A subject taught in many high schools and colleges, entrepreneurship is actually defined as "the state of being an entrepreneur." An entrepreneur is an individual who owns, organizes, and manages a business and, in so doing, assumes the risk of either making a profit or losing the investment. According to the Small Business Administration (1999), the total number of businesses in the United States in 1995 was somewhere between 16 million and 24 million, of which approximately 15,000 were large. In 1997, there were an estimated 8.5 million businesses owned by women.
For any business to be successful, an adequate level of funding must be furnished. The amount needed varies according to the scope and nature of the business. Another key factor in the success of an entrepreneurial organization is planning, including planning for the marketing, management, and financial aspects of the business.
From a personal perspective, becoming an entrepreneur is not a simple task. It certainly has its drawbacks. However, it can also be quite rewarding.
BENEFITS AND DRAWBACKS OF ENTREPRENEURSHIP
Choosing to create a new business, or even to purchase an existing one, is a decision that has a far-reaching impact. Long hours, poor pay, and an unclear future are only three of the challenges a budding entrepreneur must face. And, of course, losing everything one invests in a business is a very real risk. In fact, while 885,416 new employer firms were created in 1997, as reported by the U.S. Department of Labor, 857,073 businesses were terminated during the same year, with 53,826 of these being bankruptcies and 83,384 being failures. Failures and bankruptcies are business closures that occur while the business owes debts.
However, the potential rewards are unlimited. Business owners can profit greatly. Many of the wealthiest people on earth are entrepreneurs, including William Henry Gates III (1955– ), the world's richest person and cofounder, chairman, and CEO of Microsoft Corporation. Another reward entrepreneurs tend to appreciate is independence. However, entrepreneurs' time is not necessarily their own. The work of the business must be completed, and often the entrepreneur is the one who must perform the most complex tasks of the business. Although others may work for the owner and manager of the business, it is ultimately the responsibility of the entrepreneur to make sure that the work gets done. Other rewards cited by entrepreneurs include personal satisfaction gained while performing the duties of the business and the resulting prestige.
Planning is a key ingredient in the success of an entrepreneur. A business plan helps to guide the decision making needed to operate a business. The first decision is to choose what sort of business to own. The business may be:
- A retail business that markets a tangible product (such as clothing, houses, food)
- A wholesale business that acquires goods from a producer and distributes requested quantities to retailers
- A service business that offers an intangible product (such as insurance, haircuts, consultant services, construction, financial services)
- A manufacturing business that produces a product
Of course, a business may perform more than one of these functions. The scope of the business will also be
dependent on the breadth and depth of the products or services offered as well as the geographic region served.
One option available to someone interested in purchasing a business is a franchise. A franchise is a license to organize a business that markets products manufactured or owned by a parent company, such as a Kwik Copy, Sleep Inn, McDonald's, Play It Again Sports, or other businesses.
Another early decision involves choosing the legal form of ownership. Three options are sole proprietorship, partnership, and corporation. In a sole proprietorship, a single person owns and operates the business. The owner assumes all risks and responsibilities for the business, including debts. Two or more individuals may form a partnership and serve as co-owners of the business. If the partnership is a general partnership, all partners assume unlimited liability. However, if the partnership is a limited partnership, one or more of the partners assumes unlimited liability while the remaining partner(s) do(es) not. Instead, they may lose up to the amount of their investment, while having limited involvement in the business.
The third form of ownership is the corporation. A corporation is a group of individuals who obtain a charter giving the organization formed by the group legal rights and privileges. This organization can perform such functions as buying and selling, as well as owning property, as if the group were an individual person. The corporation is actually owned by individuals who purchase stock. A major advantage of this form of ownership is that the stockholders themselves have limited liability, thus minimizing financial risks.
The Small Business Administration (1999) reports that in 1996, according to the Internal Revenue Service, 16,471,000 sole proprietorships, 1,679,000 partnerships, and 5,005,000 corporations filed nonfarm business tax returns.
A business plan often contains three major sections: the marketing plan, the management plan, and the financial plan.
Marketing is a process in which the decisions of the business are based upon the goals of the organization. One of these goals is usually that of satisfying the needs and wants of potential customers or a target market. Potential customers can be divided into specific market segments that represent groups based on specified characteristics. For example, a business may strive to serve those in their late teens and early twenties who live primarily in large cities. Narrowing the segment even further, the business may offer goods or services for those interested specifically in sports—both as active players and as spectators or fans. Thus the business may sell athletic shoes and clothing, sports equipment, and how-to books. The owner(s) would locate this business in an area with a large number of people in that age group. Other factors to consider when defining a target market include such demographic factors as income level, sex, marital status, and ethnic group, and such geographic factors as climate and region of the country.
Part of the marketing plan is the marketing mix. A marketing mix has four basic components: product, place, price, and promotion.
The product is the goods and/or services offered by the business. A travel agent may offer the service of arranging any type of trip to anywhere in the world or may specialize specifically in cruises. Choosing products is dependent on the market segment the business intends to serve. Other considerations include the amount of physical space available for storing the product, the amount of funds needed to purchase the product from the wholesaler or manufacturer, and the profitability potential of offering the product. Another important consideration is the product's life cycle. A life cycle has four sections: introduction, growth, maturity, and decline. When a new product is introduced to the market, it is in the introduction phase. Over time, it may grow in popularity and sales, reaching a point of maturity. Maturity is then followed by decline. An entrepreneur must be careful to avoid offering products or services that are in decline. That is one of the reasons for continually monitoring the sales of products and adjusting the product mix to reflect such changes in the product life cycle.
Another factor in the marketing mix is place. Marketers often say that the success of a business is dependent upon "location … location … location." Choosing the location of the business is an important decision that must take into consideration such factors as the chosen target market, traffic patterns, parking availability, population trends, competitive businesses, rental costs, and other expenses. The place function also includes business activities that involve physical distribution, such as transporting goods, handling the goods, storing the goods, and keeping track of the goods (inventory).
An increasing number of businesses are locating on the Internet. Entrepreneurs create World Wide Web pages on which they promote their offerings. Consumers may either telephone the business to order the product or service or use a credit card to purchase the item over the Internet. The actual location of the business is less important since the Web is available throughout the country and, indeed, the world. However, the location still must be considered relative to business expenses (e.g., rent, utility prices) and transportation prices (e.g., cost of transporting products purchased on the Internet from the business to the customer).
Businesses can also be located in the home. In fact, home-based businesses represent a large portion of businesses in the United States. Many entrepreneurs begin their businesses in the home and eventually outgrow the space available there, at which point the owner usually seeks an outside facility.
Price is the third component of the marketing mix. A pricing structure must be developed that includes specific goals and reflects policies of the business. A goal may reflect an intended image of the business or a particular profit margin that is sought. Factors to consider when identifying goals and policies related to price are: the amount of sales that are sought, pricing policies of competitors, profits that are projected, supply of the product that is available and projected demand for that product, the location of the business, and the expenses of the business.
The fourth component of the marketing mix is promotion—the activities of the business that are intended to inform potential customers about the product or service and persuade them to purchase it. Methods include personal selling, advertising, visual merchandising (the coordination of all physical elements in a business such as displays, counters, offices, windows, signs, fixtures, lighting, and such), and publicity. The effectiveness of promotional strategies must be monitored so that promotional dollars are spent on strategies that are contributing to the achievement of business goals.
Another major section of a business plan is the management plan. The four basic functions of management are planning, organizing, directing, and controlling.
Planning involves the determination of goals and objectives for the business, including the actual results sought by the firm. A set of policies and procedures are determined that guide the identification of specific activities that will lead to these goals. Planning does not end with the creation of a business plan, however, as it continues throughout the life of the business.
To implement the plan, the entrepreneur organizes the personnel and other resources of the business. An organizational chart is created that shows the hierarchy of the people working in the business. After the number of employees and their qualifications are determined, applicants are recruited and, once hired, are trained. Other types of resources that are organized by management are facilities, equipment, materials, and supplies.
The third management function is directing. Managers direct the work of the business by applying leadership and management skills. They model desired behavior while supervising, motivating, and evaluating their employees. Finally, comparing the plan with the actual results is called controlling. By observing and studying financial statements, managers can understand the status of the business and adjust activities where necessary to contribute toward the achievement of the business goals. The controlling function also includes evaluation of employees.
The financial aspects of the business must also be planned. The financial plan includes several financial statements. One of these statements is the statement of financial requirements, which identifies the projected expenses and the assets they will create for a specified time period. Among the expenses listed are those for rent, insurance, telephone, and inventory. The entrepreneur also needs money to meet personal expenses as the business grows. These expenses are also included in this statement. The expenses are used to create assets. Assets are items of value that are owned by the business. For example, if a business purchases land upon which to place a facility for the business, the money needed for the purchase is an expense that then creates the asset of land.
The financial plan also includes the source(s) of the funds needed to meet the financial requirements. Sometimes an entrepreneur will already have all the funds needed, but more often these must be acquired from family members, private lending agencies, and/or governmental loan programs.
Another statement included in the financial plan is the income statement, which may be referred to as a profit-and-loss statement or operating statement. This statement is a projection of the sales expected in a given period of time, the cost of the merchandise that will be sold, and the operating expenses of the business. From this information, projected profits or losses are determined.
A financial plan also includes a beginning balance sheet. This form provides a list of the assets, liabilities, and net worth of a business on a given day. Assets are tangible items that are owned by the business, liabilities are the debts of a business, and net worth is the amount of investment that the owner(s) has in the business.
The financial plan also includes a cash-flow analysis and a break-even analysis. The cash-flow analysis identifies the cash generated after expenses and loan principal payments are deducted. This projection is calculated for several years into the future. The break-even analysis identifies the break-even point, which is the level of sales and expenses, including loan principal payments, at which a business has no profit and no loss.
Information that can help the budding entrepreneur is available from people, printed material, and the Internet. All entrepreneurs need people they can go to for advice. Accountants and attorneys are especially important. An accountant not only provides the financial data and statements for the business but also interprets the information for the entrepreneur. This is important because business decisions must be based on a variety of considerations, including financial ones. Attorneys provide legal advice throughout the process of purchasing or creating a business and owning and managing it.
Other sources of information include financial institutions, the Chamber of Commerce, educational institutions, insurance agents, and suppliers of products used in the business. Publications provide up-to-date information: books from major publishers, magazines such as Entrepreneur and Inc., and newsletters and journals offered by associations are available. Many types of businesses are served by trade associations such as the American Hotel and Motel Association, which is comprised of owners and operators of lodging businesses throughout the country. Along with providing publications, these organizations hold conferences and workshops and provide networking opportunities. Various government agencies are also available for advice, such as the Small Business Administration and the Internal Revenue Service.
The Internet provides information from a variety of people and organizations. Although the Internet is a valuable resource, the information available on it is not screened for accuracy. Relevant Web sites can be located by use of search engines that pinpoint specification on categories and topics.
Although it is important that the entrepreneur seeks advice throughout the planning and operation of a business, the ultimate decision maker on matters related to the business is the entrepreneur.
Successful entrepreneurs can be found in just about every community in the country. From small businesses employing only a few persons to megabusinesses employing thousands, successful entrepreneurs abound. The following successful entrepreneurs represent a few of those at the high end of success as measured by wealth:
William (Bill) H. Gates is the co-founder, chairman, and CEO of Microsoft Corporation, the world's leading provider of software for personal computers. Gates was a student at Harvard when he developed BASIC, a programming language for the first microcomputer. He founded Microsoft in 1975 with a childhood friend, Paul Allen (1953– ). According to Microsoft Corporation, Gates's determination to develop Microsoft stemmed from his belief that the personal computer would be a valuable tool for every home and office; thus he began developing software for personal computers.
Mary Kay Ash (1918–2001) launched Mary Kay Cosmetics on September 13, 1963. Mary Kay, Inc. reports that, with a life savings of $5,000, Ash launched what is now the largest direct seller of skin care products and the best-selling brand of skin-care and color cosmetics in the United States. Mary Kay Cosmetics originated from an idea of writing a book to help women survive in the male-dominated business world. From there, Ash inadvertently created the marketing plan for Mary Kay Cosmetics.
Gozi Samuel Oburota (1957– ) founded the Gozi Samuel Oburota Certified Public Accountancy Corporation (GSO) in 1994. According to the GSO Corporation, before founding the company, Oburota had served as a senior accountant at IBM, trusted with worldwide accounting responsibility for the DASD 3390 mainframe computer project from product development through manufacturing and general availability. GSO is a full service certified public accounting firm with offices in San Jose, Los Angeles, and Washington, D.C. By 1999, GSO was one of the fastest-growing professional firms headquartered in Silicon Valley. GSO is 100 percent minority owned.
see also Factors of Production; Sole Proprietorship
Ely, Vivien K., Berns, Robert G., Lynch, Richard L., and Popo, Debbi (1993). Entrepreneurship. New York: Glencoe/McGraw-Hill.
Entrepreneur Magazine, Entrepreneur Media, Inc., 2445 McCabe Way, Ste. 400, Irvine, CA 92614.
Longenecker, Justin G., Moore, Carlos W., and Petty, J. William (2003). Small Business Management: An Entrepreneurial Emphasis. Mason, OH: Thomson/South-Western.
Mary Kay, Inc. (2005). Retrieved October 18, 2005, from http://www.marykay.com/home.aspx.
Meyer, Earl C., and Allen, Kathleen R. (1994). Entrepreneurship and Small Business Management. Mission Hills, CA: Glencoe.
Microsoft Corporation (2005). Retrieved October 18, 2005, from http://www.microsoft.com. 1999.
Moorman, Jerry W., and Halloran, James W. (1995). Contemporary Entrepreneurship. Cincinnati, OH: South-Western Educational Publishing.
United States Small Business Administration (2005). Retrieved October 18, 2005, from http://www.sba.gov.
Robert G. Berns
Jewel E. Hairston
"Entrepreneurship." Encyclopedia of Business and Finance, 2nd ed.. . Encyclopedia.com. (September 14, 2018). http://www.encyclopedia.com/finance/finance-and-accounting-magazines/entrepreneurship
"Entrepreneurship." Encyclopedia of Business and Finance, 2nd ed.. . Retrieved September 14, 2018 from Encyclopedia.com: http://www.encyclopedia.com/finance/finance-and-accounting-magazines/entrepreneurship
Modern Language Association
The Chicago Manual of Style
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There are some unresolved differences in the definitions of entrepreneurship, but there is agreement that the term includes at least a part of the administrative function of making decisions for the conduct of some type of organization. One group of scholars would restrict the term to strategic or innovating decisions, and an overlapping group would apply it only to business organizations. The basis for these differences can be understood from the history of the concept.
The word entrepreneur appeared in the French language long before there was any general concept of an entrepreneurial function. By the early sixteenth century, men engaged in leading military expeditions were referred to as entrepreneurs. From this usage, it was easy to move to applying entrepreneur to other types of adventurers. After about 1700, entrepreneur was frequently applied by the French to government road, bridge, harbor, and fortification contractors and, somewhat later, to architects (Hoselitz 1951, p. 195). Seeing such activities as the entrepreneurial function, the mid-eighteenth-century French writer Bernard F. de Belidor further defined it as buying labor and materials at uncertain prices and selling the resultant product at a contracted price (Hoselitz 1951, pp. 198-199).
Richard Cantillon’s Essai sur la nature du commerce en général (1755), probably written a generation before its publication date, drew attention to entrepreneur as a technical term. The essence of the function of the entrepreneur was to bear uncertainty. Conversely to the Belidor emphasis, Cantillon saw the entrepreneur as anyone who bought and sold at uncertain prices. Obviously, there is no contradiction between Belidor and Cantillon in theory, but merely in the type of examples chosen. Except for princes, landowners, and salaried workers, Cantillon regarded everyone engaged in economic activity as an entrepreneur.
The physiocratic economists of the later eighteenth century, such as Francois Quesnay and Nicolas Baudeau, called the agricultural cultivator an entrepreneur. Since the physiocrats also thought that only the land was a source of social product, this put the entrepreneur in a key position. In the sphere of agriculture, Baudeau credited the entrepreneur with all the essential characteristics of risk taking and innovation that were to be elaborated in later definitions (in his Premiére introduction a la philosophie economique). At about the same time A. R. J. Turgot, in his Réflexions sur la formation et la distribution des richesses, spoke of the entrepreneur in manufacturing as one who risked capital (Hoselitz 1951, pp. 205-212).
