- Explain the history of entrepreneurship in the United States


[SLIDE 1]

The history of entrepreneurship in the United States can be divided into five distinct eras. Let's take a look at each of these eras to understand how entrepreneurship has evolved, and the contribution it has made in the U.S.


[SLIDE 2]

A common saying that the French brought with them when they began to migrate to America in the 1600s was that the entrepreneur is:
<i>"one who undertakes a project; a manufacturer; a master builder".</i>

Touted as the 'land of opportunity', the newly discovered continent of America attracted European colonists who exulted in the freedom of being able to reinvent themselves in their new land. These immigrants started new ventures, created new markets and exploited opportunities in exploration, agriculture, trade, and other mercantile activities.

One of history's greatest entrepreneurs also emerged during this era. After multiple experiments, founding father Benjamin Franklin invented the lightning rod – now a symbol of the ingenuity of a young nation. 


[SLIDE 3]

In 1755, Cantillon described an entrepreneur as "someone who engages in exchanges for profit; someone who exercises business judgment in the face of uncertainty". A couple of decades later, the Constitution laid one of the building blocks for America to become an entrepreneurial nation. It granted citizens the right to private property, access to banking, and protection for their intellectual property. The industrial revolution is associated with major developments in the manufacturing, agriculture and transportation technology sectors, and innovations became commonplace. For example, Charles Goodyear invented vulcanized rubber. Mary Dixon Kies was granted a patent for an innovative straw and silk weaving process that boosted the hat industry. She was the first woman granted a US patent. 


[SLIDE 4]

Around 1800, Jean Baptiste Say wrote that "The entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield".

The Second Industrial Revolution, which took place between 1865 and 1920, was the peak of US entrepreneurship. It was an era that saw consumer markets grow and technical innovations develop rapidly in response to demand. Entrepreneurs developed a series of innovations that changed the way people lived. Thomas Edison invented the light bulb, Josephine Cochrane invented the automatic dishwasher and Alexander Graham Bell invented the telephone. These were devices that satisfied consumer desires to be more efficient and live in comfort.

However, golden eras do not last forever, and there would soon be a major shift in the entrepreneurial landscape.


[SLIDE 5]

Two classic views of entrepreneurship were provided by Joseph Schumpeter and Israel Kirzner. Schumpeter argued in 1934 that entrepreneurs reached into their landscape to combine existing resources in new ways, and this is exactly what happened at the beginning of this era. Small firms merged with each other or were swallowed up by larger competitors and the corporation was born. Until the Great Depression, science-based innovation was everywhere.

After the Second World War, the middle classes began to expand and so growing consumer demand boosted production and further empowered large corporations. Corporations helped to commercialize a wide range of domestic appliances and devices including the transistor radio, the videotape recorder, and eventually, the microchip.

By the 1970s, corporate entrepreneurship had peaked and a growing interest in information technology set the scene for the exploitation of new markets and globalization. This led to Kirzner's definition of entrepreneurship, which emphasized the ability to perceive new opportunities.


[SLIDE 6]

The current era is often described as the knowledge economy, or rather, knowledge economy 1.0., implying that this is just the early stages of an information-driven society. Knowledge workers are a rapidly-growing segment of the workforce both in the advanced and the emerging economies. Millennials (the generation born between 1981 and 1997) are expected to comprise 75% of the workforce by 2025.

The key skillset and resources of this group of workers is their knowledge, which can be expressed in both explicit and tacit terms. Explicit knowledge is knowledge that can be expressed, and therefore shared through code, such as through script, language, formulas or imagery. However, tacit knowledge is far more difficult to express and share. This type of knowledge is either fully or partly subconscious, and embedded within individuals. It is learned by doing, and thus difficult to extrapolate from the individual that performs it.

Entrepreneurs exhibit the ability to take both explicit and implicit knowledge and use it to create and act on new opportunities. It is in this era that tech entrepreneurs have emerged. These highly educated entrepreneurs have created new markets, business models and opportunities, especially, but not only, in technology markets.

It is difficult to know what the Knowledge Economy 2.0 will bring. As Elon Musk has remarked, "If you go back a few hundred years, what we take for granted today would seem like magic – being able to talk to people over long distances, to transmit images, flying, accessing vast amounts of data like an oracle... These are all things that would have been considered magic a few hundred years ago".