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Businessperson
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| Occupation | |
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Occupation type | Business |
Activity sectors | Private |
| Description | |
| Competencies | |
Education required | Qualification is not required |
| Part of a series on |
| Capitalism |
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A businessperson, also referred to as a businessman or businesswoman, is an individual who has founded, owns, or holds shares in (including as an angel investor) a private-sector company.[dubious – discuss] A businessperson undertakes activities (commercial or industrial) to generate cash flow, sales, and revenue by using a combination of human, financial, intellectual, and physical capital to fuel economic development and growth.[1]
History
[edit]Medieval period: Rise of the merchant class
[edit]Merchants emerged as a social class in medieval Italy. Between 1300 and 1500, modern accounting, the bill of exchange, and limited liability were invented, and thus, the world saw "the first true bankers", who were certainly businesspeople.[2][need quotation to verify]
Around the same time, Europe saw the "emergence of rich merchants."[3] This "rise of the merchant class" came as Europe "needed a middleman" for the first time, and these "burghers" or "bourgeois" were the people who played this role.[4]
Renaissance to Enlightenment: Rise of the capitalist
[edit]Europe became the dominant global commercial power in the 16th century, and as Europeans developed new tools for business, new types of "business people" began to use those tools. In this period, Europe developed and used paper money, cheques, and joint-stock companies (and their shares of capital stock).[5] Developments in actuarial science and underwriting led to insurance.[6] Together, these new tools were used by a new kind of businessperson, the capitalist. These people owned or financed businesses as investors, but they were not merchants of goods. These capitalists were a major force in the Industrial Revolution.[7]
The Oxford English Dictionary reports the earliest known use of the word "business-men" in 1798, and of "business-man" in 1803. By 1860, the spelling "businessmen" had emerged.[8]
Merriam Webster reports the earliest known use of the word "businesswoman" in 1827.[9]
Modern period: Rise of the business magnate
[edit]
The newest kind of corporate executive working under a business magnate is the manager. One of the first true founders of the management profession was Robert Owen (1771–1858). He was also a business magnate in Scotland.[10] He studied the "problems of productivity and motivation", and was followed by Frederick Winslow Taylor (1856–1915), who was the first person who studied work with the motive to train his staff in the field of management to make them efficient managers capable of managing his business.[11] After World War I, management became popular due to the example of Herbert Hoover and the Harvard Business School, which offered degrees in business administration (management) with the motive to develop efficient managers so that business magnates could hire them with the goal to increase productivity of the private establishments business magnates own.[12]
Salary
[edit]Salaries for businesspeople vary.[13][14] The salaries of businesspeople can be as high as billions of dollars per year. For example, the owner of Microsoft, Bill Gates makes $4 billion per year. The high salaries which businesspeople earn have often been a source of criticism from many who believe they are paid excessively.[15]
Entrepreneurship
[edit]An entrepreneur is a person who sets up a business or multiple businesses (serial entrepreneur). Entrepreneurship may be defined as the creation or extraction of economic value. It is generally thought to embrace risks beyond what is normally encountered in starting a business. Its motivation can include other values than simply economic ones.[16][17][18] In general usage, because the distinction is not clear-cut, the term 'entrepreneur' may be used as a (self-)promoting euphemism for 'businessperson', or it may serve to objectively indicate particular passion and risk-taking in a business field. Still, the distinction is only one by degrees.[19][20]
See also
[edit]
References
[edit]- ^ "businessman". WebFinance Inc. 2018. Archived from the original on 2 February 2009. Retrieved 6 July 2018.
businessman[:] A person who is employed by an organization or company. Businessmen are often associated with white collar jobs. In order to avoid sexism or the perpetuation of stereotypes, the term "businessperson" is often used. The term "businesswoman" is less commonly used.
- ^ Roberts, J.M. (2013). The Penguin History of the World, Sixth Edition. New York: Penguin. p. 506. ISBN 9780141968728.
- ^ Roberts, J.M. (2013). The Penguin History of the World, Sixth Edition. New York: Penguin. p. 509.
- ^ Roberts, J.M. (2013). The Penguin History of the World, Sixth Edition. New York: Penguin. p. 510.
- ^ Roberts, J.M. (2013). The Penguin History of the World, Sixth Edition. New York: Penguin. p. 558.
- ^ Roberts, J.M. (2013). The Penguin History of the World, Sixth Edition. New York: Penguin. p. 559.
- ^ "Industrial Revolution Definition: History, Pros, and Cons". Investopedia. September 2008. Retrieved 2 May 2023.
- ^ "businessman". Oxford English Dictionary (Online ed.). Oxford University Press. (Subscription or participating institution membership required.)
- ^ "Definition of "businesswoman"". Merriam-Webster. Retrieved 2 May 2023.
- ^ Drucker, Peter (2008). Management, Revised Edition. New York: Collins Business. pp. 13.
- ^ Drucker, Peter (2008). Management, Revised Edition. New York: Collins Business. pp. 14.
- ^ Drucker, Peter (2008). Management, Revised Edition. New York: Collins Business. pp. 15–16.
