I. The Genesis of Entrepreneurial Authority and its Contradictions (Early 20th Century)

Make Your Own Job: The early 20th century saw the emergence of a distinct entrepreneurial authority, often rooted in the “personality” of the firm’s leader, while simultaneously grappling with the rise of bureaucratic structures and the influence of new psychological and philosophical movements.

• Personality as Corporate Policy: Business executives began to frame the success of a firm through the “personality” of its founder or head. A. Montgomery Ward noted that the “primary personality of business… influences every employee, stimulates every manager, creates duplication of each good idea upon the broadest plane until each part of the great combination is enjoying the best that each other part has.” This quasi-mystical language linked the leader’s individual dynamism to the collective success of the enterprise. Make Your Own Job.
• Ford’s Charismatic and Violent Authority: Henry Ford exemplifies this personal authority, which, despite a “Sociological Department” for surveillance and moral enforcement, ultimately relied on a “methodical brutality” enforced by deputies like Harry Bennett. Ford’s hiring question, “Can you shoot?”, highlights his intolerance for “any rival governing force in his firm besides his own personal dynamism.” This illustrates a tension between nascent bureaucracy and raw personal power. Make Your Own Job
• New Thought and the Cultivation of Success: The “New Thought” philosophy played a significant role in shaping success ideals. It emphasized mental work, imagination, and willpower as keys to achievement. Marcus Garvey, a prominent Black leader, was a “voracious” reader of New Thought, believing that “industrial and commercial expansion and conquest” was “the new thought, the new hope” for Black racial greatness. Napoleon Hill, a notorious “con man” of the era, popularized a secularized version of New Thought, claiming a fabricated relationship with Andrew Carnegie to dispense his “law of success,” which highlighted “imagination” as the source of “IDEAS” (always capitalized for “quasi-supernatural valence”).
• Early Economic and Management Theories: Economists like Werner Sombart, Joseph Schumpeter, and Frank Knight contributed to understanding the “entrepreneur function.” Schumpeter defined the entrepreneur by their role in “creative destruction,” while Knight emphasized the entrepreneur’s function in bearing “risk, uncertainty, and profit.” Early management theory, influenced by figures like Frederick Winslow Taylor (Taylorism) and Walter Dill Scott, focused on scientific management and personnel psychology, aiming to optimize worker efficiency and motivation.

II. The Great Depression and the Reconceptualization of Entrepreneurialism

The economic upheaval of the Great Depression compelled a re-evaluation of entrepreneurialism, presenting it as a dynamic solution to widespread joblessness and economic stagnation, even as it challenged traditional notions of work.

• Direct Selling as a Dynamic Island: In a period of economic stagnation, direct-selling companies like Avon (California Perfume Company – CPC) thrived, portraying their salesforce (predominantly female) as resourceful and independent. Avon literature framed selling as “a laudable act of feminine social service, not merely a business opportunity,” enabling women to “make new friends, minister to those in need of a friend, and help others to get on a better financial footing.” This reconceptualized direct selling as acceptable “women’s work” that provided dynamism amidst the Depression.
• “Executives” as Entrepreneurs: William T. Grant, a chain-store magnate, adapted the entrepreneurial image to describe his store managers as “independent businessmen” rather than “mere employees.” He argued that managers were “executives—not clerks—and when they have left our organization they have proved able to successfully operate their own store,” contrasting them with clerks whose “initiative” and “ingenuity” had “atrophied from underuse.” This shifted the perception of a corporate role towards an entrepreneurial one.
• The Appeal of Self-Help: The Depression gave a “new jolt of life” to secularized New Thought in advice writing. Napoleon Hill’s populist message, emphasizing “specialized knowledge” and “IDEAS” over traditional academic education, resonated with professionals facing precarity, offering a “change of heart but not of vocation.”

