after World War II, noting the burden of controls and high taxation. Whidden observes a shift in the social ethic where individual acquisitiveness and 'conspicuous consumption' are no longer admired, reflecting a deeper reaction against the 'Acquisitive Man' model, even as the businessman's relative social status remains stable due to educational advantages. [Entrepreneurship and the Soviet Economic System: Pre-Revolutionary Russia]: Dr. Shimkin examines the functional role of the entrepreneur in Russia, starting with the pre-Revolutionary era. He describes the rapid industrial growth following the liberation of the serfs in 1861, characterized by an alliance between the state and large-scale capitalists, a high concentration of capital, and a heavy reliance on foreign investment which eventually led to economic strain and xenophobia. [The NEP and the Elimination of the Soviet Entrepreneur]: Shimkin details the transition from the chaos of the Revolution to the New Economic Policy (NEP), which briefly allowed private enterprise to flourish before its forced elimination under the Five-Year Plans. He concludes that the removal of the entrepreneur led to unsolved distribution problems and the necessity of creating elaborate state-controlled incentives and labor restrictions to maintain industrial progress. [Soviet Economic Balance and Lessons from Russian Experience]: Analyzes the substitute mechanisms required for economic balance in the Soviet system, including the difficulties of technological flexibility and the role of bureaucratic control. It concludes with Dr. Shimkin's four principal observations on the tenacity of small-scale entrepreneurship and the necessity of elaborate state controls in the absence of private entrepreneurs. [The Entrepreneur of Eastern Maine]: Dr. Richard E. Du Wors describes the entrepreneurial landscape of eastern Maine, using the timber and paper industry to illustrate how local entrepreneurs operate. He defines the entrepreneur through responsibility, a single-goal standard for decision-making (profit), and a specific life cycle moving from money-making to a hunger for social honors, while also addressing the critical issue of business succession in small communities. [Choices Confronting Our Democracy]: Professor David McCord Wright discusses the ideological tensions between security and progress in modern democracy. He distinguishes between 'vested interest' capitalism, which seeks routine and protection of property rights, and the 'capitalism of creative competition,' which embraces technical change and independent opportunity. He argues that a policy of compensation is the only stabilization method consistent with democratic values. [Economic Theory and Entrepreneurial History: Historical Survey]: Schumpeter provides a historical survey of how economic literature has treated the entrepreneur. He traces the concept from the scholastic doctors and Cantillon through the French tradition of J.B. Say, contrasting this with the English classical school (Smith, Ricardo, Marx) which often conflated the entrepreneur with the capitalist or ignored the directing function entirely. He notes the gradual emergence of the entrepreneur as a distinct agent in the late 19th century. [Schumpeter: Defining the Entrepreneurial Function]: Schumpeter refines his definition of the entrepreneur as an innovator who acts outside the pale of routine. He distinguishes the entrepreneurial function from risk-bearing (which he assigns to the capitalist) and from mere management. He discusses the nature of entrepreneurial profit as a temporary monopoly gain and addresses the 'stagnationist thesis' regarding the stationary state of the economy. [Schumpeter: Historical Application and Social Influence]: Schumpeter explores the historical application of his theory, discussing 'original accumulation,' the role of credit creation and banking in financing new industries, and the social origins of entrepreneurs. He challenges the notion that entrepreneurs or the capitalist class exert direct political 'power,' arguing instead that they influence civilization through their mentality rather than direct political control. [The Institutional Setting of Entrepreneurship]: Arthur H. Cole defines entrepreneurship as a purposeful activity within a social milieu aimed at profit-oriented business units. He emphasizes that entrepreneurship is socially conditioned and varies across cultures. He argues for viewing entrepreneurship through the lens of the 'operating unit' or organization rather than just the individual, noting that survival and aggrandizement are primary drivers. [Cole: Classification of Decisions and Success Measures]: Cole classifies entrepreneurial decisions into management, adjustment, and innovation. He critiques the 'maximization of profits' as a realistic tool, suggesting instead that profits serve as a 'measure of success' or a 'sanction.' He outlines three historical stages of entrepreneurship: empirical (rule-of-thumb), rational (informed), and cognitive (sophisticated), while also addressing the role of security and information (communication) in shaping the system. [Role Structure of Entrepreneurial Personality]: Leland H. Jenks introduces a sociological approach to entrepreneurship, focusing on how individuals perceive and deal with business opportunities. He argues that entrepreneurship must be understood through the 'social role' of the businessman. He critiques the purely economic view and proposes a conceptual scheme to accommodate historical types and their role in social change. [Entrepreneurial Action and the Business Unit: Polar Situations]: