- SOME CHARACTERISTICS or SELECTED

ENTREPRENEURS

Thésis for the Degree of Ph. D.‘ I
MICHIGAN STATE UNIVERSITY .

John Louis KomiVes

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SOME CHARACTERISTICS OF SELECTED
ENTREPRENEURS '

presented by

John Louis Komives

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ABSTRACT

SOME CHARACTERISTICS OF

SELECTED ENTREPRENEURS
by John Louis Komives

This thesis analyzes and reports the findings of a study of
the administrative organization patterns of 36 recently formed new
enterprises. These firms were all founded after 1946 in three com—
munities in the State of Michigan. The founders of these firms were
meticulously interviewed, and the lengthy reports were analyzed to learn
about the founder of the firm himself as well as the nature of the en—
terprise which he created. All firms were successful in that they
had survived at least four full years prior to the time of the inter—
views. Data were obtained about the early history of the firm, its
present organizational structure, its pattern for handling its affairs,
its plans for the future; in addition, personal histories of the foun-
ders plus the occupations and educational histories of the fathers of
the entrepreneurs were obtained.
The data on the business firms were catalogued according to a
six-point scale developed by Richard Hall,l namely:
1. A Division of labor based upon functional
specialization
2. A well—defined hierarchy of authority

3. A system of rules covering the rights and
duties of positional incumbents

4. A system of procedures for dealing with
work situations

5. Impersonality of interpersonal relations

6. Promotion and selection for employment
based upon technical competence.

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John L. Komives

-2_

The firms were then distributed along a continuum from the least
bureaucratic to the most bureaucratic. It was found that four classes
were pertinent: Craftsmen Class I and Class II, and Organizational Class
II and Class I. Class II in both cases was somewhat diluted from either
pole position. Of the 17 firms classified as Craftsmen, 11 were of the
Class I variety, and the remainder were of the Class II variety. Of the
17 Organizational Firms, only 8 were of the Class I variety, and 9 were
Class II.

A grading of the founders themselves by means of ”Social Class
Characteristics” (developed by Professor W. Lloyd Warnerz) was reveal-
ing. This was accomplished by using occupational and educational at—
tainments of the firm founder. Similar attainments of the fathers of
these same founders were also catalogued. Classification into ”blue-
collar" and "white—collar" social Class characteristics and values in—
dicated that blue—collar people have significantly less formal education
and less managerial work experience. White~collar founders have much
higher educational attainments and much more managerial experience.

The major hypothesis of this thesis is that business firm founders
with "blue-collar" backgrounds tend to develop business organizations
with the least bureaucratic tendencies, and that ”white-collar" back-
grounded business firm founders tend to create firms which have many
more bureaucratic appurtenances. Without exception, only blue—collar
peOple were founders of Class I Craftsmen firms, and only white—collar
people were founders of Class I organizational firms. In Class II firms

there was very little mixing. The hypothesis was proved.

John L. Komives

-3-

Bureaucracy is a model which is primarily concerned with ration-
ality, with ordering the affairs of men, with optimizing within the
total cultural milieu, with the specialization and complementarity of
work and effort. In its ideal sense, it lays down a set of principles
on how work is to be performed, by whom, under whose direction, and,
finally, how the whole effort is to be coordinated to achieve some dis-
tinctive objectives. Bureaucracy is concerned with relationships, both
internal and external. In this regard, craftsmen entrepreneurs were
found to be disruptive of the general process towards ideal bureaucracy,

whereas the organizational entrepreneurs were found to be facilitative.

A *4 4 WW A A__

1Richard H. Hall, ”The Concept of Bureaucracy: An Empirical As-
sessment," The American Journal of Sociology, LXIX (July 1963), pp. 32—40.

2W. Lloyd warner, Marchia MEeker, and Kenneth Eells, Social Class

in America: The Evaluation of Status (New York: Harper Torchbooks, 1960),
pp. 34-430

 

SOME CHARACTERISTICS OF
SELECTED ENTREPRENEURS
by

John Louis Komives

A THESIS
Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of
DOCTOR OF PHILOSOPHY

Department of Menagement

1965

ACKNOWLEDGEMENTS

The author wishes to express his gratitude and affection to
Dr. Dalton E. MCFarland for admitting, teaching, and guiding him
throughout his studies, and especially for undertaking the enormous
task of advising him throughout this writing.

To Dr. David G. Moore for his confidence and insightful train-
ing and his patience in directing the overall research plan under
which this paper was instituted, this author is deeply grateful.

To Doctors Rollin H. Simonds, and Fred Wickert, the author offers
his thanks for assisting in providing fundamental training and insights
in industrial organization and their psychological aspects.

Thanks are also given to Doctors Darab Unwalla, Norman R. Smith
and Orvis Collins, who were colleagues and who were most instrumental
in forming some basic ideologies concerning both the study and its
analysis.

To the many faculty members, fellow students, administrative
staff, and friends, both at Michigan State University and Kalamazoo
College, the author acknowledges their encouragement and persistence
as being most instrumental in getting this work performed.

And finally to his family, and especially to his wife Margaret,
who suffered through the long hours and torment while the paper was

completed, the author expresses his deepest appreciation.

~ii-

Page
ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . ii
LIST OF TABLES . . . . . . . . . . . . . . . . . . . . . v
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . 1
Chapter
I. NATURE OF THE STUDY . . . . . . . . . . . . . 1
Significance of the Study
METHODOLOGY . . . . . . . . . . . . . . . . . 6
Sample Selection
Definition of Entrepreneur
Method of Interviewing
Analysis of Material
FURTHER DEFINITIONS AND CONCEPTS . . . . . . 12
Definition of a Firm
Bureaucracy
White—Collar vs. Blue-Collar Distinctions
HYPOTHESIS . . . . . . . . . . . . . . . . . 28
II. THE CRAFTSMAN ENTREPRENEUR . . . . . . . . . 30

TABLE OF CONTENTS

Craftsmen Entrepreneurs, Class 1
Craftsmen Entrepreneurs, Class 2
Portrait of Craftsmen Entrepreneurs
Work Experience

The Idea of Starting a Business
Preparatory Steps

Initial Capitalization

—iii-

Chapter

III.

IV.

APPENDICES

I

THE ORGANIZATION ENTREPRENEUR . . . . . .

Organization Entrepreneurs, Class 2
Organization Entrepreneurs, Class 1

O O 6].

Portrait of the Organization Entrepreneur

WOrk Experience

The Idea of Starting a Business
Prepatory Steps

Initial Capitalization

FURTHER COMPARISONS .

Time Perspective

Time and Survival

Control

Long-Range Planning Contrasted

Time and the Emergence of Bureaucracy

SUMMARY AND CONCLUSIONS . .

I.

II.
II.
IV.

BIBLIOGRAPHY .

Implications

Business Firm Operation in the united
States . .

National Polls . . .

Roster of Interviews . . . .

Alphabetical Listing of Interviewees .

... iv—

101

117

135
136
137
141

143

 

CHAPTER I
INTRODUCTION

THE NATURE OF THE STUDY

This thesis reports on a study of individuals who found new en-
terprises where they did not exist before. The entrepreneur is that
key man who embarks on a venture to bring together resources and out—
lets in a new combination. In this study, the term ”entrepreneur" or
"enterpriser" is used to identify the business founder, the man who at
least once in his lifetime has founded a new business.

One would suppose that schools of business have been frequently
occupied with the study of how businesses begin, but such is not the
case. Large scale enterprise and the tactical problems of advancing
technology occupy the main stream of effort. Yet all social institu-
tions began in very small efforts by men newly joined in cooperative
enterprise. Occasionally these businesses become large institutions,
others merely survive, and many fail or go out of business with the
demise of the principals. The essential fact is that an enterprise
is not a natural outgrowth of technological change or of happenstance.
It is the willed result of human effort.

Why do some men "will" to enterprise? The answer is not yet
clear, but social scientists are hard at work on some phases. It seems
evident that for some it is an avenue of upward social mobility. For

others, however, the motivations and outcomes seem to be something else.

-1-

Why is it that among those who endeavor to form a new enterprise
some succeed in that formation and some don't? Why is it that among
those who do succeed in forming an on-going enterprise some become
sovereign and persisting firms and others do not persist and wither
away? Students of business have shown that failure to persist is in-
timately connected with clear violations of good management practices,
such as adequate cost accounting, management controls, or nonaggressive
sales techniques, etc.1 However, the central question still remains:
why do the founders not recognize their failings, or, if they know,
why do they not wish to do something to correct them? Even in cases
where the timing and environment are very similar, some founders lead
comfortable lives in existing but nongrowing institutions, and others
infuse their enterprises with continuous growth and expansion. Here
again some studies in the social sciences are beginning to point the
way, but no conclusions are definitive.

All of the above questions have at their core the idea that
underlying the entire concept of new enterprises is the will and per—
sonality or Character of the entrepreneur. This pervasive quality of
the undertaker of enterprise, in his enterprise, seems to provide a
Clue for further investigation.

This study differs from previous studies of entrepreneurial ac-
tivity. Sociologists and historians have studied entrepreneurs, her—

alding their heartaches and triumphs, and noting their sociological

 

1William M. Hood and Peter Rosko, Management Factors Contributing
to the Success or Failure of New Small Manufacturers (Ann Arbor: Bureau
of Business Research, University of Michigan, 1964), pp. 8-9; and
warren W. Etcheson, A_Study of Business Terminations (Seattle: Univer—
sity of washington, Bureau of Business Research, 1962), pp. 25-26.

I.,~l .. __v..~~.\v:-—-9.:.¢ m -

-3-

background. However, they focus on the founder and not on the resulting
business enterprise. Even the Mayer and Goldstein study,2 which does
involve survival, does not relate the quality of business survival to
the character of the people studied.

On the other hand, Filley3 described the business conditions
needed for firm "take—off" after the initial survival had been achieved.
He pointed out, through elaborate case studies of five different firms,
the conditions for delegation of tasks, productive financial relation—
ships, controlled marketing arrangements, and the orderly arrangement
of people in various relationships. However, Filley does not indicate
that the character of the entrepreneur is also an essential ingredient
not only for bringing together these resources and conditions, but also
as the impelling force in the take-off process.

This study examines the ways in which the firm founder is both
the undertaker of the enterprise as well as the essential catalyst in
the take—off process. It is also concerned with the idea that the char-
acter of the catalyst will determine the character of the firm after
survival.

Economists have also looked at the process of founding business
firms, from various points of view. These studies have related entre-
preneurial efforts to laws of classical economic theory, treating the

entrepreneur as an opportunist, a rational profit maximizer. According

 

2Kurt B. Mayer and Sidney Goldstein, The First Two Years: Prob-
lems of Small Firm Growth and Survival (Washington, D.C.: Small Busi—
ness Administration, 1961), pp. 147—148.

 

3Alan C. Filley, A Theory of Small Business and Divisional
Growth (Ann Arbor: University Microfilms, Inc., 1962).

to Say, he is the one who

. unites all means of production—-the labor
of the one, the capital of the land of the others—-
and who finds in the value of the products which re-
sult from their employment the reconstitution of the
entire capital which he utilizes, and the value of
wages, the interest, and the rent which he pays, as
well as the profits belonging to himself.4

And, according to Dillard:

A prospective yield is what an entrepreneur expects

to obtain from selling the output of his capital as-
sets. There are two types of expectations regarding
the yields of assets: (1) short-term expectations and
(2) long—term expectations. Short—term expectations
concern the sales proceeds from the output of existing
plant. Long—term expectations concern the sales pro-
ceeds which an entrepreneur can hope to earn with vari—
ation in the size of the plant.

Edith Penrose cited another approach in an article entitled "Bio—
logical Analogies in the Theory of the Firm." Miss Penrose discusses

the suitability of biological models and the taxonomy of life cycles,

homeostasis, and mutation, etc., as a means of describing the theory

6

 

of the firm.
This study makes no such general classification but in contrast

views the entrepreneur in human and personal perspective as a man building

 

4Jean—Baptiste Say, Catechism of Political Economy (London: 1816),
pp. 22-29. [The first French edition appeared in 1815, cited by Arthur
H. Cole, "An Approach to the Study of Entrepreneurship," by Frederick
C. Lane and Jelle C. Riemersma in Enterprise and Secular Change (Home-
wood, Illinois: Richard D. Irwin, Inc., 1953), p. 183.].

5Dudley Dillard, The Economics of John Maynard Keynes (Englewood
Cliffs: Prentice—Hall, Inc., 1958), p. 143.

6Edith Penrose, "Biological Analogies in the Theory of the Firm,"
American Economic Review, XLII, No. 5 (December 1962).

-5-

and developing a business through the development of his unique charac-
teristics, the extension of his own personality as it relates to the
world of people and technology around him. He is a business manager
in the Filley sense, and he is also a social being in the Lewis or
Mayer and Goldstein sense. He is impelled by the culture to behave as
a rational maximizer in the classical economic sense.

This study will examine the point of view of the firm founder as
a human being and to that extent, as a product of his environment, ex-
hibits in his decisions and actions, his sensitivities, values, percep—
tions, control mechanisms, ability to deal with abstractions and pro—
jections, breadth of contact, insight, personal motivations, tensions,
and expectations. It will show that the managerial functions of plan—
ning, organizing and controlling within a framework of objectives are
also attributes of the founder. The system of human and productive
(technological) relationships is a result of both individual effort and

business administration.
Significance of the Study

Such a study is important because the founding of new businesses
is of vital importance in our dynamic society. New businesses on occa—
sion become the seed for later, much larger enterprises, or the grist
for new technology. Of concomitant importance is the outlet which new
firms provide for human feelings and skills which are not met in exist—
ing firms. In society, the importance of new enterprises is seen in the
notion that the oligarchy may be bloodlessly overturned and that there
is a potential place for administrative experimentation and new forms

of enterprise.

-6-

Of importance, too, is the nature of the new enterprise, not so
much for the new technique it offers but rather in the evaluation of a
new (additional) generational enterprise. Society has a vested in—
terest in it for employment, taxes, and diverse other reasons. Because
society places high value on innovation, growth and persistence (stabil—
ity), society is interested in the nature of the enterprise as it more
or less achieves short—run or long-run objectives.

Finally, the area of business administration needs further exami—
nation in terms of man (behavior) and systems (analysis and behavior)
relationships. Studies of management often are normative, and behavioral
scientists have frequently examined management largely in terms of what
is desirable rather than what actually exists. Hopefully, this research
has brought these elements closer together.

In another sense this study is dedicated to bringing about the
increasingly intensive study (in schools of business) of the nature of
new enterprises. Human motives, the conception and birth of the new
enterprise, the way it is shaped, the impact of the original character
of the enterprise and its short-run and long-run effects--are all legi-

timate areas of concern to the business school.

METHODOLOGY

 

Sample Selection

This thesis is an outgrowth of a major study of business enter-

7

prise sponsored by the Graduate School of Business Administration at

 

7Orvis F. Collins, David G. Maore, and Darab B. Unwalla, The
Enterprisinngan (East Lansing: Bureau of Business and Economic Re—

 

search, Michigan State University, 1964).

_7_

Michigan State University under a grant from the Small Business Adminis—
tration. The format of research, including lengthy depth interviews and
thematic apperception tests, content analysis, etc., was patterned after
Professor W. Lloyd warner's work.8

The author of this paper was a research associate in this parti—
cular project and much of his data, Opinion and conceptual organization
were derived from that study. Nondirective interviews of forty entre-
preneurs associated with thirty-six firms in the Detroit, Lansing, and
Benton Harbor metropolitan areas provided the basic data of this report.
These cities were chosen in order to examine the possibility of the dif-
ferences due to urban size or differing industrial complexes on the
style of entrepreneurship.

The firms were in the tool and die, metal working, machine and
fabricating, plastic and electronics industries (see Appendix III for
a roster of companies). The research design omitted service and mer-
chandising companies because of the difficulty of maintaining controlled
samples. To eliminate military production and differing population
selection, the sample included only those firms founded after WOrld
war II. All firms had been in business at least four years at the

time of the study.
Definition of Entrepreneur

In many firms it was difficult to identify the actual entrepre-

neur without considerable interviewing and observation. In a few cases

 

8W. Lloyd Warner and James C. Abegglen, Occupational Mobility in
American Business and Industry, 1928—1952 (Minneapolis: Minnesota Uni-
versity Press, 1955).

-8—

the actual entrepreneur was disguised as an administrator; in other cases
he had delegated that function. Therefore, a concept of the entrepre-
neur as a catalytic agent and promoter of the managerial team, a person—
ality which results in a fusion process, the role of a father in the
sense of biological conception, is necessary.

For the purposes of this paper, the definition of an entrepre-
neur may be stated as that person who has developed an on-going business
firm where none existed before.

In two cases there were four people intimately involved as a
team in the forming of the new enterprise. In one of these it became
clear that the eldest brother was the key man; however, in the other,
all four members of the team were crucial to the firm. In two other
cases there were two men in each firm who ran the company, but the in-
terviews indicated that a silent partner (in each case the Chairman of
the Board) seemed to wield Considerable influence, and the interviewers
were quite convinced that the interviewee was not the entrepreneur.
Therefore, for the purposes of this paper, another definition of the
entrepreneur is the team of persons which develops an on—going business
firm where none existed before.

Since success in an elusive and highly subjective concept, the
research team decided to consider all firms in the sample as success-
ful in that each had survived at least four years at the time of the
interviews in 1961. Whether the firm was as successful as it might be
or as the enterpriser wished it to be is another matter and will be men-
tioned later in this paper. On the other hand, there was a distinct

downturn in general business, and particularly in the automotive area,

-9_

commencing in 1958. All the firms in the sample had shown considerable

resilience in surviving that test of their success.

Mathod of Interviewing

 

This research was conducted by means of lengthy and generally un-
structured interviews. All the interviewers had extensive training in
business administration, including practical business experience. While
the interviews were not taped directly, they were recorded on tapes im—
mediately (from brief note outlines) after each interview. All of the
interviews cited or used in this paper were conducted by the author,
either individually or with one other research associate.

In general, each interview began with a short explanation of the
nature of the research project and a generalized statement of how the
information would be used. The respondent was then asked to tell how
he got where he is today, or how he happened to get into this business.

It is interesting to note that one group of entrepreneurs could
begin easily at some chronological point and proceed. Several began at
the present time and worked backward in an orderly fashion. Others began
at the point of birth and worked forward in retelling their life history.
Two began by giving only their business history and later, when they had
gained confidence, told something about their life history. In general,
respondents in this group talked rather easily about themselves, their
dealings, and their aspirations.

In contrast, another and by far larger group had difficulty be—

I

ginning. The comment, ”Gee, I don't know where to begin,‘ is typical

of this group. The usual response to this reply was, ”Why don't you tell

 

-10.-

us how you got into this business?” It seemed best to leave the personal
questions until later in the interview when confidence was restored. This
group also had considerable difficulty talking about their home lives,

and generally the interviewers had to ask specifically about wives and
background, fathers' occupations, schooling, etc. There was, on the

other hand, considerably more readiness to talk about certain technical
details that they had mastered.

The first group avoided too direct confrontation with the techni—
cal aSpects of their products or Operations. However, one founder in
this group began by asking the interviewer if he knew what a transducer
is, and upon a negative reply proceeded to give a succinct and explicit
explanation in lay terminology. He then launched into a two—and-a-half
hours detailed history, in complete reverse chronology.

There were four revisits to obtain additional data, and on three
occasions the use of the Thematic Apperception Tests offered a revisit
opportunity to obtain additional information. The findings from these

9

TAT protocols are consonant with the findings in this report.