Thus, by 1800, many French economists had given special meanings to entrepreneur and entre-preneurship, with differences arising largely from the characteristics of the sector of the economy that chiefly attracted their attention. Those economists interested in government saw the entrepreneur as a contractor, the specialists on agriculture as a farmer, and the proponents of industry as a risk-taking capitalist. The “classic” definition, which was to survive until the twentieth century, was written by an aristocratic industrialist who had had unpleasant practical experience, Jean Baptiste Say.
In the Catechism of Political Economy, Say wrote of the entrepreneur as the agent who “unites all means of production and who finds in the value of the products … the re-establishment of the entire capital he employs, and the value of the wages, the interest, and the rent which he pays, as well as the profits belonging to himself” ( 1816), pp. 28-29). This idea appeared earlier in A Treatise on Political Economy (1803), which was not translated into English until 1827. Say’s entrepreneur commonly, but not necessarily, supplies either his own or borrowed capital. To succeed, he must have “judgment, perseverance, and a knowledge of the world as well as of business. He must possess the art of superintendence and administration” (1803, p. 295 in the 1827 edition). Say does not, however, discuss the entrepreneur in relation to innovation or capital creation. As in the case of the British classicists, he was unable to make entrepreneurship a ponderable factor in his general economic theory.
In contrast to the tolerably consistent and expanding French definitions of entrepreneur, the English appear to have made rather less use of three terms: adventurer, undertaker, and projector. While the Merchant Adventurers of the sixteenth century were the equivalent of French entrepreneurs, adventurer did not come into general use. The seventeenth-century French use of entrepreneur for government contractor had its English counterpart in the term undertaker. Near the close of the century, the third term, projector, came into use. Daniel Defoe, in An Essay Upon Projects, equates the term projector with inventor, but also with fraud or swindler. In Malachy Postle-thwayt’s Universal Dictionary of Trade and Commerce the words adventurer and undertaker are referred to but these terms are not given precise definitions (Redlich 1949, p. 9). Bert F. Hoselitz (1951) finds that by the time of Postlethwayt, undertaker could be applied to businessmen in general but that the term was, in fact, becoming obsolete. [See the biographies of CANTILLON; QUESNAY; SAY; TURGOT.]
Early treatment in economic theory . As economic theory became more carefully formulated in all the western European nations, no operative place was found for the entrepreneur. This was particularly evident in English classic theory from Smith to Marshall, where many writers made no effort either to define or include entrepreneurship.
The difficulty was that English theory was based upon a normal state of equilibrium, established by the multiple reactions of businessmen, consumers, investors, and workers to the prices of goods and services. Individual variations in behavior were seen either as canceled out in the aggregate or suppressed by competition. In this highly aggregative system, any unknown element was to be derived from the relations of theoretically measurable quantities. Such a system could obviously not utilize unmeasurable social or cultural factors such as entrepreneurship. To say that the entrepreneur was rewarded for risk taking, that is, for uncertainty, was the negation of a proper theoretical explanation.
In addition to the inhospitability of classic theory, the mid-nineteenth-century business structure of small-sized to medium-sized family firms, or closely held firms, obscured the distinctive character of the entrepreneurial function. With few exceptions, the men performing this function were also capitalist owners. Their rewards could be seen as a return on capital rather than as special compensations for entrepreneurial ability per se. In his Principles of Economics, Alfred Marshall perceived the changed situation inherent in big, managerially run business: “Those general faculties, which are characteristic of the modern businessman,” he wrote, “increase in importance as the scale of business increases” (1891, p. 644). Yet Marshall did not elaborate upon the theoretical significance of this increasing factor, and in discussing the growth of English manufacturing he used capitalist and undertaker interchangeably (1891, pp. 40-43).
Perhaps the relatively early development of big corporations in the United States led American economists to think of entrepreneurship as a function separate from either ownership or the supply of capital. In the late 1870s, Francis A. Walker emphasized the distinction between capitalists and entrepreneurs and called the latter the engineers of industrial progress and the chief agents of production (Dorfman 1946-1959, vol. 3, p. 109). Frederick B. Hawley, writing in 1882, saw risk taking as the distinguishing attribute of the entrepreneur, and ranked this as a factor in production on a par with land, labor, and capital (ibid., p. ^32). At the end of the century, the unorthodox John R. Commons gave an explanation of risk-taking entrepreneurship and profit that anticipated some of the more fully elaborated ideas of Joseph A. Schumpeter (ibid., p. 283). According to Commons, one type of profits arose from the ability and risk taking of the entrepreneur and was temporary and contingent on changes in the economic situation. But Schumpeter himself, in 1912, gave John Bates Clark credit for being the first to connect “entrepreneurial profits considered as a surplus over interest (and rent), with successful introduction into the economic process of technological, commercial, or organizational improvements” (ibid., vol. 4, p. 1667i). The basic problem of finding an operative role for entrepreneurship in economic theory, however, remained unsolved; and economic theorists, in general, well aware of the incongruity of a nonmeasurable human element in a theoretical structure based on quantifiable assumptions, moved in other directions, such as the study of business cycles, income, saving, and investment. [See the biographies of CLARK, JOHN BATES; COMMONS; MARSHALL; WALKER.]
Schumpeter-Cole views . Schumpeter’s acceptance of a chair at Harvard, the translation of The Theory of Economic Development into English in 1934, and the great depression all called new attention to his position regarding the essential role of the entrepreneur in creating profits. According to Schumpeter, both interest and profit arose from progressive change, and would not exist in a static society, as he defined it. Change, in turn, was the work of innovating businessmen or entrepreneurs. Since one change was likely to stimulate others, there was a tendency for innovations to cluster and produce long upswings in profits and business activity.
Much additional interest in entrepreneurship arose from the work of two of Schumpeter’s colleagues at Harvard, economic historians Edwin F. Gay and Arthur H. Cole. In 1944, in his presidential address to the Economic History Association, Cole offered a historical analysis of the changing character of entrepreneurship. Four years later, he and Schumpeter cooperated in establishing at Harvard the Research Center in Entrepreneurial History. From the work of the center, influenced greatly by Cole and Leland H. Jenks, there emerged an approach to entrepreneurship differing from Schumpeter’s.
In the Schumpeterian view, innovation was the criterion of entrepreneurship; “… the defining characteristic is simply the doing of new things or the doing of things that are already being done in a new way (innovation)” (Schumpeter 1947, p. 151). The “new way” was a “creative response” to a situation that had, at least, three essential characteristics.
First … it can practically never be understood ex ante… . Secondly, creative response shapes the whole course of subsequent events and their “long-run” outcome… . Thirdly, creative response … has … something to do (a) with the quality of personnel available in the society, (b) … with quality available to a particular field of activity, and (c) with individual decisions, actions and patterns of behavior. Accordingly a study of creative response in business becomes coterminous with a study of entrepreneurship. (Schumpeter 1947, p. 150)
Thus, to Schumpeter, a manager was an entrepreneur only while he was making a creative or innovative response.
The Cole view of entrepreneurship, however, equates it with the continuing general activities of managers. It is “the purposeful activity (including an integrated sequence of decisions) of an individual or group of associated individuals, undertaken to initiate, maintain or aggrandize a profit oriented business unit for the production or distribution of economic goods and services” (Cole 1959, p. 7). “Novelty is successful in the business world only if the institution introducing it is being effectively maintained” (p. 15).
Since the difference in the two definitions involves only the scope within which the term may be applied, the followers of Cole and Schumpeter have worked together with a minimum of friction. Both definitions implied broad social approaches, close to the Germanic tradition of Gustav Schmoller, who had seen the need for “a deeper insight into the social context of the enterprise” (Lane & Riemersma 1953, p. 6), or Alfred Weber, who had regarded entrepreneurship as a socioeconomic function separate from profit making. Both definitions also suggest time spans longer than those of dynamic economic theory. [See the biography of SCHUMPETER.]
Recent thought . In spite of the difficulties inherent in long-run analysis and in unmeasurable human factors, the increasing interest of economists in economic development has directed their attention to entrepreneurship. While economists in this field include the entrepreneurial function in empirical studies of situations and in recommending appropriate economic policies, the theoretical problem of finding a place for unmeasurable and socially influenced forces in a mathematically oriented theory has not been solved. More specifically, the difficulty is that entrepreneurial earnings would have to be accounted for in a theory of profit, but no theoretical cost of entrepreneurship can be set.
Entrepreneurial study continues, however, in the unoccupied territory bordered by economics, history, and sociology. Two publications—Explorations in Entrepreneurial History (started by R. Richard Wohl and Hugh G. J. Aitken at the research center at Harvard and continued in the 1960s under the editorship of Ralph L. Andreano at Earlham College) and Economic Development and Cultural Change (initiated by Bert F. Hoselitz at the University of Chicago)—emphasized, during the 1950s and 1960s, the importance of entrepreneurship. In addition to scores of articles in these two publications, the Harvard center inspired a number of larger empirical studies. Of these, Fritz Redlich’s volumes on the military entrepreneur in Europe cover the longest historical time span. In all, a new field of specialization, not firmly attached to any single discipline, appears to have been established.
Students of entrepreneurship generally have come to agree that while it is a definable function, entrepreneur is a term denoting an ideal type rather than a term continuously applicable to a real person. Any businessman or other official may exercise entrepreneurship, but a classification cannot be devised that would empirically separate entrepreneurs and nonentrepreneurs.
One group of scholars has expanded the Cole point of view that entrepreneurship is a continuous function in business organization.
To the extent that behavior in a business firm is organized (formally or informally), to that extent we have entrepreneurship; to the extent that it is disorganized, random, or self-defeating, to that extent entrepreneurship is lacking… . The characteristics conventionally associated with entrepreneurship—leadership, innovation, risk-bearing, and so on—are so associated precisely because, in a highly commercialized culture such as ours, they are essential features of effective business organization. By the same logic, in a differently oriented culture, the typical characteristics of entrepreneurship differ. (Aitken 1963, p. 6).
Another school of thought prefers to keep the Schumpeterian distinction between the entrepreneurial function of making strategically important or innovating decisions and the managerial function of maintaining the more routine operations of a business organization. Nonspecialists, also, tend to emphasize strategic decision making in distinguishing entrepreneurship from management.
Thomas C. Cochran
Aitken, Hugh G. J. 1963 The Future of Entrepreneurial Research. Explorations in Entrepreneurial History Second Series 1:3-9.
Cantillon, Richard (1755) 1952 Essai sur la nature du commerce en général. Paris: Institut National d’Etudes Demographiques.
Cole, Arthur H. 1946 An Approach to the Study of Entrepreneurship: A Tribute to Edwin F. Gay. Journal of Economic History 6 (Supplement): 1-15.
Cole, Arthur H. 1959 Business Enterprise in Its Social Setting. Cambridge, Mass.: Harvard Univ. Press.
Dorfman, Joseph 1946—1959 The Economic Mind in American Civilization. 5 vols. New York: Viking. -> See especially volumes 3 and 4.
Hoselitz, Bert F. 1951 The Early History of Entrepreneurial Theory. Explorations in Entrepreneurial History 3:193-220.
Lane, Frederic C.; and RIEMERSMA, JELLE C. (editors) 1953 Enterprise and Secular Change: Readings in Economic History. Homewood, Ill.: Irwin.
Marshall, Alfred 1891 Principles of Economics. 2d ed. New York and London: Macmillan. → The first edition was published in 1890. A ninth, variorum edition was published in 1961.
Redlich, Fritz 1949 The Origins of the Concepts of “Entrepreneur” and “Creative Entrepreneur.” Explorations in Entrepreneurial History 1:1-7.
Say, Jean Baptiste (1803) 1964 A Treatise on Political Economy: Or, the Production, Distribution and Consumption of Wealth. New York: Kelley. → First published as Traitt d’economie politique: Ou, simple exposition de la maniere dont se ferment, se distribu-ent, et se consomment les richesses.
Say, Jean Baptiste (1815)1816 Catechism of Political Economy: Or, Familiar Conversations on the Manner in Which Wealth Is Produced, Distributed, and Consumed by Society. London: Sherwood. → First published as Catechisme d’economie politique.
Schumpeteh, Joseph A. (1912) 1934 The Theory of Economic Development. Cambridge, Mass.: Harvard Univ. Press. → First published in German.
Schumpeter, Joseph A. 1947 The Creative Response in Economic History. Journal of Economic History 7:149-159.
"Entrepreneurship." International Encyclopedia of the Social Sciences. . Encyclopedia.com. (September 14, 2018). http://www.encyclopedia.com/social-sciences/applied-and-social-sciences-magazines/entrepreneurship
"Entrepreneurship." International Encyclopedia of the Social Sciences. . Retrieved September 14, 2018 from Encyclopedia.com: http://www.encyclopedia.com/social-sciences/applied-and-social-sciences-magazines/entrepreneurship
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Entrepreneurship is the process of identifying opportunities, marshalling the resources needed to take advantage of the opportunities, and creating a new venture for the purposes of providing needed products or services to customers and achieving a profit. The word “entrepreneurship” is taken from the French word entreprendre, which means “to undertake.” A person who engages in entrepreneurship is called an entrepreneur. Entrepreneur-ship occurs all over the world, but it is a particular characteristic of free-market economies. Countries with the highest rates of entrepreneurship include the United States, Canada, Israel, Italy, and Great Britain.
Entrepreneurship involves considerable risk, as the failure rate for new ventures is very high. Thus, to be successful, an entrepreneur must be able to tolerate and even thrive under conditions of risk and uncertainty. Successful entrepreneurship also requires innovativeness and creativity, as well as self-confidence, high levels of energy, and a strong need for achievement. Interest in entrepreneurship is at an all-time high. Most colleges and universities offer courses or even entire programs of study in entrepreneurship.
The process of entrepreneurship is complex and requires the aspiring entrepreneur to make many decisions. It begins with recognizing an opportunity and applying innovativeness and creativity to exploit the opportunity. The entrepreneur must engage in strategic thinking and identify a competitive advantage that will set the small business apart and provide customers a unique reason to patronize the business.
The outcomes of this strategic thinking should be a business plan, which is a written statement that provides a comprehensive blueprint for the new venture. Although every business plan should reflect the unique characteristics of the entrepreneur and the proposed new business, there are common elements that exist in most business plans. Typically, the business plan includes some or all of the following components:
- Executive Summary
- Description of the Firm's Product/Service
- Business Strategy
- Forecasted Financial Statement
- Loan or Investment Proposal
The executive summary provides a concise one to two page overview of the entire business plan. The description of the product or service should identify the key features and benefits of the product or service. The business strategy is the most detailed part of the business plan. Here, the plan provides the entrepreneur's vision and what he or she sees as the mission of the new venture.
This section must also lay out key strategies in the areas of operations, marketing, and finance. The forecasted financial statements should include monthly and/or quarterly projected cash budgets, income statements, balance sheets, and capital expenditures. The loan or investment proposal should identify the type of financing required and a plan for repayment.
Entrepreneurship is an important, if not the most important, component of a successful market-based economy. Free economies require individuals who are willing to take risks by creating, organizing, and successfully running new businesses. Most entrepreneurs operate in the areas of small business and/or family-owned business. These are the engines of economic growth. If small businesses are defined as those having fewer than 100 employees, 99 percent of businesses in the U.S. are small. Ninety percent of these small businesses employ fewer than twenty employees. Yet, it is estimated that small businesses have created 85 percent of the new jobs in the U.S. since the early 1990s. Further, most of these small businesses are family-owned. Family-owned businesses employ more than 50 million people and generate more than 50 percent of the nation's GDP. Thus, much emphasis is placed on public policies that will encourage entrepreneurial activity and nurture and sustain new ventures, small businesses, and family-owned businesses.
STARTING A BUSINESS
Once the business plan has been formed, the entrepreneur must find investors, form a business structure both legally and economically, and bring together employees with the necessary skills and tenacity to run a successful business around a common goal. These steps, especially those requiring financial backing, can be difficult for entrepreneurs. Professor Scott Shane, author of the 2008 article “Top Ten Myths of Entrepreneurship,” writes about some of these difficulties and few of the common misconceptions among those trying to start businesses.
First, it does not take a large amount of money to begin a business. The average amount is about $25,000, and successful entrepreneurs will have the skills necessary to run a company with a low amount of funding. Some of the tricks include paying beginning employees on commission, renting premises for the first couple of years, and offering conditional benefits. There are rarely large investors willing to fund starter businesses, unless they are promising computer or science companies. Most investors are not million dollar venture capitalists, and good entrepreneurs know how to work with limited resources.
Other entrepreneurs are hesitant to begin their businesses with debt, afraid that it will impede success. Actually, most entrepreneurial businesses are financed primarily by debt, with a little less than half their money coming from equity (approximately 47%). Conventional wisdom also insists that entrepreneurs search for loans among their friends, families, interested investors, and government entities, using banks only as a last resort. Banks, however, are the most common provider of loans toward entrepreneurial activities, and they are often willing to consider promising business plans.
