The entrepreneur, wealth creator and growth seeker: myth or reality?

Abstract

Nowadays, entrepreneurship appears as the driver of social and economic development (Observatory of European SMEs, 2003). Entrepreneurs are perceived as the pillars, if not the saviours, of market economy, and their activities as creating value, employment and multiple advantages for consumers. However, some recent studies (Shane, 2009) show that the entrepreneur seen as a hero would be nothing else than a myth. Most of the time, entrepreneurs would create ordinary firms that would not grow. Although the entrepreneur has largely been ignored by classical and neo-classical economic theory, the myth of the entrepreneur as a wealth creator finds its roots in the postulate of profit maximisation that would force firms to grow. However, actual competition, combined with the fact that, often, ownership and management are in the hands to the same people, allows entrepreneurs to pursue utility functions other than profit maximisation. Entrepreneurs often follow non-monetary aims like independence, power, or achievement. This leads them to voluntarily limit growth. The aim of this paper is thus to explain how this myth was born and to show that, if these alternative objectives are not taken into account, it is not possible to reconcile the entrepreneurial behaviour with apparent infringements to economic and management theories.

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