Wed Aug 6 05:20:12 EDT 1997
EHS Abstract Submission
(c) 1997 EH.Net
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Name: James Foreman-Peck
Email: james.foreman-peck at sant.ox.ac.uk
Institution: University of Oxford
Co-author: Elisa Boccaletti, University of Oxford
Title: The Supply and Demand for Entrepreneurs in
Nineteenth-Century France
Internet Address
of abstracted work: Not available on the Internet
By mail:
St. Antony's College
University of Oxford
Oxford
OX2 6JF United Kingdom
Language: English
Abstract:
Delayed industrialization has remained a central topic in
French nineteenth-century historiography. A popular explanation
for this retardation has been inappropriate attitudes and actions
of key players in the economy, especially the managerial classes.
To address this hypothesis we model the supply and demand for
entrepreneurship and also management success more widely. The
demand for entrepreneurship is derived from entrepreneurial
productivity and depends upon the opportunities presented by the
economy. Sectoral openings for entrepreneurship will be
determined by state policy, as well as by natural and social
endowments, competition, and personal ingenuity. The simplest
entrepreneurial supply assumption is the free entry and exit of
perfect competition. If we suppose that the supply of
entrepreneurship is not infinitely elastic, possibly
institutional or cultural influences, such as religion, family
size, legal structure, and political culture, determine the
response. Another line of investigation focuses on purely
economic factors--time preference, risk aversion, work-leisure
trade-offs--as the driving force behind the supply of
entrepreneurship. In this paper we attempt to synthesize the two
approaches.
We define entrepreneurship under the Second Empire as starting
a successful firm, for entrepreneurship had not been
institutionalised in the nineteenth century. But we are also
interested in business success, as measured by wealth at death,
in all types of enterprise, not only in start-up firms. We
construct and analyse a data set of 247 nineteenth-century French
businessmen. The analysis divides the determinants of
entrepreneurship and business performance into demand- and
supply-side forces. Their individual contributions are tested
and estimated with logit and OLS regression equations. The
variables on the supply side include financial capital, formal
human capital (education), and informal human capital (family,
religion) and on the demand side, industry of operation. As to
causes of French entrepreneurship, a clear result is that those
whose fathers were in business did not inherit an entrepreneurial
gene that encouraged them to set up their own enterprises. On
the contrary, this measure of informal human capital discouraged
starting a business. Secondary and university education
similarly influenced entrepreneurship negatively. Apparently
human capital created opportunities that were preferable to
business innovation. Surprisingly, religion makes no difference
to the chances of setting up a firm. We infer that Protestant
businesses were longer-lived.
Two very robust findings emerge from the business performance
model. First, the longer the period the businessman was active,
the greater the accumulation. Second, those who started their
own business reduced their wealth at death by even more than they
could be expect to accumulate over a normal lifetime, other
things being equal. Innovating in French business was expensive
for the entrepreneur but the pace of wealth accumulation suggests
a dynamic sector.
Bibliography: Foreman-Peck, James, and Elisa Boccaletti.
"The Supply and Demand for Entrepreneurs in Nineteenth-Century
France." Paper presented at the third World Congress of
Cliometrics, Munich, Germany, July 1997.
Subject: B
Geographical Area: 4
Country/Region: France
Time Period: 7