- ^ "Business and Financial Occupations". www.bls.gov. U.S. Department of Labor. Retrieved 18 September 2015.
- ^ "Management Occupations". www.bls.gov. U.S. Department of Labor. Retrieved 18 October 2015.
- ^ Gavett, Gretchen (23 September 2014). "CEOs Get Paid Too Much". Harvard Business Review. Retrieved 18 September 2015.
- ^ "Entrepreneur: What It Means to Be One and How to Get Started". Investopedia. 1 May 2006. Retrieved 2 April 2023.
- ^ "What is entrepreneurship?". Stanford Online. 10 January 2022. Retrieved 2 April 2023.
- ^ "Starting a Business | Encyclopedia.com". www.encyclopedia.com. Retrieved 5 December 2021.
- ^ "Difference between businessman and entrepreneur". Define Business Terms. 19 March 2023. Retrieved 2 April 2023.
- ^ "The Difference Between An Industrialist, Businessman And An Entrepreneur". The Gritti Fund. 21 February 2019. Retrieved 2 April 2023.
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Businessperson
View on Grokipediafrom Grokipedia
A businessperson is an individual, particularly an owner or executive, who engages in commercial or industrial activities to transact business and generate profit.[1][2] Businesspersons drive economic activity by allocating resources—human, financial, and material—to produce goods and services that meet market demands, thereby creating value and sustaining cash flows.[3][4] In market economies, they respond to price signals and consumer preferences, fostering competition that enhances productivity and innovation, while empirical evidence links their ventures to substantial job creation and GDP contributions.[5][6] Empirical studies highlight defining characteristics of successful businesspersons, including high openness to experience—manifesting as a preference for novelty and risk-taking—and traits like adaptability and decisiveness, which correlate with venture performance and opportunity recognition.[7] These individuals often navigate controversies such as regulatory burdens and labor disputes, yet their profit-oriented decisions have historically propelled industrialization and wealth accumulation, as seen in the expansion of private enterprise since the Industrial Revolution.[8][9]
Definition and Terminology
Core Definition
A businessperson is an individual who engages in commercial or industrial activities, typically as an owner, executive, or manager of a private enterprise aimed at generating profit through the production, distribution, or exchange of goods and services.[1][2] This role inherently involves risk-taking, resource allocation, and decision-making under uncertainty to create economic value, distinguishing it from mere employment in non-commercial contexts.[10] The term emerged as a gender-neutral designation, replacing or supplementing "businessman" or "businesswoman" to encompass both sexes without implying traditional gender roles in commerce.[11] Businesspersons often hold positions of authority, such as chief executives or proprietors, where they negotiate contracts, oversee operations, and pursue market opportunities, contributing to economic growth via innovation and capital investment.[12] Unlike public-sector administrators, their activities center on private-sector transactions driven by market incentives rather than governmental directives.[13] Empirical data underscores the prevalence of businesspersons in capitalist economies; for instance, in the United States, small business owners— a core subset of businesspersons—numbered approximately 33 million in 2023, employing nearly half of the non-government workforce and accounting for 44% of economic activity. This highlights their causal role in job creation and wealth generation, predicated on voluntary exchange and profit motives rather than coercive redistribution.Etymology and Synonyms
The term "businessperson" is a compound noun formed by appending "person" to "business," the latter deriving from Middle English bisinesse, ultimately from Old English bisig ("busy, occupied") combined with the suffix -ness, connoting a state of diligence or anxiety in affairs. This construction emerged as a gender-neutral alternative to "businessman," which first appeared in 1798 to describe a male engaged in commerce.[14] The Oxford English Dictionary records the earliest attestation of "businessperson" in 1834, in Niles' Weekly Register, reflecting early efforts toward inclusive terminology amid expanding 19th-century trade.[15] Its adoption gained traction in the late 20th century alongside broader linguistic shifts toward neutrality, supplanting gendered variants in formal and professional contexts.[1] Synonyms for "businessperson" vary by nuance and historical connotation, often denoting roles in ownership, management, or trade. Primary equivalents include entrepreneur (from French entreprendre, "to undertake," emphasizing risk-taking innovation since the 18th century), executive (a high-level decision-maker in organizations), and industrialist (focused on manufacturing and capital-intensive production).[16] Other terms such as merchant (a trader of goods, rooted in Latin merx "merchandise," dating to medieval commerce), capitalist (one employing capital for profit, popularized in the 19th century by economic theorists), and financier (specializing in funding and investment) overlap but highlight specific functions.[16] Less common but contextually apt synonyms include tycoon (from Japanese taikun, "great prince," adapted in 1857 for American magnates like Cornelius Vanderbilt) and magnate (implying industrial dominance, from Latin magnas "great"). These terms are not always interchangeable, as "entrepreneur" stresses initiation while "executive" implies oversight.[17]Historical Development
Ancient and Medieval Origins