Analysis of Material

To permit analysis of the data, the interviews were typed ver-
batim from the tapes, and each research associate given a c0py. The
transcripts were read and re—read many times, and were analyzed for themes
and repeated patterns. A broad cataloging of characteristics and beha—
viors or events was completed. The richness of the data was distilled

until it emerged into the skeleton of a report outline.

 

9Collins, Mpore and Unwalla, op. cit., pp. 65-67.

_11-

In time, the overall project under the grant from the Small Busi-
ness Administration developed in three distinct directions. The project
director decided that the major work of the project would be to publish
a book detailing many of the psychological and social-psychological
backgrounds of the entrepreneurs in the sample. The plan also called
for one researcher to write a paper on the relationship between patterns
of entrepreneurship and market growth.10 It was further planned that
this researcher would compare patterns of entrepreneurship and the re—
sulting organization patterns.11

Inasmuch as the interviewers and researchers were working closely
together, and even collaborating in obtaining the raw material, the con-
cepts and forms of analysis naturally were influenced by this interac—
tion. A pattern of on-going content analysis was developed so that
even the final data, the typed interviews, were to that extent contami—
nated. For an exploratory study such contamination was believed per—
missible as a cost of planning future studies.

The general method for handling mass interview data is to read and
re—read the protocols until some form or pattern emerges. This way of
classifying should preferably require other noncontaminated readers to
go through the same process and come up with substantially the same or—
dering of the data. Only in this manner does reasonable reliability
emerge. However, the research project was disbanded before such a pat-

tern was clearly discerned and a true test could be conducted.

 

10Norman R. Smith, The Entrepreneur and His Firm (East Lansing:
Michigan State University [Unpublished Ph.D. Thesis], 1965).

11Collins, Moore and Unwalla, 9p. cit., Footnote No. 2, p. 24.

-12..

Because of the nondirective nature of the interviews, a precise
cataloging of the data was not possible. However, interviews included
data in the following five general areas:

(1) The occupational history of the respondent.
This included early employment, development

of technical skills, supervisory skills, and,

finally, the entrance into his own business firm

as owner and manager.

(2) A survey of the enterprise from the respon—
dent's earliest recollection to the present

day. At this point some cataloging of financial,

sales and employment data was done.

(3) Data regarding family background as well as
current family status.

(4) Data regarding organizational patterns, es—
pecially troubled areas. This included
immediate officers, partners, and the seemingly
inevitable fight for control and including rela—
tionships with unions and/or rank and file labor

force.
(5) Whenever possible, the researchers obtained
data regarding future plans.

FURTHER DEFINITIONS AND CONCEPTS

This section will be concerned with definitions of a business
firm, and the distinctions between a bureaucratic firm and a nonbureau—
cratic firm. Distinctions between blue-collar and white-collar values
toward employment and firm formation will be made. In the final section
two major hypotheses will be advanced that will suggest the format of

the balance of this report.
Definition of a Firm

The enterpriser, having made a ”determination” to embark on forming

-13_

his own enterprise, then goes about seeking a way to establish himself.
The founder may begin developing his contacts (potential customers, sup-
plies, employees, and lenders), and even buying generalized machinery,
but his enterprise does not exist until the contacts are brought into
active transaction with the new firm.

The going concern is animated by real people, has a common pur—
pose of its own, exhibits a collective behavior unique to it, and is
"governed by common rules of its own making."12 AS Commons observed,
it is the combination of a ”going plant (a technological process of pro-
duction and consumption of physical things)” and a ”going business (a
process of buying and selling, borrowing and lending)” and is "made up
of action and reaction with nature's forces, and the transactions between
human beings according to accepted rules."13 The enterpriser must find
a customer for whom he can produce "goods or service"; he must be able
to fabricate and/or deliver it (implying skills and equipment); and he
must be able to finance his time, materials, and labor until he receives
payment from his customers.

The next stage is to develop corporate continuity. The corpora-
tion was so described by Chief Justice Marshall in his celebrated opinion
in the Dartmouth College case:

A corporation is an artificial being, invisible,
intangible, and existing only in contemplation of

law. Being the mere creature of law, it possesses
only those properties which the charter of its

 

12Richard Bells and Clarence walton, Conceptual Foundations of
Business (Homewood, 111.: Richard D. Irwin, Inc., 1961), p. 140.

13John R. Commons, Legal Foundations of Capitalism (New York:
The Macmillan Company, 1924), pp. 144—145.

-14_

creating confers upon it, either expressly, or
is incidental to its very existence. These are
such as are supposed best calculated to effect
the object for which it was created. Among the
most important are immortality, and if the ex-
pression may be allowed, individuality; proper-
ties by which a perpetual succession of many persons
is considered as the same, and may act as a single
individual. They enable a corporation to manage

its own affairs, and to hold property without the
perplexing intricacies, the hazardous and endless
necessity of perpetual conveyances for the purpose
of clothing bodies of men, in succession as indi-
viduals are capable of acting for the promotion

of the particular object, like an immortal being.14

Having registered the business the founder has enwrapped his efforts
into a corporate shell. Thus, like other institutions in society, there
is a legal sanction to do business and to conduct the affairs of the
enterprise as an entity. Some enterprisers can purchase a portion of
the shell, others can purchase the entire enclosure, but this study is
concerned with the erection of the shell from conception to birth and
survival. How the firm's founder went about carrying out his initial
transactions—-brought about the birth of his enterprise and fathered
its survival--are distinctions which may differ according to the notions,
values, perceptions and abilities of the founder and the peculiarities

of a particular industrial or technological system.

Bureaucracy

Bureaucracy, as the term is used herein, is a system used by men
to organize the work of men. It is an abstraction. It is used as a
model to describe the way an event passes in time, a willed event. It

does not describe the end product of that work, but merely the way in

 

14Dartmouth College vs. WOodward, 4 Wheaton 518 (1819).

_15-

which that work is done by human beings in large—scale organizations.
Max Weber described a bureaucratic organization by listing a series of
organizational attributes which, when present, would constitute the
bureaucratic form in its ideal sense. These included division of labor,
hierarchy of authority, extensive rules, separation of administration
from ownership, and hiring and promotion based on technical competence.
Other manifestations included a system of elaborate records, seniority
as influencing technical competence, and the notion of a career as a
lifelong sequence of positions leading to retirement remuneration, im-
plying also that work in a bureaucracy was a role or primary occupation.15

Not all organized work systems can be described as bureaucratic.
A kinship system in which additional people are employed to get a job
done may be organized on the basis of (l) the number of relatives who
need to be employed for wages and (2) having relatives organized into
work units by family system rather than on the basis of merit for work
performed or on the basis of a particular skill which that individual

16 Also in kinship systems there is no sense of

may bring to the job.
permanency in the sense of a career based upon skill or meritorious

work. People are continued as long as the organization can afford to
keep them, and rewards are based upon marriage, blood ties, ownership
or other mitigating systems. The specialization and rationalism of a

kinship system of work are not based upon impersonal methodology but

on some other means.

 

15Max Weber, The Theory of Social and Economic Organization, Trans.
by A. M. Henderson and Talcott Parsons (New York: Oxford University
Press, 1947). ‘

16Stanley H. Udy, Jr., "The Structure of Authority in Non-Indus—

trial Production Organizations," American Journal of Sociology (May 1959),
p. 582.

—16-

The cottage work system is also another way in which work may be
delegated. Here work is farmed out into small production units on the
basis of price or previous connection or contact. This system is highly
decentralized and usually unconditional and unstable in terms of work
performance. A bureaucracy, on the other hand, is much more highly
coordinated, centralized, rationalized and impersonalized than other
human organizations. The emergence of automation and high capital in—
vestments and equipment have Spurred the use of the bureaucratic model
in order to control the pay—back dollar. As mechanisms and technology
are becoming indigenous to underdeveloped countries, bureaucratic sys—
tems are being implemented in these countries, too.l7

Bureaucracy, however, needs some preconditions before it will be—
gin to move toward the ideal model as described by Weber. Some of these
conditions are: (1) an advancing technological pattern, (2) an accep—
tance within the cultural pattern that bureaucracy is the best method
for all concerned, (3) a divisionalization and specialization of labor
so that skilled specialists can be trained and employed, (4) an accep-
tance that life careers can be had in these specialties and that the
system will allow for movement ”up" through these career ladders and
eventual retirement, and, finally, (5) payment can be made in specie
rather than in barter. This is necessary so that work may be broken
down into its smallest units, and no one person need produce complete
units on which he needs to subsist. This last point relies heavily on

an integrated market system so the flow of goods and specie can be

facilitated.

 

17John M. Pfiffner and Frank P. Sherwood, Administrative Organi-
zation (Englewood Cliffs, N.J.: Prentice—Hall, Inc., 1960), pp. 212-213;
and Reinhard Bendix, Werk and Authority in Industry (New York: John
Wiley and Sons, Inc., 1956), Preface xx and xxi.

 

-17-

This discussion does not require that every firm or economic en-
deavor be so organized that the ideal characteristics inhere in that
organization. It merely indicates that endeavors of certain sizes and
organizational technologies are more susceptible to this pattern and
that the firm which better organizes for the prosecution of its busi—
ness is in a more desirable position to capitalize on its own advance.
This implies that competition may be a motivating agent in the progress
of bureaucracy along with technological advances.

In the ideal type bureaucracy, all the aforementioned characteris—
tics would be present to a high degree. A nonbureaucratized enterprise
would have a low degree of the aforementioned characteristics. Hall18
has devised a system to test the presence or absence of six Specific
characteristics of bureaucracy. These six items are listed as follows:

1. A division of labor based upon functional
specialization.
2. A well—defined hierarchy of authority.

3. A system of rules covering the rights and
duties of positional incumbents.

4. A system of procedures for dealing with
work situations.

5. Impersonality of interpersonal relations.
6. Promotion and selection for employment

based upon technical competence.1

He found that these dimensions are not necessarily all present in the

 

18Richard H. Hall, "The Concept of Bureaucracy: An Empirical
Assessment," The American Journal of Sociology, LXIX (July 1963),
pp. 32-40.

19Ibid., p. 33.

—18—

same degree in actual organizations. The bureaucratic concept would
appear to be rather a description of a series of dimensions ranged along
a continuum. Thus a highly bureaucratized firm would be one which at
least the six above items would tend to the pole which were strongly
positive. The negative pole would be a looser organizational; system
which is more "primitive.”20 It should be concluded, however, that
many firms will exhibit a strong emphasis of one or two or even three
of the above items, and that the remaining items will be essentially
negative. Here the total degree of bureaucracy will have to be esti—
mated based upon an insightful speculation. Later in the paper, the
firms represented in this thesis will be ranged along a continuum and
this ranging system is based upon an assessment of the ”total degree"

of ideal bureaucracy exhibited.
White—Collar vs. Blue—Collar Distinctions

The next definition concerns the distinction between blue-collar
sentiments and white-collar sentiments. Essentially, these distinctions
are derived from a classification of social class devised by Professor

21 and others. While a short description is inadequate,

W. Lloyd Warner
nevertheless a profile or portrait of the values and life style of this
working man is presented here to assist the reader in understanding the

definition mentioned below.

The blue-collar man or a man in the ”working class" is a regular

 

20Tbid., p. 38.

21W. Lloyd Warner, Marchia Meeker, and Kenneth Eells, Social
Class in America: The Evaluation of Status (New York: Harper Torch-
books, 1960), pp. 34-43.

-19-

member of the nonagricultural labor force in manual occupations. Ac-

cording to Miller and Riseman,22

-He is traditional, "old-fashioned," somewhat reli-
gious, and patriarchal. The worker likes discipline,
structure, order, organization and directive, defi-
nite (strong) leadership, although he does not see
such strong leadership in opposition to human, warm,
informal, personal qualities. Despite the inadequacy
of his education, he is able to build abstractions,
but he does so in a 31 w physical fashion. He reads
ineffectively, is poorly informed in many areas, and
is often quite suggestible, although interestingly
enough he is frequently suspicious of "talk” and
Vnew-fangled" ideas. He is family centered; most

of his relationships take place around the large,
extended, fairly cooperative family. Cooperation
and mutual aid are among his more important charac-
teristics. While desiring a good standard of living,
he is not attracted to the middle—class style of life
with its accompanying concern for status and pres-
tige. He is not class conscious, although aware of
class differences. While he is somewhat radical on
certain economic issues he is quite illiberal on
numerous matters, particularly civil liberties and
foreign policy. The outstanding weakness of the
worker is lack of education. Strongly desiring
education for his children, he shows considerable
concern for their school work, although he feels
estranged and alienated from the teacher and the
school, as he similarly feels alienated from many
institutions in our society. This alienation is
expressed in ready willingness to believe in the
corruptness of leaders and a general negative feel-
ing toward "big shots." He is stubborn in his ways,
concerned with strength and ruggedness, interested
in mechanics, materialistic, superstitious, holds

an "eye-for-an-eye" psyggology and is largely un-
interested in politics.

And again, one of

. . . the central determinants in the working class
life is the striving for stability and security.

 

22S.‘M.Miller and Frank Riesman, ”The Working-Class Subculture:
A New View," in Blue Collar World: Studies of the American Werker, Arthur
B. Shostak and William Gomberg, Eds. (Englewood Cliffs: Prentice-Hall,
Inc., 1964), p.26.

231bid., pp. 28—29.

-20-

External and internal factors promote instability
and insecurity. . . . The worker also has a tra-
ditional attitude toward discipline which may be
confused with authoritanism. While there are num-
erous areas about which workers are confused and
lacking an Opinion, there are important Spheres in
which they have definite convictions and are in-
deed highly intense. . . . Among sources Of this
intensity may be their physical (less symbolic)
relation to life, their person-centeredness and
their lack Of education. . . . In the bureaucratic
situation, the worker still tends tO think Of
himself as relating to peOple, not roles and in—
visible organizational structure. . . .24

With workers it is the end result Of action rather
than the planning of action or the preoccupation
with means that count. An action that goes astray
is not liked for itself; it has to achieve the goal
intended to be satisfactory. It is results that
pay Off. The pragmatic orientation Of workers
does not encourage them to see abstract ideas as
useful. Education, for what it does for one in
terms Of Opportunities, may be desirable but
abstract intellectual speculation, ideas which

are not rooted in the realities Of the present,
are not useful, indeed may be harmful. On the
other hand, workers Often have an exaggerated re-
spect for the ability of the learned. A person
with intellectual competence in one field is fre—
quently thought tO be a "brain" with ability in
all fields. . . . If a real Obstacle comes up,
they may expect the ”brain" to have a ready solu—
tion for it, even if they may not be willing to
adopt it.

Another component in workers' lives is apprecia-
tion Of excitement . . . news, gossip, new gad—
gets, and sports are frequently very attractive
tO workers. TO some extent, the consumership Of
workers, the desire to have new goods with their
television sets or new cars is part Of this ex-
citement dimension.2

Richard Hamilton, in an article entitled, "The Behavior and Values Of

Skilled WOrkers," questions the assertion that skilled and highly paid

 

2%;p;g., p. 31. 25Ibid., p. 32. 26Ibid., p. 33.

;21-
Workers tend tO assume middle-class values. He stated:

Given the fact that Skilled workers tend to
be the sons Of manual workers or Of farmers,
it is reasonable to assume that their value
will reflect these milieus. For this reason
the values and behavior Of the skilled worker
will be similar to the semi-skilled rather
than those Of the white collar workers. We
found that in the overwhelming majority Of
the comparisons made, the skilled worker
proved to be closer tO the semi-skilled in
their attitudes and behavior. 27

A second conclusion showed that skilled workers
also Show a degree Of independence in some re-
spects that suggest that they may form a semi-
autonomous status group which is in part iso-
lated from the rest Of the population and can
both set and force its own standards.28

In contrast tO the foregoing, C. Wright Mills defined the white—

collar group:

. their characteristic skills involve the
handling Of paper and money and people. They
are expert at dealing with peOple transiently
and impersonally; they are masters Of the com-
mercial, professional and technical relation—
ship. The one thing they do not do is live

by making things; rather, they live Off the
social machineries that organize and coordi-
nate the people who do make things. White-
collar people help turn what someone else

has made into profit for still another; some

Of them are closer to the means Of production,
supervising the work Of actual manufacture and
recording what is done. They are the people
who keep track; they man the paper routines
involved in distributing what is produced. They
provide technical and personal services, and
they teach others the skills which they themselves

 

27Richard S. Hamilton, "The Behavior and Values Of Skilled WOrkers,"
Blue Collar WOrld: Studies Of the American WOrker, Ed. Arthur B. Shostak
and William Gomberg (Englewood Cliffs: Prentice-Hall, Inc., 1964, p. 43.

281bid., p. 53.

fl

-22-

practice, as well as all other Skills transmitted

by teaching. . . . White—collar occupations now
engage well over half the members Of the American
Middle Class. . . . Today the three largest groups

in the white-collar stratum are school teachers,
sales people in and out Of stores, and assorted
office workers.30

The income averages showed that the lower white—collar
people--sa1es employees and Office workers—~earned
almost the same as Skilled workers and foremen, but
more than semi—skilled urban wage workers. In terms
Of property, white-collar peOple are in the same
position as wage workers. In terms Of occu ational
income they are ”somewhere in the middle.”3

C. wright Mills asserts that people in white-collar occupations

claim higher prestige than wage workers:

This fact has been seized upon with much justifi—
cation as a defining characteristic Of the white
collar strata, and although there are definite in—
dications in the United States Of the decline Of
their prestige, still, on a nation—wide basis, the
majority of even lower white—collar employeeS—-Office
workers and sales people-~enjoy a middling prestige.

The historic bases Of the white collar employee's
prestige, apart from superior income, have included
the similarity Of their place and type Of work tO
those Of the managerial classes which‘has permitted
them to borrow prestige. . . they have also bor-
rowed prestige from the firm itself. . . . In par-
ticular the fact that most white collar jobs has
permitted the wearing Of street clothes on the

job has also figured in their prestige claims as
have the skills required in most white-collar jobs,
and in many Of them the variety Of Operations per-
formed and the degree of autonomy exercised in set
work procedures. Furthermore, the time taken to

 

29C. Wright Mills, White Collar: The American MHddle Classes (New
York: Oxford University Press, 1951), p. 65.

3QIhié-. p. 64. 311bid., p. 73. 32Ibid., p. 73.

-23_

learn these skills and the way in which they have
been acquired by formal education and by close con—
tact with the higher-ups in charge has been impor-
tant. White—collar employees have monOpOlized high
school education. . . . Some white—collar occupa—
tions require the direct exercise Of supervision
over other white—collar and wage workers, and many
more are closely attached tO this managerial cadre.

. In the white—collar pyramids, authority is
roughly graded by age and sex: younger women tend
to be subordinated tO Older men.

On all points Of definition, it must be remembered
that white—collar people are not one compact hori-
zontal stratum. They do not fulfill one central,
positive function that can define them, although
in general their functions are similar to those Of
the Old middle class. They deal with symbols and
with other people, coordinating, recording, and
distributing; but they fulfill these functions as
dependent employees, and the skills they thus em-
ploy are sometimes Similar in form and required
mentality to those Of many wage workers.3

According to Mills,

In terms Of property, they are equal to wage
workers and different from the Old middle class.
Originating as propertyless dependents, they

have no serious expectation Of property indepen-
dence. In terms Of income, their class position
is, on the average, somewhat higher than that Of
wage workers. The overlap is large and the trend
has been definitely toward less difference, but
even today the differences are significant.