III. Democratic Leadership, Development, and Post-War Entrepreneurialism

The post-war era saw entrepreneurial principles integrated into concepts of democratic leadership and national/international development, often blurring the lines between public and private sectors.

• Social Entrepreneurship and Regional Development: David E. Lilienthal, the principal director of the Tennessee Valley Authority (TVA), presented the agency as a model of “democratic” development, relying on “grass roots” private initiative. He viewed development as a “change… in the way men think, and so thinking, act,” fostering qualities like “resourcefulness,” “inventiveness,” and “pride of workmanship” in workers, making them “better equipped for a modern, industrial, capitalist economy.” Lilienthal later coined the term “social entrepreneurs” for leaders operating at the intersection of public and private sectors.
• Private Business Partnerships in Wartime and Development: The Roosevelt administration’s approach to economic mobilization for World War II relied heavily on private business partnerships, with Secretary of War Henry Stimson explaining, “If you are going to try and go to war, or to prepare for war, in a capitalist country, you have to let business make money out of the process or business won’t work.” This precedent extended to New Deal programs like the Reconstruction Finance Corporation (RFC) under Jesse H. Jones, emphasizing cooperation with local business executives.
• Entrepreneurship and International Development: Post-WWII, American social scientists, particularly at Harvard Business School, extensively researched entrepreneurship’s role in the “modernization” and “Westernization” of “Third World” nations. David McClelland’s work on “achievement motivation” became central, suggesting that individuals could “literally rewrite their personalities to become more entrepreneurial” through psychological interventions like modified Thematic Apperception Tests (TAT). This approach emphasized “cultural transformation” and “human factors” over purely economic methods.
• Corporate Entrepreneurship (“Intrapreneurship”): Within large corporations, the concept of “simulated decentralization” (Peter Drucker) and “simulated entrepreneurship” (Tom Peters and Robert Waterman) emerged, aiming to foster entrepreneurial spirit internally. Companies like 3M, with its “venture teams,” were lauded for allowing employees to act as entrepreneurs within the organizational structure, contributing to successful products like the Post-It Note.

IV. The Modern Entrepreneur and the “Entrepreneurial Work Ethic”

The late 20th and early 21st centuries saw the entrepreneur elevated to a cultural icon, particularly within conservative ideology, influencing the perception of work and individual responsibility.

• The “Founding Father” Entrepreneur: Ray Kroc, McDonald’s CEO, cultivated a personal mythology as the “Founding Father” of McDonald’s, embodying “entrepreneurship, his competitiveness, his integrity.” Despite not inventing the core business model, Kroc’s relentless ambition to make McDonald’s an “American institution” solidified his image as the true entrepreneur. This reinforced a “masculinism historically associated with the ‘entrepreneur’ concept into a potent family metaphor.”
• Small-Town Entrepreneurship and Decentralization: Sam Walton, founder of Wal-Mart, epitomized entrepreneurial success through his strategy of targeting underserved small towns and promoting internal “proprietorship” among his managers. His “Store Within A Store” program provided department managers with profit data and incentive pay, giving them “the pride of proprietorship even if they weren’t fortunate enough to go to college or be formally trained in business.”
• Social Entrepreneurship and Microfinance: Muhammad Yunus, founder of Grameen Development Bank, became a global celebrity for his “microfinance” model, providing small loans to women in the Global South. Yunus proudly declared himself a “social entrepreneur,” asserting that “Microcredit institutions are powerful because they are not about charity for the poor, but are based on business principles.” This discourse suggested that poverty could be eradicated through market mechanisms, blurring the line between social good and profit-making. The concept gained significant traction, especially during the Clinton era, with initiatives like the Good Faith Fund in Arkansas, patterned on Grameen.
• The Ambiguity of the “Gig Worker” and the Entrepreneurial Work Ethic: The “entrepreneurial work ethic” pervades contemporary understanding of labor, particularly in the “gig economy.” Taxi drivers are presented as “enduring symbols” of this ambiguity: are they “factory workers, doing a clearly defined job on behalf of a boss, or… like entrepreneurs, managing themselves, jockeying for customers, making their own jobs?” The sources suggest that this perception thrives “most in times and places when workers feel unable to answer this question as definitively” as the character Damani in Your Driver Is Waiting, who identifies politically as a worker. The prevailing message is that it’s “a spectrum that every worker sits on, and where they are located depends more on their attitude and the attitude of their managerial leaders than on the material facts of their job.”