In ancient Mesopotamia, commercial activity traces back to the Ubaid Period (circa 6500–4000 BCE), with local barter evolving into organized long-distance trade by the Uruk Period (circa 4000–3100 BCE), involving goods like textiles, metals, and grains transported via rivers and overland routes.[18] Merchants, often operating under state or temple auspices, served as tax farmers and procurement agents, amassing wealth through ventures documented in cuneiform tablets from the Ur III period (2112–2004 BCE).[19] Specific traders, such as Ea-nāşir during the reign of Hammurabi (circa 1792–1750 BCE), engaged in copper imports from the Gulf region, highlighting risks like quality disputes resolved via early contractual mechanisms.[20] Ancient Egyptian commerce paralleled Mesopotamian patterns, with state-directed expeditions sourcing timber, gold, and incense from Nubia and Punt as early as the Old Kingdom (circa 2686–2181 BCE), while private merchants handled Nile-based grain and linen exchanges.[21] In Greece, emporoi (traders) dominated maritime commerce from the Archaic period (circa 800–480 BCE), exporting olive oil, wine, and pottery to colonies across the Mediterranean and Black Sea, importing timber and grain to sustain urban centers like Athens.[22] Roman negotiatores extended these networks empire-wide by the 2nd century BCE, financing provincial trade in wine, olive oil, and slaves through associations (collegia) and early credit instruments, though societal elites often scorned commerce as beneath landed aristocracy.[23] Medieval Europe saw the resurgence of independent merchants amid feudal fragmentation, with Italian city-states like Venice and Genoa fostering maritime trade leagues by the 11th century, channeling spices, silks, and slaves from the Levant and Byzantium via the Mediterranean. Northern European traders formed the Hanseatic League around 1358, controlling Baltic grain, fish, and timber routes, while guilds in cities like Florence regulated crafts and commerce, elevating merchants to political influence.[24] Florentine families such as the Bardi and Peruzzi pioneered deposit banking and bills of exchange in the 13th–14th centuries, financing monarchs like Edward III of England and enabling capital accumulation that underpinned the Commercial Revolution.[25] This era marked a shift toward viewing businesspersons as societal drivers, contrasting ancient disdain, as trade volumes surged with Crusades-era contacts and monetary innovations.[26]Early Modern Expansion
The early modern period, spanning roughly the 16th to 18th centuries, marked a pivotal expansion in the scope and scale of business activities, as European merchants transitioned from localized medieval trade guilds to orchestrating global commerce amid the Age of Discovery. Driven by profit motives, businesspersons financed exploratory voyages to access lucrative spice routes and precious metals, bypassing Ottoman-controlled intermediaries. For instance, Portuguese merchants under figures like Vasco da Gama established direct sea links to India by 1498, enabling the importation of pepper and cloves that fetched prices up to 14 times higher in Europe than in Asia.[27] This era's business expansion was fueled by causal incentives: high risks of long-distance voyages necessitated pooled capital, while state-granted monopolies under mercantilist policies rewarded successful traders with exclusive rights, fostering proto-capitalist structures.[28] A cornerstone of this expansion was the emergence of joint-stock companies, which democratized investment by allowing multiple shareholders to fund high-risk enterprises while limiting personal liability. The Dutch East India Company (VOC), chartered on March 20, 1602, exemplified this innovation as the world's first publicly traded multinational corporation, raising 6.4 million guilders from 1,143 investors to monopolize Dutch trade in Asia.[29] The VOC's structure included quasi-sovereign powers, such as maintaining a fleet of 150 merchant ships, 40 warships, and 50,000 employees at its peak, enabling it to establish trading posts from Cape Town to Japan and generate dividends averaging 18% annually over two centuries.[30] Similarly, the English East India Company, incorporated by royal charter on December 31, 1600, pursued analogous goals, securing monopolies on British trade to the East Indies and amassing fortunes through exports of textiles, tea, and opium, which by the 18th century dominated global supply chains.[31] These entities shifted the businessperson's role from individual adventurers to corporate directors and investors, who managed risks through share diversification and state-backed enforcement. Financiers like the German Fugger family further propelled this expansion by pioneering advanced banking practices that supported imperial ventures. Originating as Augsburg textile merchants, the Fuggers under Jakob Fugger (1459–1525) evolved into Europe's dominant bankers by the early 16th century, lending over 2 million florins to Holy Roman Emperor Maximilian I and financing Habsburg elections, including Charles V's 1519 imperial bid with loans secured by future American silver shipments.[32] Their operations spanned mining copper and silver in Tyrol and Hungary, trading in spices and silks via Venice, and innovating bills of exchange to facilitate cross-continental payments without physical coin transport. This financial infrastructure enabled monarchs to fund explorations and wars, while businesspersons like the Fuggers extracted concessions such as mining monopolies, amassing wealth equivalent to billions in modern terms and influencing European power dynamics.[33] Overall, early modern business expansion institutionalized profit-driven risk-taking, laying groundwork for sustained economic growth through integrated trade, finance, and colonial outposts, though often at the expense of local economies in Asia and the Americas.Industrial and Post-Industrial Eras
The Industrial Revolution, originating in Britain around 1760 and accelerating in the United States by the mid-19th century, elevated the businessperson from a primarily mercantile role to that of an industrial innovator and organizer of large-scale production. Entrepreneurs like Richard Arkwright established the first mechanized textile factories, such as Cromford Mill in 1771, which integrated water power, division of labor, and centralized management to achieve unprecedented output efficiencies.[34] Similarly, the partnership between inventor James Watt and financier Matthew Boulton scaled steam engine production from 1775 onward, enabling factories to operate independently of natural power sources and fueling mechanization across sectors like mining and textiles.[35] These figures demonstrated causal links between capital investment in technology and exponential productivity gains, with Britain's cotton industry output rising from 5 million pounds in 1780 to over 366 million pounds by 1830.