Perhaps Of more importance psychologically is the fact that white—
collar groups have successfully claimed more prestige than wage workers
and still generally continue tO do SC. The bases Of their prestige may
not be solid today, and certainly they Show no signs Of being permanent;

but however vague and fragile, they continue to mark Off white—collar

peOple from wage workers.

 

33_I_b_i_c_1_., p. 74. 34Ibid., p. 75, 351bid., p. 75.

-24-

In addition, Gerald Handel and Lee Rainwater, in their article en—
titled "Persistence and Change in WOrking Class Life Style," assert the
following differences in attitudes. In the area of education among the
working classes:

education is conceived quite narrowly as
vocational training and a kind Of entry card to
an occupation. . . while the importance Of voca—
tional preparation is by no means slighted in

the lower middle class, education is valuable
even %5 not put to direct use in an occupation.

It is interesting in this connection that both Miller and Reisman
in their paper describe the working class as "person-centered." The
authors indicate that interpersonal relationships are easy and informal;
perhaps this is one reason why working-class parents do not look to
the school to provide preparation in interpersonal relationships. "Middle
class parents, more attuned to symbolic manipulation, as well as more anx-
ious about the management Of impressions, as Goffman would say, expect
the school to prepare their children for this kind Of Management."37

In the area Of housing, Handel and Rainwater suggest that working-
class people are increasingly owning their own homes and that this tends
tO mean to the working—class people escape from restriction. ". . . a
rising above limitation . . . imposed by a landlord . . . to the middle
class person wanting a house tends to be perceived as a validation of

status. .38

36Gerald Handel and Lee Rainwater, "Persistence and Change in WOrk—
ing Class Life Style," Blue Collar WOrld: Studies Of the American WOrker,
ed. by Arthur B. Shostak and William Gomberg, gp. cit., p. 41.

37Ibid., p. 39. 38Handel and Rainwater, 2p. cit., p. 39.

-25-
Hamilton, in his article on "The Behavior and Values Of Skilled
WOrkers," finds that skilled workers have a much higher home ownership
tendency than do either the wage-workers, lower-wage workers, or white-
collar workers, and in fact approximate the higher managerial classes.39

On family behavior, Hamilton and Rainwater say that:

. all Of these changes that are bound up
in the shift Of emphasis from the extended
family to the nuclear family bespeak also a
change in role Of the working-class wife. In
the traditional working—class family, the wife
thinks Of herself in terms Of what she does
_fg§ her family. . . . The middle-class wife
thinks Of herself in terms Of what she does
with her family.

For expenditure patterns: (a) expendi-

tures for education are likely to claim a
smaller portion Of the working-class than Of
the middle-class income; (b) expenditures for
services are less in working-class than in
middle—class families; (c) expenditures for
clothing and dry cleaning are less than for
middle-class people; (d) the expenditure for
hotel and motel rooms as well as tranSportation
services tend to be lower than is true Of middle-
class families; (e) working—class peOple do not
eat in restaurants with any great frequency.40

. Thus the husband is the central person

in the lives Of these "working—class" women.

. . . because these women feel as unsure as
they do about themselves and their worth, about
how acceptable they are to the world around
them, they are heavily dependent on having a
husband as a Sign that they are full members

Of the society and mature women. . .

The middle-class women's husbands are
also important to them, but with this differ-
ence: these women do not feel SO isolated from
their husband's lives and they exhibit far less
anxiety over whether their husbands are pleased

 

39Hamilton,.gp. cit., p. 52.

40Handel and Rainwater, op. cit., p. 41.

-26_

with their every little act. Middle—class women
manifest great confidence about her place in their
husband's affections, as well as the greater degree
Of self—confidence in her ability to "go her own
way” and get by with it; they appear to be less
willing to sacrifice their own interest in order
to please any particular husband. They also appear
to have greater intellectual resources with which
to "understand" their husbands and they believe
their husbands tO be more "understandable." .
In a variety of areas——the husband's work, the
family finances, household chores-—we find the
working—class husband and wife going their sepa—
rate ways. The couple's day seemed to be spent
in isolated activity, with a minimal amount Of
time spent around Shared interest. There seems
to be a greater division Of labor and interest
between husband and wife in the working class
than in the middle class. Often we find the wife
a little unhappy about her isolation, but feel-
ing that this is the way her husband prefers it.
In such circumstances they feel that the
most they can do for their husbands is to keep
their clothes neat and clean, SO that the man
will not lOOk "like there is nobody to take care
Of him," or do a good housekeeping jOb SO that
the husband can go Off tO work in a good frame
Of mind and won't have to worry about what's
going on at home. In contrast, middle—clasp1
wives seldom report separate vacations. . .
There is then in the working class a SharpéiZ
division in who does what around the house.
. . . A husband's main task is to work and earn
the family's income. WOrking—class wives do not
feel that it is their place to take any conSid-
erable interest in their husband's work or career.
. . While over two—thirds Of the middle—class
women emphasize taking an4§ntense interest in
the husband's work. . . . For the middle
class wife, however, the job has much richer
meaning, it is a more integral part Of the
family's life in the penetration Of family
concern and career concerns is much greater.
The wife considers herself more responsible for
the husband's work performance and success, She
must be understanding and helpful when he has

4"Lee Rainwater, Richard P. Coleman, and Gerald Handel, WOrk—
ingman's Wife (New York: Oceana Publications, 1959), p. 76.

42Ibid., p. 81 43Ibid., p. 85.

-27-

problems there, and she must do a good job Of rep—
resenting him socially tO work associates, clients,
the boss when that is necessary. For herself the
middle—class wife Often finds some knowledge Of her
husband's job intellectually stimulating; it helps
her avoid being "just a housewife."

In summary, it is suggested that the educational attainments and
occupational career patterns Of the blue—collar person will cause him
to have perceptions and values which will assert themselves in the
process Of new firm formation differently from what it will for a

white—collar person. This difference will be seen in the extensive—

ness Of ”bureaucracy" in that new firm.

—28-
HYPOTHESIS

This Study is concerned with the following general hypothesis:
that if a business firm develops the appurtenances and characteristics
of a bureaucracy, its founder imbued that firm with the necessary ingre-
dients to become a bureaucracy and the entrepreneur reflects character—
istics Of the white~collar social classes Of society. This study then
will demonstrate the essential intimacy between white-collar values Of
the firm's founder and the subsequent development Of a bureaucratic or-
ganization.

As a corollary, it is asserted that nonbureaucratic firms are
develOped by founders who do not imbue the firm with bureaucratic values
and that they themselves have characteristics which are essentially blue—
collar in their source and expression. This study will demonstrate that
firms in this category tend to be more a form Of self—employment or are
extensions or departments Of large-scale client companies as contrasted
to the bureaucracy which in its essence is an independent and sovereign
business firm.

It is apparent that there are a number Of firms and founders who
do not neatly fit the above dichotomy. These firms are then somewhere
on the continuum between these poles. They may be there for numerous
reasons, among which are the changing character Of the founder (in either
direction) or the newness of the enterprise, inasmuch as the character—
istics Of bureaucracy have not as yet been implanted or, rather, are
only partially implanted in the organization.

For these reasons the following polarity has been asserted and the

use Of interview excerpts employed tO develOp a sense of confidence in

-29-

the patterning procedure. These interviews are immensely rich in de—
tail. AS the reader attempts to ferret out information, he is inundated
with incidents which tend to ameliorate his feeling about the polarity
Of the subject. He gets to a point where he is unwilling to assign

that particular subject to the pole position, and yet he knows that

that pole position is a better selection than is the Opposite pole.

As a result, two other positions were devised for greater accuracy Of
classification. In essence, the left Of the middle pole position repre-
sents subjects who belong to the left-hand pole position but who for
certain reasons have been moved tO the right. On the other hand, those
designated to the right—Of—center position are subjects who really be—
long tO the right—hand pole but who for compelling reasons have exhi-
bited some characteristics which attenuate their "strength” and move
them to the left.

Chapter 2 will analyze and distinguish between craftsmen-entrepre—
neurs Class 1 and Class 2. Firms founded by Class 1 entrepreneurs are
the least bureaucratic, and firms founded by Class 2 entrepreneurs are
only slightly more bureaucratic. These two classes are on the left-hand
side Of the continuum mentioned above.

Chapter 3 will analyze and distinguish between organization-entre-
preneurs Class 1 and Class 2. Firms founded by Class 1 entrepreneurs
are the most intensively bureaucratic, and the firms founded by Class 2
entrepreneurs are slightly less so.

Chapter 4 will compare and contrast the various dimensions Of the

data presented in Chapters 2 and 3 in View Of the hypothesis mentioned

above. Chapter 5 will suggest final conclusions and some implications

and recommendations for future Studies in this field.

CHAPTER II
THE CRAFTSMAN ENTREPRENEUR
Craftsman Entrepreneurs Class 1

This chapter will compare and contrast craftsmen entrepreneurs'
firms by using five items which are characteristics Of bureaucracies
and which were stated operationally by Richard Hall and noted in the
previous chapter. Essentially, it is the lack Of these items which
indicates its position at the more primitive end on the bureaucratic
continuum. These five items are: (1) There is no functional breakdown
of any significance. This is particularly emphasized at the managerial
levels. (2) Generally speaking, the entrepreneur resists efforts aimed
at diversifying the firm or its product line beyond some rather narrowly
defined limits. (3) Another indication is the lack Of'records indicat-
ing any policies or procedures Of the firm. Normally, at this point on
the continuum, these firms keep minimal records and these only because
statements and invoices must be paid and government taxation and legal
records are required. (4) The general attitude of the firm's founder
is much like a form of Small-scale self—employment, or he sees himself
(and therefore the firm) as merely an extension or department of a large
client firm. (5) As a natural consequence of item #1, there is very
little, if any, hierarchical breakdown, there is no elaboration of
status or power or functional distinctions in a hierarchical sense, and
finally, the notion of blue—collar small business authoritarianism seems
to be operative at this level.

-30-

_31-

Interview statements from the group Of companies and founders in
this category are reported on the following pages. An attempt has been
made to select the interview excerpt which seemed most nearly to typify
the attitude and actions Of the entrepreneur toward each of the items
mentioned above. There is no intent here to suggest that the personali—
ties and characteristics of each of the firms in this particular class
are identical. It is suggested, however, that the classification of
these firms into this grouping is normal and does not seem to violate
one's sensibilities in these classifications and in reclassifying the
rich interview data into the following skeletal forms.

The first characteristic Of no functional breakdown (and perhaps
the fifth characteristic, in which there is no elaborate hierarchy of
arrangements in the firm) is best typified by the statement made by

Jim Pernachi, founder of Basic Industries.1

. . . I do everything necessary in the company
related to going out on the road to sell, bring
the drawings back, decipher the drawings, make
estimates on the drawings, conclude.the bids,
and even make deliveries and follow—up, and
generally supervise the shOp.

A second interview again illustrates this type of administration.

This excerpt is taken from Russ Himmler, Acme Boring Company.

. . . In about eight months I found that my
partner was getting ornery. I was out on the
road getting business into the plant and my
partner was in the shOp sort of running things
back there, and when I came back to do the en—
gineering and the estimating and the bidding,

 

1The names Of firm founders as well as their company affiliation have
been disguised as per agreement with them prior to the interview. A
roster of all the interviews appears in Appendix III.

 

-32-

and following the work through the plant, handl—

ing the business end Of the Operation, I sort of
felt my partner's job was to supervise the produc—
tion on the floor. . . and my partner would get very
upset if I would get back thirty or forty minutes
late from making a call . . . and there were several
people I had hired that I thought were really good
men only to find out that my partner would turn
around and fire them without so much as a say—so.

The second arena, in which the entrepreneur resists efforts at diver—
sifying, is best illustrated by the following excerpts: John Lather of

the Lather Die Casting Company:

. . now I am happy about at this level, and I
see no reason for working any harder at it, and
I'm pretty good to the boys in the plant. They've
never been threatened with the union, and I don't
think they will be. We pay competitive wages plus
time off with pay, and I'm an easy-going boss in
a sense, although when I'm here in the plant I
really want them working . .

Another excerpt also reveals the lack of imagination and drive to
increase business or to become more diverse. Mr. Alfie Kurt, founder Of

Wheeling Die Sinking Company, states:

This product is a rather technical product
used in controlling die making. It sold for around
$2800 a piece. we sold about thirty of them over
the past eight years, and we expected to sell a
lot more, but we haven't sold any for a couple of
years now. . . In the past two years sales were
about 70% right here in this town, and, Oh, about
90% were in Michigan.

When asked what proportion of sales came from Michigan prior to two years

ago:

. . . About 50% were out of state . . . I have nothing
planned for the future except mebbe we might get into

-33..

this new electro-die cutting tool, but it'd cost us
$40,000. We have no new definite plans, but just
sort of thinking it over. . .

The next item of bureaucratic significance has to do with records
and record keeping. It was asserted that craftsman-entrepreneurs Class 1
generally keep no records of any importance and only the minimum records
needed for government and invoice purposes. The following interview ex—
cerpts from Mr. Clark Gable Of the Gable Perforating Company are illus—
trative of this style of enterprise:

I have two sons. . . this son designs the dies.
My other son is the bookkeeper and he runs ma—
chines (editor's note: punch press in the plant)
about 80% of the time.

The interviewers asked Mr. Gable had he known about the Michigan
business activities tax would it have made any difference between locat-
ing in Ohio or Michigan. He said:

Oh, they have the same thing in Ohio, or at
least that's what I have been told. In fact,

I had not even been aware of this tax until

my accountant brought it to my attention and
said that I had better start taking Care of it.

The interviewers then asked him about how much business he does in
physical figures, and Mr. Gable mentioned:

It's hard for me to determine the actual ton-
nage of material coming and going out of this
plant because some of our customers ship their

own material to us, have us perforate it, and
we ship it back to them.

In Showing the interviewers around the plant, Mr. Gable said:

-34-

The cost of a job is determined by the amount
of time that it takes to run the sheets through
a machine. The smaller the perforation and the
more area that is actually perforated, the more
the cost of the job is, because the machine
Operates Slower.

A description of the physical condition of the office, the place
where the paper work takes place, is also revealing. The interviewer's

notes read as follows:

. we also noticed that it consisted of three
adjoining quonset huts--and as business expanded,
additional quonset huts were built parallel to
the original one. We approached the door at the
center of the front building. . . and went to the
left, which we determined was the Office, and
walked in. we introduced ourselves to Mr. Gable
and pulled up two very Old leather—covered, torn,
with springs exposed, easy chairs and we sat down.
The Office itself was rather cluttered and dusty.
It contained a heater on the floor, a television
set, and a radio. The Old wooden desk, which at
one time was stained mahogany, was scarred and
piled high with papers, particularly folded-up
Wall Street Journals. It looked as if some of
the newspapers had been there quite some time
as seen from the collection of dust and yellowing
sheets. In the cramped corner of the desk was a
large, dark glass ashtray, which was full of cigar
butts. . . During the course of the interview, he
sat sideways and slouched in his old matching
leather-covered swivel chair. There was a large
calendar on one wall from a mill supply house.

Another attitude towards records and paper work was provided by Mr.
John Dingle of Materials—Matic Company. The first excerpt is taken directly
from the descriptive comments made by the interviewers as they entered
the building.
The office is in the front part of a fairly large

one—story-and—a-half building and Mr. Dingle's
desk is at one end of this large Office. There are

-35-

no partitions. There is another desk opposite his,
and farther away there were a couple of other desks.
A11 during the time we were interviewing, there were
people in and out of the office, and there seemed to
be almost a complete lack of privacy. Consequently,
the interview was conducted in fairly low tones. Mr.
Dingle's desk is by the front window, and had a fair
amount of paper and items such as trade journals and
drawings on it. Also it had a glass top covering a
picture of four of his children. There was a chair
in front Of the file cabinets which had to be moved
in order to gain access to them.

When asked about his plant layout, he stated,

Yeah, we use every bit of space. You notice even up
above that Office there was stored some of our stuff.
And over there, above the rest of the Office, which
is actually the roof of the office up to the ceiling,
we got that place fixed up for our drafting engineers
when we need them.

In another interview excerpt, with Mr. Larry Auer of the Auer Spring
Company, the interviewer notes:

He pulled out his financial report and looked
through it to try to find the figures. It took

him quite a while to look through it, and fin—

ally he found what he was looking for, and he
explained to us, “I hadn't had much of a Chance

to go over it yet. At any rate, in 1960 my sales
were 3.2 million. NOW look here in January how I've
been able finally to get my inventory down. That's
why my profit is up.”

The fourth aspect of the degree of bureaucracy existent in a firm
indicates that the Class 1 Craftsman—Entrepreneur is very much dependent
on the large firm to extend continuing business to him, and in many ways
he acts as if he were an extension of a department of a large firm. This

form of entrepreneurship is much like self—employment rather than the

development of a new business enterprise with a degree of sovereignty.

—36-

In a certain sense this attitude can be seen from the following

excerpt Of Mr. Fred Just of the Just Tire Equipment Company. Mr. Just

\

mentioned,

I once was called to come on over to the Ford
Highland Park Plant where they had a problem

melting tires onto the rim in a moving assembly

line, and it was a real problem. I watched the
Operation for some three hours and then I told

the plant manager that I could solve the problem.

It took me a couple of weeks, but I took the pro—
totype over, mounted it on and the unit was doing

the job, and so I told the plant manager, now let

me take it back to the plant and make some refinements
on it and make up a full scale unit. Well, the
plant manager insisted that I leave it there and
bring the full scale model with me just as soon as
possible, 'cause they need that equipment now. Well,
I was pretty proud of this fact, and you know I'm
just a practical engineer, I'm not a diploma en—
gineer.

In another interview with Mr. Jay Bird of the Auto Trim Company,

he said,

. . . Chrysler, as do the other auto companies,
require us manufacturers to keep the dies. . .
we gotta keep the dies because we get service
orders for them. These are replacement parts
for dealerships who sell to collision shops. It
amounts to about a quarter Of a million dollars
a year.

The interviewers noted that there were "row upon row upon row of
these discs set on racks and all lettered in the inventory building of

the plantl'. . He continued:

We were the only one willing to submit a bid

to the Chrysler Corporation on making that
curved end tail piece, seeing as it was such an
awkward part that nobody else wanted to have
anything to do with it; but I said, hell, we'd
take it on, and we did, and we were able to make
a suitable part and pass it through inspection.

-37-

When he was asked how he maintains his competitive position in
light of the fact that all but one of his competitors has now moved to

a low labor cost area in Arkansas, he responded,

primarily on the basis of being local
and being able to stay in this area to do this
work without having a union in the shop. For
example, those dies out in back, if they send
in an order for service parts I can truck it
over to them in a matter of a day or so, all
complete, and when we're setting up new jobs
it requires a lot of contact with their engi-
neers, especially in inspection. we send the
first prototype models over to inspection and the
boys look at it and if it suits them, then we can
bring it back over, but that usually involves two
to five trips in making all the final adjustments;
and there is considerable change that goes on, too,
between the time some designer dreams up a de-
sign until they finally decide which one they are
going to build. .

Again quoting from Mr. Auer of Auer Spring Company:

well, after improving the wire I was able to
start out by selling to Chevrolet and then

those guys sent me over to Olds and to Buick
and to Pontiac, to the point where we had prac—
tically 100% of their business of wire springs
for cars; and Chevy said that after they got
through testing my wire and found that it was
superior to any other, they said, Okay, go ahead
and make this, and I said, How much do you want,
and they said, As much as you can give us . . .

