Academic journal article Academy of Entrepreneurship Journal

Does Firm Origin Matter? an Empirical Examination of Types of Small Business Owners and Entrepreneurs

Academic journal article Academy of Entrepreneurship Journal

Does Firm Origin Matter? an Empirical Examination of Types of Small Business Owners and Entrepreneurs

Article excerpt

INTRODUCTION

Since the earliest writings about entrepreneurship, there has been little agreement on a definition. In certain respects, there is considerable overlap between entrepreneurship and small business, if not, indeed business of all sizes. Entrepreneurship is not limited to firms of a certain size, or to certain industries, or only to some cultures. Entrepreneurial activity is carried out by people of both sexes, of all ages, and of all backgrounds. In some ways, entrepreneurship has baffled researchers in social sciences the way subatomic particles have baffled physicists. Its impact is observed, but the thing itself seems ephemeral and invisible.

Like physicists seeing the marks left on the screen of an electron microscope by the mysterious subjects of their inquiry, entrepreneurship researchers have examined the economic activity that results from entrepreneurship: the new enterprises and jobs that are created, the new products invented, and the new services that are offered. But when it comes to specifying what it is that creates these phenomenon, there is little agreement. The question of what the definition of entrepreneurship is has been central in both theory building and empirical work. A good definition will put boundaries around entrepreneurship and separate it from all other types of business activity.

Richard Cantillon, the 18th century businessman and economist, described entrepreneurs as traders who risked their own capital. For Cantillon, (Spiegel, 1983 and Barreto, 1989) the central component of the definition of entrepreneurship revolved around the concept of risk taking, which was rarely encountered by the independently wealthy land owning class or the salaried worker. Later research carried out by McClelland (1965), McClelland and Winter (1969), and Timmons (1986), concluded that, to a moderate extent, entrepreneurs are risk takers. Other research, such as Brockhaus (1992), concluded that entrepreneurs are not risk takers.

Jean-Baptiste Say, a French textile manufacturer and economist, wrote that the human contribution to economic growth came in three types: scientists, workers, and entrepreneurs (Scott, 1933, p.4). The entrepreneur's role was to coordinate the other elements of production such as capital, labor, and land, produce products, estimate demand, and market the product.

Perhaps the most influential conception of the entrepreneur belongs to Joseph Schumpeter (1947), who wrote that entrepreneurs have a desire to "found a private kingdom, drive to overcome obstacles, a joy in creating, and satisfaction in exercising one's ingenuity." Schumpeter saw the entrepreneur playing a key role in the economic world. Improved products and more efficient processes of production were developed by the entrepreneur, leading to a stronger, more efficient economy, albeit at the expense of the older, less efficient producers. Schumpeter termed this the process of "creative destruction." Thus, for Schumpeter, the key central concept of entrepreneurship is innovation in the broadest sense of the word, leading to increased economic efficiency and well-being.

Wilken (1979) saw a continuum of innovation when he examined entrepreneurs. Some entrepreneurs, he argued, will initiate a new venture, while others, on the opposite end of the continuum, will only make minor changes to an existing one. Khan and Manopichetwattana (1989) developed a model for distinguishing between innovative and non-innovative firms. Smith and Miner (1983) showed the distinctions between "craftsmen" and "opportunistic" entrepreneurs based upon a sample of 38 business owners. Gartner, et al. (1989), as is discussed in more detail below, posited eight types of entrepreneurs based upon factor analysis of characteristics of a sample of 106 entrepreneurs which revealed different strategic orientations. Archer (1991) saw three groups of entrepreneurs: an elite, general merchants; and petty merchants. …

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