What is an “entrepreneur”?

You keep using that word. I do not think it means what you think it means.

I try not to be nitpicky about words. Some people are really into language activism — insisting on using or not using particular terms (e.g. greeting a mixed gender group with, “hey you guys”) because they reinforce power structures, legitimize inequalities, or whatever. I tend to think the power structures lead to the terminology, and not vice versa, so it’s more productive to focus on those structures than on the language.

That said, I am a huge proponent of language precision. When an issue becomes hot and buzzwords are involved, we sometimes forget what we’re talking about. Everyone knows what we mean with certain terms, so why waste time defining them? Anyways, a proposed definition is easily contested by others. So instead we just keep using the term, and our analysis gets gradually muddier.

I believe that “entrepreneur” has reached this stage. The word now means so many things that it means little at all.

A recent piece by Ha-Joon Chang made this clear to me. The piece is titled “Poverty, Entrepreneurship, and Development” (hat tip to Jennifer Lentfer for tweeting it out). Chang cites a finding from an OECD study that 30-50 percent of the non-agricultural workforce is self-employed in most developing countries. He proceeds to refer to these individuals as “entrepreneurs”. Another typical example of this usage comes from a recent Gallup poll, which asked youth in 19 Arab League countries about their plans to start their own businesses; the report refers to those who said “yes” as “entrepreneurs”. The high level of self-employment in developing countries is often used to support assertions that people in those countries are “more entrepreneurial” than employees in developed countries.

But is every self-employed person automatically an entrepreneur? The word has many connotations. I conducted a highly scientific poll (of my Facebook/Twitter friends) to ask what “entrepreneur” means. Answers included references to change, startups, trial and error, risk, failure, dreams, finding openings and leverage points. The term often refers as much to an attitude or a personality trait as to any particular activity. If that’s the case, then we should be wary about inferring the attitude/personality from someone’s actions.

Chang’s article actually does a good job of complicating the issue. He describes the failures of microcredit to help these entrepreneurs grow their businesses or move out of poverty. He ends by discussing the importance of collective entrepreneurship (i.e. education systems, legal structures, business associations, professional management, and other social elements that facilitate the development of a business). This emphasizes the structures that prevent or enable someone to transition from self-employed to employing-others. I think this is key, but these structures also determine whether someone would choose to be self-employed or employed-by-others. If there are no jobs, then self-employment may be your only option.

I won’t try to define what “entrepreneur” “should” mean. I tend to think its meaning is the use that we make of it (hat tip to Wittgenstein). What I will say is that I find some uses to be more useful than others.

As an aspiration to promote, entrepreneurship is useful. It’s usually a good thing when people decide to be entrepreneurs, whatever form that takes, so let’s promote it. But as an analytical category, I find it less useful. The term has too many connotations and leads us into muddy thinking when we conflate people pursuing very different activities. We end up assigning certain aspirations and personality traits to people who are simply pursuing their best livelihood option.

Of course, this isn’t the only term to suffer this fate. “Democracy” is similar: we all know it’s a good thing, but we get into trouble when we start setting criteria to measure it and run regressions. On the other hand, some terms start out all aspiration and little substance (ahem, I’m looking at you, “social enterprise”). I guess expecting precise use of language in public discourse would be, well, inconceivable.

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(You know how sometimes when you say or use a word a lot, it starts to sound funny to you? Like those syllables no longer make sense together, even if it’s a very simple word? That happened to me while writing this post. Turns out there’s a term for this effect: semantic satiation. That’s not really relevant to the above post. I just think it’s cool.)