In conclusion, some insights can be gained from the following quo-
tation. Himmler at Acme Boring Company stated:
Nowadays when I walk into their Offices (pur—

chasing agents of large companies) they treat
me with reSpect.

—38—

Craftsman—Entrepreneur Class 2

This class entrepreneur is characterized in his bureaucratic organ—
ization by the following distinctions: (It should be remembered that these
classifications and their degrees, are only Slightly differentiated from
those of the Class 1 entrepreneur.)

(1) In the area of functional organization of labor, this entre—
preneur has a more elaborate organizational pattern; that is, there are
more people carrying out more specialized tasks than we find in the Class 1
entrepreneur. (2) There is a greater diversification in the product or
products that these companies make as compared to Class 1; however, the
diversification is only so far as skill was developed in producing these
items. There seems to be some indication that bids for doing certain
types of work also emphasize to a greater extent features such as qUality
performance and delivery Specifications than they do for the Class 1
entrepreneurs. (3) There is a higher degree of competence in record
keeping. This is not to suggest that there is a considerable increase
in sophistication of these records or of the use made Of these records.
(4) There is a tendency for greater sovereignty of these companies. It
is Speculated that it is perhaps easier to sell a going company in Class 2
than in Class 1, inasmuch as there is a lesser dependence on a single
individual to carry out a multitude of tasks; also there are a larger
number of salable and therefore income generational assets available for
sale which have usefulness to the purchaser. (5) There is a greater hier—
archical range in these firms. This follows naturally from the previous
four items, and particularly the first item above, which demands greater

coordinating emphasis.

-39-

Some illustrations from entrepreneur interviews which have been
designated as Class 2 are descriptive of the above points.

Mr. Eloise Rivers, Foremost Manufacturing Corporation said,

. . and most of these small accounts are for
Specialized jobs, and my chief engineer, Gerald
Simons, takes special supervision Of these.

In a second excerpt from another interview, Mr. John Kiwi of the
Metal Benders, Inc., was asked about his organizational arrangements, and

he replied,

. Now I have a finance man who is our accoun—
tant and bookkeeper, and an Operating man who is
in charge of production and the plant. I got Erd-
mann when I bought out the Swift Company in Indiana.
I also have a Plant Engineer who does the product
design work and estimating and layout work.

Later in the interview he mentioned how he was able to move into his new

plant:

. we got the Lafayette plant by borrowing money
from a Jewish acquaintance, but on absolutely no
collateral whatsoever. We did have some expensive
machinery around, but I wouldn't put that up against
a loan .

Another type of organizational arrangement is the highly Simplified

process used by Book Records, Inc. Mr. Lee stated that:

. . There are two female employees who do the as—
sembly work. There are two secretaries who do the
billing and the handling of paper work, and a young
accountant-controller. I'm the general manager but
I do most of the selling work, and getting our cata—
logue listings in the Sears catalog, and things like
that. We are going to have some 30 representatives
this next year who regularly call on the school and
library trade, 'n' that'll help .

_40_

And finally, the interview with Mr. Robert Eve of the Paradise
Company demonstrates that it is familial relationships which lead to
functional breakdowns rather than the emphasis on hiring additional mana—

gerial people. He states in his interview:

. . . three of my four brothers were also at Able
Company in various departments in the tooling and
machine areas. Tom was in tool and die design,
Harry in the process work, and Dick in another
phase of Operation (editors' note: This was in
heat—treating). By 1946, I was the supervisor of
the tool design department . . .

Note that this is almost precisely the same occupational breakdowns these
brothers occupy in the Paradise Company, including the fact that the eldest
brother, who was supervisor of a very large-scale tool toolroom, is now
acting in the capacity Of President of this corporation.
In the second area, i.e., greater diversification of product, Mr.

John Kiwi of the Metal Benders Company explains how he was able to enter
an already established set of relationships and oust the other manufac—
turers in selling to the automobile industry. He stated that he ob—
tained his first major automotive account in this way:

. . . I don't really like this automotive busi—

ness, but this guy at Chrysler who'd known me

back when I was Operating the Feltex Company

called and asked me to bid on some work that

evidently no one else wanted. I held Off and

he pleaded with me, so I bid on this particular

item, which was a wrist pin. well, we got the

contract and it was fairly profitable. I'm not

unhappy for having gotten into automotive work,
but I sure don't like to stay wholly in it . . .

The interviewer's notes continue:

-41_

. . Purchased . . . the Swift Company in Indiana
. . . because they were available and they also
made a line of wheels which are primarily stamped
steel sheets with a rubber tire mounted around the
rim. This product line was a natural fit for they
already had existing stamping and assembling faci—
lities in the Metal Benders Company . . .

In conclusion, another form of competitiveness of the Class 2 en-

trepreneur is taken from the statement of Mr. Robert Eve Of the Paradise

Company who said,

It seems that many firms . . . have labor contracts

and these contracts state that . . . tools, dies, jigs,
and fixtures may not be moved out of the plant for
completion in case of labor problems or strikes. That
puts the buyer . . . at a decided disadvantage . . . he
gets involved with a labor diSpute even though he's
not a party to it . . . we do not get involved with
these problems and we can guarantee delivery to our
customers . . .

The third item which characterizes a degree Of bureaucracy indi-
cates a higher degree of record keeping. This item can perhaps best
be visualized from the interviewer's description of the office of Mr.

Carl Norse of Norseman Broach Company, as follows:

. . we arrived at the appointed hour . . . the
company is located on Mound Road, on which there

is astream of small and large manufacturing plants
for a great number of miles in either direction

from this company. The Norseman Company is located
in a fairly new building probably built around 1950 and
of the standard variety with the front office located
toward the street, extending almost the width of the
entire building, and with the factory portion located
behind the front Office. we entered the middle por-
tion Of this front through an entrance vestibule.

The southern half of the building from the vestibule
is a fairly large, approximately 60 ft. by 25 ft.
wide, engineering and estimating section. . . . We
were able to Observe through the glass doors three

-42_

ties in that part of the building. . . . The room

was painted a light green wall with tan tiled floor
and white acoustical tile ceiling with fluorescent
lighting running the length of the building. The
north half is absorbed primarily with the front

Office bookkeeping, accounts, billing, and the sec—
retary-receptionist who also functioned as the
switchboard Operator for incoming calls. This por-
tion of the Office had two desks in addition to the
secretary—receptionist counter and switchboard area.
There was a bank of approximately four file cabi—

nets. The portion Of the Office extended approxi—
mately 40-45 feet from the vestibule. The remaining
portion of the office had two desks and was behind
another wall, and one had to walk through the Office

to get into that back Office, which was the head—
quarters for Mr. Carl Norse. This portion of the
Office was also painted a light green color, par—
tially panelled, with tan tile floor and white
acoustical tile ceiling. All the furniture in

this Office was Of the metallic green steelivariety.
Mr. Norse's office was similarly attired. He had

a larger desk, but the chairs and swivel chairs

and credenza were the matching metallic green steel var—
iety. There was one girl who worked in the front Office.
We found out later that She performed all of the neces—
sary paper work functions of tallying records, paying
invoices, making up payrolls, etc.

Mr. Norse was asked about the volume Of business that he was doing,

and his response was:

well, we have about 26 direct labor production men in

this Operation, and last year we did about $850,000 worth

of business.
Then he excused himself and went into the office and picked up and
brought back the accountant's report in which there was a slip of paper
indicating earnings for the past few years. The sales figures fluctu—

ated variously from $530,000 to $870,000 with a close correlation to

the general level of automobile business.

 

_43_
Then he went on to state:

In the first quarter Of 1961, we did $188,000 worth
of business; and you know, these figures are very
interesting, 'cause from 1956 through 1959 our
profits ranged somewhere between three and four

per cent. Now in 1960 our profit ratio went up

to seven per cent, and here's the clincher: In

1961 for the first quarter reported, our profit
ratio is up to nine per cent. I really don't

know what to attribute this to.

The interview at this point extended for another half hour, as Mr. Norse
discussed a great variety Of things that he believed contributed to a
higher profit ratio. At no time did he mmake a definite statement or
that it was perhaps a combination of these items. Later on in the in—
terview he was talking about the use of overtime rather than second
shift work when he stated:

I'd rather not do what my competitors do, and I

believe in going into overtime. You know, there's

a lot of indication here. We don't write letters

in our Operation. I get on the phone, and I notice

that when our telephone bill is the largest that's

when our business is the best. I don't believe in

writing. I call; I'm just not a composer of letters.

I feel I'd rather, than insult a man. I can get

my point over the phone much more easily. . .

In another interview excerpt regarding this sphere Of activity
with Charles Minor of Minor Spline and Gear Company, the interviewer's
notes indicate that this Office arrangement is very similar to Mr. Norse's
above . . . and then he brought in the w>2 forms for the year 1960 and
showed us the wage rates for the men in his plant.

Now look here. An unskilled worker, the sweeper in
my plant made $5,600. My secretary, who keeps the

books out front, makes $7,600, and the wages range
upward to my tOp scale man.

_44_

He said:

Look, this wasn't even a particularly good year for
the men in terms of overtime, and yet my tOp skilled
man made $13,800 and this is not counting further
outlays of $144 for his share Of Social Security and
does not count the outlays made for 75% of the hospi—
talization benefit or life insurance benefit. Look
here, my plant superintendent made a shade over
$15,000.

Later in the interview Mr. Minor talked about the fact that he
bought a tobacco farm in Kentucky, near Paris, Kentucky, and as he dis-

cussed this he stated:

You know, before I purchased that farm I went on down
to the University Of Kentucky at Lexington and I got
a lot of free advice and a lot of free information,
but that's what Ag. schools are for, and it was there
that I got a lot of my ideas about rejuvenating this
farm and mechanizing it and a number Of other ideas
to make that a profitable operation. . . .

The fifth and final item in the category concerning craftsman-
bureaucratic organization has to do with hierarchy or the lack thereof.

Mr. John Seedy of the BMT Stamping Specialties Company stated:

This is about as big a family as I can handle and since
I and the rest of the founders came out of the factory,
we understand the problems of the workmen, and we remain
close to them all. We even sort of have somewhat of a
guaranteed annual wage. . . for that matter we've grown
about as big as we can or as big as I want to. Sure,

we can grow and make larger profits but we couldn't
maintain our profit percentage with that additional
business. . . we are roughly fifty employees, and we've
had that for about three years. . . and there on your
right is that small enclosed Office with one large draft—
ing board and a filing cabinet and Spec charts.l.and
that's the engineer's Office. He's not a graduate engi—
neer ; in fact, there are no graduate engineers in the
company; he's a tool designer, a practical engineer.

When asked if he did any entertaining or customer contact, Mr. Seedy said:

NO, we don't do any entertaining at all. That's handled
by our sales representative.

 

-45-
Portrait of Craftsmen Entrepreneurs

The usual methodology for characterizing social class background
is to investigate, first of all, the occupational traditions in a family
life cycle. Inasmuch as occupation becomes a focal point for several
socially determined characteristics, this is a useful scheme. A man's
occupation is usually the result of the Skills both manual and social
that a person brings to his job. From this it can be deduced, therefore,
the approximate amount of education and inherent intellectual charac—
teristics that the incumbent of an occupation has. Secondly, inasmuch
as a set of values inhere in an occupational system, it is legitimate
to suggest that the incumbent of the occupation will himself ingest and
manifest numerous values in that occupation. For example, a blue-collar
factory worker will absorb the values of employment as a blue—collar
worker; he will see the world around him through the eyes of the values
that have been invested in blue-collar work both by himself and his
colleagues and the values set on that occupation by society in general.
He will react to employment and unemployment, security feelings, the
sexual maleness or femaleness that are invested in such occupations,
the time dimension involved, the autonomy that he can exercise in that
occupation, the amount of social contact he has with colleagues and
whether the social characteristics of other occupations will be enhanced
or limited by his present occupation, etc.

A thread that would seem to tie many current find—
ings together is the tendency of a person to use
himself as the norm of standard by which he per—
ceives or judges others. If we examine current

research, certain conclusions are suggested: (1)
Knowing yourself makes it easier to see others

-46-

accurately. When we are aware of what our own per—
sonal characteristics are, we make fewer errors in
perceiving others. People with insight are less
likely to view things in black and white terms and
to give extreme judgments about others. (2) Our own
characteristics affect the characteristics we are
more likely to see in others. The extent of one's
own social ability influences the degree of impor-
tance that we give to the social ability of other
people when we form impressions of them. The person
with 'authoritarian' tendencies is more likely to
view others in terms of power and is less sensitive
to the psychological or personality characteristics
of other people than is a nonauthoritarian. (3) The
person who accepts himself is more likely to be

able to favor aspects of other people. (4) A corol-
lary is the finding that for peOple we like, we tend
to perceive more accurately the ways in which they
are Similar to us, and are less accurate in viewing
the unlike ways. (5) Accuracy in perceiving others
is not a single skill that some people have and others
do not have.

When he starts going out to work, the individual will
carry with him a host Of attitudes that have been ac—
quired from the culture (broadly, the major group mem-
berships, including nationality, class, and religion),
his family and fears, and those with whom he has pre-
viously worked. . . by the time he goes to work for a
Specific organization (particularly if it is not his
first job), he will hold many attitudes concerning
such areas; for example, pay, working conditions,
company policies, the way he should be supervised,

the way of supervising others. He will have attitudes
about the way work Should be done, what constitutes

a day's work, the way people Should be treated and

the ways to sell a product. Such tOpics as the ap-
propriate relationships with different units Of the
company as well as with customers, suppliers and com—
petitors will bring out views based on attitudes al—
ready formed.

Another determinant that can be characterized by an occupation is

2Timothy W. Costello and Sheldon S. Zalkind, Psychology in Adminis-
tration; A Research Orientation (Englewood Cliffs: Prentice-Hall, Inc.,
1963), pp. 45-46.

3Ibid., p. 262.

-47_

the factor of wealth and particularly how that wealth was earned. An
unskilled blue—collar occupation Offers relatively little in remunera-
tion. Therefore, the amount of discretionary income, the values that one
has towards expensive vs. less expensive items, taste, and perhaps even
values toward education as well as style of education are to that extent
determined. And finally, where--that is, in what neighborhood and in
what types Of towns--people will domicile. And, therefore, it is as-
serted that the values of any children of issue will be determined sig—
nificantly from the values impressed on them by their parents. That is,
children of blue—collar families will learn and manifest those values
taught to them by their parents and by the social neighborhood in which
they live (which also is usually of blue-collar status and therefore the
neighbor's children will have blue-collar values). While some of the
characteristics of blue—collar versus white—collar tend to be fraught
with ethical judgments of goodness and badness, depending on the view-
point Of the reader, the intention here is merely to point out that
these learned characteristics, when manifested in the process of new
firm formation, will become part of the values impressed into that or-
ganization. For example, if blue—collar occupations necessarily result
in a short time perspective and the resultant salient need for concrete
and rather immediate feedback information or results, this will tend to
result in business firm characteristics which will also have the same
felt needs. Therefore, the result will be a style of business endeavor
which differs from that of firms which can engage in long-range planning
and long-lead time from point of embarkation to final gratification.

It is interesting, therefore, to catalog the occupational backgrounds

of the fathers of the craftsmen—entrepreneurs, as shown in Table I.

10.

ll.

12.

13.

14.

15.

16.

17.

FATHERS'

Occupation

Lower level salesman

-48-

OCCUPATIONS AND

Shipping Clerk, unemployed for

Blue-collar worker; later became

various periods

white—collar and upper

management

Skilled blue-collar worker

Domestic fuel Oil salesman

Blacksmith

Farmer

Unknown

Blue-collar worker, later
became white—collar

Foundry worker

Small-town lawyer (Canada)
eight children

Sheet metal worker, later
became foreman

Retail clerk, small general

store

Factory worker

Father died at age three;
mother was scrub woman

Farmer and later factory worker

Unsuccessful real estate salesman

EDUCATION

Educationp(when given)

Less

Less

Less

Less

High

Less

than high school

than eighth grade

than eighth grade

than eighth grade

school graduate

than fourth grade

Eighth grade

_49-

Table II is a cataloging of the amount of education completed by
the entrepreneur (the sons of the fathers in Table I). This list is
somewhat incomplete, although some of the interviews do mention addi—
tional schooling, such as correspondence schools and some trade schools
and Specialized courses; however, not all the interviews explored this

item in depth. The cataloging matches the same order as in Table NO. I.

10.

ll.

12.

l3.

14.

15.

16.

17.

-50-

TABLE II

EDUCATION AND TRAINING ATTAINMENT — SONS (Entrepreneurs)

High school graduate plus Skilled experience as salesman

One year of college, two years managerial and six years skilled
work experience

High schOOl graduate, plus skilled experience, plus two years of
supervisory experience

High school plus skilled experience, four years supervisor
High school plus skilled experience

Less than high school, plus skilled experience (two years)
Less than high school, plus skilled experience

High school plus six years supervisor, one year managerial
experience

Completed Junior College, one year managerial experience
Tenth grade, plus five years managerial experience

Less than high school, plus Skilled experience

Two years college, plus skilled experience

Tenth grade, plus managerial experience

One year law school (no A.B. degree), plus skilled worker and
one year managerial experience

Tenth grade, plus Special extra courses, plus two years managerial
experience

Tenth grade, plus trade and ICS school

High school, plus six years managerial experience

-51-
Wprk Experiences

The early work experiences of the founders are remarkably alike.
The reader will note in the excerpts below that there is a constant float-
ing from job to job. After "learning to Operate all the machines" in a
given location, monotony seems to set in. Also noted was the fact that
seldom could these entrepreneurs recall the names of companies they were
employed in, but almost always they could remember the name of the foreman
who hired them and "sort of looked after" them. Relationships were very
personal. Usually, too, there was some evidence of personal difficulty

with others at the work place. Russell Himmler stated it succinctly:

. . . I was only 18 years Old at the time but I got
along very well with the foreman, and as a result in
six months' time I had learned to run every machine in
that particular shop. . . I was asked to go into the
toolroom, which was considered a promotion. This meant
I would have had to take a pay cut to $6.40 a day and

I talked to the foreman about this and told him I'd like
to stay in the cutter-grinder department; my foreman
told me this was a much better job and so I went on
over and I got along quite well. I did well in that
place and made progress learning all about the equip—
ment and Operations.

The interview with Charles Minor of Minor Spline and Gear Company

repeats the same theme:

. I was hired as an apprentice machinist, and I
watched the operation for a little while on the machine,
and then I was put on the machine itself and started

to work . . . and went to the Vinco Company. I learned
a great number of Operations, starting off as an appren-
tice, and worked my way through a great number of Opera—
tions. . .

And John Lather, Lather Die Casting:

He gave me a bucket of kerosene and some brushes and rags

 

-52-

and told me to go out and clean down every machine

in the plant. well, it was a big Operation and then
something broke. I began to learn the machine trade
that way and I figured I'd gotten a chance. well, at
any rate, I got about two—thirds of the way through
this cleaning job when a job opened up on a milling
machine on a tap, and I proceeded to start learning
the machinist trade. Eventually, I learned to Oper—
ate every machine in that shOp.