The business an entrepreneur picks has an enormous effect on the success of his or her idea. Most entrepreneurs have difficulty spotting and entering industries that have potential. Those who began businesses in the tech industry several years ago had a far better chance of succeeding than those who chose other industries. What will be the industries of the future? What markets will open? A good entrepreneur will be able to choose an industry with potential, which will take a continuing commitment. Professor Shane's article says that only the top 10 percent of entrepreneurs make more money than their employees. The key is to defy the odds with superior innovation and work.
International entrepreneurship refers to the practice of using technology and insight to develop an overseas company by highlighting a need in foreign nations that the entrepreneur can fulfill. Foreign markets have particular resources that an entrepreneur can capitalize on, making use of differing cultures, financial regulations, economies, and desires to create a successful global business. Most international entrepreneur-ship is conducted by well-established companies that have sufficient funds or backers to attempt expanding into foreign markets. Fortunately, more investors are becoming willing to support a global endeavor, especially if a company has clear plans to fill a specific niche in international business. Like local entrepreneurship, international business-building is a matter of opportunities and design.
Once a new element is introduced into a foreign market, there is a period of adaption that takes place in increments. An international market might at first be unwilling to admit a new entrepreneurial business, requiring more time for trial and acceptance of products or services. The number of other businesses trying to sell the same new ideas and the type of international market being entered will also affect the trial period for the entrepreneurial endeavor. Generally, entrepreneurs will encounter three different types of markets globally, as described by Jones and Dimitratos in their 2004 book Emerging Paradigms in International Entrepreneurship :
- Bazaar economies. Bazaar economies function on a flexible, personal level. Prices are usually negotiated, and competition involves cooperating with others in the same industry to form a reliable network of businesses. Loyalty is often based on personal treatment, customer to customer.
- Firm-type economies. In these markets, similar to many of the markets in America, firms have much more control over goods and services. Prices are usually set by the firms or the industry. They are based on customer demand but are not negotiable, and transactions are impersonal, resembling legal contracts more than personal connections. Since relationships are not so important, competition is generally more vigorous and direct. Complex strategy and business plans are commonplace in firm-type economies. Loyalty is generally directed toward a product or a name brand, and not the companies creating or selling the product. Decision-making power, instead of being displaced on a person-to-person basis, is centrally located at a main office.
- Multi-polar network economies. These markets are systems that incorporate both personal and transactional styles in their business. Relationship marketing is conducted, where companies form lasting connections with customers. Prices are usually negotiated in these markets, but not always. Relationship networks affect competition and decision-making, but at a wider scale than person-to-person. Power is not held by any main office, but is distributed along the relationship network of the business.
Social entrepreneurship, like international entrepreneur-ship, has risen in popularity over recent years. It involves developing unique ideas, usually from a business standpoint, to solve social problems. Often social entrepreneurs can create practices that revolutionize industries and create very successful companies, but the goal is always social welfare. Social entrepreneurs tend to judge success in terms of “social value” rather than the income generated by a business. They look for ways in which their society needs aid or needs a particular problem solved, then work to solve the problem in the same way a traditional entrepreneur does. A social entrepreneur deals with social potential, and seeks to create lasting change for the better.
Examples of social entrepreneurship abound. Medical practices centering around helping the patient achieve responsibility for their own health and treatment by teaching them about their ailments is a successful form of entrepreneurship beguninWorld WarIIbydoctors like Byrnes Shouldice. Another good example is strategies for police departments to deal with criminal behavior with new, results-oriented methods. Community programs designed to bring out talents in at-risk youth or help senior citizens become more independent function in the same way.
When considering a social enterprise, an entrepreneur must first decide what sort of business to create—nonprofit or for-profit. Nonprofit businesses find it easier to focus on the social endeavor, attract the right-minded employees, and effectively market their purpose without sounding pretentious. Nonprofit organizations also receive more donations, especially from taxpayers who can write off the donation. For-profit businesses, on the other hand, can often make a better profit, raise more money through investors and stockholders who are willing to keep the business focused on its social goals, and create more opportunity for growth than nonprofit organizations. Which type of business to construct is one of the first questions a social entrepreneur should ask when sitting down to outline the plan.
Many entrepreneurial businesses can hinge on very brief—even chance—proposals to investors, ventures capitalists, and banks. These short proposals have become so useful and widespread that they are referred to as elevator pitches, the name drawn from a scenario in which an entrepreneur encounters a high-ranking business executive or capitalist in an elevator, and has only the time both are in the elevator to make the pitch and win the necessary investment.
So, how does an entrepreneur form a perfect elevator speech? Professor Jack Raiton, in his 2007 article, “Mastering the Elevator Pitch,” has several good pieces of advice:
- An elevator pitch should not be directed at making a sale. That is a lot to shoot for in a very short amount of time. Instead, the pitch should be designed to pique interest, to give valuable tidbits of information, and to secure some sort of return communication. A successful entrepreneur will win an e-mail, phone call, or interview after an elevator pitch.
- The problem or need the entrepreneur intends to solve should be presented in the elevator pitch. This should be explained in concise, vivid language.
- Since attention spans are not notably long, an elevator pitch should sound interesting—about 30 seconds of spontaneous, memorable conversation. “Spontaneity” can be achieved through extensive practice, rehearsing the speech until it flows naturally and sounds unstilted. A script and a mirror both help prepare for a good elevator pitch.
- The pitch should include the particular advantages the entrepreneur can offer, wrapped up in a nutshell. The title to a book is a good metaphor to apply. The title should be clear, explain the abilities and status of the book, and not run on all over the cover—neither should the elevator speech.
- Nothing complex should be included in an elevator pitch. If it can be simplified, simplify it. Otherwise, do not include it. An idea that is too complex can ruin the entire pitch.
The structure of the elevator speech can be formed using the guidelines above. There are many other tips entrepreneurs may find useful as well. It is a good idea, for instance, to begin by giving a statistic or other arresting fact concerning the pertinent industry, introducing the problem or general situation immediately. Technical or scientific language, in any form, should be avoided in the pitch; even though it may impress, the use of unfamiliar terms ultimately confuses and bores any investor listening. Contacts can also be used in elevator pitches to catch attention, whether it be the dropping of a significant name or previous work experience at a prestigious company. The most important thing is that the entrepreneur feels comfortable and excited giving the pitch under any circumstances.
Business angels are resourceful investors who have a medium amount of capital available to contribute to starting businesses and are known to save or start entrepreneurial endeavors. They are not as difficult to find or win over as the major-investment venture capitalists, and so much of an entrepreneur's selling efforts are directed toward angels. Angels can exist individually and as part of sponsoring networks.
As a way of life, entrepreneurship has several advantages. It offers individuals the chance to be their own boss and to enjoy an independent lifestyle. It provides individuals the opportunity to develop and grow a new business that makes an impact on their community. And, of course, successful new ventures offer the tantalizing prospect of almost unlimited profit potential. However, as a lifestyle, entrepreneurship also has its downside. It requires a tremendous amount of personal commitment and long work hours, particularly in the early stages of new business startup. Uncertainty of income and the potential for financial loss are also potential negatives.
Cowan, David. “Practicing the Art of Pitchcraft.” Who Has Time for This? 2008. Available from: http://www.whohastimeforthis.blogspot.com/2006/01/practicing-art-of-pitchcraft.html.
Dees, Gregory J. Strategic Tools for Social Entrepreneurs. New York: John Wiley and Sons, 2004.
“Global Entrepreneurship Monitor.” Available from: http://www.gemconsortium.org.
Jones, Marian V, and Pavlos Dimitratos. Emerging Paradigms in International Entrepreneurship. Edward Elgar Publishing, 2004.
“Nonprofit vs. For-profit Social Ventures.” SmartMoney, 2008. vailable from: http://www.entrepreneur.com/startingabusiness/smsmallbiz/article195242.html.
Oviatt, Benjamin M. “Defining International Entrepreneurship and Modeling the Speed of Internationalization.” Entrepreneurship: Theory and Practice, 2005. Available from: http://www.allbusiness.com/management/557273-1.html.
Raitin, Jack. “Mastering the Elevator Pitch: 5 Steps to Entrepreneurial Success.” Professor Raitin's Inside Perspectives, 2007. Available from: http://www.mstblog.ohsu.edu/index.php/2007/11/13/mastering-the-elevator-pitch-5-tips-to-entrepreneur-success/.
Shane, Scott. “Top Ten Myths of Entrepreneurship.” How To Change the World, 2008. Available from: http://www.blog.guykawasaki.com/2008/01/top-ten-myths-o.html.
Zimmerer, T.W., and N.M. Scarborough. Essentials of Entrepreneurship ond Small Business Management. Upper Saddle River, NJ: Prentice-Hall, 2002.
"Entrepreneurship." Encyclopedia of Management. . Encyclopedia.com. (September 14, 2018). http://www.encyclopedia.com/management/encyclopedias-almanacs-transcripts-and-maps/entrepreneurship
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Entrepreneurship comes from entrepreneur, anglicized from the original French word. It means someone who undertakes something. Merriam-Webster defines "entrepreneur" as "one who assumes the risk and management of business; enterprise; undertaker." The relevant definition of "enterprise," in turn, is "the character or disposition that leads one to attempt the difficult, the untried, etc." Starting with basic definitions is useful because entrepreneurship is valued in American culture and has therefore come to be applied to all manner of business activities, including the running of very large corporations where the managers are not genuinely at risk, did not start the business, and are simply running things; their "undertakings" might sometimes be risky—but not in relation to total assets.
Academic students of the entrepreneurial phenomenon have emphasized different aspects of behavior in business. Josef Schumpeter (1883–1950), the Austrian economist, associated entrepreneurship with innovation. Arthur Cole (1889–1980), Schumpeter's colleague at Harvard, associated entrepreneurship with purposeful activity and the creation of organizations. The management guru, Peter Drucker (1909–2005) defined entrepreneurship as a discipline. "Most of what you hear about entrepreneurship is all wrong," Drucker wrote in Innovation and Entrepreneurship (1986). "It's not magic; it's not mysterious; and it has nothing to do with genes. It's a discipline and, like any discipline, it can be learned." Drucker argued that entrepreneurship extends to all types of organizations. Two widely cited contributors to the Encyclopedia of Entrepreneurship (1982), A. Shapero and L. Sokol argued, from a sociological position, that all organizations and individuals have the potential to be entrepreneurial. They focused on activities rather than organizational make-up in examining entrepreneurship. In their view entrepreneurship is characterized by an individual or group's initiative-taking, resource gathering, autonomy, and risk taking; thus, like Drucker's their definition encompasses all types and sizes of organizations with a wide variety of functions and goals—very much in line with the observation which shows that entrepreneurship is evident in the foundation and growth of all types of organizations.
The academic approach to this subject has tended to be analytical—attempts at disassembling the entrepreneurial phenomenon in order to generate laws of business. One of Arthur Cole's intentions, for example, was to integrate the entrepreneurial phenomenon into a general theory of economics; thus he spoke of it as one of several production factors: "Entrepreneurship may be defined in simplest terms," he wrote in Journal of Economic History, 1953, "as the utilization of one productive factor of the other productive factors for the creation of economic goods." Much of Peter Drucker's work related to management, particularly the management of large organizations; not surprisingly he saw entrepreneurship in terms of a methodology of management—and methodologies can be learned.
Another way to look at entrepreneurship is by the study of history on the one hand—how enterprises came to be, with special emphasis on their beginnings—and looking at the reports of entrepreneurs themselves to see what they have to say. The historical approach is very instructive but in a surprising way. First, the actual entrepreneurial experience somewhat de-mystifies the concept (as Drucker did, but for other reasons): entrepreneurs very often stumble across opportunities, follow peculiar interests, or make something useful because they cannot find it. Second, history also highlights intangible aspects of the entrepreneurial personality (the very genes that Drucker dismissed): such individuals tend to be open-minded, curious, inquisitive, innovative, persistent, and energetic by temperament, thus showing many of the characteristics highlighted by the academics. But, fourth, the notion that entrepreneurs are risk-takers is not confirmed: rather, entrepreneurs are risk-averse but good at minimizing risk.
Paul Hawken, himself the founder of two successful businesses, provided a good view of entrepreneurship, from the entrepreneur's perspective, in his book Growing A Business. Hawken looked at many instances of start-ups (including his own companies) and highlighted the interesting mix of personal qualities, leanings, opportunities, the incremental means by which businesses get started, and the characteristics good entrepreneurs exhibit. Hawken made useful distinctions that Peter Drucker apparently overlooked. "Entrepreneurial change," Hawken wrote, "depends on static situations, and these are provided in abundance by government, large corporations, and other institutions, including educational ones. We need both entrepreneurial and institutional behavior. Each feeds on the other. The role of the former is to foment change. The role of the latter is to test that change." The distinction will ring true to anyone engaged in small business—especially those who have taken it up after working in a large organization: change is difficult inside large, bureaucratic structures; it is easier to accomplish in a small firm: no committees need to make an input, no chain of command needs climbing one link after the next … Some examples illustrating the historical view of entrepreneurship:
Sears and Kmart
Sears, Roebuck (according to Sears Archives, http://www.searsarchives.com/history/history1886.htm) began because a railroad station agent in North Redwood, MN had time on his hands and, to fill it, did some minor dealings in lumber and coal. A jeweler in nearby Redwood Falls refused a shipment of watches in 1886. The young Richard Sears, the agent, bought the watches from the seller and sold them to other agents up and down the railroad line. This little venture having been successful, Sears bought more watches. Eventually he started selling the watches in a catalog of his own. The company was then called R.W. Sears Watch Company. Sears needed a watchmaker to support this business and hired another young man, Alvah Roebuck, using an ad in a Chicago paper. One thing led to another. Sears was not the first catalog seller to the then predominantly rural U.S. population. One of his innovations was to make the Sears catalog smaller than that of the dominant Montgomery Ward. Sears argued that, being smaller, the catalog would always end up on top. "Small is beautiful," you might say. Kmart also began small—as a dime-store founded by Sebastian Kresge, a category now equivalent to so-called "dollar stores." Kresge's innovation consisted in exploiting the low-price end of retail goods and concentrating on them.
The "golden arches" had their start because Ray Kroc, McDonald's founder, sold milkshake blenders to drugstores and eateries. In 1954 he discovered that a hamburger seller owned by the MacDonald brothers was far and away the most popular in Southern California and had developed a method for serving customers in record time. Eight milkshake blenders were running at the little shop continuously. He proposed to the brothers that they open several more shops—thinking that he could sell them blenders. The brothers wondered who could open these stores for them. Kroc then said, (according to McDonald's web site, http://www.mcdonalds.com/corp/about/mcd_history_pg1.html) "Well, what about me?" The first golden arches rose a year later in Des Plains, IL. Ray Kroc himself had, by that time, already shown his entrepreneurial spirit by investing his savings and a second-mortgage on his house into the milkshake blender distributorship—which in due time led to his fortune. In this case the desire to sell more blenders resulted in the establishment of a national and now international "fast food" category.
Apple and the Macintosh
Apple began when two Steves, Steve Wozniak, the technical innovator, and Steve Jobs, the entrepreneur, got together to make circuit boards for hobbyists—who, in turn, would use them to make homegrown computers. Thus Apple did not begin as a computer maker. When Jobs attempted to sell these boards to a local computer store, Paul Terrel, the owner, told him to make finished computers and promised to buy 50 of them for $500 each. Financing was a problem, but Jobs, armed with the purchase order from Terrel, managed to persuade a electronics distributor to let him have the components on credit. Thus Apple was born—financed by a sale-in-hand. This history illustrates the limited visions of the start-up enterprise and the effect of tenacious enterprise. Jobs, however, had a vision when, some eight years later, in 1979, he toured Xerox's Palo Alto Research Corporation (PARC) and there saw, for the first time, an experimental visual interface and the computer mouse. Xerox, clearly, was miles ahead of anyone in technological innovation, but the people at Xerox PARC could not persuade their managements to commercialize the ideas already present in physical demonstration. Apple, however, independently developed the concepts and thus created the Macintosh. Visual interfaces became standard after that—and everyone now uses a mouse. This bit of history illustrates Hawken's notion that institutionalization stifles and entrepreneurship creates change.