[34] In the American Gilded Age (circa 1870–1900), businesspersons consolidated industries through vertical and horizontal integration, creating vertically controlled supply chains from raw materials to distribution. John D. Rockefeller's Standard Oil, incorporated in 1870, exemplified this by acquiring refineries and pipelines, capturing 90% of U.S. oil refining capacity by the 1880s via aggressive pricing and exclusive railroad deals.[36][37] Andrew Carnegie applied similar strategies in steel, leveraging the Bessemer converter process to produce rails at one-third the prior cost; his Carnegie Steel Company, founded in 1873, generated $40 million in annual profits by 1900 and supplied infrastructure for railroads spanning 200,000 miles of track.[38][39] J.P. Morgan facilitated this era's financing, orchestrating mergers like U.S. Steel in 1901, the first billion-dollar corporation, which underscored the businessperson's pivot to finance-driven consolidation.[40] While critics labeled these "robber barons" for labor suppression and monopolistic practices—such as wage cuts during the 1892 Homestead Strike—their enterprises empirically correlated with U.S. GDP growth from $98 billion in 1870 to $518 billion by 1900 (in constant dollars), alongside urbanization rates doubling to 40% of the population.[37][40] The post-industrial era, emerging post-World War II and solidifying by the 1970s in developed economies, redefined businesspersons as stewards of knowledge-intensive services, where the tertiary sector overtook manufacturing to comprise over 70% of GDP in nations like the U.S. by 2000.[41] This shift prioritized intangible assets like software, data, and R&D over physical factories, with business leaders focusing on scalable digital models and global value chains rather than raw extraction. Sociologist Daniel Bell's 1973 framework highlighted theoretical knowledge as the axial principle, driving policy and innovation in sectors like information technology.[42] For instance, professional managers in conglomerates emphasized human capital development and automation, as seen in General Electric's pivot under Jack Welch from 1981, where market share in core businesses rose from 0.5% to 9% by streamlining operations and investing in tech acquisitions.[43] In this phase, businesspersons increasingly operated as venture-backed innovators in high-tech ecosystems, with Silicon Valley exemplifying the transition: venture capital investments surged from $2.3 billion in 1980 to $100 billion by 2000, funding scalable firms over capital-intensive ones.[43] Characteristics included a premium on adaptability to rapid technological change, such as Microsoft's evolution under Bill Gates from software licensing in 1975 to cloud services, yielding a market cap exceeding $2 trillion by 2021 through IP monetization rather than hardware dominance. Empirical data links this era's emphasis on services to productivity gains, with U.S. non-manufacturing output contributing 80% of economic growth from 1990–2010, though it introduced challenges like skill polarization and offshoring.[41][42] Unlike industrial tycoons' asset-heavy empires, post-industrial leaders navigated regulatory scrutiny and stakeholder pressures, fostering ecosystems where knowledge workers—comprising 60% of the U.S. workforce by 2020—drove causal value creation.[43]Classifications and Functions
Entrepreneurs and Innovators
Entrepreneurs are individuals who identify market opportunities, organize resources such as capital and labor, and assume the financial risks of establishing and operating new business ventures with the aim of generating profit.[44] This role involves coordinating factors of production to create value where none previously existed, often under conditions of uncertainty.[45] Unlike mere managers, entrepreneurs bear the potential for loss personally, distinguishing them as agents of economic change who disrupt static equilibria by reallocating resources toward higher productivity uses.[44] In economic theory, entrepreneurs function as intermediaries who translate technological inventions or ideas into marketable products and services, thereby bridging the gap between innovation and commercial viability.[46] They perform critical tasks including opportunity recognition, business planning, and scaling operations, which collectively drive resource efficiency and market expansion. Empirical analyses across multiple countries indicate that higher entrepreneurial activity correlates positively with GDP growth rates, as new ventures introduce efficiencies and stimulate competition that erodes inefficiencies in incumbent firms.[47] [4] For instance, studies of 74 economies show that entrepreneurial entry not only creates jobs—accounting for a disproportionate share of net employment gains—but also elevates overall productivity through competitive pressures.[6] [4] Innovators, as a subset or complement to entrepreneurs, focus on devising novel solutions such as improved processes, products, or organizational methods that yield competitive advantages.[48] While pure innovators may generate ideas without commercialization, business innovators integrate creativity with execution to implement changes that enhance value creation, often overlapping with entrepreneurial functions in practice. This distinction underscores that innovation provides the substance—new technologies or models—while entrepreneurship supplies the mechanism for market adoption and risk management. Research highlights that innovative entrepreneurship accelerates economic development by fostering "creative destruction," where superior alternatives supplant obsolete ones, leading to sustained productivity gains and welfare improvements.[49] [50] Successful entrepreneurs and innovators exhibit traits such as perseverance, calculated risk tolerance, and a capacity for adaptive decision-making under uncertainty, enabling them to navigate failures and pivot toward viable paths.[51] These attributes facilitate the mobilization of teams and investors, crucial for transforming concepts into scalable enterprises. Cross-country evidence confirms that regions with robust entrepreneurial ecosystems—characterized by supportive policies and access to finance—experience amplified growth, as innovators-turned-entrepreneurs channel ideas into tangible economic output.[52] [53]Executives and Managers