Schumpeter distinguishes between two polar types of entrepreneurial situations: the traditional owner-manager of a 'one-man show' and the contemporary entrepreneurial executive within a giant corporation. While the former is multi-functional and personally manages all aspects of the firm, the latter operates within a managerial group where decision-making is shared and delegated. He references Knauth, Gordon, and Barnard to highlight how modern corporate leadership involves organizational rather than purely individual behavior. [The Conceptual Framework of the Business Unit]: This section explores the definition of the 'business unit' as a central element in entrepreneurial action. Drawing on Sombart, Weber, and Lange, the author describes the firm's evolution from a legal or accounting fiction to a social reality comparable to the family or church. He proposes viewing the business unit through the lens of culture, defining it as a system of reciprocal behavior and role systems where individuals exercise entrepreneurship to initiate or maintain the enterprise. [The Business Unit as a System of Exchanges]: The author analyzes the business unit as a system of four minimal exchange relations: with suppliers of capital, sellers of materials, employees, and customers. These relations are linked in a sequence focused on augmenting the unit's value and generating profit. The section emphasizes that these exchanges involve legal and economic commitments to the future, defining the entrepreneur's responsibility and the firm's status as a 'going concern.' [The Business Unit as a Productive System]: Schumpeter defines the business unit as a system of productive performance aimed at creating use-utilities. He discusses the criteria for overall performance (profits) and part-performances (work). A key distinction is made between universalistic criteria (objective standards) and particularistic criteria (personal connections like nepotism). He questions whether universalism is a necessary concomitant of machine industry and notes the role of accounting as a control device that can sometimes create 'technological blind-spots' in executives. [The Business Unit as an Organization]: Applying Chester Barnard's theory, the author defines the business unit as an organization coordinating individual efforts toward a collective goal. The entrepreneur is the locus of authority, derived from ownership or organizational position. The section highlights that the entrepreneur must coordinate not just others but themselves, requiring a 'disciplined objectivity' historically supported by frameworks like the Puritan ethic. It also notes that in large units, the entrepreneur's role shifts toward political reconciliation of conflicting internal and external claims. [Personality and Role Theory in Entrepreneurial History]: This extensive section introduces personality and role theory as tools for understanding entrepreneurial behavior. Schumpeter argues that historical change is driven by individuals, not just objective variables. He defines personality as a function of constitutional, idiosyncratic, communal, and role factors. He distinguishes between 'personal roles' (individual predispositions) and 'social roles' (collective expectations and sanctions). Innovation is viewed as a form of 'creative' role performance where individuals deviate constructively from social norms. The section concludes that entrepreneurs learn their roles through social interaction, rewards, and role models. [Social Roles, Sanction Patterns, and Social Control]: The final section of the chunk discusses 'social roles' as collective representations manifested through 'sanction patterns' (approval or disapproval). Using a statement by Dean Donald K. David on the 'ideal businessman,' the author breaks down the components of social roles: definition of position, functional requirements, expectations, and sanctioning acts. He distinguishes between formal sanctions (laws, contracts) and informal sanctions (peer group approval). The entrepreneur's task is to reconcile these often-conflicting sanctions while maintaining the business unit, sometimes even modifying the sanctions themselves through innovation. [X. Conclusion]: The concluding section of Schumpeter's essay summarizes the main contentions regarding the business unit as an institutional system. It argues that the business unit and the entrepreneur are interdependent concepts, where the unit provides the necessary scene for entrepreneurial action through a system of roles and exchange sets. The author emphasizes that the analysis of personal and social roles, alongside sanction patterns, provides the essential tools for constructing historical typologies of entrepreneurship and understanding social change. [Role and Sanction in American Entrepreneurial History]: Thomas C. Cochran explores the application of role theory and social sanctions to American entrepreneurial history. He defines social change as being initiated when personal idiosyncrasies or new opportunities lead individuals to deviant behavior that eventually alters social roles or environments. Conversely, sanctions and ceremonial patterns act as anchors for social stability. Cochran analyzes specific historical examples, such as J.P. Morgan's influence on investment banking and Henry Ford's resistance to market shifts, to illustrate how the interplay between individual deviance and social approval drives historical evolution. He also identifies core American cultural themes—such as individualism, belief in progress, and the 'cult of the average man'—that shape the sanctions governing business conduct. [Research