The History of Entrepreneurship

First Republic Bank
September 12, 2022

  • Entrepreneurship began thousands of years ago as people specialized their skills. 
  • As trade routes expanded, opportunities for entrepreneurs grew as well. 
  • The evolution of entrepreneurship has redefined America's economy many times over.

Entrepreneurial activities are nothing new. In fact, the history of entrepreneurship dates back to ancient times and has steadily evolved over thousands of years. Entrepreneurship has influenced nearly every aspect of society, from aiding in the development of economies to creating new technologies for modern consumers. 

The origins of entrepreneurship started with tribal communities trading goods and eventually led to the invention of money. Dive into this article to discover how entrepreneurship has affected society, fueled the industrial revolutions and framed the American economy. 

The origins of entrepreneurship 

The first instances of entrepreneurship centered on the exchange of goods between ancient tribal societies. The development of agricultural skills created the opportunity for even more entrepreneurship, and this eventually evolved into more specialized skills and tasks, from crafting jewelry to making weapons to crafting tools for working with crops. Exchanging these goods and services with others was the birth of entrepreneurship.

Where Does the Term "Entrepreneur" Come From?
The term “entrepreneur” likely comes from the French word "entreprendre," meaning to start something. Richard Cantillon, an 18th-century Irish-French economist, is widely credited with defining entrepreneurship — and entrepreneurs — as an economic force that drives development. 

The evolution of trade routes

Trade became more nuanced as entrepreneurship continued to evolve. The development of early towns and cities meant that people began to not only trade among themselves but also travel between places to obtain other goods. The use and invention of various modes of transportation, from horses to ships, enabled this movement even more. 

Entrepreneurship thrived with this expansion. Communities established markets as business centers, and traders developed regular routes — over land and sea — to shuttle items between commercial hubs. 

Moving from trade to the invention of money

The history of entrepreneurship started with bartering, as people traded goods for other goods. However, the barter system relied on each party having something the other party needed: enter the invention of money.

Monetary systems provided a way to assign objective value to items and exchange them at that price. Starting with rocks, shells or other small items, money gradually became gold or other forms of metal. Banks began to emerge as a way to safely store money. 

An overview of the four industrial revolutions

An industrial revolution, while often associated with the transition from agriculture to industry, generally refers to the evolution of new manufacturing processes and rapid social and economic change. If trade routes and the development of money sparked entrepreneurship, then the industrial revolutions added fuel to the fire.

Entrepreneurs became the driving force behind the innovation that launched the first industrial revolution and those after. Their inventions ushered in the industrial age, often allowing companies to scale their production and become exponentially more efficient. Products that used to take days or weeks to make could now be made in hours or minutes. 

The first industrial revolution: From agriculture to industry

The first industrial revolution occurred in the late 18th century and early 19th century. The primary innovations were early machines that reduced the need for human labor, enabling the rise of the first factories. The extraction of coal and the invention of the steam engine during this period also led to the proliferation of railroads around the world, accelerating trade. Entrepreneurs raised money to invest in some of the first railroads, built early factories and developed some of the first mass-produced textiles. 

The second industrial revolution: Electricity, gas and oil

The second industrial revolution, which started in 1870, was defined by the use of new energy sources, including electricity, gas and oil, along with the mass production of steel and iron. Advances in telecommunications, chiefly the telegraph, allowed ideas to spread quickly and opened the door for the beginning of globalization. The invention of the automobile also made the second industrial revolution exceptionally significant — some say it's the most important industrial revolution. Entrepreneurs in this era accumulated considerable wealth by mass-producing everything from railroad tracks to Model T's. 

The third industrial revolution: Electronics, the internet and nuclear energy

The third industrial revolution started in the late 1960s and extended for 50 years. This revolution was characterized by computers and electronics, the rise of the internet and the advent of nuclear energy. In this period, entrepreneurs invented digital technology and then started global businesses to sell it to the masses. The third industrial revolution includes, for example, the invention of Apple computers and the launch of social media. 

The fourth industrial revolution: Interconnected technologies and renewable energy

The fourth industrial revolution is ongoing: we are living in it. This revolution is defined by connected devices, digital transformation, data analytics, artificial intelligence and machine learning. The focus is also on renewable energy as companies look for ways to reduce their carbon footprint and slow global warming. Entrepreneurs continue to influence this era through their innovations, leveraging emerging technologies to automate far more complex processes or create more sustainable business operations. 

American entrepreneurship

In many ways, innovation and entrepreneurship are at the heart of the American Dream. Our country's history has relied on entrepreneurs to develop new technologies and enable advancements that grow the U.S. economy and improve the quality of life. The ability to have an idea, start a business and create a livelihood has made the United States a center of innovation and wealth creation for centuries. 

Examples of American entrepreneurs

American entrepreneurs loom large in the country's history. Henry Ford, the founder of the Ford Motor Company, and Madam C.J. Walker, founder of the Madam C. J. Walker Manufacturing Company, are examples of Americans who transformed their ideas into flourishing businesses and paved the way for others who used entrepreneurship to create global economic powerhouses. 

The entrepreneurial era today

Today's entrepreneurs can follow a few different paths, whether they're creating a technology startup or running a small business in their hometown. They may even use entrepreneurship to drive social change or fight for social justice. 

Regardless of their path, entrepreneurs come from a long line of innovators that have defined and shaped history. They will likely continue to do so going forward, inventing and introducing new products and ideas that improve people's lives and inspire budding entrepreneurs for generations to come. 

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