A classical case of entrepreneurship, mixing a challenge, a creative response, and persistent enterprise is that of Margaret Rudkin, founder of Pepperidge Farm, Inc. Margaret Rudkin moved with her family from New York to a farm in Fairfield, CT where sour gum or "Pepperidge" trees grew—hence Pepperidge Farm. Here one of her young sons developed an allergy to commercial breads laced with preservatives and artificial ingredients. This was the "challenge." The year was 1937. As the Pepperidge Farm web site reports (see http://www.pepperidgefarm.com/history.asp), Rudkin set out not only to bake wholesome bread her child could eat but "the perfect loaf of bread." She succeeded very well—her "creative response." Visitors to the home liked the bread so much they persuaded her to try to sell it. With a few loaves in hand, she approached the local grocer who, with some reluctance, agreed to try to sell them—soon he was asking for more. The business weathered the shortages created by World War II during which Rudkin sometimes suspended production rather than produce inferior product—a sign of her "persistence." On July 4, 1947 the small business suddenly grew quite a lot with the opening of a large modern bakery in Norwalk, CT. The bread was of such quality that it commanded a price of 25 cents a loaf at a time when bread sold for a dime a loaf. The product is still on the shelf everywhere—in testimony to Margaret Rudkin's persevering "enterprise."
THE ENTREPRENEURIAL PERSONALITY
Scholars, psychologists, analysts, and writers continue in efforts to define that elusive something called the "entrepreneurial" personality—but while the results usually include some of the same words (creative, innovative, committed, talented, knowledgeable, self-confident, lucky, persistent, and others), actual entrepreneurs (like actual artists, scientists, discoverers, and leaders in every walk of life) come in a bewildering variety. They may be highly trained or untrained, very knowledgeable or not. What seems certain is that the qualities entrepreneurs exhibit are not likely to be mass producible or the consequence of a well-crafted curriculum. That such people are in many ways outstanding—and in others quite ordinary—is also clear from a study of history. Entrepreneurship, therefore, might simply be called a kind of excellence that appears sharply in organizational life—be it business or some other activity.
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"Entrepreneurship." Encyclopedia of Small Business. . Encyclopedia.com. (September 14, 2018). http://www.encyclopedia.com/entrepreneurs/encyclopedias-almanacs-transcripts-and-maps/entrepreneurship
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The concept of entrepreneurship and the portrayal of the entrepreneur as leading economic figure, even cultural hero, derive from both the evident nature of the market system and the projected self-image of middle-class business leaders. As with any such concept, its meaning depends on the larger model of which it is a part and its more or less precise relationships to other key figures. Defining the entrepreneur or entrepreneurship deals with a term whose meaning is highly variable in use, and generates serious questions.
The term capitalist could refer to all business people, or to only the suppliers of capital, with the others as managers—the promotional, organizational, and operational decision makers—and with the entrepreneur performing a particular function or role, transcending the others. Even that array of possibilities is rendered further complicated by formulations that treat the entrepreneur as either (1) an active promoter or agent of change; or (2) a passive responder to market signals and to change; and either (1) a creator or (2) finder of opportunities.
A troublesome question is whether entrepreneurship refers (1) to a particular function(s) or (2) to persons. If the answer is persons and not function(s) per se, then the correlative question is whether it refers to a particular group of persons or to an aspect of the behavior of all persons. Some individuals may well undertake more and/or more specialized entrepreneurship. But all individuals undertake one or more of the functions of entrepreneurship that can enter the definition of the term—even if it is a matter of reacting to price and other signals in a creative way.
Further difficulties arise when one tries to distinguish the certain behavior(s) or qualities that constitute entrepreneurship, requiring that one identify what makes any activity or quality “entrepreneurial.” But that effort is a part of the larger and vexing question of the definition of entrepreneur(ship), say, one that does not equate entrepreneurs with business managers as organizers and decision makers.
Two further, interrelated questions are, first, whether the meaning and defense of capitalism involves a system dominated by capitalists and/or entrepreneurs, or a market system of economic agents without such domination, that is, whether capitalism or market economy is the more systemic term; and, second, whether some kind of entrepreneur(ship) has the critical role in all economic systems, i.e., whether only one generic economic system exists and therefore actual economies differ principally in the identity and institutional setting of entrepreneurship.
Several considerations almost invariably enter discussions of entrepreneurship. One consideration is that the entrepreneur is achievement oriented, manifesting the type A personality and always seeking success. The second consideration is that the substantive meaning of achievement is a matter of culture. In market economies, especially capitalist ones, success is achieved through rising in large, important organizational structures, acquisition of wealth, and similar iconic honors. The third consideration concerns the entrepreneur serving as a driving force in the economy, whatever the specifics of its organization and structure. One consideration that often but by no means always enters discussion is the relation of business and governmental entrepreneurs. This relation may take the form of a competition over the use of resources; movement among key leadership positions in private and public sectors; another involves the tendency of entrepreneurs to act up to, if not even beyond, the limits imposed by law.
Definitions typically turn on the incorporation of functions. One definition, centering on coordination, can be close to that of manager or decision maker within the firm; alternatively the usage may turn on the contribution that individual entrepreneurship makes to coordination that is systemic, that is, going beyond the firm to the economic system. In either case, the key element is capability in participating in institutionalized decision making processes specializing in the making of policy.
A second function often ensconced within a definition is that of adventurer, the role of formulating a vision and acting upon it. At its most dramatic, this definition tends to make capitalism a civilized game of power in monetary form. This entrepreneur is not content with finding niches or paths not seen by others, and therefore goes beyond finding to creating them themselves. One definition centers on the heroic role itself. This definition recognizes entrepreneurship as a system-specific honorific channel of achievement motivation and/or a designation of such achievement.
Other definitions that incorporate functions are the management of risk or, more properly, uncertainty; the marshalling, management or analysis, and application of information; serving as the adjudicator of conflicting interests within and between firms; and the identification if not creation of opportunities. Some definitions may combine functions, such as innovation under uncertainty and asymmetrical information. Not all definitions apply equally well to both entrepreneurial function and their application to specific individuals.
The concept of the entrepreneur, whether it be understood to pertain to a class of person or an aspect of all agents’ activity or one function or another, is related to other concepts as well. Innovation can result from entrepreneurial activities in in-house or external research and development generating new technology. Both market structure and the form of competition are both influenced by entrepreneurial activity along technological, strategic, and political lines, and influence the form, direction, and mode of entrepreneurial activity. Although much economic theorizing is static, the introduction of entrepreneurship both opens up a wider range of efficient results and multiple paths of economic growth, and the possibility of multiple efficient results and economic-growth paths amenable to entrepreneurial activity. The realm of entrepreneurship is, moreover, transformed by Canadian-American economist John Kenneth Galbraith’s concept of a new industrial state in which corporate and general economic decision making are expanded from the top levels of corporate managements and a mix of government-business antagonism and quid pro quo relationships to decision making lower down in the corporation, in technological and educational elements, and to a system of more or less joint planning for economic stability. In Galbraith’s conception, the entrepreneur is less heroic but no less important a figure.
Finally, attention should be given to Italian economist Vilfredo Pareto’s theory of the circulation of elites and what may or may not be its modern formulation, the market for corporate control and therein competition between entrepreneurs. An alternative formulation juxtaposes individuals with power to competitive forces.
SEE ALSO Capitalism, State; Enterprise; Socialism; State, The
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Warren J. Samuels
"Entrepreneurship." International Encyclopedia of the Social Sciences. . Encyclopedia.com. (September 14, 2018). http://www.encyclopedia.com/social-sciences/applied-and-social-sciences-magazines/entrepreneurship-0
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In French, to be an entrepreneur is to be "one who undertakes a task or project." Thus, entrepreneurship has come to be defined as the act of risking capital and resources to identify and implement a solution to a problem with the goal of turning a profit. The eighteenth-century Irishman Richard Cantillon first used term entrepreneur in a business context to describe businessmen who bought goods and services only in order to resell them later at a higher price. This idea of risking one's fortune for the possibility of a large but uncertain future gain is still the central meaning of entrepreneurship.
In 1904 the German sociologist Max Weber (1864–1920) described the entrepreneur as a heroic, energetic figure whose "Protestant work ethic" relied on thrift and hard work to make possible economic innovation and growth. The leading economist of entrepreneurship, Austrian Joseph Schumpeter (1883–1950), argued that in every capitalist society great risk-taking entrepreneurs arise who have the vision and energy to create new technologies and industries. But when lesser imitators attempt to recreate the success of these entrepreneurs, the economy becomes glutted with over-investment and eventually collapses into recession. Eventually a new generation of entrepreneurs arises to fuel a new boom in innovation.
The strong tradition of property rights in the United States created an ideal environment for the first great period of U.S. entrepreneurship. Between 1789 to 1932 U.S. entrepreneurship enjoyed its "classical" age. During this time business risk-taking and economic growth occurred largely through the efforts of individual men such as Andrew Carnegie (1835–1919), John D. Rockefeller (1839–1937), Thomas Edison (1847–1931), and Henry Ford (1863–1947). These entrepreneurs and many like them accumulated the capital, identified the opportunities, organized the resources, and crushed their competition to build vast corporate empires. Since 1933 the federal government has played a much larger role in ensuring that pure entrepreneurship doesn't harm the public interest.
To some people, the rise of Bill Gates (1955—) and the Microsoft Corporation in the 1980s represented the birth of a new age of corporate-style entrepreneurship. Some U.S. economists attributed the explosion in new Internet and technology companies in the 1990s both to the emergence of a new class of managers and risk-takers trained to pursue innovation and to economic conditions that created a large pool of investment capital for these entrepreneurs to draw on. But at the close of the twentieth century entrepreneurship means everything from starting a small home-based business to developing and marketing a new product or technology to establishing an entire corporation or industry
See also: Capital, Capitalism, Microsoft, Joseph Schumpeter, Work Ethic
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The 1980s saw the development of the concept of intrapreneurs; that is, people working alone or in teams who remained employees within the organization or firm for which they worked, but took responsibility for some innovation, costly exercise or risky development, or even for a routine subset of activities, in the expectation of additional personal financial reward for successful ventures and profitable operations. At the extreme, intrapreneurs shade into employees whose earnings depend heavily on bonus and commission payments, or other incentive payments—such as sales personnel.
Theories about entrepreneurial behaviour concern the relative importance of personality traits, social marginality, the ‘artisan’ or ‘craftsman’ orientation to work, sources of risk capital, the economic environment, and institutions. Theories of economic growth do not always attach importance to entrepreneurs. Sociological interest in entrepreneurship has declined steadily with the emergence of monopoly capitalism and the rise of the modern business corporation. However, the American economic sociologist Ronald S. Burt has conducted a number of analyses of envy and entrepreneurial opportunities in competitive environments, notably via the application of concepts derived from network analysis (see Corporate Profits and Cooptation, 1983, and Social Contagion and Innovation, 1988
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entrepreneur (än´trəprənûr´) [Fr.,=one who undertakes], person who assumes the organization, management, and risks of a business enterprise. It was first used as a technical economic term by the 18th-century economist Richard Cantillon. To the classical economist of the late 18th cent. the term meant an employer in the character of one who assumes the risk and management of business; an undertaker of economic enterprises, in contrast to the ordinary capitalist, who, strictly speaking, merely owns an enterprise and may choose to take no part in its day-to-day operation. In practice, entrepreneurs were not differentiated from regular capitalists until the 19th cent., when their function developed into that of coordinators of processes necessary to large-scale industry and trade. Joseph Schumpeter and other 20th-century economists considered the entrepreneur's competitive drive for innovation and improvement to have been the motive force behind capitalist development. Richard Arkwright in England and William Cockerill on the Continent were prominent examples of the rising class of entrepreneurial manufacturers during the Industrial Revolution. Henry Ford was a 20th-century American example. The entrepreneur's functions and importance have declined with the growth of the corporation.
See J. Schumpeter, The Theory of Economic Development (1934); J. W. Gough, The Rise of the Entrepreneur (1969); O. F. Collins, The Organization Makers (1970).
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en·tre·pre·neur / ˌäntrəprəˈnoŏr; -ˈnər/ • n. a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so. ∎ a promoter in the entertainment industry. DERIVATIVES: en·tre·pre·neur·i·al adj. en·tre·pre·neur·i·al·ism n.
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Michael D. Woodard, PhD
African Americans have a unique history of entrepreneur-ship in the United States. African Americans have been in business since before the Civil War and their entrepreneurial tradition has continued overtime. Today, there is an explosion of the entrepreneurial spirit among African Americans as their businesses and sales are expanding rapidly. This increase in business activity is in part due to the positive impact of affirmative action laws in providing opportunity once denied to African Americans. This essay presents an analysis of the impact of affirmative action on black entrepreneurship.
This essay draws heavily from the author’s Black Entrepreneurs in America: Stories of Struggle and Success (1997) and from Thomas Boston’s seminal book Affirmative Action and Black Entrepreneurship (1999). The idea common to these books is that opportunity matters.
Throughout its history, America has welcomed various immigrant groups attempting to escape religious intolerance, find political freedom, and enjoy greater economic opportunity. Africans, however, are the only group that was forcibly transported to the American shore, not to enjoy increased freedom, but to serve as chattel slaves to advance the economic interest of American slaveholders. Prior to the Civil War, slavery defined the existence of most Africans in America. The antebellum period denied African slaves economic rights in the truest sense of the term and excluded them from private enterprise altogether. “Free” African Americans, numbering about 60,000, who could accumulate the capital to generate business activity, developed and sustained enterprises in almost every area of business, including merchandising, real estate, manufacturing, construction, transportation, and extractive industries.
As impossible as it was for slaves to engage in private enterprise, it was also hazardous for “free” African Americans to do so. Free blacks lived under constant fear of being labeled as “runaway slaves” and being sold into slavery. The major problem confronting African American entrepreneurs during slavery stemmed from the inability of whites to tolerate the economic success of any single person of African origin. Whites feared that even isolated instances of economic success would undermine the system of racial oppression. As a consequence, the full force of the law and many acts of violence were imposed to extinguish the entrepreneurial spirit among African Americans. For instance, in areas where free African Americans lived, laws called Black Codes were passed to restrict their movement and their economic freedom. By 1835, Virginia, Maryland, and North Carolina passed laws forbidding free African Americans to carry arms without a license. The right of assembly was also denied African Americans throughout the South, making it illegal for African American civic, business, or benevolent organizations to convene. In 1865, many southern states passed regulations declaring that any black man who did not have an employer was subject to arrest as a vagrant, including any black man working independently. Black Codes reflected white slave owners’ fears of an African American uprising, and these legal restrictions had the purpose and effect of making it difficult for free African Americans to earn a living.
President Lincoln’s Emancipation Proclamation of 1863 offered the promise of freedom and political enfranchisement for African Americans, but that promise was soon undermined by judicial rulings. In 1877, in Hall v. DeCuir, the U.S. Supreme Court ruled that a state could not prohibit segregation on a common carrier. In 1896, with the Plessy v. Ferguson ruling, “separate but equal” became the law of the land. Following these decisions, a pattern of rigid segregation of the races was established that remained the norm throughout the nation until the civil rights movement in the 1960s. What is unique about American race relations is that segregation laws applied exclusively to African Americans. Segregation laws restricted blacks from competing against any other entrepreneur in an open market. On the other hand, the Chinese, Mexican, Jewish, and Native American entrepreneur could operate a business in the open market as well as compete against black businesses in black neighborhoods. In addition, every ethnic group, except African Americans, had access to public accommodations to drink at public fountains, eat in restaurants, and sleep in hotels. The intent of this rigid caste system of segregation was to deny African Americans social and political rights, and privileges, and to strangle their economic rights and opportunities. This virulent system of caste segregation shaped African American business development for the next 100 years until the civil rights movement.
Segregation restricted black businesses to eight categories: personal services, such as cleaning and pressing shops; eating and drinking establishments; shoe repair; funeral parlors; barber shops and beauty salons; miscellaneous retail gas stations; and grocery stores. These businesses tended to be small, served a black clientele, operated with few or no employees, and their owners tended not to be college graduates. Sociologist Joseph Pierce coined the term “traditional businesses” to refer to this first generation of black-owned businesses that characterized most of the twentieth century. The civil rights movement brought about change in the traditional black business pattern.