Executives and managers represent a primary functional category of businesspersons in mature organizations, emphasizing the coordination, optimization, and execution of established operations to maximize value for owners or shareholders, in contrast to the risk-taking innovation of entrepreneurs. Executives, typically the C-suite leaders such as chief executive officers (CEOs), chief financial officers (CFOs), and chief operating officers (COOs), hold ultimate accountability for an organization's overall success, including strategy development, resource deployment, and performance delivery.[54][55] Their roles demand integrating cross-functional decisions, anticipating market shifts, and aligning teams toward long-term objectives, often through habits like prioritizing high-impact routines across six core areas: vision-setting, culture-building, talent allocation, and risk management.[56] Managers, positioned at operational or middle levels, focus on tactical implementation, supervising employees, processes, and departmental goals to ensure efficiency and compliance with executive directives; they manage managers in larger firms, bridging strategic intent with daily execution.[57] This distinction arises empirically from role scope: executives address enterprise-wide patterns and leverage influence for systemic change, while managers handle localized oversight and performance metrics.[58] Transitioning from manager to executive requires evolving from detail-oriented control to broader analytic leadership and expertise deployment.[59] Effective executives and managers drive measurable firm outcomes, with studies showing that people-focused performance management—emphasizing clear goals, feedback, and development—renders companies 4.2 times more likely to outperform competitors, alongside 30% higher revenue growth and sustained total returns to shareholders.[60] Organizational-level adoption of positive management practices, such as empowering decision-making and fostering accountability, correlates positively with profitability, as evidenced by analyses of firm financials controlling for industry and size factors.[61] Conversely, deficiencies in these roles, like misaligned incentives or poor coordination, undermine productivity, underscoring their causal role in value creation through disciplined resource use and adaptive governance.[62]Investors and Financiers
Investors are individuals or entities that allocate capital to businesses or assets with the expectation of financial returns, such as through equity appreciation, dividends, or interest.[63] This role involves evaluating opportunities based on potential profitability and risk, often without direct involvement in daily operations.[64] Financiers, while overlapping, typically emphasize arranging and managing debt financing or complex financial structures, distinguishing them from pure equity investors by focusing on loans or advisory services in capital raising.[65] Key functions include efficient capital allocation, where investors channel savings into productive investments, bridging the gap between surplus funds and capital-needy enterprises.[66] They perform due diligence on business viability, market conditions, and management teams to minimize losses and maximize yields, thereby supporting venture growth and innovation.[67] In financial markets, their activities facilitate price discovery, liquidity provision, and risk transfer, essential for broader economic stability and expansion.[68] Subtypes encompass angel investors, who provide early-stage funding to startups often from personal wealth; venture capitalists, managing pooled funds for high-risk, high-reward equity stakes in emerging companies; and institutional investors like pension funds or mutual funds, deploying large-scale capital across diversified portfolios.[69] Investment bankers, as financiers, underwrite securities issuances and advise on mergers, enabling firms to access public markets for funding.[63] These actors assume significant risks, including principal loss, but their capital infusion has historically driven technological advancements, with venture capital alone funding disproportionate shares of unicorn companies.[69] Economically, investors and financiers enhance resource efficiency by directing funds to ventures with superior returns, fostering job creation and productivity gains over inefficient alternatives like government allocation.[70] Empirical evidence links robust investment activity to GDP growth, as seen in periods of active equity markets correlating with accelerated business formation and innovation rates.[71] However, misallocations, such as during asset bubbles, can amplify downturns, underscoring the need for prudent risk assessment.[68]
Essential Attributes
Key Skills
Successful businesspersons demonstrate proficiency in cognitive and interpersonal skills that enable value creation amid uncertainty, as evidenced by systematic reviews of entrepreneurial studies spanning 2012–2022. These include opportunity recognition through innovativeness, which facilitates identifying market gaps and novel solutions, appearing in 12 analyzed studies as a predictor of both intention and success. Self-efficacy, found in 24 studies, underpins the confidence to execute ventures by overcoming obstacles, while a internal locus of control, noted in 16 studies, empowers individuals to attribute outcomes to personal actions rather than external forces, enhancing persistence and adaptability.[72] Strategic decision-making forms a cornerstone skill, involving anticipation of trends, interpretation of ambiguous data, and timely choices under risk, derived from analyses of over 20,000 executives. This encompasses challenging assumptions to foster innovation and aligning stakeholders for execution, as leaders who master these elements outperform peers in dynamic environments. Financial acumen, including budgeting, investment analysis, and cash flow management, is critical for sustainability, with empirical links to venture longevity in case studies emphasizing technical proficiency alongside risk-taking.[73][74] Interpersonal skills such as negotiation, networking, and team leadership amplify these capabilities by securing resources and talent. Conscientiousness, a trait enabling disciplined execution and reliability, correlates strongly with success in 22 studies, supporting effective delegation and conflict resolution. Need for achievement, evident in 13 studies, drives goal-oriented behaviors that sustain long-term performance, distinguishing high-impact businesspersons from others.[72]Psychological and Behavioral Traits