Projects in Entrepreneurial History: I. Entrepreneurship and Economic Development]: This research proposal outlines a comparative study of entrepreneurship across different nations to understand its role in economic development, particularly in 'backward' or underdeveloped areas. It emphasizes that science and technology do not apply themselves; they require entrepreneurial agency. The project suggests examining countries like Great Britain, France, Spain, and India to identify sociocultural factors and social pressures that either facilitate or hinder entrepreneurial performance. It aims to provide public administrators and investors with a better understanding of the human factors necessary for successful industrial progress. [Research Projects in Entrepreneurial History: II. Corporate Government and Managerial Performance]: This proposal advocates for studying the corporation as an instrument of entrepreneurship rather than just a legal entity. It focuses on four areas: the locus of authority (sovereignty), internal groupings like boards of directors, the evolution of administrative structures (bureaucracy), and the influence of corporate practices on other forms of administration. Key questions include the historical timing of the separation of ownership from management and the development of the 'seniority principle' in executive selection. The project aims to bridge the gap between business administration and economic history by examining the 'anatomy' of corporate decision-making. [Research Projects in Entrepreneurial History: III. The Origins and Issues of Entrepreneurs]: This section proposes research into the social origins and subsequent family trajectories of entrepreneurs to test the 'three-generation' hypothesis (from shirt-sleeves to shirt-sleeves). It suggests cross-sectional surveys at specific points in time (1850, 1880, 1940) to track whether entrepreneurial skills and 'know-how' are transmitted to descendants or if families tend to exit business for professional or other roles. The study aims to provide empirical data on social movement in America, focusing on specific industries like textiles, steel, and railroads to ensure comparability across generations. [Research Projects in Entrepreneurial History: IV. Conditioned Entrepreneurship]: The final research proposal examines how entrepreneurship is 'conditioned' by regional, religious, or industrial environments. It explores potential differences between businessmen in various US regions (e.g., coastal Maine vs. rural Illinois) and different industries (e.g., brass-working vs. banking). The proposal suggests that structural factors like oligopoly, capital intensity, and the distance from the consumer significantly shape entrepreneurial thought and behavior. It posits that technological innovation is often characteristic of oligopolistic situations and that cross-industrial studies can help appraise the potency of various elements that constitute the 'spirit of adventure' in business.
Front matter for the 1949 publication 'Change and the Entrepreneur', including the title page, copyright information, and a detailed table of contents. The table of contents outlines reports on meetings, analyses of the area of entrepreneurship by key figures like Schumpeter and Cole, and various research projects.
Read full textArthur H. Cole, Executive Director of the Research Center in Entrepreneurial History, describes the intellectual and financial origins of the Center. He emphasizes the interdisciplinary nature of the field, drawing from economics, sociology, and history, and outlines the Center's goal to refine theories of entrepreneurship through collaborative research.
Read full textR. Richard Wohl provides a foreword to the summaries of the Center's 1948-49 meetings. He explains the thematic organization of the discussions—covering the nature of entrepreneurship, its role in different countries, and the time-dimension of the phenomenon—and notes that the summaries are his own interpretations of the speakers' remarks.
Read full textChester I. Barnard defines the entrepreneur as an innovator within a formal organization. He argues that economic behavior is often non-rational, driven by a desire for prestige and a fear of personal failure rather than simple profit maximization. He distinguishes between invention and contrivance, identifying the corporate form as a major social invention.
Read full textProfessor George Albert Smith explains the 'Business Policy' course at Harvard, which uses the case method to develop student judgment from a top-management perspective. He outlines four key administrative concepts: diagnosis, planning, organization, and control, while arguing that modern business leaders are increasingly motivated by a professional desire for community service.
Read full textProfessor Robert A. Gordon examines how entrepreneurial decisions are made in large-scale enterprises where management is separated from ownership. He critiques classical economic theory's assumptions about profit maximization and perfect information, suggesting that entrepreneurs often pursue 'short-cuts' or subordinate objectives like maintaining market share to ensure survival in a world of dynamic uncertainty.
Read full textClarence H. Danhof presents a typology of entrepreneurship based on his study of 19th-century American agriculture. He defines the entrepreneurial function as determining the 'formula of production' and categorizes individuals into four types: innovating, imitative, 'Fabian' (cautious), and drone (refusing change). He argues entrepreneurship is a spasmodic departure from routine management.