In conclusion, the entrepreneurial ideal has evolved from a charismatic leader’s personal dynamism to a pervasive work ethic that shapes individual identity and societal approaches to economic development and social welfare. It has been adapted and reinterpreted across various historical contexts, consistently emphasizing individual initiative, imagination, and a “can-do” spirit, often blurring the lines between traditional employment, self-employment, and corporate structures, and sometimes obscuring the underlying material realities of work.

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Entrepreneurialism and the American Workforce: A Study Guide

Quiz

Instructions: Answer each of the following questions in 2-3 sentences, drawing upon the provided source material.

1. What was the purpose of Ford’s “Sociological Department,” and how did it relate to Henry Ford’s personal authority?
2. How did Marcus Garvey connect New Thought philosophy to his vision for the Universal Negro Improvement Association (UNIA)?
3. Explain A. Montgomery Ward’s perspective on “personality in business” and its influence within a firm.
4. Why was L.J. Henderson’s interest in Vilfredo Pareto alarming to some, as noted by Arthur Schlesinger Jr.?
5. How did the California Perfume Company (Avon) frame direct selling as “women’s work” during the Depression era?
6. Describe Napoleon Hill’s background and his alleged connection to Andrew Carnegie, as presented in the text.
7. What did Henry Luce value most that made Peter Drucker decline his job offer at Time-Life, despite its perks?
8. How did David E. Lilienthal, as head of the TVA, describe the relationship between individual development and regional development?
9. Explain Sam Walton’s “Store Within A Store” program at Wal-Mart and its intended effect on department managers.
10. How did Muhammad Yunus, the founder of Grameen Bank, reconcile the business principles of microfinance with its goal of combating poverty?

Answer Key

1. Ford’s “Sociological Department” rigorously surveilled workers to ensure adherence to standards like thrift and sobriety, with offenders risking disqualification from the “five-dollar-day” plan. While it routinized some of Ford’s charisma, other enforcers like Harry Bennett directly sharpened his personal authority through brutal discipline, highlighting Ford’s intolerance for rival governing forces.
2. Marcus Garvey, a voracious reader of New Thought, saw its cosmic bent suiting his temperament as a messianic figure. He explicitly announced “industrial and commercial expansion and conquest” as “the new thought, the new hope” of the twentieth century, believing it would lay the foundation for Black racial greatness.
3. A. Montgomery Ward viewed the “primary personality of business” as the firm’s founder or head, whose name represents its policy. He believed this leader’s “personality” mystically influenced every employee, stimulated managers, and facilitated the broad duplication of good ideas throughout the organization.
4. L.J. Henderson’s conversion to Vilfredo Pareto’s ideas was alarming to figures like Arthur Schlesinger Jr. because Pareto had accepted a senatorship from Mussolini. This association linked Pareto’s theories, and by extension Henderson’s enthusiasm for them, with fascism and right-wing political ideologies.
5. CPC literature framed Avon selling as a laudable act of feminine social service, beyond just a business opportunity. Women were encouraged to exploit female social networks for sales, with testimonials emphasizing making new friends, ministering to those in need, and helping others achieve financial footing, thus making direct selling acceptable “women’s work” during the Depression.
6. Napoleon Hill was a notorious con man who spent much of the early 20th century on the run for various fraudulent schemes. His “greatest con” was fabricating a relationship with Andrew Carnegie, claiming Carnegie had revealed the secret to success to him, though this meeting almost certainly never occurred.
7. Peter Drucker declined Henry Luce’s job offer at Time-Life because, despite the obvious perks, a job there with its aversion to individual bylines and homogenizing house style would cost him “the thing he valued most: his ability to be a public personality.”
8. Lilienthal believed the TVA’s fundamental role was to propagate a new intellectual and spiritual orientation among Appalachian valley-dwellers toward personal and economic development. He argued that building dams not only provided new skills but also fostered “resourcefulness,” “inventiveness,” and “pride of workmanship,” thereby fusing individual and regional growth.
9. Sam Walton’s “Store Within A Store” program provided department managers with data on their individual department’s profit margins and sales volume. It also offered incentive pay based on performance, aiming to give managers “the pride of proprietorship” even without formal business training, thereby converting them into entrepreneurs within the larger Wal-Mart structure.
10. Muhammad Yunus reconciled business principles with combating poverty by framing Grameen Bank not as a charity, but as a fully solvent business operating on “business principles.” He argued that microcredit institutions are powerful because they can cover costs and don’t rely on long-term subsidies, thus promoting entrepreneurship while being self-sustaining.