Businesspersons, encompassing entrepreneurs, executives, and investors, demonstrate empirically validated psychological traits that correlate with professional success, as measured by frameworks like the Big Five personality model. Meta-analyses reveal that conscientiousness—encompassing traits such as self-discipline, organization, and achievement orientation—exhibits the strongest positive association with entrepreneurial outcomes, including startup survival and earnings growth, with effect sizes indicating up to 20-30% variance explained in performance metrics across samples of over 10,000 individuals.[75][76] Openness to experience, marked by creativity and intellectual curiosity, similarly predicts innovation propensity and venture founding, with entrepreneurs scoring 0.5-1 standard deviation higher than non-entrepreneurs in large-scale reviews.[77][78] Extraversion facilitates leadership and resource mobilization, correlating positively with business creation rates in cross-national data from 2000-2020.[79] Lower neuroticism, reflecting emotional stability and stress resilience, distinguishes effective business leaders from managers, reducing failure risk by enabling decisive action amid uncertainty, as evidenced in longitudinal studies tracking firm performance over 7 years.[80] Agreeableness tends to be subdued, potentially aiding negotiation and competition but risking relational strains, with meta-analytic evidence showing negative links to earnings in high-stakes roles.[76] Beyond the Big Five, traits like internal locus of control—belief in personal agency over outcomes—and high need for achievement drive entry into business, with self-efficacy scales predicting 15-25% of variance in entrepreneurial intent per theory-of-planned-behavior models tested on thousands of participants.[79][72] Behaviorally, successful businesspersons exhibit persistence and calculated risk tolerance, with novelty-seeking and perseverance outperforming general populations in temperament assessments of over 5,000 leaders, linking to higher firm growth rates.[81] Innovativeness, operationalized as proactive opportunity recognition, underpins adaptability, as corroborated by reviews synthesizing post-2000 data showing its causal role in scaling ventures.[78] These traits, while adaptive for economic contributions, vary by context; for instance, high conscientiousness buffers against post-2020 disruptions, per analyses of founder data during economic volatility.[82] Empirical patterns hold across sectors, though self-reported measures in studies warrant caution due to potential overconfidence biases inherent to the population.[83]Economic and Societal Impacts
Job Creation and Growth Contributions
Businesspersons, particularly entrepreneurs and executives, drive job creation primarily through the establishment and expansion of firms that require labor to produce goods and services. Empirical analyses indicate that young and small firms, often initiated by individual businesspersons, account for the majority of net new job creation in advanced economies. For instance, in the United States, startups and high-growth young firms contribute approximately 20 percent of gross job creation, with young firms responsible for nearly all net employment gains over business cycles.[84] This dynamic stems from the causal mechanism where businesspersons identify unmet market needs, allocate capital efficiently, and scale operations, thereby necessitating hires to sustain growth.[85] Data from the U.S. Bureau of Labor Statistics reveal that small businesses—defined as firms with fewer than 500 employees and frequently led by owner-operators—generated 55 percent of total net job creation between 2013 and 2023, encompassing over 12 million positions.[86] From the first quarter of 2021 through the second quarter of 2024, these entities accounted for 52.8 percent of net job gains, outpacing larger firms despite comprising the vast majority of businesses.[87] The U.S. Small Business Administration reports that small firms added 12.9 million net new jobs from 1998 to 2023, representing 66 percent of total employment expansion during that period.[88] Post-2019 recovery data from the U.S. Department of the Treasury further underscore this, with small businesses contributing over 70 percent of net new jobs amid economic rebound.[89] Beyond raw numbers, businesspersons foster sustained growth by innovating processes and products that enhance productivity, enabling firms to hire more workers over time. Research from the Kauffman Foundation highlights that entrepreneurial ventures, by disrupting stagnant markets, generate disproportionate employment effects relative to their initial size.[85] Investors and financiers among businesspersons amplify this through capital provision, funding scalable enterprises that transition from minimal staffing to substantial payrolls; for example, venture-backed startups have historically driven clusters of high-wage jobs in sectors like technology. However, not all businesspersons yield equivalent impacts: studies show that while the average new firm creates few net jobs in its early years, a subset of high-performing entrepreneurs accounts for the bulk of gains, underscoring the role of skill and market timing in causal outcomes.[90][91] Executives in established firms contribute to job growth by optimizing operations and pursuing expansions, often retaining and adding positions through efficiency gains rather than solely new hires. Aggregate evidence suggests that businesspersons' decisions on investment and risk-taking underpin broader economic dynamism, with entrepreneurship correlating positively with GDP growth via employment multipliers.[4] This contrasts with critiques attributing job creation to public policy alone, as firm-level data affirm private initiative as the primary vector.[84]Innovation and Productivity Effects
