------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (May 2010)

David S. Landes, Joel Mokyr and William J. Baumol , editors, _The
Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to
Modern Times_. Princeton: Princeton University Press, 2010. xv + 566
pp. $49.50 (hardcover), ISBN: 978-0-691-14370-5.

Reviewed for EH.NET by Mansel G. Blackford, Department of History,
Ohio State University.


The second volume published in the Ewing Marion Kauffman Foundation’s
Series on Innovation and Entrepreneurship, this collection of eighteen
essays explores entrepreneurship, innovation, and economic development
in parts of the world from ancient times to the present.  This work,
states William J. Baumol, an economist at New York University and one
of the study’s editors, was designed to test three basic hypotheses:
1) “that the practical utilization of inventions” and accompanying
economic growth would be lower without the work of entrepreneurs; 2)
that “entrepreneurial activities are not always productive”;  and 3)
that “the direction taken by entrepreneurial activity depends heavily,
at any particular time and in any particular society, on the
prevailing institutional arrangements” (p. ix).  David Landes, another
editor and an economic historian at Harvard University, argues further
that “the countries and regions that have done best are precisely
those that have taken advantage of the opportunities offered by active
trade and entrepreneurial freedom.”  Those areas, Landes claims, have
been mainly in the West, with “China and the Arabic Middle East”
offering “pungent case studies” of “resistance to innovation”(p. 2) --
surely an outdated assertion.  The essays comprising this volume bear
out Baumol’s hypotheses, but not the statements made by Landes.[1]

Six essays investigate preindustrial entrepreneurship and innovation.
Michael Hudson explores the development of entrepreneurship and
business enterprises in ancient Mesopotamia (3500-1200 BC), where the
association of businesses with public temples and palaces led to a
commercial take off.  Many of the business practices first created in
Mesopotamia -- the use of money, uniform weights and measures, price
systems, interest charges, and profit-sharing -- Hudson shows, then
spread to the Mediterranean world, only to collapse in Roman times.
In an essay on the Neo-Babylonian Empire (626-539 BC), Cornelia Welch
looks at family entrepreneurship in agriculture and trade.
Particularly valuable is her case study of the Egibi family, which
left an archive of 2,000 cuneiform tablets spanning five generations.
“The Egibi family represents,” she concludes, “an outstanding example
of Schumpeter’s idea that the main entrepreneurial opportunities for
profit or quasi-rent lie in creating new business opportunities.”  The
Egibi family had “far-flung operations” based on a “marketing plan
that integrated agricultural production, tax payments, and the
shipment of crops to cities along Babylon’s canal system” (p. 53).
Timur Kuran claims that Islam first spurred entrepreneurship and
economic development in the Middle East by creating “institutions well
suited to personal exchange,” but later “became a source of
retardation with the transition to impersonal exchange.”  Islamic
institutions, Kuran finds, “supported small-scale entrepreneurship,”
but “inhibited larger-scale entrepreneurship” (p. 63).  James Murray
suggests that the European Middle Ages “deserve a special place in the
history of entrepreneurship,” for by 1500 merchants “came to direct
many of society’s ‘productive forces’” (p. 88).  John Munro then
examines the ideas of Max Weber and Richard Tawney, about economic
development.  He finds that the alterations in mindsets and
institutions that Tawney claimed were needed as precursors to
industrialization in Great Britain occurred in 1640-1740, not, as
Tawney posited, a century earlier.  Oscar Gelderblom defines
entrepreneurs broadly as “not just merchants involved in long-distance
trade, but also shipmasters, fishermen, millwrights, farmers,
artisans, and shopkeepers,” in arguing for the importance of
entrepreneurial actions as the sources of economic development in the
Dutch Republic between 1580 and 1650 (p. 156).

Eight essays probe entrepreneurship in Western Europe and the United
States during industrial and post-industrial times.  Joel Mokyr, the
third editor of this volume and a faculty member in history and
economics at Northwestern University and Tel Aviv University, argues
for the importance of institutions, especially informal ones such as
codes of conduct, as stimuli for entrepreneurship in industrializing
Great Britain.  In two jointly authored essays, Mark Casson and Andrew
Godley debunk the idea that entrepreneurial failure retarded British
economic development in the late-nineteenth and twentieth centuries --
a well-worn topic.  They find that entrepreneurs rationally shifted
their attentions from manufacturing to infrastructural projects and
other undertakings (such as finance) in Great Britain and abroad, in
which they were very successful.  Ulrich Wengenroth surveys the
“tortured” history of entrepreneurship in Germany from the early 1800s
to the present, emphasizing the roles institutions (including
educational ones) played in creating opportunities for innovation.
Pulling no punches, he also looks at anti-Semitism and the unbalanced
nature of Germany’s economy, which he concludes became
over-industrialized and lacking in service businesses.  Turning to
France, Michael Hau presents a picture of varying regional
developments and changing roles taken by the national government,
concluding that after declining in importance for several decades
after World War II “entrepreneurs have greatly gained in power” in the
present day (p. 323).  Louis Cain examines entrepreneurship in the
antebellum United States, first exploring innovations in law, finance,
and transportation that allowed entrepreneurship to flourish and then
describing the processes of industrialization and the diffusion of
products to American markets.  Discussing the United States between
1865 and 1920, Naomi Lamoreaux stresses the importance of
institutions, including federal and state governments, and big
businesses, which encouraged entrepreneurship.  In a particularly
wide-ranging essay, Margaret Graham offers a nuanced picture of
American entrepreneurship after 1920, looking at the varied roles
played by people in companies of all sizes and in many sectors of the
economy.