The civil rights movement was the greatest effort at social reform in the history of United States because it significantly improved opportunities available to African Americans. It was a reformist movement that focused on changing the laws that denied African Americans the rights guaranteed other citizens by the U.S. Constitution. Indeed, the civil rights movement changed the way in which laws were promulgated. Prior to the movement, laws such as those requiring chattel slavery, Black Codes, and Jim Crow segregation were designed to subordinate African Americans. Beginning with Executive Order 8802 in 1942 that prohibited government contractors from engaging in employment discrimination based on race, color, or national origin, laws were designed to protect the rights of African Americans as well as promote access to public accommodations, jobs, public education, and business opportunities. Other legislative acts and executive orders included Brown v. Board of Education, Topeka, Kansas, in 1954, that ruled that racial segregation in public education as unconstitutional, the Gayle v. Browder rule that segregated seating on the public buses as unconstitutional in 1957, as well as the Civil Rights Act of 1964, the Voting Rights Act of 1965, and the Executive Order 11246. Taken together, these legislative acts and executive orders are indicators of the success of the civil rights movement.
Perhaps the greatest boost to African American entrepreneurship came in 1967 with the Equal Opportunity Act that created the U.S. Department of Commerce’s Small Business Administration 8(a) program. Section 8(a) of the Small Business Act Amendments (Pub.L. 90-104) directed that a portion of all federal government procurement contracts be reserved for competition only among disadvantaged business persons. The 8(a) provision became one of the primary means by which minorities gained access to federal procurement. The concept became known as “setasides.” Participation in the 8(a) program is restricted to small and disadvantaged businesses, which include non-minority small businesses and exclude larger African American-owned businesses. Participation in the 8(a) program for small and disadvantaged businesses is contingent upon SBA approval of the business plan prepared by the prospective firms. The total dollar value of contracts processed through Section 8(a) had grown from $8.9 million in 1969 to $2.7 billion in 2000. Through this program, many small and African American-owned businesses were able to stabilize and grow.
During the early 1980s, however, the Section 8(a) program was criticized because less than 5% of the firms had achieved open market competitiveness, implying that the program was assisting the marginal entrepreneur more so than the promising self-employed minority businessperson.
The 1977 Public Works Employment Act (Pub.L. 95-28) and the Omnibus Small Business Act in 1978 established percentage goals in procurement for minority firms for the first time. These acts required that at least 10% of all federal procurement contracts for local public works projects
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be expended with minority businesses. The SBA 8(a) Program, the 1977 Public Works Employment Act, and the Omnibus Small Business Act constituted the first attempts at set-asides to provide access to contracts for small, disadvantaged, and minority businesses. As a result of these laws, the amount of federal procurement expended with minority-owned firms increased from 3.4% in 1981 to 8.3% in 1994, or 14.4 billion dollars.
ATLANTA, GEORGIA—A CASE STUDY IN AFFIRMATIVE ACTION PROCUREMENT
In Affirmative Action and Black Entrepreneurs (1999), Professor Thomas Boston analyzed the way in which Atlanta, Georgia, implemented its affirmative action procurement program. According to Professor Boston, black entrepreneurs got their first opportunity to participate in city contracting in a significant way in 1974 when Maynard Jackson was elected the first African American mayor of Atlanta. Maynard Jackson demanded the immediate implementation of affirmative action policies in employment and business contracting. The minority business program created by Jackson opened new markets and created new opportunities for black entrepreneurs. The 1973 Annual Report of the Atlanta Office of Contract Compliance indicated that blacks did not receive their first contracts from the city until 1973, the year that Jackson became mayor. The total dollar amount of contracts awarded to black businesses was just $41,800 of the $33.1 million awarded in contracts that year. A study of the city’s contracting history with blacks and other minorities revealed that insidious forms of discrimination were practiced until the 1970s. The city once maintained separate job qualification registers for blacks and whites, separate water fountains, and did not provide blacks with knowledge of bid opportunities.
To ensure more equitable access to public works projects, Mayor Jackson targeted the newly planned $1 billion Hartsfield International Airport project. His goal was to have 25% of the awards for construction go to minority-owned businesses. That meant, for the first time, that black contractors could move out of the small-scale residential construction and repairs as well as small-scale commercial construction. These projects also required architectural and engineering services, construction management, and public relations and related expertise. This affirmative action procurement program brought about a significant change in the city’s black-owned businesses.
Indeed, the ability of minority businesses to diversify away from traditional personal service and retail activities into non-traditional industries is the most important legacy of affirmative action policies. New market opportunities meant faster growth possibilities, greater profitability, and increased employment capacity. Black-owned firms that did not receive city contracts directly benefited nonetheless because affirmative action hastened the decline in racial stereotypes, improved networks between black and white entrepreneurs, and encouraged private sector companies to emulate public sector affirmative action initiatives.
The opportunities created by Atlanta’s affirmative action program attracted blacks out of the corporate-sector management, administrative, and executive positions and into entrepreneurial careers. These opportunities also encouraged black entrepreneurs in other parts of the country to migrate to the city such that Atlanta soon became known as the “Black Mecca.” More than 100 cities across the nation followed Atlanta’s lead in affirmative action procurement, and for 10 years the Atlanta plan was the model for other cities to follow. Between 1987 and 1992, the number of black-owned business in Atlanta doubled from 11,804 to 23,488. Opportunity matters in black business development.
SECOND GENERATION ENTREPRENEURS
As racial barriers began to fall in Atlanta and across the nation as a result of the civil rights movement, a second generation of black-owned businesses emerged. Firms established between 1970 and 1990 were not mere replicas of earlier traditional black-owned businesses. Many black entrepreneurs were now graduates of the nation’s leading business schools, and had acquired years of managerial experience in corporations and public sector employment. The new business opportunities made available through affirmative action public and private sector procurement programs converged with enhanced educational and business experience of blacks, and the outcome changed the character of black-owned businesses. By 2002, black business owners were more likely to hold graduate degrees when they started or acquired ownership in their business (about
one in four) than the national average (19%). Second generation businesses operate in non-traditional, skill-intensive industries such as finance, business and professional services, information technology, wholesaling, and manufacturing. They serve a more diverse and national client base. The number of paid employees has increased significantly. Civil rights–era laws created a more level playing field in public procurement and private enterprise and stimulated the fastest growth in the skill and capital intensive lines of business with black ownership. Although there remains a concentration of small traditional businesses, a coinciding trend exists toward establishing highly skilled and capital-intensive firms, referred to as emerging or second generation firms.
BACKLASH TO EMERGING FIRMS
Because of the success of affirmative action programs at the local and federal levels, a strong backlash emerged among white entrepreneurs who were threatened by competition from African American and other disadvantaged groups. In Atlanta, opposition to the affirmative action procurement plan was powerful. For instance, the Hartsfield International Airport project was one of the largest construction projects in the South. Not only was there strong resistance to the 25% minority participation requirement, but race relations grew even more intense when, in addition to the airport mandate, Mayor Jackson threatened to withdraw city funds from local banks unless they took steps to elevate minorities to executive positions. In response to an earlier suit, the Georgia Supreme Court issued a ruling in November 1987 that affirmed the constitutionality of Atlanta’s minority business program.
THE CROSON AND ADARAND DECISIONS
The white backlash to the black business advancement resulting from affirmative action procurement programs reached a crescendo with the Croson decision. The fundamental concept of affirmative action and set-aside minority assistance programs was called into question during the Reagan-Bush era. In 1989, the landmark U.S. Supreme Court ruling in City of Richmond v. J. A. Croson Co. struck down as unconstitutional under the Fourteenth Amendment a city ordinance of Richmond, Virginia, requiring that 30% of each public construction contract be set aside for minority businesses. In ruling against the Richmond ordinance, the Supreme Court made the distinction between local/state-mandated business development programs and federally-enacted business development programs, holding that the U.S. Congress has far more authority than the states in formulating remedial legislation.
The Croson decision had a devastating impact on minority businesses. In July 1987, when a lower court first ruled against Richmond’s set-aside program, 40% of the city’s total construction dollars were allocated for products and services provided by minority-owned construction firms. Immediately following the court’s decision, the minority businesses’ share of contracts fell to 15%, later dropping to less than 3%. In Tampa, Florida, the number of contracts awarded to African American-owned companies decreased 99%, and contracts with Latino-owned firms fell 50% after Croson. Such dramatic decreases in contracts awarded to minority businesses occurred throughout the country. More than 33 states and political subdivisions began taking steps to dismantle their racial/ethnic set-aside programs; more than 70 jurisdictions were conducting studies or holding hearings to review and evaluate their programs in light of Croson.
The Croson decision legitimated the idea of reverse discrimination in government procurement just as the Regents of the University of California v. Bakke (1978) decision did in higher education. This issue would surface again in Adarand Constructors, Inc. v. Pena (1995). Adarand filed suit against the U.S. Department of Transportation, claiming that consideration of social and disadvantaged status, which was assumed to include women and minority groups, in awarding subcontracts violated the equal protection component of the Fifth Amendment’s due process clause. The court of appeals rejected Adarand’s claims, but in June 1995, the Supreme Court remanded the case for further consideration using the “strict scrutiny” criteria established in Croson. Together, the two decisions had the
effect of greatly limiting the access of disadvantaged entrepreneurs to procurement opportunities in the private and government sectors.
The government’s ambivalence in supporting economic opportunities for African Americans and other minority groups should be viewed as a reflection of society’s ambivalence regarding the extent to which African Americans are entitled to economic rights. Nevertheless, the civil rights movement helped African American entrepreneurs gain greater access to capital and to government and private sector procurement opportunities for the first time in history. And as a result, many small African American-owned businesses were able to grow and stabilize. However, the continued growth of second generation black-owned firms is threatened by the demise of affirmative action procurement. Affirmative action procurement is declining, black businesses still do not have equal access to private markets, and, in the face of these adversities, a third generation of black entrepreneurs appears to be emerging.
The number of African American-owned firms grows steadily as the country moves into the twenty-first century. In 1972, 187,602 firms were enumerated. By 2002, the number of black-owned firms increased 638.4% to 1.2 million firms. Gross receipts of African American businesses also increased more than fourfold. Receipts of African American businesses grew from less than $20 billion in 1977 to $88.9 billion in 2002. The number of successful and emerging black-owned businesses has increased significantly. In 2002, there were 10,727 black-owned firms with receipts of $1 million or more, an increase of 30% since 1997. Revenue for these firms was about $49 billion, compared to $40 billion in 1997, up 22%. Businesses that grossed more than $1 million annually accounted for 1% of the total number of black-owned firms in 2002 and 55% of the total receipts of all black-owned businesses.
This significant growth of black-owned businesses is evidence of the strong entrepreneurial tradition among African Americans and the emergence of a third generation of black entrepreneurs. The third generation entrepreneurs have more private sector networks, a greater reliance on equity as a source of growth, and more strategic alliances with non-minority-owned companies. The companies that master these attributes are more likely to succeed going forward. Today, more black-owned businesses are going public, merge, or acquire other companies. In addition, more venture capital and equity funds are being established with the express purpose of investing in fast growing black-owned businesses. That would never be the case with black entrepreneurs in the past. The quintessential example of a third generation entrepreneur is Regional Lewis, of Beatrice Foods. Lewis amassed sufficient capital and business acumen to become the principal shareholder of Beatrice Foods until his premature death. While the number of third generation businesses remains small, businesses that reply on strategic alliances will extend the next frontier of black entrepreneurship.
Indeed, the robust growth rate in the number and the sales and receipts of black-owned businesses for 2002 confirms that these firms are among the fastest growing segments of the American economy. Segments of the African American population have exhibited the same entrepreneurial spirit over time as segments of other ethnic groups that migrated to this country. The entrepreneurial tradition continues to grow as a fundamental element of African American culture, even in the face of strong institutional adversity.
Black-owned firms still exhibit a geographic concentration as that with the African American population concentration. In 2002, six states claimed 55% of African American-owned businesses, whereas in 1997, these same states claimed 49% of African American-owned firms. New York had the greatest number with 129,324 black-owned businesses, followed by California (112,874), Texas (88,768), Florida (102,053), Georgia (90,461), and Maryland (69,410). While New York had the greatest number of African American-owned firms, California firms had the greatest sales and receipts. In 2002, the total sales and receipts of California’s black-owned firms were $9.7 billion, while the total for firms in New York was $7.5 billion. For Texas, the total sales and receipts of black-owned firms were $6.4; Georgia ($5.7); Florida ($5.7); and Maryland ($4.7). Other states with high numbers of black-owned businesses include Illinois with 68,699 firms, with $5 billion in sales and receipts; North Carolina with 52,122 firms and $3.6; Michigan with 44,366 and $4.3; Virginia with 41,165 and $3.7; and Louisiana with 40,243 and 1.9 billion in sales and receipts.
African American-owned firms tend to be concentrated in urban areas. New York City had more black-owned firms than any other city in the country at 98,076. Chicago had the second largest number of black-owned businesses (39,424), followed by Los Angeles (25,958), Houston (21,226), and Detroit (19,530). Washington, DC, historically ranked in the top five, ranked sixth in the number of black-owned firms with 12,198.
The location of corporate headquarters in urban areas has provided increased business opportunities for African American business service enterprises. Large cities have become areas where administrative and service functions are the dominant economic activities. The growth in corporate and government administration in central business districts has created a need for complementary advertising, accounting, information technology, computer, legal, temporary human resources, and maintenance business services. The aging demographics of the American population have created a need for a variety of health care services. Indeed, Table 1 indicates that health care and social service is the industry sector with the greatest number of black-owned businesses in 2002.
By 2002, African Americans tended to concentrate in skill-intensive service-producing industries. Health care and social services; other services; administrative support, waste management, and remediation services; and professional, scientific, and technical services account for 57.9% of black-owned businesses.
The development of African American-owned businesses in the new millennium likely will continue to reflect their emphasis on services. However, services of the twenty-first
century are not personal services but high-skill and capital-intensive services, and an increasing number of African American entrepreneurs focused on the unique challenges posed by what is called professional services. By 2002, two-thirds of African American-owned businesses were concentrated in health and social services, scientific and technical services, and administrative and waste management and remediation services. Success stories are numerous, and continued educational advances, especially in technology and business education, have translated into an increasing number of business successes among aspiring entrepreneurs.
The relative well-being of the African American community is directly linked to the vitality of its business segment. African American communities must continue to give birth to and grow successful businesses. Indeed, African Americans must strive to increase the rate at which they found and develop businesses. Even in the face of persistent institutional adversity, the responsibility for greater entrepreneurial growth rests with African Americans. The research clearly shows that black-owned firms are more likely to hire African Americans, whether these firms are located in low-income neighborhoods or in the suburbs. In contrast, black workers are a distinct minority in white-owned firms, even if such firms are located in distressed urban areas that are predominantly black. In 2002, an estimated 94,862 black-owned firms had paid employees, with receipts of $69.8 billion, or about $735,586 per firm. In addition, 973 of these firms had 100 or more employees, representing an increase of 9% compared to 1997 with 889 such firms. African Americans must continue to establish and grow firms with employees to ensure the relative well being of the African American community.
Professor Thomas Boston argues for a strategy of “Twenty by Ten” to grow black-owned businesses and to provide employment in the black community. Twenty by Ten calls for the government and private sector to pursue policies that are designed to create a sufficient number of black-owned firms such that their combined employment capacity will be equal to 20% of the black labor force by the year 2010: hence, Twenty by Ten.
Professor Boston estimated that, between 1982 and 1992, the number of black-owned businesses grew at a rate of 7.25% annually, and their employment capacity grew at a rate of 11.02% annually. In 1992, 620,912 black-owned firms were enumerated and they had an employment capacity that was equal to 2.3% of the African American workforce. Professor Boston as suggests that by 2010, given a sustained estimated 7.5 growth rate for African American firms from 1992 to 2010, there will be 2.2 million black-owned firms employing between 2.3 and 3 million African American workers, equivalent to approximately 16.6% of the projected workforce. With this calculation, Professor Boston contends, “If the current trends hold, 80% or 2.5 million of the new jobs that these firms create will go to blacks. And if we can improve our efforts just slightly, we can easily reach Twenty by Ten.”
In 2002, the U.S. Census enumerated 1,191,567 black-owned firms for a growth rate of 4.8% annually since 1992. At a sustained 4.8% annual growth rate, approximately 1.74 million black-owned firms will be created by 2010. Differing calculations aside, Professor Boston’s strategy and challenge to the African American community and to the American society at large is laudable. Black-owned businesses are more likely than white-owned businesses to locate in low-income neighborhoods and hire low-income persons. But whether a black-owned firm locates in low-income neighborhoods or in suburban industrial parks, black-owned firms are more likely to hire black workers, reduce black unemployment, and sustain the economic development of the African American community.
To accomplish this goal of Twenty by Ten, or “near Twenty by Ten,” African Americans must continue to strive to eliminate internal barriers. The successful entrepreneur must become viewed as an honored career path just as careers of teachers, lawyers, physicians, social workers, and ministers. Increasingly, entrepreneurship has become part of the curriculum or extracurricular activities of many high schools and community organizations. Moreover, parents must explicitly include entrepreneurship in the mix of career options presented to their children.