Businesspersons, especially entrepreneurs and innovators, catalyze technological advancements and process improvements that elevate productivity across economies. Empirical analyses indicate that innovative entrepreneurship correlates positively with per capita economic growth, as new ventures introduce disruptive technologies and services that incumbents must emulate or surpass, embodying Joseph Schumpeter's concept of creative destruction.[92] [93] A synthesis of 102 studies affirms that such entrepreneurial activity drives industrial dynamics, with entry of high-growth firms accelerating reallocation of resources toward more efficient producers, thereby boosting aggregate productivity.[93] For instance, in the United States, sustained entrepreneurial breakthroughs have underpinned approximately 2% annual real per capita income growth since the mid-20th century, primarily through innovations in sectors like information technology and manufacturing.[94] Executives and managers within established firms further amplify these effects by implementing operational efficiencies and scaling innovations, often drawing on entrepreneurial insights to refine production methods. Research demonstrates that firm-level investments in research and development (R&D), directed by business leaders, account for a significant portion of productivity variance; for example, NBER investigations link technological adoption by managers to industry-specific productivity surges, such as the 1990s IT-driven boom that raised U.S. multifactor productivity growth by over 1 percentage point annually.[95] [96] Productivity growth serves as a direct metric of such innovation, distinguishing it from mere replication, with evidence showing that business-led R&D reallocations yield sustained gains rather than transient outputs.[97] Investors and financiers enable this cycle by allocating capital to high-potential ventures, mitigating funding barriers that stifle innovation. Cross-country studies reveal that productive entrepreneurship, fueled by venture capital from business financiers, exhibits a positive interactive effect with economic expansion, particularly in innovation-driven economies where such investments correlate with higher total factor productivity.[98] Microeconomic evidence from creative destruction processes further substantiates that entry by capital-backed entrepreneurs disrupts low-productivity incumbents, fostering net productivity increases; recessions, for instance, amplify this reallocation, with empirical models confirming intertwined productivity-enhancing mechanisms.[99] Overall, these roles collectively underscore businesspersons' causal contribution to long-term prosperity, though outcomes depend on institutional environments favoring competition over protectionism.[4]Controversies and Critiques
Prevalent Criticisms
Critics contend that businesspersons, especially top executives, perpetuate economic inequality through outsized compensation packages that diverge sharply from worker earnings. In 2024, the median CEO-to-worker pay ratio in S&P 500 companies reached 192:1, with CEOs earning millions while the median employee compensation stood at $85,419.[100] This disparity, documented via SEC-mandated disclosures, is argued to reflect rent-seeking behavior rather than merit, as executive pay has risen faster than firm performance or productivity gains in many sectors.[101] Worker exploitation remains a focal point of critique, with businesspersons accused of prioritizing profits over labor rights in global supply chains. The International Labour Organization estimates 17.3 million people endure forced labor in the private sector, often linked to corporate outsourcing for cost reduction.[102] Empirical studies highlight risks in industries like apparel and electronics, where subcontractors impose debt bondage and unsafe conditions, with only 14% of major brands disclosing forced labor incidents from 2016 to 2024 despite regulatory pressures.[103] Such practices, critics assert, stem from business leaders' decisions to minimize oversight for competitive edges, evading accountability through complex international networks. Environmental degradation draws ire for businesspersons' roles in driving emissions and resource depletion without adequate mitigation. Corporations account for the bulk of global greenhouse gas emissions, with studies equating carbon damages to up to 44% of some firms' profits when monetized.[104] Research indicates environmental intensity—impacts as a share of sales—averages 2% across organizations, yet many prioritize expansion over reduction, responding minimally to public or regulatory pressure unless it threatens revenue.[105] [106] Further rebukes target monopolistic tendencies and policy influence, where businesspersons allegedly stifle competition and skew governance. Antitrust actions, such as the FTC's 2023 suit against Amazon for illegally maintaining monopoly power through predatory tactics, exemplify claims of market dominance harming consumers via higher prices and reduced innovation.[107] Concurrently, corporate tax avoidance via profit-shifting to havens costs governments $500–600 billion annually, enabling business leaders to underpay on earnings while benefiting from public infrastructure.[108] Lobbying expenditures, often funneled by executives, are criticized for distorting policy toward short-term corporate gains, as evidenced by persistent influence on regulations favoring incumbents over broader economic welfare.[109]Evidence-Based Defenses
