In his article "Entrepreneurship in American History," John S. Gordon (2014) traces the success history of entrepreneurship in America and, claims that major factors such as availability of opportunities, enactment of incorporation law, invention, freedom to take risks and freedom to fail, and favorable market regulation account for this enormous success. According to him, an entrepreneur is an individual who undertakes the risks of a new venture. America has had an abundance of such people, dating back to the colonial period.
The first major factor that has contributed to entrepreneurship is availability of opportunities. The author explains that most of the American colonies were endowed with natural resources that could be exploited to generate revenue. Profit-seeking corporations and proprietors commercialized these activities, leading to establishment of businesses such as fishing, shipping and ship-building, rum distilling, and iron smelting, among others. He further points out that such opportunities are still abundant today and if exploited, can generate new market niches.
The second factor that has contributed to entrepreneurship is the enactment of incorporation law. The article states that this law reduced the cumbersome procedures that entrepreneurs had to follow when establishing a company, leading to an upsurge in the number of corporations. The article further asserts that this law encouraged the formation of joint-stock companies with limited liability, which motivated risk-taking individuals to invest their funds and become owners.
The third factor that has contributed to entrepreneurship is innovation. Gordon states asserts that invention stemmed from the successful smelting and, exportation of iron and steel by America at the end of the colonial era. The availability of iron and steel promoted the manufacture of upgraded edged tools for manual work. He further postulates that this need for man to make work easier led to the emergence of numerous patented inventions that generated huge profits for their owners, giving credence to the synergistic influence that entrepreneurship and invention have had on each other. The article also asserts that the digital age has seen the emergence of new technological inventions, some are yet to be discovered and exploited at cheaper costs.
The fourth factor that has contributed to entrepreneurship is the freedom to take risks and freedom to fail. This article maintains that America has always accorded entrepreneurs the freedom to take risks and, venture into legal unchartered areas. The author, however, points out that an entrepreneur runs the risk of facing creative destruction when a new invention makes a previous one obsolete. He further asserts that this risk is beneficial in driving forward the wheel of innovation. The article also maintains that America has always been lenient to economic failure, giving entrepreneurs the space to try out new ideas over and over until they make their big break. Most entrepreneurs fail on their first attempts. However, with a conducive environment and support, they usually succeed on their successive attempts. The author believes that this is what led to the birth of capitalism. He is, however, quick to caution against the emergence of plutocracy, a phenomenon that has stifled the economic development of many countries.
The fifth factor that has contributed to entrepreneurship is favorable market regulation. This article asserts that the American government has over the years enacted laws to regulate the market in order to protect entrepreneurs from unscrupulous corporate managers, who embezzled shareholders’ investments and drove corporations to bankruptcy. These regulations include full disclosure of business operations by managers to shareholders through regular audited reports and, imposition of accounting rules. The author maintains that these checks play a key role in creating a reliable and efficient capital market that entrepreneurs can rely on in making financing decisions.
Furthermore, the article highlights some barriers to entrepreneurship. The first barrier noted by the author is excess government intervention through creation of state corporations. The state corporations are meant to provide citizens with essential social amenities. These monopolies restrict free market trade by inhibiting competition and, thus entrepreneurship. The second barrier is political interference. Law makers formulate regulations to benefit themselves through insider dealings with the owners of big private firms. The article further states that these unfavorable regulations make it difficult for smaller innovative firms to thrive, thus wiping them out. The last barrier highlighted by the author is fear of failure. The article maintains that bankruptcy was and, is still viewed in some countries as a ‘moral and financial failure’ (4). It further states that debtors’ prisons were established in the colonial era to detain owners whose companies went bankrupt. This fear of incarceration sapped the willingness of entrepreneurs to take risks.
Gordon, John S. “Entrepreneurship in American History.” Imprimis 43.2 (2014) : 1-7. Print