The second internal barrier is commitment. The sacrifice necessary to achieve a business goal is considerable. Success in business is difficult to achieve regardless of race. Success in business is enhanced by acquiring the necessary educational background, work experience to be technically competent, and saving sufficient start-up capital. The evidence tends to suggest that African Americans are increasingly willing to make this commitment since, by 2002, black business owners were more likely to hold graduate degrees when they started or acquired ownership in their business (about one in four) than the national average (19%).
In terms of external barriers, the majority community and government sector must take responsibility for eliminating the artificial barriers to the products, credit markets, and public sector procurement that have impeded the investment possibilities and profit potential of African American-owned businesses. Analysis conducted by the National Bureau of Economic Research to determine the extent to which minority-owned businesses encountered discrimination in applying for loans concluded that African American-owned businesses faced significant and persistent constraints in the credit market. Furthermore, the study revealed that these constraints extended beyond the availability of credit to also include the cost of credit. In other words, African American-owned businesses paid higher interest rates on their loans than did their majority counterparts. In addition, many successful black-owned businesses are dependent on government contracting. Gaining access to government procurement opportunities and subcontracting opportunities is critical if growth of black-owned businesses is to be sustained. The perpetual assault on affirmative action procurement is troubling. Therefore, an immediate concern is to find creative ways to support and extend government contracting programs to address racial disparities in public sector contracting.
The accomplishments of African American entrepreneurs over time provides evidence that the entrepreneurial spirit among African Americans burns bright as the United States moves into the new millennium.
(To locate biographical profiles more readily, please consult the index at the back of the book. For example, media executives appear in the Media chapter.)
WALLY AMOS JR. (1937– ) Entrepreneur
Wallace Amos Jr. was born in Tallahassee, Florida, on July 1, 1937, and grew up there until his parents divorced when he was 12 years old. Following his parents’s divorce, he went to New York City to live with his Aunt Della. She loved to cook and often made Amos her special chocolate chip cookies. After spending several years in New York City, he dropped out of high school to join the U.S. Air Force, where he earned his high school equivalency degree.
Upon discharge from the Air Force, Amos achieved success as the first African American talent agent for the William Morris Agency. Starting there as a mail clerk, he quickly worked his way up to executive vice president. While there he “discovered” Simon & Garfunkel for the agency and served as agent for such well known acts and entertainers as the Supremes, the Temptations, Marvin Gaye, Dionne Warwick, and Patti Labelle.
In 1975 Amos founded Famous Amos Chocolate Chip Cookies. Based on his Aunt Della’s recipe, the cookies became a nationwide success as they spread across the country from his original store on Sunset Boulevard in Los Angeles. By 1980 Amos was selling $5 million worth of cookies each year and his operation had expanded to include a large production facility in Nutley, New Jersey. Amos’s success and expansion was enhanced by the backing of such well known entertainers as Bill Cosby and Helen Reddy. In 1985 Amos became vice chairman of the company and served in that capacity until 1989. Amos left the Famous Amos Cookie Corporation in 1989 following a dispute with a group of investors and financial difficulties. He began a new business, Wally Amos Presents . . . Chip & Cookie, in 1990. In 1993, Amos started yet another company, Uncle Noname Cookie Company, and serves as its president. Uncle Noname Cookie Company, based in Honolulu, Hawaii, specializes in five varieties of gourmet cookies. Proceeds from the sale of its cookies are donated to the support of Cities in Schools, a national dropout prevention program of which Amos is a board of directors member.
Amos has donated personal items to the Business Americana Collection at the Smithsonian’s Collection of Advertising History and received the Presidential Award for Entrepreneurial Excellence Award from President Ronald Reagan in 1986. In 1987, he received a citation from the Horatio Alger Association. Amos also served as a national spokesperson for Literacy Volunteers of America.
JIM BECKWOURTH (1798–1866) Author, Trapper, Entrepreneur
James Pierson Beckwourth was born on April 26, 1798, near Fredericksburg, Virginia. His father was a landowner and member of a prominent Virginia family; his mother was an African American woman, possibly a slave. The family moved to a farm near St. Charles, Missouri, in 1806 and Jim attended school in St. Louis from 1810 to 1814. He was apprenticed to a St. Louis blacksmith but soon found himself heading west. Similar to many other events in Beckwourth’s life, there are conflicting stories concerning the dissolution of the apprenticeship. Evidently at this time, Beckwourth also changed the spelling of his last name.
In 1824, Beckwourth joined a westward bound fur trapping and trading expedition under the leadership of William Henry Ashley. Beckwourth soon became known as a man of many adventures and exploits. Although the basis of these stories are factual many, with Beckwourth’s approval, have been greatly exaggerated. Nevertheless he undoubtedly embodied the spirit of the legendary mountain men of the American west. In 1827, while still engaged in the fur trade he married a Blackfoot Indian woman. In 1829, he took refuge from a debt collector by hiding with the Crow Indians where he married again. It must be remembered that marriage on the frontier was a much less formal arrangement than it is today. Beck-wourth claims he was made a Crow chief in recognition of his fighting prowess against the Blackfeet.
By 1837, Beckwourth was with the U.S. Army in Florida serving as a scout during the Seminole wars. He soon returned to the Rocky Mountains, married a woman in New Mexico, and, in 1842, opened a trading post near
what is now Pueblo, Colorado. Between 1844 and 1850, he fought in the California uprising against Mexico and the Mexican-American War. In 1850, Beckwourth joined the California gold rush and while in the Sierra Nevadas discovered a mountain pass that bears his name today. He made the gap more passable, opened an inn, and, by 1851, was guiding wagon trains through the pass.
Beckwourth’s memoirs, entitled Life and Adventures of James P. Beckwourth, Mountaineer, Scout and Pioneer, were in part ghost written by T.D. Bonner and published in 1856. Beckwourth traveled to St. Louis and Kansas City where the popularity of his book enhanced his reputation and he was regarded as somewhat of a celebrity. Beck-wourth returned to Denver, married again, opened a trading post, and was acquitted on a charge of manslaughter. Tiring of city life he signed on with the Army as a scout and fought the Cheyenne Indians. Beckwourth probably died of food poisoning on or around September 25, 1866, while riding to a Crow encampment. Accounts of his purposely being poisoned by Crows are largely discounted today.
DAVE BING (1943– ) Business Executive, Former Professional Basketball Player
Bing was born November 29, 1943, in Washington, DC, where he played basketball at Spingarn High School. He was named to play on a national All-Star team and was voted most valuable player on the tour. Bing attended Syracuse University on a basketball scholarship graduating in 1966 with a B.A. in economics. He was the second overall pick in the 1966 National Basketball Association draft and was chosen by the Detroit Pistons.
During his first season he was the league’s top rookie and the league’s high scorer his second year. In the 1974–1975 season Bing played for the Washington, DC, Bullets and in the 1977–1978 season he was with the Boston Celtics. Bing was voted the league’s Most Valuable Player in 1976 and played in seven NBA All-Star games. The Professional Basketball Writer’s Association of America gave him their Citizenship Award in 1977. Bing was named National Minority Small Businessperson of the Year in 1984. In 1989 he was elected to the Naismith Memorial Basketball Hall of Fame.
After being associated with management programs at the National Bank of Detroit, Chrysler Corporation, and Paragon Steel, Bing formed Bing Steel Inc. in Detroit, a very successful steel supplier to the automobile industry. The company eventually came to be known as the Bing Group. In its first five years, the company doubled its revenues. In 2000, a disgruntled employee burned down the main offices and warehouse of the Bing Group, and while the company experienced tough times, Bing rebuilt; the company continues to be a major supplier to most car companies in the Detroit area.
Bing has served on the board of directors of Children’s Hospital of Detroit, Michigan Association of Retarded Children and Adults, Black United Fund, Detroit Urban League, and the March of Dimes.
MARIE DUTTON BROWN (1940– ) Entrepreneur
Marie Brown’s career is a picture book example of the kind of tenacious nature entrepreneurs need to have, and how to expand on opportunities when they present themselves. She received a degree in psychology in 1962, from Penn State University, where she was part of the one percent of the student body’s African American population. She went to work as a social studies teacher in the Philadelphia public school system. Two years later, when a salesperson from a publishing firm in New York came to sell her some of his company’s titles for the school, the meeting turned into a job offer to work for Doubleday.
Brown stayed at Doubleday for two years, then moved to Los Angeles with her new husband. She moved back to New York in 1972 and returned to Doubleday as an associate editor. During the 1970s, as an interest in African American literary titles grew, so grew Brown’s position, as she brought many ethnic titles to print.
In 1980, Brown quit Doubleday to become founding editor of Elan magazine, which focused on the cultural life of the international black community. After only three issues were launched, Brown’s financial backers pulled out, leaving Brown jobless. She went to work at a bookstore, giving her firsthand retail experience.
In the fall of 1984, Brown started her own business, Marie Brown Associates, a literary agency that run from her Harlem apartment. Although, similar to any new business venture, times were lean for several years, things started to turn around as Brown began signing more and more writers. As the 1990s began, the larger publishing houses began courting African American writers, but Brown was far ahead of them, as one of only five African American literary agents in the country. Brown still contributes her time to the community, sitting on several boards including the Studio Museum of Harlem.
MALCOLM CASSELLE (1970– ) Computer Entrepreneur
Born on March 22, 1970, in Allentown, Pennsylvania, CasSelle has accomplished a great deal at a young age. Growing up in Allentown, Pennsylvania, CasSelle developed a passion for writing computer programs in high school. He graduated from Massachusetts Institute of Technology (MIT).
CasSelle left for Japan three days after finishing his undergraduate work in order to enter MIT’s Japan program. While overseas, he worked for Shroders Securities and NTT Software Labs. Upon his return to the United States he took a job with Apple Computers. After earning his master’s at Stanford, he occupied the position of director of digital publishing and marketing for Blast Publishing. CasSelle would later introduce E. David Ellington, his partner, to the wonders of cyberspace.
Along with Ellington, CasSelle co-founded NetNoir Inc., an African American-oriented online site. Based in San Francisco and available through America Online, NetNoir explores a wide range of news and information. VIBE magazine, along with Motown Records and the clothing company Blue Marlin, channel their services and goods through CasSelle’s cybersite.
EMMA CHAPPELL (1941– ) Banking Executive
Dr. Emma Carolyn Chappell was born in Philadelphia, Pennsylvania, on February 18, 1941. As a member of the Zion Baptist Church, she began to work for the Continental Bank. She took classes at both Temple and Rutgers Universities and slowly moved up the bank’s hierarchy. By 1977 she was its first African American female vice president.
Chappell was active in the community during her assent to the top of Continental. She worked for a variety of community action groups that were concerned with redeveloping the inner-city. In 1984 she took time off from Continental to be the treasurer for the presidential campaign of the Reverend Jesse Jackson.
In 1987 Chappell and a group of community business leaders founded the United Bank of Philadelphia, the only African American-owned bank in the city. The bank struggled to find funding in the late 1980s. By March 1992, however, it opened for business with sufficient backing. United struggled upon its opening and, in 1995 and 1996, neared insolvency, but only one year later the bank had reached $106 million in assets. Black Enterprise chose it as the financial company of the year in 1995. It also began issuing its own credit cards and embarked on a partnership with American Express to offer investment advice and financial services to its depositors. In June 2000 Chappell stepped down from her duties as chairman of the board and chief executive officer, but United continued its campaign to improve banking services in historically poor neighborhoods of Philadelphia and the surrounding cities. In addition to serving on the boards of Philadelphia-area organizations, she took over executive directorship of the Rainbow/PUSH Coalition’s Wall Street Project, which aims to make the businessworld equitable towards African Americans.
KEN CHENAULT (1951– ) Corporate Executive
Born on June 2, 1951, in Mineola, New York, Kenneth I. Chenault grew up in the town of Hempstead, New York, on Long Island. He attended the upscale, private, untraditional Waldorf School. Following high school, he attended Springfield College on an athletic scholarship. After only one year there, he decided to concentrate more on academics. He transferred to Bowdoin College and received a B.A. in history in 1973, graduating magna cum laude. In 1976, he graduated from Harvard Law School with a juris doctorate.
After graduation, Chenault spent two years working for a corporate law firm before transferring to a firm that specialized in business consultancy. In 1981, he joined American Express. His first position was as a director of strategic planning for the Travel Related Services (TRS) division. He moved up to become vice president of the merchandise services division in 1983, and from 1984 to 1986 served as senior vice president and general manager of marketing for the division. Under his direction, the area saw sales jump from $150 million to $500 million a year. In the second half of the 1980s, Chenault served as executive vice president and general manager for American Express Platinum/Gold division, executive vice president of the personal card division, and president of American Express Consumer Card Group, USA, a post he held until 1991.
That year, Chenault was promoted to president of the American Express Card, and two years later became president of American Express Travel Related Services, USA. With the business on an upswing, Chenault became vice chairman of the company in 1995, making him the highest-ranking African American executive in corporate America. Two years later, he made even more waves when he was named president and chief operating officer. In 2001, Chenault took over as CEO of American Express. Named as the second most powerful African American executive by Fortune magazine, Chenault faces the challenges of leading American Express through the country’s economic slump.
COMER COTTRELL (1931– ) Entrepreneur
Cottrell was born in Mobile, Alabama, on December 7, 1931. He began his sales career at the age of eight, joining his father for visits to clients selling insurance. Cottrell continued his sales career at Sears Roebuck after graduating from the University of Detroit in 1952. Years later, while managing a post exchange at a military base, Cottrell observed that there were no hair products for African Americans. Cottrell decided to form a company that would sell products specifically for hair styles worn by African Americans.
In 1970, Cottrell began his company with an empty Los Angeles warehouse, $600, and a typewriter. He started out marketing hair spray to African American beauticians and barbers. With the moderate success of this product, the Proline company was born. Five years later, Proline opened a distribution center in Birmingham, Alabama. By 1980, Proline had outgrown Los Angeles and moved to Dallas, coinciding with the release of the Curly Kit Home Permanent product. Soon Proline enjoyed sales figures in excess of $11 million and began to expand into overseas markets. By 1989, Proline was ranked nineteenth on Black Enterprise’s list of top 100 African American businesses with sales of $36 million annually. Pro-Line had expanded its sales to $104 million in 2000.
In 1989, Cottrell became—as a member of a 14-owner consortium of investors that purchased the Texas Rangers—the first African American to own a Major League Baseball franchise. Cottrell used his position to speak out about affirmative action in professional sports. In 1990, he continued his philanthropy by purchasing the bankrupt Bishop College, a Dallas school founded by free slaves and Baptist missionaries, and he convinced Paul Quinn College to relocate from Waco, Texas, to the Bishop College grounds. In 1994, Cottrell visited South Africa as part of an envoy of African American businessmen sponsored by Langston University’s National Institute for the Study of Minority Enterprise to establish links with black-owned businesses there.
JEAN BAPTISTE POINT DU SABLE (1750?–1818) Entrepreneur, City Founder
Jean Baptiste Point Du Sable was born in Haiti, reportedly in 1750, to a French mariner and an African-born slave. It is believed that he may have been educated in Paris, France, and worked as a sailor during his young adult years. Du Sable entered North America through either Louisiana or French Canada.
In the early 1770s, entrepreneur Du Sable established the first settlement in the area later called Chicago. Having impressed the British as a well-educated man and capable frontiersman, he was sent to the St. Clair region to manage trade and act as a liaison between Native Americans and the British. Later returning to his original settlement, Du Sable built a bakery, dairy, smoke house, horse mill and stable, workshop, and a poultry house. He also traded, trapped, and served as the local cooper and miller. Through Du Sable’s efforts, Chicago became a major center for frontier commerce.
In 1788 Du Sable wedded a Potawatomi woman named Kittihawa, or Catherine, with whom he raised two children. Once married, Du Sable became increasingly involved in the community. His bid in 1800, however, for tribal chieftaincy failed, and soon after he sold his holdings and moved from the Chicago area. Real estate records suggest that he moved to St. Charles, Missouri, and that he probably died there in poverty on August 28, 1818.
E. DAVID ELLINGTON (1960– ) Computer Entrepreneur
Ellington was born in New York, New York, on July 10, 1960. Growing up in Harlem, he was raised primarily by his mother. While earning his undergraduate degree at Adelphi University, which he received in 1981, Ellington worked in the office of a U.S. congressman. In 1983, he received his master’s from Howard University, then spent a great deal of his time travelling in such places as Europe, Japan, China, and India. Later, he earned his law degree from Georgetown University. He founded the Law Offices of E. David Ellington and chaired for the International Law Section of the Beverly Hills Bar Association.