Entrepreneurs, as a subset of businesspersons, have been empirically linked to substantial net job creation, countering assertions of systemic exploitation through unemployment or underemployment. High-growth startups founded by such individuals account for approximately 50% of new job generation in the United States, often expanding into new markets and spurring ancillary economic activity. [110] Seminal analyses, including Birch's 1979 study reaffirmed in subsequent research, demonstrate that small and young firms—typically led by businesspersons—drive the majority of job growth, with productive entrants absorbing labor from less efficient incumbents and even creating positions from unemployment pools at rates of 20-60%. [111] [90] Innovation propelled by businesspersons addresses critiques of stagnation or profit prioritization over societal benefit by enhancing productivity and overall economic performance. Peer-reviewed evidence confirms that entrepreneurial introduction of new technologies, products, and services boosts GDP growth through heightened competition, which disciplines inefficient firms and delivers lower prices and improved quality to consumers. [4] [112] Economists broadly concur that technological innovations, frequently originating from business-led ventures, serve as a primary engine of sustained economic expansion and improved human welfare, with dynamic panel analyses across countries showing positive causal links from innovation metrics to per capita income gains. [113] Criticisms framing businesspersons as drivers of inequality are mitigated by data illustrating how their activities foster broad-based prosperity rather than zero-sum extraction. Cross-country correlations reveal no robust negative relationship between income dispersion and subsequent growth rates, implying that entrepreneurial wealth accumulation often coincides with expanded opportunities and absolute income rises for lower quintiles via spillover effects like job access and technological diffusion. [114] In sectors dominated by business innovation, such as information technology, productivity surges have historically outpaced inequality concerns by enabling scalable efficiencies that reduce costs and elevate living standards economy-wide. [115]Modern Contexts and Trends
Globalization and Digital Shifts
Globalization has enabled businesspersons to extend operations across borders, tapping into diverse markets and optimizing supply chains for cost advantages. By facilitating cross-border trade and investment, it has lowered barriers for entrepreneurs to establish international ventures, with empirical studies indicating that globalization promotes business activity through broader market access and intensified competition.[116] This expansion diversifies revenue streams and mitigates risks tied to single-market reliance, as businesspersons leverage global opportunities to scale enterprises.[117] For example, advancements in trade liberalization since the late 20th century have sustained exported goods at approximately 25% of global output, supporting ongoing integration of business operations worldwide.[118] In the 2020s, despite projections of subdued global growth averaging around 3% annually—the lowest in half a century—businesspersons continue to pursue expansion amid regionalization trends, adapting to geopolitical shifts like supply chain reconfigurations.[119] [120] These dynamics compel leaders to balance opportunities in emerging economies with risks such as regulatory variances and currency fluctuations, yet the net effect remains an enlargement of entrepreneurial scope beyond domestic constraints.[121] Digital shifts have revolutionized businessperson roles by integrating technologies like artificial intelligence and cloud computing into core operations, driving efficiency and innovation. This transformation reshapes business models, allowing leaders to accelerate growth and enhance competitiveness through data-driven decisions.[122] Entrepreneurial leadership in digital environments correlates with improved firm success, as it fosters adaptability in rapidly evolving markets.[123] Empirical data underscore this impact: business e-commerce sales surged nearly 60% from 2016 to 2022 in countries representing three-quarters of global GDP, reflecting how digital platforms empower businesspersons to reach international customers without traditional infrastructure.[124] The digital economy's projected contribution of $60 trillion in revenue by 2025 further highlights its role in amplifying entrepreneurial ventures, particularly in platform-based models that democratize access to global audiences.[125] Together, globalization and digitalization create a synergistic environment where businesspersons navigate a flattened world, prioritizing technological agility and cross-border strategies for sustained viability.[126]Post-2020 Entrepreneurial Surge
Following the COVID-19 pandemic, new business formations in the United States experienced a marked surge, with applications reaching nearly 4.5 million in 2020—a 24.3 percent increase from 2019's 3.5 million.[127] [128] This trend persisted, with 5.5 million applications filed in 2023 and an average of 430,000 per month in 2024, representing a 50 percent rise over pre-pandemic levels.[129] [89] Globally, 92 percent of economies reported increased new firm registrations in 2021 compared to prior years, driven by similar disruptions.[130] The Kauffman Indicators tracked the U.S. rate of new entrepreneurs at 0.46 percent in 2020 before a slight decline to 0.36 percent in 2021, still elevated above the 1996–2019 average of 0.30 percent.[131] [132] Causal factors included pandemic-induced shifts in labor markets, where lockdowns and remote work enabled individuals to pursue independent ventures with lower entry barriers via digital platforms.[133] Government stimulus payments, totaling over $800 billion in U.S. economic impact relief by mid-2020, provided initial capital for many starters, particularly non-employer firms in gig and service sectors.[134] Elevated unemployment rates, peaking at 14.8 percent in April 2020, prompted necessity-based entrepreneurship, though opportunity-driven starts also rose amid perceived gaps in e-commerce and health services.[135] Enhanced digital tools and low-interest environments further reduced startup costs, with applications for high-propensity employer firms increasing 50 percent from 2019 to 2020.[127] Demographic shifts marked the surge: new entrepreneurs included higher shares of women (from 23 percent pre-2020 to 35 percent in 2020–2021), Black Americans (around 10 percent of new starts in 2021), and immigrants.[136] Sectors like online retail and professional services dominated, reflecting adaptations to remote economies, though many ventures remained solo operations with limited job creation.[134] Early survival rates improved to 81.7 percent for 2021 startups, up from 2020, as economic recovery stabilized operations.[137]| Year | U.S. New Business Applications (millions) | Year-over-Year Change |
|---|---|---|
| 2019 | 3.5 | - |
| 2020 | 4.5 | +24.3% |
| 2023 | 5.5 | Continued elevation |