The Entrepreneurial Group: Social Identities, Relations, and Collective Action

The Entrepreneurial Group: Social Identities, Relations, and Collective Action

The Entrepreneurial Group: Social Identities, Relations, and Collective Action

The Entrepreneurial Group: Social Identities, Relations, and Collective Action

Synopsis

Recent surveys show that more than half of American entrepreneurs share ownership in their business startups rather than going it alone, and experts in international entrepreneurship have likewise noted the importance of groups in securing microcredit and advancing entrepreneurial initiatives in the developing world. Yet the media and many scholars continue to perpetuate the myth of the lone visionary who single-handedly revolutionizes the marketplace. The Entrepreneurial Group shatters this myth, demonstrating that teams, not individuals, are the leading force behind entrepreneurial startups.


This is the first book to provide an in-depth sociological analysis of entrepreneurial groups, and to put forward a theoretical framework--called relational demography--for understanding activities and outcomes within them. Martin Ruef looks at entrepreneurial teams in the United States during the boom years of the late 1990s and the recent recessionary bust. He identifies four mechanisms for explaining the dynamics of entrepreneurial groups: in-group biases on salient demographic dimensions; intimate relationships to spouses, cohabiting partners, and kin; a tendency to organize activities in residential or "virtual" spaces; and entrepreneurial goals that prioritize social and psychological fulfillment over material well-being. Ruef provides evidence showing when favorable outcomes--with respect to group formalization, equality, effort, innovation, and survival--follow from these mechanisms.



The Entrepreneurial Group reveals how studying the social structure of entrepreneurial action can shed light on the creation of new organizations.

Excerpt

Americans group together to … found seminaries, build inns, con
struct churches … They establish hospitals, prisons, schools by the
same method … Where you see in France the government and in
England a noble lord at the head of a great new initiative, in the
United States you can count on finding an association.

—Alexis De Tocqueville, Democracy in America
(2003: 596)

THOUGH PENNED OVER A CENTURY-and-a-half ago, Tocqueville's book presents an enduring puzzle for the nature of entrepreneurial activity in the United States. On the one hand, American society is often characterized as a prototypical case of an individualistic culture. Media and academic accounts portray entrepreneurs as autonomous and self-sufficient agents who are often oriented toward their own material prosperity. Tocqueville himself endorsed an image of American entrepreneurs that was individualistic in a political sense, entailing a “shift from public and communal concerns to private and personal interests,” and in a social sense, viewing them “as individuals in a Lockean state of nature.” In Seymour Martin Lipset's (1963) influential thesis, these individualistic values can be traced back to the origins of the Republic and provide the basis for the exceptionalism of American society.

At the same time, Americans also display a rich heritage of associational activity. During his extensive travels in the United States during the 1830s, Tocqueville found “Americans of all ages, conditions, and all dispositions constantly unit[ing] together” (ibid.: 596) to form organizations for commercial, political, religious, and other pursuits. In Tocqueville's eyes, it was the aristocratic societies of old Europe that were more likely to witness instances of heroic entrepreneurship on the part of solitary individuals. Countries such as England and France had a “number of very powerful and wealthy citizens each of whom has the ability to perform great enterprises single-handed”; consequently, “men feel no need to act in groups” in these societies (ibid.: 597).

For modern students of entrepreneurship, Tocqueville's claim about the relative level of associationalism in the United States and Europe may seem dubious. But the central theoretical tension he identifies—that between individualism and associationalism—remains. Tocqueville's own . . .

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