In 1995, Ellington and computer entrepreneur, Malcolm CasSelle, cofounded NetNoir Online, an African American-oriented site on the Internet. Billing itself as “The Cybergateway to Afrocentric Culture,” NetNoir explores a wide range of news and information. Participants include journalist Charlayne Hunter-Gault and athlete Carl Lewis. Extremely innovative, NetNoir was named one of the “25 Cool Companies of the Year” by Fortune magazine. With minority investors, NetNoir News Media Services planned to venture into CD-ROMs and the designing of Web sites in 1996.
ANN MARIE FUDGE (1951– ) Corporate Executive
Ann Marie Fudge was born April 23, 1951, in Washington, DC. She received a B.A. with honors from Simmons College in 1973 and an M.B.A. from Harvard Business School in 1977. She began her business career at General Electric in 1973 as a manpower specialist. She worked at GE until 1975, when she received a job at General Mills in Minneapolis. There she began as a marketing assistant until she was promoted to assistant product manager in 1977, product manager in 1980, and marketing director in 1983. She remained in that position until she joined Kraft General Foods in 1986.
At Kraft, Fudge started out as the associate director of strategic planning, but by 1989, her worth to the company earned her a vice presidency in charge of marketing and development of the Dinners and Enhancers Division working on products, such as Log Cabin Syrup, Minute Rice, and Stove Top Stuffing. She managed to reposition the products and increase sales in the over-burdened food market. She moved up to general manager of that division in 1991, and became executive vice president in 1994. The same year, she became president of the Coffee and Cereals Division.
Fudge has served as president and vice president of the Executive Leadership Council and holds memberships with the National Black MBA Association and the Junior League. She also has served on the board of directors for the Federal Reserve Bank, New York, Allied Signal Inc., General Electric, Liz Clairborne Inc., and Catalyst. She was a COGME Fellow in 1975 and won a Leadership Award from the Young Women’s Christian Association in 1979.
S. B. FULLER (1905–1988) Entrepreneur
S. B. Fuller was born on June 4, 1905, in Monroe, Louisiana. He moved with his family to Memphis, Tennessee, where he dropped out of school after the sixth grade and worked at various jobs. In 1928, he moved to Chicago and began selling products door-to-door. By the mid 1930s he had established a successful business on the South side of Chicago.
In 1947, he acquired Boyer International Laboratories, a white-owned cosmetics company, and greatly expanded his business. His company grew in size and he became famous for his motivational techniques. However, when whites in the South learned that Boyer was owned by an African American, they boycotted Boyer’s products. In 1969, Fuller Products was forced to declare bankruptcy.
Fuller reorganized the company, and it reemerged from bankruptcy in the early 1970s. The company reestablished its sales techniques and grew into a large company again. Fuller died on October 24, 1988, after receiving numerous honors.
ARTHUR G. GASTON (1892–1996) Entrepreneur
Arthur George Gaston was the living embodiment of what makes up an entrepreneur. He had stated many times in interviews, that one of his primary rules for business success is “Find a need and fill it.” Gaston’s business accomplishments are a testimony to the man’s lifelong adherence to this rule.
Gaston was born on July 4, 1892, in Demopolis, Georgia, a small rural town. He started his business career in 1923 by founding the Booker T. Washington Burial Society, guaranteeing African Americans a decent burial. In 1932 it had grown large enough to be incorporated. In 1930, Smith and Gaston Funeral Directors was formed to complement the services of the burial society. The “Smith” was A. L. Smith, Gaston’s father-in-law, who helped him financially get started in business.
Finding it hard to staff his growing company with skilled clerical employees, Gaston started the Booker T. Washington Business College in 1939. The college provided a place where African American students could learn proficiency in working on business machines. (The school continues to this day.)
In 1946, Gaston started the Brown Belle Bottling Company, offering Joe Louis Punch. Next came a cemetery in 1947, a motel in 1954, an investment firm in 1955, a savings and loan association in 1957, a senior citizens home in 1963, and two radio stations in 1975. In 1986, at the hearty age of 94, Gaston opened the A. G. Gaston Construction Company. From the original burial society in 1923 to his sprawling empire seven decades later, bringing in more than $24 million in revenues in 1991, Arthur Gaston was the quintessential self-made man. He died on January 19, 1996, in Birmingham, Alabama.
ARCHIBALD GRIMKÉ. SEELAW CHAPTER.
LA-VAN HAWKINS (1960– ) Fast Food Restaurant Entrepreneur
La-Van Hawkins was born and raised in Chicago, Illinois. He suffered as a youth through drug addiction and gang membership. However, after starting to work at McDonald’s in downtown Chicago, he turned his life around. He quickly rose through the ranks at McDonald’s, becoming director of operations before leaving the
company to work for Kentucky Fried Chicken in the late 1970s.
Hawkins managed inner-city projects for KFC and became a district manager. In 1986, he joined T. Boone Pickens in various investment schemes that earned him large amounts of money. In 1990, he began franchising Checkers restaurants. By 1995, the success of this chain had made him a multimillionaire.
In 1995, officials for Burger King approached Hawkins about fronting several of their restaurants in urban areas. Hawkins accepted the offer and now owns Burger Kings in various cities and several federal empowerment zones. With more than a dozen Burger Kings in Detroit by 2002, Hawkins continued to add restaurants each year.
ROBERT HOLLAND JR. (1940– ) Business Executive
Robert Holland Jr. was born in April of 1940, in Albion, Michigan. Holland earned a bachelor’s of science in
mechanical engineering from Union College in Schenectady, New York in 1962, and in 1969, he completed a master’s of business administration in international marketing at Bernard Baruch Graduate School of Manhattan. In 1968, Holland moved from his job at the Mobil Oil Co. as an engineer and sales manager to join the McKinsey & Co. consulting firm, where he worked as an associate and eventually a partner until 1981. During that time, he worked abroad in the Netherlands, England, Mexico, and Brazil. He returned to Michigan in 1981 as CEO of City Marketing, a beverage distributor. In 1987, he switched companies again, accepting the chair position for Gilreath Manufacturing, Inc. in Howell, Michigan, a manufacturer of plastic injection molds.
In 1991, Holland started Rohker-J Inc. in White Plains, New York, a company of his own that bought struggling companies, turned them around and sold them. In 1994, Holland’s business savvy and his whimsy with poetic verse won him a position as president and CEO of Ben & Jerry’s Homemade Ice Cream, Inc. After accomplishing his goals of stabilizing Ben & Jerry’s manufacturing operations and bringing more professional management to the company, he resigned in October 1996. In 1997 he founded WorkPlace Integrators, a leading dealer of Steelcase office furniture, in Bingham Farms, Michigan. In addition to his business, Holland has served on the board of directors for the Harlem Junior Tennis Program, UNC Ventures, and Atlanta University Center. He has also served as chairman of the board at Spelman College.
GEORGE E. JOHNSON (1927– ) Business Executive
Johnson was born in Richton, Mississippi, on June 16, 1927. He attended Wendell Phillips High School in Chicago then went to work as a production chemist for a firm that produced cosmetic products for African Americans. While there, he developed a hair straightener for men and began marketing it himself in 1954. By 1957 he had formed Johnson Products and was selling products under the Ultra-Sheen label. The company prospered and, by 1971, its stock was being traded on the American Stock Exchange. Johnson Products was the first African American-owned company to trade on a major stock exchange. In June 1993 Joan B. Johnson, chair and CEO of Johnson Products, announced the sale of the company to Ivax Corp., a white-owned pharmaceutical firm. Johnson Products was officially sold to Ivax in August 1993.
Johnson has served as a director of the Independence Bank of Chicago, the U.S. Postal Service, and the Commonwealth Edison Co. Johnson also is responsible for the George E. Johnson Foundation, which funds charitable and educational programs for African Americans.
Johnson has received the Abraham Lincoln Center’s Humanitarian Service Award (1972), Ebony magazine’s Black Achievement Award (1978), and the public service award presented by the Harvard Club of Chicago. He has also been awarded the Horatio Alger Award (1980) and the Babson Medal (1983).
Johnson has received honorary degrees from many institutions of learning including Chicago State University (1977), Fisk University (1977), and the Tuskegee Institute (1978).
KARL KANI. SEEVISUAL AND APPLIED ARTS CHAPTER.
DENNIS KIMBRO (1950– ) Author, Educator, Motivational Speaker
Dennis Paul Kimbro was born on December 29, 1950, in Jersey City, New Jersey. He graduated from Oklahoma University with a bachelor’s in 1972 and later from Northwestern University with a Ph.D. in political economy in 1984, while working as a salesperson at Smithkline Beckman pharmaceutical corporation. In 1987, he left Smithkline to work at ABC Management Consultants Inc., where he worked until 1991. Meanwhile, Kimbro worked at revising a manuscript left to publisher W. Clement Stone written by the late Napoleon Hill, the author of Think and Grow Rich. Hill had been working on a version for an African American audience when he died. Stone gave the manuscript to Kimbro. Kimbro interviewed many successful African Americans to chart how they managed to maximize potential and channel positive thinking to build their success.
In 1991, Kimbro’s book—co-authored originally by Hill—Think and Grow Rich: A Black’s Choice was published by Ballantine Books and became the first ever major-release, African American self-help book. In the next two years, the was a best seller among African American audiences, selling more than 250,000 copies and earning Kimbro an Award of Excellence from the Texas Association of Black Personnel in Higher Education in 1992. The same year, Kimbro accepted a post as associate professor and director of the Center for Entrepreneur-ship at Clark Atlanta University School of Business and Administration. Daily Motivations for African-American Success, Kimbro’s second book, was published by Ballantine in 1993. In 1997, Kimbro authored What Makes the Great Great: Strategies for Extraordinary Achievement, which outlined nine “stones of greatness” that underly true success.
REGINALD F. LEWIS (1942–1993) Business Executive
Lewis was born December 7, 1942, in Baltimore, Maryland. He received an A.B. from Virginia State College in 1965 and a law degree from Harvard Law School in 1968. He first worked with the firm of Paul, Weiss, Rifkind, Wharton & Garrison until 1970. He was a partner in Murphy, Thorpe & Lewis, the first African American law firm on Wall Street until 1973. Between 1973 and 1989 Lewis was in private practice as a corporate lawyer. In 1989 he became president and CEO of TLC Beatrice International Holdings Inc. With TLC’s leveraged acquisition of the Beatrice International Food Co. Lewis became the head of the largest African American owned business in the United States. TLC Beatrice had revenues of $1.54 billion in 1992.
Lewis was a member of the American and National Bar Associations and the National Conference of Black Lawyers. He was on the board of directors of the New York City Off-Track Betting Corp., the Central Park Conservance, the NAACP Legal Defense Fund, and WNET-Channel 13, the public television station in New York. He was the recipient of the Distinguished Service Award presented by the American Association of MESBIC (1974) and the Black Enterprise Achievement Award for the Professions. Lewis died unexpectedly January 19, 1993, in New York.
J. BRUCE LLEWELLYN (1927– ) Business Executive
James Bruce Llewellyn was born July 16, 1927, in New York City and earned a B.S. from City College of New York. He attended Columbia University’s Graduate School of Business and New York University’s School of Public Administration before receiving a degree from New York Law School.
Before attending law school, Llewellyn was the proprietor of a retail liquor store. While attending law school he was a student assistant in the District Attorney’s Office for New York County from 1958 to 1960. After graduating he practiced law as part of Evans, Berger and Llewellyn. Between 1964 and 1969 he worked in a variety of professional positions for various governmental agencies including the Housing Division of the Housing and Re-Development Board (1964–1965), Small Business Development Corporation (1965), and the Small Business Administration (1965–1969).
In 1969, as part of a syndicate buyout, he became president of Fedco Food Stores of New York. By 1975, the company had grown from 11 to 14 stores and had annual revenues of $30 million and 450 employees.
Llewellyn has served on the boards of the City College of New York and its Graduate Center, American Can Co., American Capital Management Research, and the Freedom National Bank. He has belonged to the Harlem Lawyers Association, the New York Interracial Council for Business Opportunity, and the New York Urban Coalition and its Venture Capital Corporation.
Llewellyn has honorary doctorates from Wagner College, City University of New York, and Atlanta University. He was in the U.S. Army Corps of Engineers from 1944 to 1948. In 2002 he was CEO of Queen City Broadcasting Inc. and chairman of the Philadelphia Coca-Cola Bottling Co., the second largest firm on the “Black Enterprise Industrial/Service 100” list.
SAMUEL METTERS (1934– ) Entrepreneur
Dr. Samuel Metters, a native of Austin, Texas, received his B.S. in architectural engineering from Prairie View A&M University, a B.A. in architecture and urban planning from the University of California at Berkeley, a M.S. in systems management and in public administration from the University of Southern California, and a Ph.D. in public administration from USC.
Metters founded Metters Industries Inc. in 1981 after a career that included a stint in the Army. The firm, which has over 350 employees, is a strategic planning and analysis company that works in conjunction with various governmental entities. His customers include the IRS and the U.S. Patent and Trade Office, as well as Northwest Airlines, Howard University, Federal Express, and Fox Studios. Metters has also worked in Saudi Arabia building new cities and handling the logistical problems that go along with any new development. In 2001, Metters began work on a $4.5 million development project in Prairie View, Texas, near the campus of his alma mater. Not surprisingly, Metters Industries ranked among the Black Enterprise Industrial/Service 100 leading African American-owned businesses with 2000 sales of $34 million. By 2002, however, annual sales had dropped to $20 million, too low to remain on the BE 100.
In 1987 Metters was selected as a member of the board of directors of the U.S. Black Engineers Publications, Inc. He is also active in the USC Alumni Association, Washington, DC, area Boy Scouts and with Prairie View University.
ROSE META MORGAN (c.1912– ) Entrepreneur
Rose Meta Morgan was born c.1912 in Shelby, Mississippi, but spent most of her growing years in Chicago. She started her own business at the early age of ten, making and selling artificial flowers door-to-door with the assistance of other neighborhood children. By the age of 14, she was earning money styling hair. Morgan claims she was a high school drop out even though she may have actually finished. Either way, she attended Morris School of Beauty, and after graduating, she rented space in a salon and began styling, grooming, and cutting hair full time. It was during this time that Morgan met Ethel Waters, a famous actress/singer, during a run of performances in Chicago in 1938. Waters invited Morgan to New York because of the stylist’s prowess in hair design.
Within six months of moving to New York, Morgan opened her own beauty shop. Later, running out of room, she signed a ten-year lease for an old dilapidated mansion and began to renovate it. Three years later, Morgan’s salon—the Rose Meta Morgan House of Beauty—was the most prestigious, most successful African American beauty salon in the world. By 1946, she drew 1,000 customers a week and increased her staff to 29 people including a nurse and masseurs. Morgan began producing and selling a line of cosmetics and hosting fashion shows that matured into major social events at the Renaissance Casino and Rockford Plaza in Harlem. Soon she was considered one of the richest business-women in New York. Customers came from all over the country to visit the House of Beauty, and Morgan travelled abroad with her cosmetics, fashion designs, and ideas about beauty and women of color.
In the mid-1950s, Morgan bought and refurbished a new building for the House of Beauty. Thousands of people attended the grand opening and the building was dedicated by the New York City mayor’s wife. The new salon offered more features, such as a dressmaking department, a charm school, and a fitness department and later a wig salon to cash in on the renewed popularity in hair pieces. In 1965, Morgan created the Freedom National Bank, New York’s only commercial bank run by and for African Americans. In 1972, Morgan created the Trim-Away Figure Contouring business, and shortly thereafter, in the 1980s, she retired with a salon and a set of businesses as a legacy that are the only ones of their kind in the world.
Morgan’s marriages were less successful than her businesses. In 1955, she married heavyweight boxing champion Joe Louis, but their marriage was annulled in 1958. Later, Morgan married lawyer Louis Saunders, and though they separated in the early 1960s, Saunders died before they were divorced.
STANLEY O’NEAL (1951– ) Corporate Executive
Born in Roanoke, Alabama, on October 7, 1951, Stanley O’Neal’s family later moved from rural Alabama to Atlanta, Georgia, where O’Neal attended high school. He worked in a General Motors plant while studying for his undergraduate degree, which he received from the Kettering Institute in 1974. O’Neal then went on to earn an M.B.A. in Finance from Harvard Business School in 1978. As an executive for General Motors from 1978 to 1986, O’Neal held a succession of financial management jobs in the company’s Madrid and New York offices. Ultimately, he served as General Assistant Treasurer, a position giving him responsibility for GM’s mergers and acquisitions.