Read full textKarl W. Deutsch proposes applying communication theory and cybernetics to the study of innovation. He suggests measuring 'innovation rates' across different countries and industries to quantify entrepreneurial performance. He models innovation as a learning process involving drive, cue, response, and reward, emphasizing that an organization's learning capacity is proportional to its uncommitted resources.
Read full textFritz Redlich introduces the concept of the 'daimonic' entrepreneur, drawing on the theology of Paul Tillich to explain how entrepreneurial creation inherently involves destruction. He explores 'daimonic' destructiveness (e.g., the obsolescence of old crafts and capital) and 'daimonic' self-destructiveness, where the success of the entrepreneur alters the institutional environment (e.g., inviting government regulation) in ways that undermine the entrepreneur's own position.
Read full textW. T. Easterbrook critiques the broad definition of entrepreneurship, arguing it should be strictly limited to market-oriented activity. He contrasts the 'entrepreneurial' form (response to market forces) with the 'bureaucratic' form (control of the market by power aggregates like states or corporations). He suggests that entrepreneurial freedom is a rare historical phenomenon dependent on specific 'securities' (physical, technological, institutional, and ideological).
Read full textProfessor Philip D. Bradley begins a discussion on entrepreneurship in 'backward' Latin American economies. He notes a prevailing view in the region that economic development is primarily a task for government, viewing private entrepreneurial activity as uncoordinated and wasteful.
Read full textProfessor Bradley examines the fallacy that economic development is primarily a task for government, using Chile as a primary example. He details how Chile's numerous 'Fomento' corporations, despite controlling a majority of the national income and increasing the money supply, failed to increase real per-capita income or industrial output, resulting instead in proportional price increases and stagnation.
Read full textThe segment analyzes Venezuela to challenge the notion that a sufficiency of capital and technical skill automatically ensures economic development. Despite vast petroleum royalties and the ability to command massive loans, the real standard of living in Venezuela likely fell during the period of peak resource exploitation, suggesting that capital alone is insufficient for flourishing development.
Read full textThis section contrasts Mexico's rapid industrial and agricultural progress under Diaz with its subsequent 'arrested development' following the revolution and the rise of xenophobia. The author argues that Mexico's early spurt of progress was directly attributable to foreign entrepreneurs and that the subsequent distrust of foreign capital halted this march.
Read full textProfessor Bradley concludes his discussion by arguing that bureaucratic centralization and nationalism are poor foundations for economic betterment. He highlights that significant entrepreneurial activity in South America is often sparked by foreigners who bring a different outlook and intensity, contrasting this with native cultural definitions of profit that may favor social status over economic efficiency.
Read full textHoward Whidden traces the trajectory of the British businessman from the late 19th century through the early 20th century. He notes that while the mid-19th century was the zenith, the late Victorian period saw a trend toward industrial combination to arrest falling prices, followed by a brief return to prosperity before World War I characterized by heavy overseas investment and light taxation.
Read full textWhidden describes the inter-war period in Britain as one of stagnation in heavy industries, rising taxation, and a shift toward restrictionism. He highlights exceptions like Lord Nuffield and Lord McGowan who succeeded through new industrial formulas, and explains how the lack of a capital-gains tax allowed some entrepreneurs to build fortunes despite high income taxes. He argues that socialization of industry occurred because capital could no longer be found for aging sectors.
Read full textThis segment covers the state of British business after World War II, noting the burden of controls and high taxation. Whidden observes a shift in the social ethic where individual acquisitiveness and 'conspicuous consumption' are no longer admired, reflecting a deeper reaction against the 'Acquisitive Man' model, even as the businessman's relative social status remains stable due to educational advantages.
Read full textDr. Shimkin examines the functional role of the entrepreneur in Russia, starting with the pre-Revolutionary era. He describes the rapid industrial growth following the liberation of the serfs in 1861, characterized by an alliance between the state and large-scale capitalists, a high concentration of capital, and a heavy reliance on foreign investment which eventually led to economic strain and xenophobia.
Read full textShimkin details the transition from the chaos of the Revolution to the New Economic Policy (NEP), which briefly allowed private enterprise to flourish before its forced elimination under the Five-Year Plans. He concludes that the removal of the entrepreneur led to unsolved distribution problems and the necessity of creating elaborate state-controlled incentives and labor restrictions to maintain industrial progress.
Read full textAnalyzes the substitute mechanisms required for economic balance in the Soviet system, including the difficulties of technological flexibility and the role of bureaucratic control. It concludes with Dr. Shimkin's four principal observations on the tenacity of small-scale entrepreneurship and the necessity of elaborate state controls in the absence of private entrepreneurs.