And, finally, the interview with Carl Norse at Norse Broaching:

I worked in several plants, Operating broaching equip—

ment. . . and from 1934-1937 I was in charge of all

the broaching equipment at Chrysler. . . .
Carl Norse, later in the interview, made the following statement: "A
good workman on a good piece of equipment can turn out twice as much
as a good workman on a poor piece of equipment." This statement ex—
presses concisely the general attitudes of the craftsmen—entrepreneurs.
Their entire lives have been centered around learning about equipment,
develOping ways of handling or coaxing machines, and they have each
develOped very strong emotional ties to this idea of machinery and
equipment. These are not unlike the feelings of a westerner or cowboy
toward his gun, or the sports car enthusiast to his automobile, or the
sailor to his ship. Russell Himmler also states it:

We were buying new equipment constantly and then

we had a new Cincinnati Boring Mill on order and

there was just no place to put it in our particular

operation. As a result. . . I built this new build—

ing. . . and we moved everything over, including

our new machine. . . . It has been my motive to

buy a lot of equipment, large equipment, and good

equipment. And with my production know-how, using

good men on good equipment, this keeps us very com-
petitive.

-53-

Charles Minor of Minor Spline and Gear stated:

I used to enjoy going out and turning a machine on my
own and I used to do it quite regularly. Now with the
union in the plant, I can't even go out into my own
plant and turn a machine. And I own one hundred per
cent of the stock in this company, and I cannot even

go out and turn one of my own machines when I want to.
Look at my hands here; they're like women's hands. You
know, in my spare time I repair clocks in my basement.
I'll do anything to keep my hands active mechanically.

I play with the clocks, I make the pendulum movements
change directions; I even go to my neighbors and friends
and get them to give me their clocks. I go down and buy
Spare parts in the junk yard just to have something to
do . . . and then all I do around here is to sit here

in my Chair eight hours a day picking my nose!

The Idea of Starting a Business

The motivations and the early conceptions for leaving one's present
employment and attempting to start a new business vary somewhat from one

firm's founder to another.

Here at last is the evidence for what economists and
others have been calling for so long and so inaccurately
the ”profit motive.” If we can assume as all our evi—
dence indicated, that western capitalists were actually
motivated primarily by the achievement motive, we cannot
understand why they are interested in money profit, al—
though not, paradoxically, for its own sake. MOney, to
them, was the measure of success. It gave them the con—
crete knowledge of the outcome of their efforts that
their motivation demanded. . .

Even assuming very little occupational information, a man
may try out several roles and discover the one that suits
him or the one at which he is most successful. Business
activities may be undertaken 'On the side' in an experi—
mental or a tentative way in combination with almost any
occupation. In fact, Bendix and Lipset report (1959, p. 162)

 

4David C. McClelland, The Achieving Sociepy (Princeton, N.J.: D. Von
Nostrand Company, Inc.), p. 237.

-54-

that men who end up owning their own businesses have
worked in a greater variety of other occupations than
men in any other occupational group. Consequently, we
might expect the area of free choice that individuals
with high n Achievement would, on the average, tend to
"drift into" or "find" themselves in the business world
because it requires those very characteristics that
they possess.

PeOple characterized by a high n Achievement level
tend to travel more.5

It is noted that in several interviews the notion that the lack of

education for further progress became one of the underlying reasons for

people leaving firms. Other individuals mentioned some additional fac-

tors, such as those mentioned by Robert Eve of the Paradise Company:

Carl Norse,

. . . I have been thinking Of going into business

for myself Since around 1938. . . .‘we talked about
it and laid some minor plans and then when the war
came along . . . unable to make any further prog-
ress. . . three Of my four brothers were also at
Able Company in various departments in the tooling
and machine area . . . Tom being in tool and die de-
sign, Harry in the process work, and Dick in another
place of Operation. . . By 1946 I was supervisor Of
the tool design department and as such was in a high—
paying, comfortable job. . . I indicated my intention
to quit as Of the first of January, 1947.

Norsman Broach, stated:

. . And then I went to Detroit Broach where I stayed
until 1954. It seems that in 1952 Norseman Broach was
started by a group. . . meanwhile I . . . started a little
company in partnership in a back-alley garage.

Russell Himmler mentioned:

I stayed about 15 years at the Ford Motor Company and
then with a tool and die company for only about a year

 

51bid., p. 316.

-55-

after that time because I started into an agreement
with Mac to go into business for myself. . . and I
asked a friend of mine whom I'd known for a while to
go into business with me and we were able to buy the
machines.

Charles Minor stated:

The war was over and I was laid off. I hired into
another place as sort of estimator and plant produc—
tion man, and the owner of the company had a bad habit
of hitting the bottle hard and regularly, and he'd be
gone for two and three days at a time; so I figured to
myself, why not go out on my own and maybe I could do
even better. SO I kept at this job about a year while
laying the groundwork for going into business for myself.

Jack Kiwi, Metal Benders, Inc., stated:

I was quite disgusted with this entire relationship with
Feltex Corporation. You see, the son of the owner had
come into the business and proceeded to give orders for
three hours out of the middle of the day, and brag about
his enormous income; and I just quit!
Larry liner of Auer Spring Company, about one hour after the interview
started, stated: "I'm an ill—educated man; do you mind if I use Shop
talk to describe what happened?” This lack of education was repeated
three times by Mr. Auer in the interview and was stated as his primary

reason for leaving the large spring and wire company which had employed him

in a managerial capacity previously.

Preparatory Steps

 

Because the craftsman-entrepreneur has generally emanated from the

blue—collar class, he does not have an enormous amount of money with which

~56-

to begin his enterprise.6 Similarly, he does not have a series of con—
nections nor has he established any large-scale credit upon which to draw
during early stages Of his enterprise. He must therefore resort to his
own liquid resources or those resources which he can borrow directly, us-
ually from a relative or very close acquaintance. It seems generally
from.these interviews that it takes about two years of business survival
to establish the entrepreneur's earnestness. Some were luckier than this
but the majority took this long a time in order to generate a sufficient
flow Of resources wherein the firm could be identified as being on its
own, with a degreeeof sovereignty. In any case, in starting enterprises
there is a period Of more or less prolonged anxiety and intense effort.
The reason is that any new enterprise, to succeed, must have equipment,
sales outlets, and the financing necessary to start production. The
craftsman—entrepreneur with his limited background is likely to pay little
heed to the interrelatedness of the three, seeing not the whole picture
but its parts, seeing not three intersecting arcs but three separate Sides
of a triangle. With a will to succeed, he tackles one factor at a time
and does not suffer from setbacks or rebuffs. In time, with perseverance
and experience, he does interrelate these three necessary ingredients and
begins to generate the necessary cash flow.

This is illustrated by the comment of Robert Eve of the Paradise
Company:

. . . We talked about it and laid some minor plans
in 1938. . . we commenced to pay Off the mortgages

on our homes. . . so that when we start. . . homes
completely paid for. . . and put together $22,000

 

6This is consonant with the findings of Mayer and Goldstein,
.22. cit., p. 122.

-57-

(this was 1946). They (Able Company) put the old
equipment in storage. Near the end of the war,

around 1946, they began to sell this surplus equip—
ment. . . we retained a lawyer to set up papers

. . . (and that's the last we have seen of him). .
Originally $22,000 was used to buy equipment, obtain
the lease—-only two months' advance rent--move equip-
ment, Obtain the lease, buy raw materials; the last
four thousand dollars was soon spent. . . In the
early days sales were difficult because we were
breaking into an existing market where other firms
already had their foot in. All we could hOpe for

was to pick up snatches of small bits of contacts

here and there to perform certain kinds of work,

and do the best mechanical engineering processing

job we could, so as to impress owners, customers,

and clients of our ability to do the kind of work

we were contracting to do and do it well. In this

way we have established a strong clientele, but it

has taken a great number of years to develOp this

kind of relationship. . . Originally the bank wanted
a mortgage on the equipment that the firm owned, and
my brother said, no. we would not mortgage the equip-
ment but we were able to work the bank on the basis

of invoices. As we received invoices from, for example,
Able, to do different kinds of work, we would take them
to the bank and obtain sufficient funds to pay off

our labor and finish the work.

And according to Carl Norse, Norseman Broach Company:

In 1952 Norseman Broach was started by a group
of men in a three-car garage and they were attempting
to get going. Meanwhile, I left Detroit Broach and
started a cutter reconditioning and repair shop in a
back alley. . . we bought out the original Norseman
Broach group. . . there were two silent partners. .
The original amount of money we put in was $55,000 and
I was the president of the company because I was pri-
marily the guy out selling. . . I felt that since I
had developed these contacts over the years these
people would be loyal to me, but I soon found out this
was wrong. You have to have a shop backing you up
when you're out selling. . . I had spent 16 years

. I had a number of contacts primarily through the
back door with master mechanics, tool room people.

 

 

~58-

Charles Minor of Minor Gear and Company:

SO I kept at this job about a year while laying
the groundwork for going into business myself. well,
about that time I had about $12,000 saved up through war
bonds and other savings, and I proceeded to buy machinery
and other equipment on my own, which I stored in the
basement, and then I went out and rented a shop that
was sort of a two-car garage size, and in 1948 I opened
the doors to business . . . These people began to send
business my way . . .

Russell Himmler of Acme Boring:

.and I asked a friend of mine whom I had known for
a while to go into business with me, and we Started to
buy machines, particularly from war assets under the
Clayton formula. we bought two machines, a hoist and
a layout plate and a number Of other items . . . we were
going into the boring and grinding business. It was
tough. we were not only doing outside work during the
day to make ends meet, but we'd go down to the shop at
night and weekends in order to get started on this
thing, trying to do all the work ourselves. . . At the
start we each put in $7,000 to buy the equipment plus
we paid off half the accounts. . . and all the equip-
ment that has been purchased by this company was pur—
chased for cash all the way down the line. we've had
good relationship with the bank and I've never had to
use the banks to any large extent except for minor
working capital purposes, and you know we got plenty
of assets and collateral to put against those.

Initial Capitalization

It is noted throughout the interviews that the craftsman—entrepre-
neur, when discussing banks and bankers, indicates a high degree of dis-
trust or uselessness. The interviews are replete with statements indicat-
ing that the firm has been built on the basis of cash and very little use
is made of borrowed capital in any form whatsoever. This fact is also
highly indicative of the blue—collar worker background where banks are

seen as places for the deposit of money, for the safeguarding of resources,

-59-

but not for the purposes of Obtaining large amounts of resources. It
is only natural, perhaps, that until these firms became quite highly
successful, lines of credit by banks or other lending institutions were
not available either to the individual entrepreneur or his firm. The
notion of security, of not tying up one's assets as collateral against
loans which perhaps might not be paid off-—followed from these same
sentiments. If the tools belong to the entrepreneur, they are his.7
That the desire to run a business is high among manual workers
is born out by Chinoy's case study Of automobile workers who see an op-
portunity to gain in business ownership what they rarely achieve in the
factory. AS one of the machine operators in the Chinoy study put it:
The main thing is to be independent and give your
own orders and not have to take them from anybody
else. That's the reason the fellows in the shOp
all want to start their own business. Then the
profits are all for yourself. When you're in the
shop, there is nothing in it for yourself. When
you put in a screw or a head on the motor, there
is nothing for yourself in it. SO you just do
what you have to in order to get along. A fellow
would rather do it for himself. If you expend the
energy, it's for your own benefit then.8
NO matter what the fortunes of the business may be, the entrepreneur
feels that with his own tools he can always re—enter the business world
again, unencumbered. He will absorb credit from suppliers and personal
loans because he does not see these as threatening the essence of his

enterprise——that is, his tools and equipment.

Furthermore, it is interesting to note that in those cases where

 

7Kurt B. Mayer and Sidney Goldstein, "Manual WOrkers as Small
Businesses," in Shostak and Gomberg,_gp. cit., p. 538.

8Ely Chinoy, Automobile Workers and the American Dream (Garden
City, N.Y.: Doubleday and Company, Inc., 1955), p. 86.

 

-60—

the firm began with a partnership arrangement, it generally reached a
point where one partner or the other was forced out of the firm so that
the control of the enterprise remained with a Single, unshared person.
This concept of control, while not particularly unique to the crafts-
man—entrepreneur--as will be pointed out in the next chapter—-is an-
other indication of the values set toward the removal of any threat to
the continuance of his enterprise.
In conclusion, Professor Victor Thompson has characterized the

nonbureaucratic enterpriser as follows:

. . .has low powers Of abstraction...frequently

preferred situations where 'cash talked'. . .

could not understand complex impersonal procedures
. . . fear. . . the nonpersonalized world. . .

world as peopled only with friends and enemies. . .
crave. . . immediate and tender responses from
everyone. . . is not satisfied with limited number

Of Situations. . . but wants to be the center Of
attraction everywhere. . . he is likely to believe
that the only successful approach is through the
personalized route of Special favors and bribes

or threats. . . is not skillful in taking on the
roles Of others. . . has an underdeveloped power
of investing energy in future Objects. . . he
tends to lose sight of the organization as an
instrument for accomplishing goals, as a struc—
ture 8f instrumental functions and relationships

 

9Victor A. Thompson, Modern Organization (New York: Alfred A.
Knopf, 1961), p. 177.

CHAPTER III

THE ORGANIZATION ENTREPRENEUR

Organization Entrepreneur Class 2

This chapter is intended to characterize the organization entrepre-
neur. Furthermore, it will indicate distinctions between the organizational
entrepreneur Class 1 and Class 2 in a manner similar to that used for the
craftsman entrepreneur Class 1 and Class 2. The methodology of comparing
the development of bureaucratic patterns against the norm established by
Richard Hall (discussed in the previous chapter) will also be similar.
Interview excerpts from the organizational entrepreneur selection will
be used to illustrate typical organizational dimensions in these classes.
The only difference noted in this chapter from the previous chapter is
that Class 2 organizational entrepreneur will be discussed first, and
Class 1 organizational entrepreneur discussed later in the chapter. This
is done in order to note the symbolic relationship along the continuum
line, ranging from least bureaucratic to most bureaucratic, and to point
out that the Class 2 organizational entrepreneur is one in which there
is a dilution of bureaucratic intensity to the left of the right-hand
polar position.

The five characteristics of the organizational entrepreneur Class 2
are: (1) There is a functional breakdown and specialization Of labor as
well as of managerial tasks. While it is not very extensive, there is
some evidence of staff activity, which includes both some planning and
some effort spent on research and development. There are also distinctions

-61—

-62-

to be made in the area of sales efforts and controllership of the firm.
(2) The firm and the entrepreneur recognize that diversity in skill and
product line and customer systems are important. These may not yet be
accomplished, or even justified at this point in the development of the
firm, but there is considerable effort manifested in that direction.
(3) Records are seen as useful in themselves; however, due to the Size
of the firm or due to a lack of awareness there is not a high degree of
intellectual sophistication regarding records. (4) There is considerable
sovereignty exhibited by the firm, and it is suggested that the firm
could even survive the demise of the founder. This is to imply that
there is an inherent concept Of continuity established in the organiza—
tional entrepreneur's firm which is differentiated from the previously
discussed firms in which, although it is possible to sell the business,
the sale would involve primarily the selling of the physical assets and
not of good will. The distinction is made then that the Class 2 organi-
zational entrepreneur does have some "good-will" and an on-going business
that is saleable or one which would survive his own demise. Finally,
(5) there is a hierarchical arrangement as well as considerable emphasis
on orderliness Of relationships, especially important relationships both
internal and external to the firm. In this last category, the basic dis-
tinction between the Class 2 organizational entrepreneur and the Class 2
craftsman-entrepreneur is a very subtle one in which the elegance of
these relationships and their orderliness is seen as more important in
the former than in the latter.

Mr. Andrew T. Straight, Straight Manufacturing Company, illustrates

the first dimension-~that is, that the functional breakdown tends to be

-63-

somewhat more elaborate. In his interview he States:

. . . the young girl out there at that desk acts as

a typist and also Operates the calculator. The young
fellow, who is really 41 years old, sitting out there

at the other desk, is the secretary-treasurer Of the
company. He acts in the capacity of accountant-bookkeeper
of the company, and he tells me when things are not going
right or when I have to bring up some more money. . . My
first plant manager was a good man as long as he served

the purposes Of the company, but I found out that he was
quite dishonest and he finally quit and set up his own
competing plant which, by the way, went out of business

in about a year's time. Ah, fortunately, about a year
prior to that time I spotted a young person who seemed

to be able to do the job, and put him in as understudy

and this fellow learned exceedingly well, even better

than the previous experienced guy; and Since he has taken
over, he has done even better than my previous man. I've
also hired several supervisors, inspectors, and a couple

of foremen, and all Of these peOple are good, qualified,
hard-working kinds of people. ‘We now have about 100 em-
ployees. . . last year the plant was unionized by a narrow
margin vote by the International Association of Machinists
(which, by the way, is the same union that organized Whir1~
pool plant). There are a number of reasons that the fellows
unionized. . . but the main reason was that there was no
channel Of communication. But even if they are voted out,
we will keep many of the provisions that have been set up
under the union contract, such as grievance procedure,
seniority; and, you know, we are developing an employee
newsletter. Mrs. Straight who kept the books the first

few years and did some odd jobs around the Operation, is
now acting in the capacity of personnel director and is
promoting this angle very hard. . . AS you know, my train—
ing has been in industrial engineering so I have been help-
ing out in this capacity, and then Lee and I (Ed.h note: Lee
is the young man who is the current production manager) have
been working on this new product development. . . Our prod—
uct line here is very narrow and there are only about a
dozen companies who are large buyers of this particular
product, and all but one of those companies is covered by

a representative that we have out in the field.

In another interview, Mr. Alex Zenon of Omega Machine Tool Company
--a very tall, gracious, distinguished—looking Polish immigrant of many

years ago——made the following comments:

—64-

. . A few years ago I hired a general manager.. Prior
to that I tried out a couple Of them without any experi—
ence in the industry and they didn't work out. They would
get bogged down in detail and really didn't help me out.
I finally was able to hire away this young man from the
Aetna Corporation—-you know Aetna is a very large machine
tool manufacturer and they do buy some component parts from
us—-well, this man has been our general manager for a couple
of years now, and he's relieving me of a great portion Of
my load. . . . There are seven engineers in the plant, the
general manager is an engineer, the three salesmen that we
have are engineers and so is the technical service man. we
have eight manufacturers agents on the road in exclusive
franchise territories covering the United States. we also
have a foreign sales broker in New York City. we sell ma-
chines all over the country and all over the world; and
we do sell equipment to Germany, Japan, Australia, and
India-~which were some of our recent orders. There are
some engineers in designing and the drafting end of it.
I generally hire my own men out of the technical and trade
schools; you see, I have a brother-in-law who is principal
of one of the leading trade schools in Dearborn, and he
gets me a great number of referrals, and this works out
mutually well; sometimes I do get a trouble—maker in the
plant if I make a mistake in hiring, and usually the fel-
lows in the plant will drum this guy out before trouble
can erupt into serious proportions. I think I have a very
happjand a very good labor force, and I have no complaints
about my relationships in this reSpect. . . We have about
120 (in our employ) at this time.

The second dimension in which diversity in both skill and product
line and the customer distribution is important to the firm--is illus-
trated by Mr. Alex Zenon again. Omega Machine Tool Company has Special-
ized over the years in high—Speed shear cutting machinery. They have
developed a complete series of machines for shearing moving steel. The
interviewer's comments go as follows:

. . . He then showed us another large example of an
invention of his that he had been working On for sev-
eral years; it has to do with the problem of cutting
tubes or squared tubing in formed metal while on a con—
tinuous process, and Mr. Zenon indicated that he designed

this machine in which the cutter device would move with
the continuous movement of the pipe of formed steel through

-65-

the machine. He calculated that cutter was so efficient
that steel moving at 300 feet per minute will be cut in
this machine allowing the die to move only 24 inches to
complete the cut . . ."and we're expecting a very large
number of orders for this machine. It is our calculation
that while the machine costs over $30,000, a manufacturer
who would put this to good use in his process should be
able to regain his capital investment in six months' time
just from the savings of labor on this particular process."