Essay Questions

1. Analyze how the concept of “personality” evolved in early twentieth-century business thought, contrasting A. Montgomery Ward’s quasi-mystical view with Dale Carnegie’s emphasis on cultivating a “self that was worth selling.”
2. Discuss the role of direct selling, particularly by companies like Avon, in reshaping perceptions of “women’s work” and entrepreneurial opportunity during the Great Depression. How did this challenge or reinforce existing economic and gender norms?
3. Compare and contrast the approaches to discipline and control of the workforce at Ford Motor Company under Henry Ford and Harry Bennett with the management strategies promoted by figures like Peter Drucker and Edwin Land at Polaroid. What do these differences reveal about evolving ideas of corporate authority and employee relations?
4. Examine the influence of “New Thought” philosophy on different figures discussed in the text, such as Marcus Garvey and Napoleon Hill. How did this philosophy inform their respective visions of success, leadership, and social change, despite their disparate goals and methods?
5. The text introduces the concept of the “democratic entrepreneur” through figures like David E. Lilienthal and later applies it to the “gig economy.” Discuss how this concept bridges the public and private sectors, and how the “entrepreneurial work ethic” is depicted as both a solution to and a symptom of economic precarity in various historical contexts.

Glossary of Key Terms

• Entrepreneurial Work Ethic: A cultural and economic philosophy emphasizing individual initiative, self-reliance, and innovation in the pursuit of economic success. It suggests that individuals, rather than solely relying on traditional employment structures, should “make their own jobs” and take responsibility for their own economic well-being.
• New Thought: A spiritual and philosophical movement popular in the late 19th and early 20th centuries that emphasized the power of positive thinking, mental attitudes, and willpower to influence one’s material reality and achieve success. It often had a “cosmic bent” and influenced self-help literature.
• Sociological Department (Ford): A department at Ford Motor Company responsible for rigorously surveilling workers to ensure adherence to standards of thrift, hygiene, sobriety, and sexual propriety. It could disqualify offenders from eligibility for Ford’s lucrative “five-dollar-day” compensation plan.
• Five-Dollar-Day: Henry Ford’s compensation plan that offered significantly higher wages to workers, but with the condition that they abided by certain moral and behavioral standards, monitored by the Sociological Department.
• Personality in Business: An early 20th-century concept that attributed the success and character of a firm to the “personality” of its founder or leader, seen as influencing and stimulating every aspect of the organization.
• Vilfredo Pareto: An Italian sociologist and economist whose ideas were influential, particularly among some right-wing intellectuals. His work, such as The Mind and Society, discussed social systems and elites.
• California Perfume Company (CPC/Avon): A direct-selling company that empowered its predominantly female salesforce during the Depression by framing direct selling as an acceptable form of “women’s work” centered on exploiting female social networks and offering social service.
• Napoleon Hill: A controversial self-help author and con man who popularized the “science of success” in the early 20th century. He is known for fabricating a relationship with Andrew Carnegie and for his books emphasizing the power of “imagination” and “IDEAS.”
• Specialized Knowledge (Hill): A concept introduced by Napoleon Hill, emphasizing practical, entrepreneurial knowledge and “IDEAS” as more valuable for navigating industrially mature capitalism than traditional, college-educated professional knowledge.
