Who Are the Entrepreneurs: The Elite or Everyman?
By Heather Haveman (University of California, Berkeley), Jacob Habinek (University of California, Berkeley), and Leo A. Goodman (University of California, Berkeley)
We trace the social positions of the men and women who found new enterprises from the earliest years of one industry’s history to a time when the industry was well established. Sociological theory suggests two opposing hypotheses. First, pioneering entrepreneurs are socially prominent individuals from fields adjacent to the new industry and later entrepreneurs are from an increasingly broad swath of society. Second, the earliest entrepreneurs come from the social periphery while later entrepreneurs include more industry insiders and members of the social elite. To test these hypotheses, we study the magazine industry in America over the first 120 years of its history, from 1741 to 1860. We find that magazine publishing was originally restricted to industry insiders, elite professionals, and the highly educated, but by the time the industry became well established, most founders came from outside publishing and more were of middling stature – mostly small-town doctors and clergy without college degrees. We also find that magazines founded by industry insiders remained concentrated in the three biggest cities, while magazines founded by outsiders became geographically dispersed. Finally, we find that entrepreneurship evolved from the pursuit of a lone individual to a more organizationally-sponsored activity; this reflects the modernization of America during this time period. Our analysis demonstrates the importance of grounding studies of entrepreneurship in historical context. Our analysis of this “old” new media industry also offers hints about how the “new” new media industries are likely to evolve.
Review by Beatriz Rodriguez-Satizabal
The paper was distributed by NEP-HIS on March 28, 2012. The study of entrepreneurship is nowadays a hot
topic among historians, sociologists, and economists. The title of this working paper by Heather Haverman, Jacob Habinek, and Leo A. Goodman should capture the attention of all these academics and particularly historian interested in the history of entrepreneurship.
The resurgence of the entrepreneur as an important figure in the economic theory, after have been neglected for many years (when compared to say, the strategies of multinationals). This resurgence has been marked in the last three decades by an increase number of biographies of successful entrepreneurs, the creation of research projects such as the Global Entrepreneurship Monitor, and the recent proliferation of public policies towards financing entrepreneurs in order to promote economic development.
Dealing with the issue of the social background of the entrepreneurs has been an essential part of the discussion of who are they, what are their characteristics, and why they exist. In general, researchers have found that the background varies across countries, cultures, and industries, and, more importantly, being a successful entrepreneur offers a chance to increase social mobility.
Guided by the perception that recent research has not incorporated a historical perspective that assumes changes across time and space in the industry where the entrepreneurs are performing its activities, Haverman et al. goal is to answer to the question: how the social positions of entrepreneurs vary across the path of industry development? Basically, their interest is to know if there are any differences between the entrepreneurs enter early in the industry’s history and those appearing in its development later on. This represents the challenge of the paper; it is calling the attention over the relationship between the entrepreneur and the industry. In other words, the entrepreneur cannot be study without a full understanding of its industry, its dynamics and the causes that result in changes within it. Is returning to the basic approaches to entrepreneurship lead by J. Schumpeter, W. Sombart, and more recently, Mark Casson. It also offers a way to deal with this approach using quantitative analysis.
Taking as case study the American magazine industry between 1741, when the first magazines appeared, and 1860, the eve of the Civil War, the authors centred their attention on the social positions of the entrepreneurs (occupation, education, location) in two periods of the industry: 1741 to 1800 during which time American magazines were few in number, poorly understood, and small, and 1841 to 1860, when American magazines were common, generally accepted means of communication, and many reached mass audiences. The mass media industry is becoming a subject of interest both as a unit of analysis and a source (e.g. Richard John’s paper in the last number of Enterprise & Society),but there is still a lack of a specific definition of what is an entrepreneur in the media mass industry, which are the variables that define it; moreover, when today there is a boom of media innovators and journalists. Understanding that the scope of the study was limited by the information available is important to mention that the use of social positions as a starting point is not a revolutionary idea and the authors could enrich the paper by including other variables related with the social and political networks, the economic background, and, why not, the innovations they brought to the industry.
Using a wide variety of sources that includes the magazines, dictionaries of biography, and books on the history of publishing, Haverman et al. gathered a sample of the founders of 148 magazines for the first period and 150 for the last one. To assess their hypothesis that in the early years of an industry the entrepreneurs are part of the elite and it changes when the industry is mature, the authors follow three methods: bivariate analysis, multivariate analysis, and log-linear analysis, the last being the one where the authors claim the novelty for future entrepreneurship studies that are willing to involve a historical perspective. As a result, Haverman et al. conclude that the entrepreneurs during the early years of the magazine industry where professionals (mostly lawyers), highly educated, members of the publishing trades, and mainly located in the cities known for being the first publishing centres (New York, Boston, Philadelphia). After the early years, this pattern changed. The audience for magazines increase, the production and distribution technologies were cheaper, and the copyright law developed making space for a new wave of entrepreneurs from different social backgrounds, ages, and located across the country.
This ambitious working paper brings a discussion on how to relate the history of entrepreneurship (the people) with the history of the industry (firms and aggregate supply). Relating the sociological characteristics of the entrepreneurs with the maturity of the industry seems to be a good idea, but the risk is that in the way of catching the individual characteristics of the links with the industry can be omitted.