O’Neal left GM to join the investment firm of Merrill Lynch in 1986. As an investment banker at the firm, he made a name for himself in the early 1990s with his resuscitation of the company’s junk bond business. O’Neal has held positions as Managing Director and head of Global Capital Markets; Managing Director in Investment Banking and head of the Financial Services Group; co-head of the Corporate and Institutional Client Group; and CEO of the Private Client Group. In 2001, he was named the president and chief operating officer of Merrill Lynch. In its July 22, 2002 issue, Fortune magazine named O’Neal the most powerful black executive in the United States. He was scheduled to take over the leadership of Merrill Lynch in December 2002.
HENRY G. PARKS (1916–1989) Entrepreneur, Business Executive
Parks was born September 29, 1916, in Atlanta, Georgia. He received a B.S. from Ohio State University and did graduate work there in marketing. After graduating, Parks worked at the Resident War Production Training Center in Wilberforce, Ohio, where he was associated with Dr. Mary McLeod Bethune. In 1939 he was a national sales representative for the Pabst Brewing Co. In addition he became involved in a variety of enterprises, mostly in Baltimore, Maryland, including: theatrical bookings in New York City; a failed attempt at marketing a beverage with former heavyweight boxing champion Joe Louis; real estate; drug store operations; and cement block production.
Parks ultimately bought into Crayton’s Southern Sausage Company of Cleveland, Ohio. After becoming familiar with the meat packing industry, he sold his interest in the company for a profit. In 1951 he started H. G. Parks Inc., a sausage packer and distributor with the aid of a group of investors. By 1971 the company had annual revenues of $10.4 million and was distributing its products to more than 12,000 East Coast stores.
Parks served as vice president of the Chamber of Commerce of Metropolitan Baltimore, was on the board of directors of Magnavox, held a seat on the Baltimore City Council, and purchased an interest in Leonard Evans’s Tuesday Publications. He died on April 24, 1989, in Towson, Maryland.
RICHARD DEAN PARSONS (1948– ) Corporate Executive
Born in the Bedford-Stuyvesant neighborhood of Brooklyn, New York, on April 4, 1948, Richard Dean Parsons grew up in the borough of Queens, New York. He graduated from high school at the age of 16 and attended the University of Hawaii, where he played varsity basketball. He earned a bachelor’s from the university in 1968, and continued his education at the Union University of Albany Law School. He graduated at the top of his class and received the highest score on the state bar exam in 1971.
Parsons started his career as a member of New York governor Nelson Rockefeller’s legal staff, where he served when Rockefeller became vice president of the United States under Gerald Ford in 1974. He continued in this capacity, also providing legal counsel for President Ford as deputy counsel and then as associate director of the domestic council. He left government service in 1977, to join the New York City law firm, Patterson, Belknap, Webb & Tyler, where he became a partner in 1979. He defended clients, such as Happy Rockefeller and Estee Lauder.
Parsons was appointed chief operating officer of the Dime Savings Bank of New York in 1988, becoming the first African American male to manage a financial institution of Dime’s size. Parsons lead the bank to a comeback from severe debt. In 1993, because of Parsons’s remarkable leadership skills, newly elected Mayor Rudolph Giuliani chose Parsons to head his transition council and later to be the Deputy Mayor for Economic Development. Parsons instead chose to act as chairman of the Economic Development Corporation for the city. In December 2001, Parsons was named to replace Gerald Levin as the CEO of the AOL Time Warner Corporation.
Parsons, no stranger to sitting on boards of directors, has served on boards for Time Warner Inc., Philip Morris, Tristar Pictures, Howard University, and the Metropolitan Museum of Art. Parsons has also served as a member of the presidential Drug Task Force, as chairperson of Wildcat Service Organization, and as a member of the board of the New York Zoological Society.
HERMAN J. RUSSELL (1930– ) Housing Construction Entrepreneur
Herman Jerome Russell was born December 23, 1930, in Atlanta, Georgia. At the age of 16, he first went into business—with his father. They bought a small piece of land and built a duplex on it. Russell used the money he accrued from rent to pay for his education at Tuskegee Institute. In 1953, he went to work for his father and, upon his father’s death in 1957, took over the family home improvement business.
Russell built a reputation for high quality work that allowed him to break down many racial barriers to success. He began to bid on large construction jobs and has worked on many of the biggest projects built in Atlanta since the 1960s, including Hartsfield International Airport, Coca-Cola Company World Headquarters, and the Georgia Dome. He continued to built afforded housing despite the high-profile success of H. J. Russell & Company.
In 1997, Russell retired from the management of the company, passing it down to his children. He is well known in the Atlanta area for his philanthropy and for his work in the inner-city.
RUSSELL SIMMONS (1957?– ) Music Company Executive, Producer, Music Promoter
Hollis, Queens, in New York City was the birth place of Russell Simmons. Although he grew up in a middle class neighborhood, Simmons got involved with gangs in his teens. The 1970s brought change to Simmons’s life, however, as he enrolled in classes at the Harlem branch of City College of New York. While studying sociology, Simmons began noticing the influence rap music had on young inner-city African Americans. The boasting and story telling skills of various rappers drew crowds on street corners and in neighborhood parks. Simmons found himself in the middle of a movement that would shape the sound of the music, particularly the rap genre. Simmons is married to hip hop clothes designer and model Kimora Lee.
Simmons left college to promote local rap artists. Hard work and perseverance led to the formation of Def Jam Records in 1984. Simmons and his partner, Rick Ruben, signed a deal with CBS Records to distribute their material. Simmons was primarily interested in promoting rap images that displayed the life and style of tough urban streets. Acts such as the Beastie Boys, LL Cool J, and RunDMC pushed Def Jam Records to early success. Other groups such as Public Enemy enjoyed Simmons’s input as their careers developed.
The music Simmons involved himself with not only revolutionized hip hop but helped bring fashion to forefront as well. High-top Adidas tennis shoes, black leather jackets, and t-shirts displaying the Def Jam Recording logo flooded the streets. These influences laid a foundation for Simmons own line of clothing called Phat Pharm. Simmons furthered his own professional growth by getting involved in film production. He contributed to Krush Groove and Tougher Than Leather in the late 1980s. Simmons is CEO of Rush Communications, which in 1992 was the nation’s second largest African American-owned entertainment company. Rush is comprised of record labels, management companies, and clothing, radio, film and television divisions. In 1998, Simmons launched an hour-long syndicated series “Oneworld’s Music Beat with Russell Simmons.” In 2001, Simmons went to Washington to speak out on the behalf of rap artists, promoting the fact that they have brought to the forefront many social issues and that they should not be blamed for the violence that many have associated with their songs. That same year, Simmons published his autobiography Life and Def: Sex, Drugs, Money, and God with the help of George Nelson. With 2001 sales of $192 million—16th on the BE Industrial/Service 100—Black Enterprise magazine named Rush Communications its Industrial/Service Company of the Year. Simmons was also named a trustee of the National Urban League.
NAOMI R. SIMS (1949– ) Business Executive, Model
Sims was born March 30, 1949, in Oxford, Mississippi. She attended New York University, where she studied psychology, and the Fashion Institute of Technology, where she graduated in 1967
Sims was a fashion model with the Ford Agency in New York from 1970 to 1973. She was the first African American woman to be a high fashion model and the first to appear in a television commercial. She also appeared on the cover of Life magazine.
In 1970 Sims also started lecturing and writing fashion and beauty articles on a freelance basis. In 1973 she co-developed a new fiber for her line of wigs and founded the Naomi Sims Collection which by 1977 had annual revenues of $4 million. Sims has also written a number of books including All About Health and Beauty for the Black Woman (1975), How to Be a Top Model (1979), All About Hair Care for the Black Woman (1982), and All About Success for the Black Woman.
In 1969 and 1970 Sims was voted Model of the Year by International Mannequins and won the Ladies Home Journal Women of Achievement Award. For her work with underprivileged children in Bedford-Stuyvesant, she also won an award from the New York City Board of Education. In 1977 Sims was voted into the Modeling Hall of Fame by International Mannequins and made the International Best Dressed List 1971–1973, 1976–1977. Sims has also received recognition for her fund raising efforts for sickle cell anemia and cancer research. She belongs to the NAACP and works closely with drug rehabilitation programs.
In 2002 Sims worked with Naomi Sims Beauty Products Ltd. in New York City.
PERCY E. SUTTON (1920– ) Business Executive, Attorney
Percy Ellis Sutton was born November 24, 1920, in San Antonio, Texas. He graduated from the Phillis Wheatley High School and attended a number of colleges including Prairie View College, Tuskegee Institute, and the Hampton Institute. His education was interrupted by World War II when Sutton enlisted in the U.S. Army Air Corps. He was promoted to captain and served as a combat intelligence officer in the Italian and Mediterranean theaters. He was decorated with Combat Stars for his service.
After his discharge, Sutton attended law school on the G.I. Bill, first at Columbia University in New York and then Brooklyn Law School where he received an LL.B. in 1950. During the Korean conflict, Sutton reen-listed in the USAF and served as an intelligence officer and a trial judge advocate.
Returning to civilian life, he opened a law office in Harlem with his brother and another attorney. In 1964, he was elected to the New York State Assembly, where he served until 1966. In 1966, he was appointed and later elected to the office of president of the Borough of Manhattan, a post he held until 1977.
With his brother Oliver and Clarence B. Jones, Sutton co-founded the Inner City Broadcasting Corporation in 1971. The company purchased radio station WLIB-AM, making it the first black-owned station in New York City. The company also produced television programs and videos for entertainment companies around the country, including Showtime at the Apollo. Sutton retired from the company in 1990, but continued to serve as chairman emeritus.
Sutton has been a civil rights advocate both as an attorney and a politician. He was a national director of the Urban League and a past president of the New York branch of the NAACP. He was voted Assemblyman of the Year by the Intercollegiate Legislative Assembly in 1966. Sutton has also served as a director of the Museum of the City of New York and the American Museum of Natural History.
JOHN W. THOMPSON (1949– ) Business Executive
John W. Thompson was born April, 24, 1949, in Fort Dix, New Jersey. He graduated from Florida A&M University in 1971 with a bachelor’s degree in business administration, and then went on to earn a master’s degree in management sciences for Massachusetts Institute of Technology’s Sloan School of Management in 1982.
Thompson spent 28 years with industry giant IBM, working his way up from an entry level sales position to occupy one of the company’s senior executive posts—general manager of IBM’s Americas unit. Though his name was mentioned in some print sources as a possible candidate for IBM’s top position, he left the company on April 14, 1999, to be named president and chief executive officer of Symantec Corporation, a Cupertino, California, software company.
The silicon valley company, though long-established and financially viable, was sluggish in its performance. A well-known manufacturer of anti-virus and utility software, Symantec was facing stiff competition. Thompson focused the company’s objectives on one area, that of Internet security. Well-publicized technology issues such as looming Y2K system failures, global e-mail viruses, and the activities of hackers helped the company’s focus on corporate security solutions pay off. During Thompson’s first years as CEO, Symantec revenues picked up substantially, growing from $632 million to $944 million in two years. According to company information, under Thompson’s leadership, Symantec served 98 of the Fortune 100 companies and more than 100 million customers.
Thompson has served on the board of a number of companies and organizations, including: UPS, NiSource, Inc., Seagate and Crystal Decisions, Florida A&M University Cluster, and the Illinois Governor’s Human Resource Advisory Council. He was named as one of Fortune magazine’s 50 most powerful African American executives in its July 22, 2002 issue.
MADAME C. J. WALKER (1867–1919) Entrepreneur
Walker was born Sarah Breedlove near Delta, Louisiana, in 1867. She was orphaned as a child, raised by a sister in Vicksburg, Mississippi, married at the age of 14, and widowed in 1887 at the age of 20.
Walker moved with her daughter to St. Louis where she earned a living by taking in laundry and sewing. By 1905 she had become interested in hair care products for women and began working on a hot comb and her “Wonderful Hair Grower.” In 1906 she moved to Denver and, with $1.50 in her pocket, started a hair preparations company. She soon married C. J. Walker, a newspaper-man who taught her the fundamentals of advertising and mail order promotion. In 1908 she moved with her daughter to Pittsburgh where she founded a beauty school, the Walker College of Hair Culture, which trained cosmetologists in the use of her products.
In 1910, with a more central location in mind, she moved to Indianapolis, Indiana, where she established a laboratory and factory and developed a nationwide network of 5,000 sales agents, mostly African American women, known as The Madame C.J. Walker Hair Culturists Union of America.
Her business prospered, and Walker became the first African American female millionaire. She had a townhouse in Harlem and a custom built mansion on the Hudson River near Irvington, New York. She died in New York on May 25, 1919.
Walker was a strong believer in self-reliance and education. She was proud of her accomplishments, especially of providing employment for thousands of African Americans who might otherwise have had less meaningful jobs. Walker was also a genius at marketing, promotion, and mail order sales. Beneficiaries of her estate included Mary McLeod Bethune’s school in Daytona, Florida, and other African American schools, the NAACP and the Frederick Douglass home restoration project in Florida.
MAGGIE LENA WALKER (1867–1934) Banker
Walker was born on or around July 15, 1867, in Richmond, Virginia. She was the daughter of Elizabeth Draper, a former slave, and Eccles Cuthbert, a New York journalist of Irish extraction.
Walker attended Richmond public schools including Armstrong Normal School which functioned as a high school. After graduating in 1883 she taught in the Richmond schools for three years before marrying building contractor Armstead Walker in 1886.
While she had been in school, Walker joined the Grand United Order of Saint Luke, a mutual aid society that served as an insurance underwriter for African Americans. Walker became active in the organization and held a number of lesser positions before becoming the Right Worthy Grand Secretary in 1899. She soon changed the name of the organization to the Independent Order of Saint Luke and moved its headquarters to Richmond.
In 1903, she became the head of the Saint Luke Penny Bank and the first woman in the United States to hold such a position. Although legally separate, the bank had a close financial association with the Independent Order of Saint Luke. The bank later became the Saint Luke Bank and Trust Company and, finally, the Consolidated Bank and Trust Company.
By 1924 under Walker’s guidance, the Order had a membership of 100,000, a new headquarters building, more than 200 employees, and its own newspaper—the Saint Luke Herald.
Walker was active in many other organizations including the National Association of Colored Women, the Virginia Federation of Colored Women’s Clubs, and its Industrial School for Colored Girls. In 1912 she founded the Richmond Council of Colored Women and was a founding member of the Negro Organization Society, a blanket association for African American clubs and organizations.
She was a board member of the NAACP from 1923 to 1934 and the recipient of an honorary degree from Virginia Union University. In 1927 she received the Harmon Award for Distinguished Achievement. Walker died on December 15, 1934.
TERRIE M. WILLIAMS (1954– ) Business executive
Terrie Michelle Williams was born on May 12, 1954, in Mt. Vernon, New York. She attended Brandeis University where she graduated cum laude in 1975, receiving a bachelor’s degree. Williams then earned a master’s degree from Columbia University in 1977. Her first job after graduate school was as a medical social worker at New York Hospital. She held this job until 1980 when she became the program administrator of The Black Film-maker Foundation. In 1982, Williams became vice president and director of corporate communication at Essence Communications, Inc., a position she held until 1987 when she formed her own company, The Terrie Williams Agency.
The multi-faceted Terrie Williams Agency, offers services to individual and corporate clients. In addition to marketing and communications consulting, the agency also offers executive skills training. Among the agency’s first clients were giants of the entertainment world such as Miles Davis and Eddie Murphy. The agency has also served clients such as The National Basketball Association, The National Hockey League, Revlon, and the Nickelodeon television network. Williams also works with organizations and programs that provide services for at-risk and underprivileged youth.
Williams is the author of three books: Personal Touch: What You Really Need to Succeed in Today’s Fast-Paced Business World (1994) (with Joe Cooney); Stay Strong: Simple Life Lessons for Teens (2001); and Plentiful Harvest: Creating Balance and Harmony Through the Seven Living Virtues (2002). She is the recipient of the Public Relations Society of America (PRSA) New York Chapter’s Phillip Dorf Mentoring Award; The New York Women in Communications Matrix Award in Public Relations; and The Citizen’s Committee for the New York Marietta Tree Award for Public Service.
"Entrepreneurship." African American Almanac. . Encyclopedia.com. (September 14, 2018). http://www.encyclopedia.com/social-sciences/encyclopedias-almanacs-transcripts-and-maps/entrepreneurship
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