• David E. Lilienthal: The principal director of the Tennessee Valley Authority (TVA) who presented the agency as an example of “democratic” development, focusing on “grass roots” private initiative and fostering a new intellectual and spiritual orientation towards personal and economic development.
• Social Entrepreneur/Social Entrepreneurship: A term coined by David E. Lilienthal and later popularized by others like Muhammad Yunus and Jeffrey Skoll, referring to leaders or ventures that straddle the line between public and private sectors, aiming to achieve social good through business principles and entrepreneurial methods.
• Tennessee Valley Authority (TVA): A federal agency presented as a model of democratic development, emphasizing regional and individual development through infrastructure projects, private business partnerships, and the cultivation of new skills and values among residents.
• Georges F. Doriot: A Harvard Business School professor and champion of entrepreneurial leadership, known for building men and companies by seeking out “creative men with the vision of things to be done” and emphasizing “imagination as well as incentive.”
• Edwin Land: The founder of Polaroid, who envisioned a company where employees worked as a “family” towards shared objectives and aimed to implement “management by objectives” and profit-sharing plans to foster individual management.
• David McClelland: A psychologist known for his work on “achievement motivation” and its connection to entrepreneurship and economic development, particularly in “Third World” nations. He developed training programs to help individuals cultivate entrepreneurial personalities.
• Thematic Apperception Test (TAT): A psychological test, modified by McClelland, where subjects create stories about ambiguous photographs. McClelland used it to identify and teach “achievement thinking,” claiming individuals could “rewrite their personalities” to become more entrepreneurial.
• Muhammad Yunus: A Bangladeshi economist and founder of Grameen Bank, known for pioneering “microfinance” – providing small, high-interest loans to the poor (primarily women) to start “microbusinesses.” He was a proud “social entrepreneur.”
• Microfinance: A system of providing small loans, financial services, and sometimes training to low-income individuals or groups, typically in developing countries, to help them start or expand small businesses and alleviate poverty.
• Ray Kroc: The entrepreneur who expanded McDonald’s into a global franchise empire. He cultivated a personal mythology as the “Founding Father” of McDonald’s, emphasizing his entrepreneurial drive, patriotism, and paternal authority, despite not having founded the original restaurant or its core system.
• Sam Walton: The founder of Wal-Mart, who emphasized “ordinary people” joining together to accomplish extraordinary things. He implemented programs like “Store Within A Store” to decentralize management and instill an entrepreneurial mindset in department managers.
• Store Within A Store (Wal-Mart): A Wal-Mart program that provided department managers with data on their department’s profit margins and sales volume and offered incentive pay based on performance. It aimed to give managers “the pride of proprietorship” and convert them into internal entrepreneurs.
• Simulated Decentralization (Drucker)/Simulated Entrepreneurship (Peters & Waterman): Management concepts advocating for structuring divisions or internal operations of large corporations as functionally independent business units, sometimes with internal markets and simulated pricing systems, to foster entrepreneurial behavior within bureaucratic organizations.
• Gig Economy: An economic system characterized by temporary, flexible jobs where individuals are hired for short-term tasks or projects, often through online platforms, leading to an ambiguous status for workers as neither traditional employees nor fully independent entrepreneurs.
• Taylorism (Scientific Management): A management theory developed by Frederick Winslow Taylor, focusing on optimizing efficiency and productivity through systematic analysis of workflows, standardization of tasks, and close supervision of workers.