IntroductionA dominant theme in American history is the importance of economic opportunity for the individual. In the 17th and 18th centuries this took the form of public admiration of the pioneer, the individual or family that overcame great hardships to carve a home out of the wilderness. Combining all the moral qualities of the sturdy yeoman, the pioneer typically enjoyed the wide open spaces found in the vast American heartland. It is reported that Daniel Boone, legendary as an early American frontiersman, claimed that when he could see smoke from his neighbor's chimney, it was time for him to move farther west.
In 19th- and 20th-century America, the economic individualist was envisioned in rural settings as a homesteading farmer. As a city dweller, he was seen as a small merchant, independent craftsman or self-reliant professional.
But just what does entrepreneurship -- the formation of independent business -- mean in the United States?
The American frontier fostered the notion that "everybody is an entrepreneur," or that everybody has the right to try his hand. On the frontier, families could homestead their land, take it simply through "squatters' rights," or purchase it on credit and make payment over many years. Its huge expanse permitted the United States to become a nation of agricultural entrepreneurs. The dream of "being in business for oneself" evolved as the nation shifted from rural to urban and from farming to other types of business.
For many people, entrepreneurship retains the significance that 19th- and 20th-century Americans attached to "having a store," "being a plumber," or "having a medical practice." Tales of door-to-door peddlers becoming successful merchants are common in many U.S. families.
Many visitors from abroad are surprised to discover that the U.S. economy is by no means one dominated by giant corporations. The Internal Revenue Service, the tax-collecting agency of the federal Treasury Department, reported that in 1989 there were 13.5 million nonfarm sole proprietorships, 1.8 million partnerships and 4.2 million corporations in the United States -- a total of 19.5 million firms. The vast majority of these were small, having business receipts under $100,000 a year.
There are various ways of defining small and medium businesses, but according to the U.S. Small Business Administration (SBA), if a small business is defined as one employing fewer than 500 persons, then there are roughly as many people employed in small businesses in the United States as there are in large ones. (If small business is defined more narrowly, as employing fewer than 100 employees, about 36 percent of all workers are employed in small business.) Furthermore, small businesses (employing fewer than 500 employees) accounted for 60 percent of all new jobs created in the years between 1976 and 1988, according to the SBA. During the decade of the 1980s, there was a net growth of 7 million new businesses in the United States, about half of which were self-employed businesses. Self-employed businesses are famous for being able to respond almost instantly to changes in demand; for example, the SBA notes that the number of self-employed part-timers "took off like a rocket" in the 1970s, partly as a result of the energy crisis which caused large numbers of Americans to get into such sideline activities as cutting up trees in rural areas to sell as firewood in cities.
A notable trend of recent years has been the increase in numbers of women in small business activities. According to the SBA, the number of women-owned sole proprietorships more than doubled over the 1977-87 period, from 1.9 million to 4.4 million.