Read full textDr. Richard E. Du Wors describes the entrepreneurial landscape of eastern Maine, using the timber and paper industry to illustrate how local entrepreneurs operate. He defines the entrepreneur through responsibility, a single-goal standard for decision-making (profit), and a specific life cycle moving from money-making to a hunger for social honors, while also addressing the critical issue of business succession in small communities.
Read full textProfessor David McCord Wright discusses the ideological tensions between security and progress in modern democracy. He distinguishes between 'vested interest' capitalism, which seeks routine and protection of property rights, and the 'capitalism of creative competition,' which embraces technical change and independent opportunity. He argues that a policy of compensation is the only stabilization method consistent with democratic values.
Read full textSchumpeter provides a historical survey of how economic literature has treated the entrepreneur. He traces the concept from the scholastic doctors and Cantillon through the French tradition of J.B. Say, contrasting this with the English classical school (Smith, Ricardo, Marx) which often conflated the entrepreneur with the capitalist or ignored the directing function entirely. He notes the gradual emergence of the entrepreneur as a distinct agent in the late 19th century.
Read full textSchumpeter refines his definition of the entrepreneur as an innovator who acts outside the pale of routine. He distinguishes the entrepreneurial function from risk-bearing (which he assigns to the capitalist) and from mere management. He discusses the nature of entrepreneurial profit as a temporary monopoly gain and addresses the 'stagnationist thesis' regarding the stationary state of the economy.
Read full textSchumpeter explores the historical application of his theory, discussing 'original accumulation,' the role of credit creation and banking in financing new industries, and the social origins of entrepreneurs. He challenges the notion that entrepreneurs or the capitalist class exert direct political 'power,' arguing instead that they influence civilization through their mentality rather than direct political control.
Read full textArthur H. Cole defines entrepreneurship as a purposeful activity within a social milieu aimed at profit-oriented business units. He emphasizes that entrepreneurship is socially conditioned and varies across cultures. He argues for viewing entrepreneurship through the lens of the 'operating unit' or organization rather than just the individual, noting that survival and aggrandizement are primary drivers.
Read full textCole classifies entrepreneurial decisions into management, adjustment, and innovation. He critiques the 'maximization of profits' as a realistic tool, suggesting instead that profits serve as a 'measure of success' or a 'sanction.' He outlines three historical stages of entrepreneurship: empirical (rule-of-thumb), rational (informed), and cognitive (sophisticated), while also addressing the role of security and information (communication) in shaping the system.
Read full textLeland H. Jenks introduces a sociological approach to entrepreneurship, focusing on how individuals perceive and deal with business opportunities. He argues that entrepreneurship must be understood through the 'social role' of the businessman. He critiques the purely economic view and proposes a conceptual scheme to accommodate historical types and their role in social change.
Read full textSchumpeter distinguishes between two polar types of entrepreneurial situations: the traditional owner-manager of a 'one-man show' and the contemporary entrepreneurial executive within a giant corporation. While the former is multi-functional and personally manages all aspects of the firm, the latter operates within a managerial group where decision-making is shared and delegated. He references Knauth, Gordon, and Barnard to highlight how modern corporate leadership involves organizational rather than purely individual behavior.
Read full textThis section explores the definition of the 'business unit' as a central element in entrepreneurial action. Drawing on Sombart, Weber, and Lange, the author describes the firm's evolution from a legal or accounting fiction to a social reality comparable to the family or church. He proposes viewing the business unit through the lens of culture, defining it as a system of reciprocal behavior and role systems where individuals exercise entrepreneurship to initiate or maintain the enterprise.
Read full textThe author analyzes the business unit as a system of four minimal exchange relations: with suppliers of capital, sellers of materials, employees, and customers. These relations are linked in a sequence focused on augmenting the unit's value and generating profit. The section emphasizes that these exchanges involve legal and economic commitments to the future, defining the entrepreneur's responsibility and the firm's status as a 'going concern.'
Read full textSchumpeter defines the business unit as a system of productive performance aimed at creating use-utilities. He discusses the criteria for overall performance (profits) and part-performances (work). A key distinction is made between universalistic criteria (objective standards) and particularistic criteria (personal connections like nepotism). He questions whether universalism is a necessary concomitant of machine industry and notes the role of accounting as a control device that can sometimes create 'technological blind-spots' in executives.
