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1.19 A False Dichotomy

If you remember earlier we discussed the work of David Birch and discussed the role of small business and entrepreneurs. At this point perhaps we need to delve into these terms in a bit more detail. Many of the early scholars who argued that small business owners are not entrepreneurs (e.g., Carland et al. 1984) had no real understanding of how small firms operate. These researchers fail to appreciate the innovations these firms often create nor how much an entrepreneur’s personality impacts their operations (think Donald Trump here). Reading today their definitions of 30 years ago of a small business owner and entrepreneur is rather more confusing than helpful. Consider these (Carland et al. 1984:358):

  • A small business owner is an individual who establishes and manages a business for the principal purpose of furthering personal goals. The business must be the primary source of income and will consume the majority of one’s time and resources. The owner perceives the business as an extension of his or her personality, intricately bound with family needs and desires.
  • The entrepreneur is an individual who establishes and manages a business for the principal purpose of profit and growth. The entrepreneur is characterized principally by innovative behavior and will employ strategic management practices in the business.

In this same article a small business venture is also distinguished from an entrepreneurial venture (p. 358):

  • A small business venture is any business that is independently owned and operated, not dominant in the field, and does not engage in any new marketing or innovative practices.
  • An entrepreneurial venture is one that engages in at least one of the Schumpeter’s four categories of behavior: that is, the principal goals of an entrepreneurial venture are profitability and growth and the business is characterized by innovative practices.

Finally, the Carland article presents a summary of a review of the literature between 1848 (Mill) and 1982 (Dunkelberg and Cooper) of characteristics that describe entrepreneurs, but obviously not small business owners. Birth order, gender, or marital status had been excluded (p. 355) “. . . because of the inability of a prospective entrepreneur to alter those variables in order to increase his/her probability of success.” These characteristics portraying an entrepreneur included risk bearing, source of formal authority, innovation, desire for responsibility, risk taking, moderate risk taker, need for achievement, ambition, desire for independence, drive, technical knowledge, communication ability, autonomy, aggression, power, recognition, need for power, internal locus of control, personal value orientation, self-confidence, goal orientation, creativity, energetic, positive reaction to setbacks, independence oriented, and craftsman oriented. Implicit was that entrepreneurs were male and Anglo-Saxon in ethnicity.

The Carlands’ article is a nice example of how the perception and understanding of who is an entrepreneur, what are entrepreneurial characteristics, and what is entrepreneurship have changed over the course of three decades. Surely the small business owner seeks profitability and growth too. Frankly, the description of small business owners sounds very much like a description of many of today’s entrepreneurs as portrayed by the mass media, which makes an entrepreneur essentially a small business owner as well. The preceding list of characteristics would make almost everyone an entrepreneur. These characteristics can also be found in small business owners or anyone else who is not an entrepreneur but who is successful in their professions or careers.

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