Another machine showed us by Mr. Zenon, which was under—
going SOme preliminary tests. . .it was a forged die. . .
automated. . . the part moves between the two dies auto—
matically. . . Mr. Zenon stated, "we expect to have con—
siderable sales from this line starting sometime early
next year. we already have an order to ship one to

Australia."
Mr. Zenon then led us to another portion of the plant
. . . where there was a machine that could make from a

piece Of strip steel a flat nail which could be mounted
in the new stapling air-hammer gun, which would have
great usage for mass assembly Of flooring . . . "this

is one Of my better designs; notice here inside this
handle the movement of the stripped steel through this
process which is entirely mechanically controlled except
for the electrical on—off mechanism. . ."

Mr. Andrew Straight mentions Similar efforts:

We're now working with printed woods and printed compo—
sitions and are branching out into wood cabinet items
and trying to get to bigger items, particularly those
console units which will have some of the same Opera-
tions that we are currently selling. . . and we're
looking around for other things to do. One of these

is the possibility of making band instrument cases, and
we're now working with some plastic products to refine
this particular process. we have several other new
products that are on the drawing board. we have tried
to expand our line Of customers away from VM. As it is
now, VM takes only a small portion Of our output, and
about eight of our customers from about 12 to 13 poten-
tial customers are buying portions of our total produc—
tion. . .

Mr. Joe Wares Of the Mid-Central Sandpaper Company was one of the
three founders of the company. He described his organization and product

diversification program this way:

—66—

. . . I'm a technical man. . . based on my experience

. . . I designed and built this machine with my own
hands; Oh, from about 1951 to 1954 I did my major work.
A lot of ideas have been patented and we have been able
to protect our patents over these years. Since that
time I have expanded my staff and now I have a produc—
tion manager, maintenance manager, a group of technical
service people, and a process engineer; these have re—
lieved me of a lot of my day—tO-day problems. All Of
the men that have come with us have come from other
sandpaper manufacturing firms-—even Norm Smith, the
president and the sales manager of the company came
from a competitor company. we also have a lab here

in which we Operate on the basis Of applied mathematics,
and we have two mathematicians working our staff; one
of them is a younger girl who also doubles as my sec-
retary. With this group I have been able to develop

an electrostatis machine which with a positive charge
on a negatively charged paper and glue would cause the
grain or the adhesive compound to adhere to the paper
in particular patterns. This has been a very profitable
innovation. (My wife, who is an accountant, has helped
in keeping the books straight on occasion and in setting
up a good accounting system for the company. She has
been successful, too, and has added to the success of
our firm. . .) They are then stored and later converted
to customer's specifications. These conversions take
the form Of Sheets, circles which are die cut to Speci-
fication, and the endless belt of infinite varieties.

We have some twelve thousand regulation, mutations,

and permutations of this conversion process. This

is carried on in the other part of the plant.

The third dimension of the bureaucratic intensity among Class 2
organizational entrepreneurs is concerned with the areas of record keep-
ing, etc. An illustration of the degree of sophistication in this field
is noted in the interview with Mr. Fred Gilbert of Mid—west Refractories
Company. This portion of the interview was with Mr. Gilbert, who was
the Vice President of Marketing and Administration. Mr. Gilbert told
the interviewers that he was 35 years of age, had been educated at the
Lawrence Institute of Technology, had worked as a co-Op student with
Mid—west Company, and that he had been a private manufacturer's repre-

sentative for about four years for the Mid—west company when he came

-67—

into the Mid-west Refractories Company in his present capacity. He
has four people working directly for him: an inside sales coordinator,
a credit man and general clerk, and two secretaries.

When Mr. Gilbert was asked about the gross sales history of the
company, he reached into the credenza behind his desk and pulled out a
loose-leaf manual and displayed the profit and loss sheet for each year
the company had been in Operation up to that time. It showed a general
increase, beginning with a $150,000 gross sales in 1949 and concluding
with a one million, seven hundred thousand dollars in 1959.

This company also had three wholly-owned subsidiaries: the walsh
Products Company is the actual fabricator and installer of the refrac—
tories; there is also a small wire company which makes specialized enamel—
ing wires (which was a technologically—related product develOped from some
other research this company had been doing), and, finally, there is a
small conveyor designing and fabricating company which makes conveyors
but primarily does the conveyor fabrication for the refractory units
which are sold. Quoting directly from the interviews:

During the course of the interview, Mr. Gilbert
showed us the organization charts for the combined
Operations. . . He also showed us the policy manual
and comparative sales figures. . . He also Showed
us a manual with the tear sheets in which were
mounted the advertisements done by the Mid4West Re—
fractories as well as subsidiaries in various trade

journals. We noticed one advertisement done on a
COOperative basis with the General Electric Company.

The interviews were interrupted three times.

One (interview) was a telephone call. . . from some-
body in the company. Mr. Gilbert ended up saying:
”That's the policy. I'm on your side, but we have

-68-

to adhere to the policy until the policy is
changed." The policy referred to was a sales
policy in regard to the terms of sale. .

It is interesting to note two additional items which are charac-

teristic of this class of enterprise. First, Mr. Gilbert, when asked

where the President of the Company was at this time, replied,

He is over in England and then he's going to
France. . . The company has overseas operations;
we used to ship refractories over there but now
we have formed an association with firms over
there to fabricate ovens for us. . .

The second remark is as follows:

. . . I would like to see the firm purchase a
furnace company. We are losing quite a few or-
ders because people do not know the difference
between a refractory and a furnace. Refractories
actually are built for heat up tO 1200 degrees
Fahrenheit, and furnaces go much higher. we
should buy a small furnace company, one which is
not in too good shape, and yet one which we can
put into Shape so that we can round out our line.

The next interview excerpt, with Mr. Jack Outer of the No—Peer

Company, illustrates some further points. Mr. Outer, who was execu—

tive

also

were

that

vice president as well as secretary—treasurer of the company, was
the administrative Officer for this Operation. He and Mr. Frank
the two major founders of the company. It should be pointed out

Frank has four brothers and a brother-in-law who are also

members of this corporation; all of them had worked together in a re—

lated company previously, except that Mr. Outer had come up through

the ranks, through administration and field Office supervision, before

-69—

he became one of the founders of the No-Peer Company. During the inter—
view Mr. Outer described numerous routine administrative details that he
supervised, but then later in the interview he launched into a lengthy

description of some financial problems:

. You know, financing has been real tough for
this company from the very beginning. When we
started, we had to borrow money from all of our
friends and relatives to meet payrolls and stay
in business; during those early times we had been
dealing with a local bank for our checking account,
and to get some little money to help us out on oc-
casion. But finally, we made a contact through
some mutual friends with Mr. Carlyle of the National
Bank in Detroit. This guy is the most unusual banker
that I've ever met; he took one look at Mr. Frank
and the company and what we were trying to do, and he
saw to it that we got all the money we needed, and he
did this strictly on the basis of his evaluation of
our ability to get the job done and make repayments.
You know, Mr. Carlyle is the vice president of the
National Bank; he's one of the best damn bankers
in this area of business in the country, and he's
very well respected in this particular area. He is
not only good at making these kinds of loans, but
he is damned good on making collections, too. This
guy was really instrumental in helping us out and
moving this company into a good-sized operation.
(Editor's note: The company was producing Slightly
in excess of seven million dollars annual sales.)
When we needed a really sizeable sum Of money, when
we decided to move out here to Novi and build our
bigger plant, this guy came through. The other
bank we were doing business with couldn't handle
the set—up that we needed then, and Carlyle really
set us up. ‘

The fourth dimension which describes another phase of bureaucracy
is that Class 2 organizational entrepreneurs develop firms that have
considerable sovereignty, and perhaps one measure of this is the ability
of the firm to survive the demise of the founder of of the key figure.

An illustration Of this dimension comes from the follow-up interview

held again with Mr. Outer of the No-Peer Company. Mr. Frank died

-70-

approximately ten months after the original interview in that firm. De-
Spite the fact that Mr. Outer is still a minority stockholder and that the
majority of ownership now resides with the four remaining brothers and one
brother-in—law, he was elected chief executive officer of the firm. It

is currently still in business and thriving, approximately one year after
the original interview. Although sales were down somewhat, Mr. Outer
ascribed this to the fact that "this was seasonal and temporary and that
he looked forward to 1962 being a normally good year for the No-Peer
Company.”

Another illustration comes from.Mr. Robert Arnold of the Zip Die
Casting Company. Mr. Arnold had sold the Zip Die Casting Company to the
Coates and Clark Button and Fastener Company in 1959 for six million dol-
lars. This wholly-owned subsidiary is currently in business. It has
been run by Mr. Arnold's younger brother in the intervening time, and at
the conclusion of 1964 was selling at the annual gross sales rate in ex—
cess of seven and a half million dollars annually. Mr. Arnold has since
retired on his capital gains, and is working as a fund raiser for the
Lutheran College he could not afford to go to as a student many years
earlier.

The fifth and last characterization of the degree of bureaucracy is
the hierarchy and the orderliness of relationships which are seen as quite
important. The reader's attention is drawn to the previous interviews and
he should note the rather extensive functional breakdown in the interven-
ing supervisory and/or managerial personnel designed to govern and coordi-
nate the various activities described in these interviews. It is apparent
that considerable concern with hierarchy and, therefore, status and peer-

group relationships, exists among these founders and that organizational

-71-

relationships are to some extent manipulated in the abstract, as wit—
nessed by the interview in the Mid-west Refractories Company mentioned

under item 3 of this section.

Organizational Entrepreneur Class 1

This final section of Chapter III describes the extensiveness of
the bureaucratic mechanisms found in this particular group of organiza—
tions studied. It should be pointed out that the extensiveness of
bureaucratic mechanisms does not imply that the firm is fraught with
red—tape entanglements, lack of action, or ineptness, but rather that
it characterizes the zeal and efficiency of a well-governed organization
in which objectives and relationships tend to be clearly defined and
placed in orderly arrangements. Following once again the five-item
listing provided by Richard Hall and described at length in Chapter I,
the following characteristics will be analyzed:

(1) There will be evidence of extensive and elaborated
organizational structure based on a high degree of
Specialization.

(2) There will be evidence of a well—defined hierarchy
which is based not only on important technical
competency but also on status and personality
characterizations which are deemed important at
each level.

(3) There is a system of rules, procedures, and work
flows, and this orderly arrangement extends addi—
tionally to the external relationships maintained
by the firm.

(4) There is selection and promotion, and career pat-
terns are based upon technical competence rather

than on kinship arrangements or some other device,

and (5) There is a very high level of sovereignty and sense
of independence.

The first characteristic of bureaucratic intensity —- extensive

 

-72-

organizational structure and specialization-—is illustrated by the fol—

lowing excerpts. First, consider the statement of Mr. Farrell Pinkerton
of the Plastic Trinkets Corporation. This company began with $12,000
initial investment in 1948 and at the time of the interviews in very

early 1961 was grossing approximately nine million dollars a year.

. . . Over the past three years, I felt that this
business couldn't last forever, and so I started

a Planning Department, and I went around trying to
hire certain kinds of creative peOple into this de—
partment. As a result we have gotten into a number
of other lines. . . we now have some fourteen prod-
ucts, two of which are patented and about ready to
bring into the market. . . Back in our earlier days
we had problems trying to make a paint that would
adhere to the plastic. I had hired the assistant

to Mr. Del Harder at Ford's (Ed. note: Mr. Harder

was chief engineer at Ford Motor Company for many
years) as our chief engineer here at Plastic Trinkets.
You know, this man himself sat down and through some
experimentation came up with the one ingredient needed
in the paint to make it a successful product.

The interviewers were then taken on a tour through the plant and
offices.
. . . This is the product planning group which con-
stitutes both the engineering design group and also
a creative group which is tinkering with the new
ideas and new products to make. . .
Next the interviewers came upon a large room with a complete IBM
set-up. He said:
. . . I have an accountant and scheduler who handle

the inventory and payroll, and coordinate the other
production problems in the company here. .

Mr. Pinkerton also mentioned that there is a part—time personnel
man in the plant who deals primarily with the union:

-73-

. we hire primarily women for the jobs here,
because they're really suited to this kind of
meticulous work.

When asked about lay-off, he said:

. We don't have much of a lay—off problem,
mainly because the women don't like to work
steadily year around, and anyway it works out
very well in the long run. .

When asked about the union, he said:

. Our plant is unionized by an independent com—
pany union——which handles the grievance procedure,
etc. We have really excellent fringe benefits and
we have a large pension program.with vested interests.
In fact, there are a couple of gals who just quit
recently around the age of 45 and who were each able
to take about $1000 out of the pension plan; they
actually made money when they quit. And we have
completely paid insurance programs and so forth.

The union gives us no problems. 'We lay off accord—
ing to seniority, and you know it's only the final
production assembly process which gets involved with
lay—offs; the rest of the plant seems to work year
around.

Our sales arrangements are set up through eight commis-
sioned salesmen who cover the entire country. There
are a few house accounts, primarily the major auto-
motive companies for whom we make the sales promotion
toys; these house accounts are handled, oh, usually

by me. Now of these eight commissioned salesmen,

there are a couple of them that handle our product
exclusively, but most of them can't make a living on
it; it looks like, though, in the next few years we
will have a few more items, but they handle some
noncompeting items. The sales to Toy and Hobby Shops
particularly is a very intricate and involved process;
we have to be able to stock the items and feed-ins,
plus handle the mark-up problems and so on, and I think
our men are really able to handle the business very well.
We know of some competitors who tried to go direct and
some who hired salesmen on salary, but it just doesn't
work. They make a couple of sales a day and then they
get lazy; they never do earn their way. My commissioned
salesmen perform best for the company, and I think we
will continue that scheme into the future.

 

. .I J... 11.): . 1 ul*"|..l. urn-I- In
2H. .- ...H ‘ «HI..- . ..... .

 

-74-

When asked about the future both for himself and his company, Mr.

Pinkerton responded:

. . . I have a son-in-law who was a World War II
submarine officer who got very bored with the sub-
marine operation; he says it's the same thing day in
and day out. I went on a submarine with him one time
for one day, and we made eleven dives and, you know,
once you've made the first dive it becomes a very
boring routine Operation. Well, my son-in-law fin-
ally quit as Lieutenant Commander, and he went to
Carnegie Tech. in that new program where they take
twenty engineers into a Master of Business.Adminis-
tration program for two years. It's a highly special-
ized program, and excellent. Well, you know, my son~
in-law was quite disappointed with this program; it
wasn't really a challenging experience and even
though he did graduate number two out of twenty and
then got so many fabulous job offers with big com-
panies he didn't know quite what to do; he decided

to go with Thompson, Ramo, Wooldridge. Well, I've
been talking him into coming in as Executive Vice
President of the company, and sometime this year
when he winds up his affairs at Thompson, he will
join the company and essentially take over the
business.

These same dimensions are also illustrated in the interview with

Mr. Sam Aaron of the On—Line Instruments Company:

Later in the

. . . and when we merged and I took over our firms,

I wasn't familiar with electronics industries as an
engineer; so my first move was to hire an engineer.

. . . As the firm grew I had to extend myself by hir-
ing a comptroller who in turn now has a bookkeeper,
and now there is also a chief engineer working for Al
and a purchasing agent, and so on. . .

interview he states:

I hire women primarily for this fine assembly

work, inserting resistors and so forth into the
printed circuits, and these women are highly skilled.
. . . (and still later in the interview). . . I
still dabble in industrial design work, and I like

to feel I have some influence over the design of

-75..

the final product or at least in the outside pack—
aging sense of it. . . These catalogs and pictures
and layout and copy work, I do this for the firm.

The interview with Mr. Jack Holden of the Die—Electric Company
is also revealing of the extensiveness of organizational arrangements.
This is a company whose sales totalled 3.8 million in 1961. On the
average it had 135 employees duringthat year. Its stock has been

listed on the American Stock Exchange for several years.

. . . We have 12 engineers in Engineering and Research
and Development, and I have three sales managers report—
ing to me. One is a Technical Sales Manager; he handles
the technical problems of customers, and he's out on
call; he has an assistant. Then there is an Internal
Sales Manager; he sees to it that the orders are processed
and that follow-up is made here in the shOp; and he is
also in charge of Training (editor's note: There is a
continuous and large training effort on the part of this
company to educate customers and users of the Die—Electric
machine tools which are highly specialized and intricate
pieces of machinery.) And there is an External Sales
Manager who has the following regional sales managers
reporting to him: one in Los Angeles, one in Cleveland,
one in Chicago, one in Philadelphia, and one in New York.
And under these field sales managers we have a number of
distributors. Our sales manager also handles the distri—
butors here in this area of Detroit. And then we have
Bob here, who is Vice President-Treasurer, and is also

in charge of Operations here in the plant. Our purchas—
ing man reports directly to Bob . .

In the area of well—defined hierarchy, the mere fact that numerous
people with a high degree of Specialized tasks are existing within an
enterprise requires coordinative devices to be present. The logic of
this system demands that a technical hierarchy be established to co-
ordinate these diverse efforts. However, one significance of hierarchy

is the system of status——that is, the reSpect and prestige that is in-

terchanged in an upward versus downward direction as viewed in the

-76—

organization hierarchy. This status can be exemplified also in terms of
distance between people who are not acting primarily on the basis of pure
relationships, but rather that which manifests itself in terms of super-
visor—subordinate styles of relationships. These styles require that
certain roles be played by both the superior and the subordinate in the
maintenance of this stylized relationship. Some insights into these
status rankings may be obtained from the following interview excerpts.
Mr. Fred Green of Green Inter-Lake Lines, a very highly successful

entrepreneur,in his rambling second interview stated:

. Dalton, you know, used to be the staff assis—
tant to Tex Colbert who was at that time vice presi—
dent of International Operations and then he went
to Ford Motor Company in Canada, and there Dalton
made a lot of money on stock manipulation in Ford
of Canada, and finally retired and came back to this
country; he then wanted to get into some sort of
business. well, about that time I wanted to sell
the Chicago—Atlantic Lines which I had developed for
packing truckload lots into containers and putting
the whole works on board and shipping them off to
the East Coast. well, you know, Dalton paid more
money for this thing than he should have, but he
didn't ask me about it, so I just went ahead and
sold it to him as is. And, you know, Dalton was a
real executive. He was bright, shrewd, sharp, but
he never got off his ass. I tried to tell him at
times that it would be good business for him, with
all of his contacts with Ford and Chrysler, to go by
and drum up some business. You know, he could walk
right into Colbert's office or over to Ford's and
go after that business; but he never went out after
this business, and in six months he went bankrupt.
And d'you think in the process he'd even come over
and ask me what I could do to help him out? Not
on your life! He never knew anything about the ship—
ping business, and he was finally forced into re—
ceivership. You can look out of the window there
and you will see some of the containers are still
sitting on my dock out there. .