Read full textApplying Chester Barnard's theory, the author defines the business unit as an organization coordinating individual efforts toward a collective goal. The entrepreneur is the locus of authority, derived from ownership or organizational position. The section highlights that the entrepreneur must coordinate not just others but themselves, requiring a 'disciplined objectivity' historically supported by frameworks like the Puritan ethic. It also notes that in large units, the entrepreneur's role shifts toward political reconciliation of conflicting internal and external claims.
Read full textThis extensive section introduces personality and role theory as tools for understanding entrepreneurial behavior. Schumpeter argues that historical change is driven by individuals, not just objective variables. He defines personality as a function of constitutional, idiosyncratic, communal, and role factors. He distinguishes between 'personal roles' (individual predispositions) and 'social roles' (collective expectations and sanctions). Innovation is viewed as a form of 'creative' role performance where individuals deviate constructively from social norms. The section concludes that entrepreneurs learn their roles through social interaction, rewards, and role models.
Read full textThe final section of the chunk discusses 'social roles' as collective representations manifested through 'sanction patterns' (approval or disapproval). Using a statement by Dean Donald K. David on the 'ideal businessman,' the author breaks down the components of social roles: definition of position, functional requirements, expectations, and sanctioning acts. He distinguishes between formal sanctions (laws, contracts) and informal sanctions (peer group approval). The entrepreneur's task is to reconcile these often-conflicting sanctions while maintaining the business unit, sometimes even modifying the sanctions themselves through innovation.
Read full textThe concluding section of Schumpeter's essay summarizes the main contentions regarding the business unit as an institutional system. It argues that the business unit and the entrepreneur are interdependent concepts, where the unit provides the necessary scene for entrepreneurial action through a system of roles and exchange sets. The author emphasizes that the analysis of personal and social roles, alongside sanction patterns, provides the essential tools for constructing historical typologies of entrepreneurship and understanding social change.
Read full textThomas C. Cochran explores the application of role theory and social sanctions to American entrepreneurial history. He defines social change as being initiated when personal idiosyncrasies or new opportunities lead individuals to deviant behavior that eventually alters social roles or environments. Conversely, sanctions and ceremonial patterns act as anchors for social stability. Cochran analyzes specific historical examples, such as J.P. Morgan's influence on investment banking and Henry Ford's resistance to market shifts, to illustrate how the interplay between individual deviance and social approval drives historical evolution. He also identifies core American cultural themes—such as individualism, belief in progress, and the 'cult of the average man'—that shape the sanctions governing business conduct.
Read full textThis research proposal outlines a comparative study of entrepreneurship across different nations to understand its role in economic development, particularly in 'backward' or underdeveloped areas. It emphasizes that science and technology do not apply themselves; they require entrepreneurial agency. The project suggests examining countries like Great Britain, France, Spain, and India to identify sociocultural factors and social pressures that either facilitate or hinder entrepreneurial performance. It aims to provide public administrators and investors with a better understanding of the human factors necessary for successful industrial progress.
Read full textThis proposal advocates for studying the corporation as an instrument of entrepreneurship rather than just a legal entity. It focuses on four areas: the locus of authority (sovereignty), internal groupings like boards of directors, the evolution of administrative structures (bureaucracy), and the influence of corporate practices on other forms of administration. Key questions include the historical timing of the separation of ownership from management and the development of the 'seniority principle' in executive selection. The project aims to bridge the gap between business administration and economic history by examining the 'anatomy' of corporate decision-making.
Read full textThis section proposes research into the social origins and subsequent family trajectories of entrepreneurs to test the 'three-generation' hypothesis (from shirt-sleeves to shirt-sleeves). It suggests cross-sectional surveys at specific points in time (1850, 1880, 1940) to track whether entrepreneurial skills and 'know-how' are transmitted to descendants or if families tend to exit business for professional or other roles. The study aims to provide empirical data on social movement in America, focusing on specific industries like textiles, steel, and railroads to ensure comparability across generations.
Read full textThe final research proposal examines how entrepreneurship is 'conditioned' by regional, religious, or industrial environments. It explores potential differences between businessmen in various US regions (e.g., coastal Maine vs. rural Illinois) and different industries (e.g., brass-working vs. banking). The proposal suggests that structural factors like oligopoly, capital intensity, and the distance from the consumer significantly shape entrepreneurial thought and behavior. It posits that technological innovation is often characteristic of oligopolistic situations and that cross-industrial studies can help appraise the potency of various elements that constitute the 'spirit of adventure' in business.
Read full text