If all this comes as news to you, don’t feel badly. You are in good company. Until recently, even the most perceptive economists had missed this revolutionary development. One of the exceptions was Edmund Phelps, who just won the Nobel Prize in economics. He recently wrote of entrepreneurship as a source of dynamism, broader life satisfaction and greater justice in society as a whole. Yet, as late as 1993, the father of modern management and one of the pre-eminent thinkers on economic matters in the 20th century, Peter Drucker, opined that we would never again see the likes of such entrepreneurs as John D. Rockefeller (founder of Standard Oil and the modern petroleum industry) and Henry Ford (founder of Ford Motor Company and the modern auto industry). But even as Drucker was writing, Bill Gates’s Microsoft and Sam Walton’s Wal-Mart were poised to surpass in market value the creations of Rockefeller and Ford.
One reason our new era of entrepreneurial capitalism has surprised so many is that it is so different from what came before it. From the mid-1940s through the mid-’70s, America had an economy of the big–big business, big labor, big government, what some have called bureaucratic capitalism. Books such as William H. Whyte’s 1956 classic “The Organization Man” and Sloan Wilson’s “The Man in the Gray Flannel Suit” the year before were assumed to describe a new and permanent change in our economic life. We all worked and would continue to work in gigantic organizations insulated from risk, structured for efficiency–or so it was thought.
Then came the oil shocks and stagflation of the late ’70s, massive and sudden changes that gave an advantage to those that could adjust equally quickly–that is, to entrepreneurs. In the 1980s and early ’90s, the personal computer and the Internet delivered to men and women building new companies tools that allowed them to compete on an equal footing. By 2005, only 25 companies from the 1980 Fortune 100 even existed in the same capacity.
Does this mean big companies are all dying? Not at all. They are adapting. The smartest of them are joining forces with America’s new culture of entrepreneurial capitalism. Want to see a vivid example of this new kind of alliance? Click to an old film on the American Movie Channel or Turner Classic Movies (both entrepreneurial companies, by the way, with Turner’s now owned by a merger of two of the giant flagships of old-line industry, Time-Warner). Read the credits and you’ll invariably see just one producer: Warner Bros., MGM, Paramount, or another of a select few. Now buy a ticket at your local theater to the latest major release. It doesn’t matter which one. In just about all, the list of producers and production companies runs almost as long as the list of actors and crew. Films today involve numerous entrepreneurs and entrepreneurial companies partnering with a big studio. One of the best examples is Pixar Animation and Disney, with the former now owned by the latter.
It is a story typical of industries from pharmaceuticals to software and retail. Behind the familiar names are hundreds of alliances with independent and relatively new firms. In a world in which knowledge and imagination have joined labor, capital and materials as factors of production, entrepreneurial companies often provide the creativity and take on the early risk while big companies chip in financial and marketing muscle when it’s finally time to go national or even global.
In today’s international marketplace, entrepreneurship is America’s unmatched advantage. It is an infinitely renewable resource, one that economist William Baumol has called the “indispensable component” of growth and prosperity. We must respect and teach it in our schools. We must make sure our tax and regulatory policies don’t create barriers to it. Most of all, we must recognize it as essential to America’s continued economic and political leadership in the world.
title: “All Hail The Entrepreneur” ShowToc: true date: “2022-12-16” author: “Latonya Langerman”
If all this comes as news to you, don’t feel badly. You are in good company. Until recently, even the most perceptive economists had missed this revolutionary development. One of the exceptions was Edmund Phelps, who just won the Nobel Prize in economics. He recently wrote of entrepreneurship as a source of dynamism, broader life satisfaction and greater justice in society as a whole. Yet, as late as 1993, the father of modern management and one of the pre-eminent thinkers on economic matters in the 20th century, Peter Drucker, opined that we would never again see the likes of such entrepreneurs as John D. Rockefeller (founder of Standard Oil and the modern petroleum industry) and Henry Ford (founder of Ford Motor Company and the modern auto industry). But even as Drucker was writing, Bill Gates’s Microsoft and Sam Walton’s Wal-Mart were poised to surpass in market value the creations of Rockefeller and Ford.
One reason our new era of entrepreneurial capitalism has surprised so many is that it is so different from what came before it. From the mid-1940s through the mid-’70s, America had an economy of the big–big business, big labor, big government, what some have called bureaucratic capitalism. Books such as William H. Whyte’s 1956 classic “The Organization Man” and Sloan Wilson’s “The Man in the Gray Flannel Suit” the year before were assumed to describe a new and permanent change in our economic life. We all worked and would continue to work in gigantic organizations insulated from risk, structured for efficiency–or so it was thought.
Then came the oil shocks and stagflation of the late ’70s, massive and sudden changes that gave an advantage to those that could adjust equally quickly–that is, to entrepreneurs. In the 1980s and early ’90s, the personal computer and the Internet delivered to men and women building new companies tools that allowed them to compete on an equal footing. By 2005, only 25 companies from the 1980 Fortune 100 even existed in the same capacity.
Does this mean big companies are all dying? Not at all. They are adapting. The smartest of them are joining forces with America’s new culture of entrepreneurial capitalism. Want to see a vivid example of this new kind of alliance? Click to an old film on the American Movie Channel or Turner Classic Movies (both entrepreneurial companies, by the way, with Turner’s now owned by a merger of two of the giant flagships of old-line industry, Time-Warner). Read the credits and you’ll invariably see just one producer: Warner Bros., MGM, Paramount, or another of a select few. Now buy a ticket at your local theater to the latest major release. It doesn’t matter which one. In just about all, the list of producers and production companies runs almost as long as the list of actors and crew. Films today involve numerous entrepreneurs and entrepreneurial companies partnering with a big studio. One of the best examples is Pixar Animation and Disney, with the former now owned by the latter.
It is a story typical of industries from pharmaceuticals to software and retail. Behind the familiar names are hundreds of alliances with independent and relatively new firms. In a world in which knowledge and imagination have joined labor, capital and materials as factors of production, entrepreneurial companies often provide the creativity and take on the early risk while big companies chip in financial and marketing muscle when it’s finally time to go national or even global.
In today’s international marketplace, entrepreneurship is America’s unmatched advantage. It is an infinitely renewable resource, one that economist William Baumol has called the “indispensable component” of growth and prosperity. We must respect and teach it in our schools. We must make sure our tax and regulatory policies don’t create barriers to it. Most of all, we must recognize it as essential to America’s continued economic and political leadership in the world.