-77-

Another insight can be taken from a very small item that was men—
tioned during a cordial luncheon the interviewers had with Mr. Holden
of the Die—Electric Company and two of his immediate key subordinates.
After the group sat down and began their noontime cocktails, Mr. Holden
turned to Al and said,

Say,.Al, thanks for inviting us over to dinner

last week and to see your new home. You know,

we had a delightful time and that certainly is

a wonderful home you have there.
At this point the interview shifted into a discussion of labor relations
in the trade show being entered by the Die—Electric Company.

A fascinatingly insightful statement by Sam Aaron of the On-Line
Instruments Company reveals some fundamental motivations on the part of
the founder towards entering the business and his subsequent set of re-
lationships with the firm. When the interviewer asked Mr. Aaron why,
when he had gotten out of a previous business with a comfortable income

30
from a trust fund, he bothered toflback into business, he made the fol-

lowing statement:

. . . I had not closed my mind to the possibility
of reentering the business world in a different
capacity, but I had established some criteria
which would govern my reentrance. . . . I wanted
a business which was in a new and rather dynamic
arena; I wanted control of a firm or to get into
a firm in which intelligence and sophistication
were the criteria of comradeship and working re-
lationships with my fellow employees. This was
not the kind of relationships I had had in my re-
tailing business. . .

Then later in the interview when Mr. Aaron was discussing the

early prospects for his new firm, he stated that:

 

—78—

. There were a couple of salesmen I had inherited
in the outfit due to the merger, and I didn't quite
know what to do with them when we took over. One of
these salesmen was fine for the company when we were
piddling along at two or three hundred thousand dol-
lars worth of business, but we grew faster as a firm
than he did, and, therefore, I had to let him go. In
the meanwhile I'd made contact with the management
consultant Danto, who knew a man who was the Eastern
Regional Sales Manager with the Daystrom Company. The
Daystrom Company is a vertically and horizontally inte—
grated electronic and electrical firm, and it was es-
timated that my prospect was earning about twenty-five
to thirty thousand dollars a year. Well, you know, I
spent six months attempting to get this man to come
with On-Line Instruments. He was a graduate of the
University of Michigan and a native of the Detroit area.
Well, you know (at this point Mr. Aaron smiled), he
finally wound up his affairs with Daystrom and came
with us the first of the year. (I had let the other
salesman go on the previous quarter, and you know we
were really hurting when we let him go, because there
was no business coming in at all, and nobody to repre—
sent us out in the field), but since the first of the
year as this man has taken over (he has all of two
months' experience!)—-well, this fellow has fitted in
beautifully into our picture, both intellectually and
business-wise; he has taken over just beautifully. He
kind-of gives the impression that he has been with the
company all of his life, and he is turning out to be
a real asset to the company.

The third item which connotes a bureaucratic tendency is the
system of rules, procedures, and work flows. In this category a short
statement by Mr. Albert Charles of Electronic Controls is useful. The
interviews mention that Mr. Charles reached back and picked up a loose-
leaf notebook and upon opening it, said,

. . I am finishing up this employee manual
and at this point I am editorializing, and I
am trying to lay out as far as I can all the

things that are involved with employment here
at Electronic Controls. . .

-79-

As the interviewers read through the pages noting the tOpics covered,

we noticed such items as when raises are due, when

performance reviews are acted upon, leaves of absences,
and how they are granted, seniority list, how seniority
was to be determined, where to report for work, how to
call in, sick leave, and a great number of other items.

It should be noted that this is a manual for a company currently employ-
ing 135 people. Thirteen of them are in the sales department as direct
employees; three are in administration under Mr. Albert Charles who is
the Vice President for Administration. These include the accountant for
the plant, the man who handles production scheduling, and a purchasing
agent——the remainder being in the plant and in a non-Unionized category.
The interviewers also noted later in another interview with the Vice
President-Sales Manager,

a similar loose-leaf notebook outlining the sales

procedures and policies of the firm with regard to

the client and with regard to relationship with the

advertising agency.

Another example of careful planning and scheduling within a cor—
poration comes from the interview with Mr. Farrell Pinkerton, Plastic
Trinkets Corporation.

. . Mr. Pinkerton then pointed out during the plant
tour, "Our plant was designed by our own planning de-
partment and subcontracted by the company itself. It
not only resulted in our saving about three hundred
thousand dollars of the cost, but it's much more effi-
cient this way, since we know better than anyone else
the way our products move through the creative group,

through engineering, out onto the plant, and then out
of the factory itself.

-80-

Item four of the bureaucratic model is selection andjpromotion
based upon technical competence. The reader is asked to review the ex-
cerpts made under items 1 and 2 above with the thought in mind that
technical competence to the Class 1 organizational entrepreneur, in ad-
dition to the technical or skilled aspect of the art of finance, account—
ing, marketing, production—-embraces a further concept of personality,
with the following ingredients: a sense of teamwork, a personality
outlook which compliments the founder and the remaining members of the
team in a highly sophisticated form of aggressiveness and competency, and
a demeanor which exemplifies those characteristics considered important
by the founder and as expressed by the personality of the firm. Thus,
the statements by Sam Aaron regarding his new Sales Manager have broad
significance for this form of bureaucracy. In addition, note the state—
ments made by Charles Byrd of Byrd Plastics:

. . . It used to take me a l7— or l8—hour work day
to plow through all the data I needed to make a de-
cision. Now I have a financial staff headed by my
Financial Vice President who feed me these data.

NOw I find that I can take a look at the data pre-
sented to me, and in five minutes make a decision

as to whether to go or not to go. I know in some
other plants, even where they have these kinds of
data, they mull it over for 48 hours and then aren't
really certain of their decisions. . . I selected

my Executive Vice President when I found this fellow
could think as I do. He's very good at negotiating
and has the ability to see the whole chessboard when
he is maneuvering. . .

Item five of the bureaucratic model ranges around the notions of
firm sovereignty and the dispersement of product lines in rather inter-

esting manners related to a market-oriented concept. Thus, the Die-Electric

Company is found to be actively pursuing theoexpansion in the electrical

—8l—

mechanical cutting of dies to produce a very wide range of products
which can be hammered, stamped, or forged. These end products range
from table silverware and other domestic and genteel items, all the way
across the spectrum in dies which are used to forge piston rings in large
diesel engines. However, in addition to this, the Die—Electric Company
is embarked on a massive training program which is designed not only
to acquaint an ever-expanding market with the potentials of this type
of cutting equipment but also in the training of technical skills and
the increasingly SOphisticated usages of the present equipment. The
President of the Die-Electric Company alluded to the fact that this
training not only enhances the sale of the product but in addition re—
sults in commitment from the potential user to the Die-Electric's line
of equipment. The Plastic Trinkets Company has moved not only to exploit
the yearning for the new car item and capitalizing on the intensive ad-
vertising surrounding new car models, but in addition has designed and
distributed a number of kits used in customizing automobiles, merchan-
dising these customized kits not only through the normal toy—hobby shop
channels, but also through the Vocational Training Schools throughout
the country. In addition, this company has a large, well—staffed plan-
ning department charged with the reSponsibility for product innovation.
The President of this company stated that there were somewhere "between
twelve and fourteen new products now on the line and ready to enter the
pipeline.” Both this company and the Die-Electric Company have issued
stock to the public at large, and the stocks are quoted daily on the
American Stock Exchange.

The Green Inter—Lake Steamship Lines has a marketing philosophy

of "look for the marketing deal and you can always find the money to

-82—

execute the deal, and the rest of the firm will adjust to delivering on
it." The On—Line Instruments Company is aggressively pursuing a series
of diversification moves which utilize the already present capacity for
handling certain electronicsParts. It is also moving into the field of
sound and acoustics measurements as well as into intriguing merchandis-
ing techniques whereby the single, most profitable item yet marketed by
the firm involves the packaging of several of their own instruments along
with a great number of instruments produced by other companies—~into one
large console. It then programs the entire console with an IBM punch card
system, with leads onto the item to be tested and with read-out instruc—
tions to the inspector;thus the entire inspection system can be synchro-
nized, based upon the peculiar characteristics of each item to be tested.
As a final example, the Bird Plastics Company has become very prof—
itable in its enterprises by selecting, first of all, products which can
be mass produced, and, secondly, developing certain quality performance
standards for the use of those items; and then, thirdly, obtaining some
form of governmental control which specifies the minimum quality perfor-
mance characteristics which only their models, at that time, were able
to deliver. For example, the firm developed the standardized plastic
base for bowling pins, and then proceeded to obtain ABC Specifications
which only they could supply for a very significant period of time. This
same company also moved rapidly into safety belts, and at one time was one
of two companies which had the ability to produce the minimum quality

standards demanded by legislative action in safety belt performance.

—83—
Portrait of the Organizational Entrepreneur

The richness of detail and endeavor of this class of firm founders
makes the delineation of a portraiture very cumbersome indeed. This
group of men certainly contains the admired qualities expressed by the
society in which they exist. In the first place, work is seen not only
as an end in itself, but also as a means for bringing together new rela—
tionships which are stimulating in themselves. It is a means in which
a new thrust into the affairs of men can be carried through to completion.

In this group are founders who sense an inherent orderliness,
rationality and perpetuity in their corporate endeavors. They sense
that bureaucratic mechanisms are useful, but that care must be exer—
cised lest these mechanisms destroy the very purpose for which they were
intended. Thus, the statement made by Pinkerton of the Plastic Trinkets
Company:

. . . Creative peOple are very interesting. You

would expect them to be rugged individualists, but

I have a couple who aren't. They turn out fine work,

but they have to have the feeling of security that

somebody will support them in order for them to

operate. . .
This statement typifies the notion that the organizational entrepreneur
senses that the orchestration of varied efforts and people in an orderly
manner leads to corporate success.

Another and key characteristic which is important is the organi-
zational entrepreneur's view of the market place. This view is perhaps
best described as one in which the product of his effort is priced in

terms of what the market will bear. This notion is in contrast to the

craftsman-entrepreneur's operation where costs are estimated and a

~84-

standard mark—up is applied. The eminent economic theorist, Joseph

Schumpeter stated:
In the second place it should be observed that
whatever their nature in other respects, entre—
preneurs' gains will practically always bear
some relation to monopolistic pricing. What—
ever it is that produces these gains, it must
of necessity be something that, for the moment
at least, competitors cannot parallel, for if
they did no surplus over costs (including en—
trepreneurial wages) could emerge.

Typical of the organizational entrepreneur's View of marketing
is that he does not desire to make something that everyone else has
turned down, nor to be competitively successful. His notion tends
to be monopolistic. The organizational entrepreneur eventually ends
up in the nucleus of a proprietary product. This product may not be
initially monOpolistic, but through his endeavors and time, it has
achieved a "market" position. In summary, the market position of the
firm is derived both from a perception of the human relationship in-
trinsic to it and from an assimilation of that position into the work
system of the company.

There was a noted tolerance for both the worker and his union.
In effect, the union was seen as an aid in the predictable behavior

I
of employees as well as the progenitor of orderly change methods.
WOrkers are seen as necessary to the ends of the firm. The statements
made previously by Mr. Albert Charles of Electronic Controls and by

Andrew Straight of Straight Manufacturing--tend to bear out this point.

Noticeable, too, is the fact that there is a much greater tendency for

1Joseph A. Schumpeter, History of Economic Analysis, (Oxford Uni—

versity Press, 1954), p. 899.

-85-

organizational entrepreneurs to hire women workers in the factory area
than is done in craftsmen organizations. While this is not an either/or
concept, it tends to be indicative of a distinction. Since organization
entrepreneur firms develop status distinctions in hierarchy such as
greater specialization of tasks, managerial interrelationships "for

men only” can be preserved; whereas factory colleague relationships are
maintained in craftsmen firms, women cannot be isolated so easily.

It is seen, therefore, that the initial input of personality of
the organizational entrepreneur is considerably wider and has many more
subtleties. The following two tables showing the father's occupation
and the subsequent son's (organizational entrepreneur's) accomplishments
are revealing. Especially notable is that, in general, the father's
background is not much different in social class standing from the pre—
vious tables (Nos. 1 and 2) on the craftsmen entrepreneurs, except for
an increase in small business ownership. Of very great significance is
the amount of formal and informal education on the part of the sons.

It is interesting to compare and contrast the fathers of the organi-
zational entrepreneurs to the fathers of craftsmen entrepreneurs. It is
quite clear that there isn't the chasm of differences that one would ex—
pect, especially if one searched after seeing the distinctions between
the educational attainment differentials between the two groups of
founders. While there is a much higher degree of college graduates
(three) among these latter fathers, perhaps the most significant dis—
tinction is the large number of small independent business men (seven);
(add three if farmers were classed as small business among the fathers).
Of high count, too, is the number of immigrants (five) reported among

the fathers of organizational entrepreneurs. An equally interesting

10.

ll.

12.

13.

14.

15.

l6.

17.

—86—

TABLE III

FATHERS' OCCUPATIONS

Pharmacist; Owned two drugstores

Retailer; Owned own store

Engineer-Designer (college graduate)

Farmer (in Poland)

Owner of small patent medicine business (less than 4th grade education)
Small manufacturing business owner (in Germany)

Small business owner (carpentry); [less than high school education]
Semi—skilled electrician (less than 4th grade education)

Semi—skilled factory worker; became foreman late in life

Unskilled immigrant (from Armenia)

(a) Sign painter; postman
(b) Small general store owner

Unknown

Farmer (in Canada)

Architect and artist (with college degree)
Saw-mill worker, three-fourth Indian (American)
(a) Skilled worker

(b) Farmer

(c) Postman

(d) Butcher in Czechoslovakia

White—collar worker

—87-

paradox is that the founder who became both the richest from his endeavors
and who also had the very largest firm at the time of the interviews, also
had come from the farthest in terms of socio-economic advance compared to

his father.

In a nationwide representative survey for the
United States they report. . . that respondents
from low prestige backgrounds who are upwardly
mobile, significantly more often have higher 'n'
Achievement scores than those who are not upwardly
mobile. All the evidence supports the influence
that boys with higher 'n' Achievements are apt

to be more upwardly mobile in society, particularly
if they are at a fairly low socio—economic level

to start with.

However, this paradox breaks down, in that of the next two largest
firms (as measured by gross sales) the fathers of the founders had higher
level socio—economic attainments than did the next two lowest on the scale.

The data are very similar in cross section to that reported in

3

Lewis in his Louisville Study, and particularly Newcomer in her Pough—

keepsie Study when she stated:

The number of foreign-born proprietors is out
of prOportion to the foreign—born in the total
pOpulation. . . that the foreign-born, with
more limited opportunities, still regard this
as one of the most promising ways of getting
ahead.4

 

2David c. McClelland, 22. cit., p. 322.

3Gordon F. Lewis, "A Comparison of Some Aspects of the Backgrounds
and Careers of Small Business men and American Business Leaders," 'Ameri—
can Journal of Sociology (January 1960), pp. 348-355.

4Mabel Newcomer, "The Little Businessman: A Study of Business Pro—
prietors in Poughkeepsie, New York," Business History Review, XXXV, No.4
(Harvard School of Business Administration, Winter 1961), p. 477.

—88—

The Table (No. IV.) indicating the educational attainment of the
son or firm founder is presented on the next page, in the exact order
to match the previous table (No. III) of the respective fathers. The
level of educational attainment is truly amazing. In a generation when
less than five per cent of the population had a college degree, this
group shows eight accredited degrees and one nonaccredited. Five of
the accredited and the one nonaccredited were in some field of engineere
ing. (No doubt the latter fact was heavily biased because of the sampl—
ing procedure for determining successful firms, very many of which were
in some form of technical manufacturing.)

Even more astounding is the fact that every founder listed in
Table IV had had some sort of managerial experience prior to embarking
on his enterprise. Managerial experience is meant to suggest supervis-
ing several peOple in a technical function, in addition to the normal

personnel style of a working foreman.
Earlier Work Experience

One of the more unusual earlier work experiences is that of Mr.

Farrell Pinkerton of the Plastic Trinkets Company:

. . . My father, with a partner, invented a patent
medicine item which was the first hair preparation
item for women; he set up manufacturing Operations
out there and the business was quite successful, but
they decided to move it to Detroit. . . was fairly
successful, inasmuch as there was a large estate
left over when the elder Pinkerton died. It was es-
tablished by the nearly irrevocable, nonassignable
trust fund from which Farrell to this day draws a
fairly sizable income. . . My father went as far as
the fourth grade in school, but he had a flare for
writing and for verbalization. . . He urged me to

10.

ll.

12.

l3.

14.

15.

l6.

17.

-89-

TABLE IV

EDUCATION AND TRAINING ATTAINMENT - SONS (Organization Entrepreneurs)

B.S.I.E. plus five years managerial experience

High school, plus 22 years retail store owner

B.S.M.E.

Three years engineering school, plus engineering supervisor
Ll.B., plus twenty years practice

High school, plus consultant, plus general managerial experience
Two years college, plus managerial experience

Fourth grade, plus Great Lakes pilot license

B.S.M.E., plus managerial experience'

High school, plus I.C.S., plus managerial experience

(a) B.S., Ch.E., plus two years Law School, plus managerial experience
(b) A.B., plus sales management experience

(Interviewee not firm founder) B.S., plus four years managerial ex-
perience

High school, plus night school, plus managerial experience
B.S.F.A., plus 10 years managerial experience

Completed Corporation Tech. school (B.S.Engineer equivalent),
plus managerial experience

(a) Three years engineering college, plus managerial experience

(b) B.S., E.E.

(c) Two years college (this person acquired 30 patents in Electronics)

(d) Two years Engineering College, plus extras, plus four years
managerial experience

Three years law school (after A.B.) plus managerial experience

-90-

take up the law. I had never been keen on it, but my
father insisted, so I went to law school after I gradu-
ated from high school in Detroit, and I went on to the
University of Michigan where I completed my law degree
and passed the bar exam. I worked as a law consultant
at the Trust Company, and I actually wrote a book on
probate law for the company, despite the fact that my
fundamental interest isn't the law. . . After about

20 years of private practice, I had learned to special—
ize in Wills and Probate Law, including arguing cases
in court. . . I handled the wills in probate for Mr.
Bennett and a number of other Ford executives, as well
as some people over at Briggs Manufacturing Company.

These contacts were vitally important, inasmuch as later in the inter—
view Mr. Pinkerton said he used these contacts to get the initial start
in selling his products in the Plastic Trinkets Company.

Another type of work experience is described by Mr. Sam Aaron:

I left and went to Chicago to study at the Art
Institute which was affiliated with the University

of Chicago. My father died Shortly after that, but
the art work that I did was very interesting, and

I thoroughly enjoyed every aspect of it, although

I had my own emotional ups and downs. I was required
to go over to the University of Chicago campus to

take the academics, but that was just like going over
to another campus. . . After I graduated I got a job
doing art and design work for an advertising agent,
but it didn't go so well, so I came to Detroit where

I got a job with Bair and Company where I did copy
writing and advertising art and layout work. I was
married in 1939, and in 1941 I was second in command
of this department. Since my boss was going to retire
in a few years, I thought I'd better get my military
service out of the way. . . Discharged in November, 1945.
. . . I was invited to go back. . . but I had had
enough of that. My wife came from a family which had
operating control of the Highland Department Store Com-
pany. I decided to go with them, where I worked at a
great number of jobs; I was general manager when I
finally decided to quit. . .