Three essays and a short conclusion complete the volume.  Susan
Wolcott examines supplies of financial credit, especially “informal”
types, available to entrepreneurs in Colonial India.  She addresses
issues about economic growth in India from the 1700s to the present,
emphasizing the importance of family and ethnic networks defined, in
part, by caste distinctions.  Wolcott concludes that, while such
networks and the informal credit they commanded initially aided
economic development, they ultimately limited business development --
a finding similar to Kuran’s conclusions about the Islamic Middle
East.  Wellington Chan looks at entrepreneurship and innovation in
China from the late 1800s, emphasizing continuities in stressing the
roles personal relationships and networks have played for business
people throughout Chinese history.  “Chinese entrepreneurship,” Chan
concludes, “has always been an inherent part of Chinese history and
tradition” (p. 495).  Seiichiro Yonekura and Hiroshi Shimazu find
entrepreneurship at the core of the development of zaibatsu in Japan
before World War II and present accounts of the development of Mitsui
and Mitsubishi, unfortunately ignoring the significant roles small and
medium size business played in Japan’s economic development.  Finally,
Baumol and Robert Strom (a director of the Kauffman Foundation) offer
short concluding remarks underlining the importance of cultural
developments and institutions for the evolution of entrepreneurship
and innovation over time.

Anyone interested in entrepreneurship, innovation, and economic
development will find much to ponder in this work, and extensive
multilingual notes and bibliographies at the end of each essay will
lead readers to additional sources.  However, even such an extensive
volume as this one has limitations.  The focus is clearly on Western
Europe and the United States.  Only a few essays examine developments
in Asia and the Middle East, and none look at entrepreneurship in
Latin America or Africa.  Then too, most of the essays approach
entrepreneurship and innovation from the vantage points of economics
and economic history.  The substantial contributions of business
historians -- Harold Livesay, Thomas McCraw, and William Lazonick,
among many others, come to mind -- are largely ignored.[2]  Moreover,
the authors of the essays follow no commonly agreed-upon definition of
entrepreneurship, making cross-national comparisons difficult.  Most
of the authors bow in the direction of Joseph Schumpeter, but
essentially fail to adopt a common approach.  I was disappointed that
little effort was expended by the editors or authors to reach
comparisons across boundaries of time or space.  For the most part,
this study consists of fairly traditional national studies.
Ironically for a book about innovation, this volume contains little in
the way of conceptual breakthroughs.  The authors might well have
explored more fully innovative business networks and industrial
districts that often spread across national lines, especially in
modern times.[3].  Even with these caveats, however, I think these
essays deserve close consideration, as much for the questions they
raise as for the answers they give about innovation and
entrepreneurship.

Notes:

1. On innovation in China, see for example, William T. Rowe, _China’s
Last Empire: The Great Qing_ (Cambridge, 2009); and Peter Zarrow,
_China in War and Revolution, 1895-1949_ (London, 2005).  Landes’ main
source on Islamic developments is Bernard Lewis, _What Went Wrong? The
Clash between Islam and Modernity in the Middle East_ (Oxford, 2002),
a one-sided study.

2. Harold Livesay, _American Made: Shapers of the American Economy_
(New York, 2007); William Lazonick, “Business History and Economic
Development,” in Geoffrey Jones and Jonathan Zeitlin, eds., _The
Oxford Handbook of Business History_ (Oxford, 2007), 67-95; and Thomas
K. McCraw, _Prophet of Innovation: Joseph Schumpeter and Creative
Destruction_ (Cambridge, MA, 2007).

3. See, for example, Louis Galambos and Jane Eliot Sewell, _Networks
of Innovation: Vaccine Development at Merck, Sharpe & Dohme, and
Mulford, 1895-1995_ (Cambridge, 1995); and Charles Sabel and Jonathan
Zeitlin, eds., _World of Possibilities: Flexibility and Mass
Production in Western Industrialization_ (Cambridge, 1995).


Mansel G. Blackford is a business historian at Ohio State University
and, most recently, is the author of _The Rise of Modern Business:
Great Britain, the United States, Germany, Japan, and China_ Chapel
Hill, 2008 (third edition).

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