Then there is the story of Mr. Albert Charles who began work at
Buick in 1936 as a junior engineer and who quit (because he wasn't given

any engineering tasks) in order to go to the A. C. Spark Plug Company

-91-

where he stayed until 1946. He then went with Good-Electronics:

This firm is in the resistance welding and control
mechanisms field, and after about twenty months
with the firm the following affair took place:

I had been commuting daily from Flint to the Good-
Electronics firm (oh, I'd drive about 120 miles a day)
when I finally decided to get married and settle down.
I found shortly that this commuting problem was more
than I could stand, so I decided to buy a house in the
north end of Detroit, a duplex. The reason I bought
that, I was worried that if I couldn't continue to
make payments, the other half would cover the major
burden of my housing expense. well, I was happily
married and, you know, on Christmas morning of 1947

I received a letter in the mail from the owner and
manager of the Good-Electronics Company. I signed for
the letter and upon tearing it open, found that it was
a dismissal notice and enclosed was a check for one
month's salary and a note stating that my services
were no longer needed. How about that for a Christmas
present! Later on that same day, I found that my very
close friend, Charles Campbell who at that time was
Sales Manager at Good;Electronics and who also came
from Flint, gave me a call; he had gotten a Similar letter!

The interesting point noted in the early work experiences of the
organization entrepreneur is the relative stability of job-holding men—
tioned in the interviews. Only two mentions of firing were made——the two
Charles' in the Electronic Controls Company and Fred Green of the Green
Inter-Lake Steamship Lines. In the latter case, discharge immediately
prior to the founding of his firm was not a factor. The interviews do
not reveal any tension of the type mentioned in the craftsmen entrepreneur
interviews. Only one mention is made about the lack of formal education
as an inhibiting factor. A more typical motivation seems to be similar to
that of Charles Byrd, founder and president of the Byrd Industries and

Plastics Company.

-92-

. . One of my intentions with Chrysler was to learn
everything I could about big business and how it Oper—
ates and how it runs. This was my whole idea with
Chrysler during the whole time I was with them. .

I had every intention of getting away from Chrysler
and striking out on my own. I lived very frugally
during my stay and in 1945 I left Chrysler, having
saved up $7,000. At the time I left I had determined
several things: one was the pent—up demand, particul-
arly for automobiles. Another thing I noticed was,

in several of the studies that I did while at Chrysler,
the operation of the dealership; I got some ideas on
how a dealership should be run. Another study I had
done involved Spark plugs that were then installed in
the six—cylinder engines. I found that Chrysler had
to purchase twelve spark plugs for every six that

were finally installed in the engine, and I think this
was due to the fact that being such a large organiza—
tion they lost control over these factors; I determined
at that time that when I got into my own Operations,

I would so control it that these kinds of cost factors
would not affect me. . . When I left Chrysler I was
able to obtain a franchise for a dealership in the
Detroit area . . . I Spent the first year getting the
business established and going . . . so when automo;
biles started to sell, my service department paid the
entire overhead of the dealership.

The Idea of Starting a Business

 

Mr. Farrell Pinkerton says,

. . As a result of these probating Operations, I
got involved with this person in financing his re-
search on a . . . die . . . I had about two thou-
sand dollars of my personal money. . . I ended up
the owner of this process. . . I had no idea. . .
all set to junk the whole affair. . . I was driving
down. . . in front of . . . when I got the idea.

Mr. Jack Holden tells another story:

. . . I worked in Detroit until my discharge. I was
déaling with all of the top people in industry, and,
in looking back on this, it couldn't have been better
training if I had tried, because I got to know the top

-93-

people in the industry——people that it would have taken me
twenty years to meet. It was here in Detroit. . . that I
met Mr. McElvenny who was the inventor of the process cur-
rently used by the Die-Electric Company. . . On this Opera—
tion in Cleveland, I didn't know a thing about the business.
I hadn't sold a thing in my life before, and I didn't know
how to find where the firms were. So I went down and talked
to a man at the Chamber of Commerce and this fellow at the
Chamber said, ”I can't spend much time with you now, but I
do know a lot of peOple in town, and if you have any trouble
just give me a call.”

Mr. Holden then went on to state,

this is an example of making friends. Up until a few
months ago when this fellow died, he'd been a real
close friend of us here all these years.

Mr. Jack Outer, who later took over the No-Peer Company stated:

. I quit D 'n' A in 1944 and went with Kinzel Con—
struction Company as an office manager in one of the
field Offices. It was a large competitor of D 'n' A.
I stayed with them until 1947 when Mr. Frank offered
me the prOposition of putting in some money to start
a firm. Organizationally he had in mind I'd handle
the office while Mr. Frank handled the operations.
There were six of us, four brothers, a brother—in—law,
and myself, and in time the jobs became slotted.

And, further,

And again,

we started out with some twenty-thousand dollars among
the six of us, with Mr. Frank holding about fifty-six
per cent. we started in the industrial construction
business because we were very familiar with the steel
erection end of it. The firm had its problems, but it
moved along fairly well. In 1951 we bid on a contract
with A.C.Spark Plug in which we promised delivery and
erection of a new plant in eight months. Other construc-
tion firms were also busy (Korean war) and their bids

had much longer delivery dates.

-94-

Mr. Frank had known some people there, and this contact
helped. .A.C. was very helpful in giving us some advance
money and paying for work immediately. As time went on,
it was my constant suggestion to Mr. Frank that the steel
fabrication and erection work was far more profitable
than general contracting.

Prepatory Steps and Initial Capitalization

One major distinction between types of entrepreneurs lies in their
outlook on how to go about starting into business. Whereas the craftsmen
entrepreneurs have a very strong inclination to locate a plant and install
machinery and fixtures, the organizational firm founder counterpart starts
with the sales of an idea, the development of a commitment, and then he
uses that commitment in order to factor it into reality. Note the pre-
vious interview of Mr. Charles Byrd and his approach to this automobile

dealership. Note also the following excerpts, first from Farrell Pinkerton:

I suddenly saw a way to use it to make a plas—
tic toy, with the idea of selling it to the Ford
Motor Company for a promotional stunt. So I called
the junkman off and proceeded to have a steel scale
model toy made of this little ornament, about eight
inches in diameter. In a couple of weeks I had one
made, and decided to go over to the Ford Mbtor Company.

Out at the Ford MOtor Company I went to the Sales
Promotion Manager; at this time there was a new one
because that was when Henry Ford II had taken over. .
So I walked in the Office of this man; I was quite
familiar with these peOple at Ford because of my pre—
vious relations with them through . . . I showed
this thing to the Sales Promotion Manager and it imme-
diately caught his eye. He walked around it and looked
at it and at this point he was completely sold on it;
then he said, "well, gee, I don't know what we can do
with this; maybe you should take it down to our man who
has direct relations with the dealer." So we were walk—
ing down the hall, and Mr. . . . who was then Vice Presi-
dent and General Manager for sales for Ford came out of
the office and we Stopped to talk to him for a minute; he
took a look at this ornament and invited me into his office.
And it turns out that he is completely sold on it, too.

-95-

But he had no interest in making these, so I told him
that I had no interest in making them, either. I just
wanted to sell this gimmick to the Ford MOtor Company
for a couple of bucks and be done with the whole affair.
Well, at that time a Mr...... who had the largest

string of Ford dealerships throughout the country was
sitting in the anteroom of Mr....'s Office and had seen
me walk into his Office with the ornament. Next thing
you know, he put his head in the door, and said, "Say,
that's a real interesting gimmick; I'll take 250 of
these." Well, I tried to interest Ford in making them
or doing something with it, but they didn't have any
way of handling this affair. Mr ..... kept pushing me
to go into the business to make these for Ford, even though
I stated that I had no interest in it. Then I made some
quick calculations and said: "Look, if I can have a firm
guarantee Of an order for 500 of these, I'll see to it
that they'll be made." Mr..... said that Ford wasn't

in the business of guaranteeing anything for anybody,
but just then he had a quick change of heart and he per-
sonally guaranteed the additional 250 units for me, and
actually wrote a letter to that effect. And with that
letter I went out and Obtained enough finance to sub-
contract the work out. And we eventually sold three or
four thousand of these units at a very handsome profit,
something like 150% on each unit.

Then later mr. Pinkerton went back to the Ford Mbtor Company, and said:

If you can give me your drawings, I could have these
models made up for gimmicks on Introduction Day. Why,
they even so constructed their purchase of parts that
each little tool and designing shop and fabrications
Shop that supplied Ford would be given only a small
part of the total model so that no one of them could
see the complete design of the Ford car prior to In-
troduction Day. Well, anyway, through a series of con—
tacts, particularly with . . . I was able to obtain
the drawings of the new models, the 1949 model which
was a very dramatic change for Ford——and only on the
basis that I'd put up a personal bond for $10,000 that
this model would not be exposed to the public before
Introduction Day. I suppose that $10,000 in Ford's
terms wasn't very much money, not much of a guarantee,
but they must have figured that $10,000 to me was a
great amount.

And, further,

I decided that my model cars should have nationwide

—96—

distribution and I needed to contact the toy buyers of
the four largest department stores in the country. Now
getting next to these toy buyers is a very interesting
experience. I traveled to Macy's, Gimbel's, Hudson's,
and Marshall Field's, and I got the story from all of
them and it was the same—~that they were very conserva—
tive and, at most, reluctant. well, Hudson's placed an
order for five dozen of these cars, but then I flew down
to see if the Buyer at Macy's and also at Gimbel's had
reconsidered, as I figured the whole thing was a fizzle.
At any rate, when I got down to Gimbel's I mentioned to
them, after showing them the prototype,that I could ship
them the new model car on the day of introduction of the
new models. The toy buyer went out for a moment and then
came back with a little wooden automobile, and he said, "What
do you think of this?" and I said, "I wouldn't give you a
dime for that piece of junk," and the buyer said, "I thought
the same thing all along; it's a cruddy—looking thing and
I wouldn't give a damn for it——but, you know, this is one
of the largest selling items we've got. I've been stung
so many times from these wrong decisions, I can't possibly
give you a bigger order than that until we see what's
really taking place.”

At any rate, I came back to Detroit in a real dejected
mood. I moped around for a couple of days and finally
I made up my mind. I called Bernard Gimbel on the phone
directly. I told Bernard Gimbel my problem; I described
the car to him; I mentioned the story that I had gotten
from the buyer. Mr. Gimbel told me to come down to New
York a couple of weeks later and he would see me at that
time. Well, I went down a couple of weeks later, and
in this meeting Mr. Gimbel had the presidents of all of
the other Gimbel Operations in New York, Philadelphia,
Chicago, Milwaukee—-they were all there, including their
chief buyers; in fact, Mr. Gimbel told me that this was
the first time in the history of the company that all
of the presidents were brought together on a toy-buying
meeting. And they looked at my models that I had brought
with me, and immediately placed an order for five thousand
of these cars. At any rate, I came home in business with
a purchase order, and this is when I went into production,
and on Introduction Day of the new cars, we were really
in business. When a buying service for most Of the commo-
dities in New York City which keeps track of sales of
certain items reported that this item was a really hot
thing, within weeks I had orders for a million of these
cars. I couldn't deliver them, but by working day and
night we finally got them out.

-97-

Another interview, with Mr. William Penna, founder of Five Machines

Company, further illustrates this kind of action. He asserted:

. . . Finally in 1953 we were forming the company
through a merger with a plastics company. I said,

we won't have Space enough, but we have to get
started. My thinking throughout is-—"In order to

get big--you have to have big business. In order

to have big business, you have to have plenty of
space to put your machines and tools and room to
Operate in." SO at this time we spotted a plant
which is currently across the street. we got an
agreement from the landlord to move the plastics
company in, and then the machine and tool company
alongside of them. But we were small, only a few
employees, so we put in a lot of workbenches and
tools, and I told my men to look busy whenever I
brought anyone in. I showed the purchasing agent
from Ford in, and he was very much impressed with

our size so we got some good—size business from them.
We outgréw the plant within a year. . . In the early
stages we had considerable financial problems. The
banks wouldn't lend money because there was nothing
to lend against. As a result we had to go to the
Telkon (Jorporation which is a lending institution
for exactly these kinds of problems. Telkon arranged
to give us money against our receivables at 18% in—
terest. Hell, we can make 10% on that, so we took it.

Fred Green, founder of Green Inter-Lake Steamship Lines concludes
with the most succinct statement:
In my mind the first input requires is sales; from
sales stems everything else. Once you get the sales
you can always find somebody who will finance it.
If you have the money, you can always hire people
as operators to do what is necessary on the project.
From these interview excerpts, the distinctions between craftsmen
entrepreneurs and organization entrepreneurs are further clarified. The

early sales contacts are not only essential at the start of the firm, but

they also quite faithfully reflect the backgrounds of the entrepreneurs.

 

 

l

 

—98—

Where the craftsman entrepreneur has had limited social experience and
his work experience has been in the fabrication or manufacturer of ma-
terial items (and even his parental background has been from the same
milieu), his primary focus is to have a productive capacity before he
makes his initial major contact. From the interviews it seems that it
is very helpful for the entrepreneur to have had either direct sales ex-
perience, such as in small business, or that he was brought up in an en-
vironment where on—going human relationships do exist, such as in mana—
gerial occupation. Craftsmen entrepreneurs relied heavily on some per-
sonal contacts to wend their way through the maze of the first contract
(indicating the need for structure), in contrast to his counterpart who
developed his own structure as he progressed.

It was interesting to note in a number of the smaller craftsmen
shOps the diSplay board which collected each item (for example, a small
stamped automotive part) and mounted them in a progressive pattern from
smallest to largest and, therefore, from least profitable to most profit-
able,(as thought, at least by the entrepreneur). It was as if the new
small company, like an incipient bureaucracy, started on a career of
learning and progression by beginning with the small and insignificant,
and progressing to larger, more responsible status. And to repeat a
previous remark, the craftsmen's organization most nearly reflects the
values of a department of an existing large-scale firm rather than being
an independent entity. Even in his sales efforts, the need for structure
is so strong that the craftsman entrepreneur is typified by the comment
of Mr. Fred Just: ”Just give me a job, and I'll get it done.” This con—

trasted to another type of comment made by Charles Byrd:

-99-

My theory about the sporging goods business is that
I have surveyed the data and information which were
available, and I felt that the population would have
considerably more leisure time to spend as well as
pent-up income to spend on these interests. I was
able to dovetail these interests. . . I eventually
devised a base for bowling pins. . . and got the ABC
to specify them. . . I made close to 90% of these
plastic bases. .

The concluding distinction of the organizational entrepreneur is the
nature of the firm which ensues. Administration is concerned with rela-
tionships and coordination. It is concerned, too, with problem solving
and action. The organization entrepreneur, in reSponse to his training
and background, notes that "his” firm needs to have particular reSponsi-
bilities assigned and distinguished from the other mainstreams of acti-
vity. Since he sees his firm as a sovereign entity, he proceeds to estab—
lish functions within the firm that the craftsman entrepreneur either
does not perceive or not perceive the need to implement them. According

to Costello and Zalkind:

A relevant law that needs citing at this point is
March and Simon's formulation of ”Gresham's Law" Of
planning. When a person can choose between routine
tasks and problem—solving effort, he will tend to
give his time to the routine. On this basis, they
suggest that if inventiveness is to be built into an
organization, special departments must be set up in
which the members are prohibited from performing roa-
tine tasks and rewarded only for problem-solving and
inventive activities.

Some people are better problem solvers than others;

not only because of Specialized abilities and the
background of knowledge, but also because of personality
characteristics and habits of thinking and working that

 

5Timothy W. Costello and Sheldon S. Zalkind, Psychology in Admin-
istration: A Research Orientation (Englewood Cliffs: Prentice-Hall, 1963),
p. 373.

—lOO-

favor effective problem solving. . . The following
personality and motivational characteristics have
been identified as favoring effective problem solv-
ing: high achievement needs; a tolerance of ambiguity
and uncertainties; flexibility; habits of searching
and exploration; and freedom from conventionalized
attitudes in the area of the problem. . .6

A useful summary for a portrait of the organizational entrepreneur
is provided by Professor William E. Henry. His comment may be compared
with the comment made by Professor Victor Thompson (on page 60 of this

thesis).7

On the basis of his study William E. Henry was
able to identify several personality characteristics
that seemed to distinguish the successful from the
unsuccessful executive. Among the traits that he
found commonly characteristic of the successful exe—
cutive and absent in the personalities of the failures
were: strong achievement drives, a strong need for up-
ward mobility, comfortable adjustment to authority and
authority figures, high organizational abilities,
decisiveness, a well-developed sense of self—identity,
sensitivity to reality and its limitations, a high
degree of activity in striving, a sense of identifi—
cation and responsiveness to superiors, and strongly
objective, detached ways of considering subordinates.

In addition, and of particular significance for
our present discussion, the successful men exhibited
a sense of dependency upon the policy and organiza-
tional framework of the company. . . .8

 

6Ibid., p. 385.

7Thompson, Modern Organization, 92. cit., p. 177.

8Costello and Zalkind, gp. cit., p. 157.

CHAPTER IV

FURTHER COMPARISONS

The previous chapters made a direCt comparison of the social back—
grounds Of firm founders and the degree of bureaucratic intensity they
exhibited in their own enterprises. This chapter will make some further
comparisons which are not so directly pertinent but nevertheless have
impact on the nature of the organizational patterns in these enterprise
units. The primary focus of attention in this section is the ability of
the entrepreneur to perceive time, to sense the nature of the flow of
events as they affect his firm, and to suppress anxiety sufficiently to
permit future objectives to take place.

The unfolding of events, the emergence of new institutions, the
displacement of the old, the growth and divisionalization of existing
organizations, the life—cycle of humans--all imply the passage of time.
It is argued that time is another factor in the unfolding of events; it
is an abstraction, a measurement, intangible, and yet a perceivable de-

rivative. In our culture, time is a spatialized continuum and linear.

Time Perspective

 

An event occurs "in time." It comes into being, along with other
events, is shaped somewhat by tradition, develops, actualizes, and fin—

ally passes into the past. The influence of the individual on this event

-lOl-

-102-

may be considerable, or it may be negligible.1 If it is considerable,
the individual may be referred to as the entrepreneur of the event. He
has undertaken the propelling Of the event, even though he did not con—
ceive it. One can theorize that in a high state of bureaucratization,
the influence of the individual may be held negligible, and the flow

of events is inevitable.

The actor in the event——the entrepreneur, the decision-maker and
impeller--is one who senses or perceives Opportunity. He sees the pos-
sibility of either bringing together or the resolving of alternate ac-
tions and thus bringing the situation into the realm of concreteness,
of solid and easily perceivable existence. His choice Of alternatives
and endeavors and commitments is based upon their anticipated conse-
quences.

The actor projects himself into the future (time) when the event
is "completed" and reconstructs the intervening events which will bring
forth his projection. The actor's ability thus to project into the fu—
ture, as well as his ability to perceive the steps and alternatives he
must shape to bring about his anticipated consequences——are then obviously
based upon his own "knowledge” and his personal set of experiences which
constitute his operating characteristics.

Two dimensions are operating: first, how far into the future the
actor can project himself, and, secondly, the administrative ability Of
the actor to perceive correctly and control all of the sub-events leading
to his goal. Obviously, this is an oversimplification, in that it does

not account for external, unforeseen events, nor does it account for the

 

lNorman H. Martin, Differential Decision Situation in an Industrial
Plant Management (Chicago: University of Chicago, 1954 [unpublished Ph.D.
thesis], eSpecially Chapter III.

-lO3-

motivation or tenacity that an actor holds for his goal(s). Both of
these items may indicate how far into the future an actor will project
himself; not how far he gag.-Nevertheless, it is argued that the set of
life experiences shapes one's ability to project into the future, and the
craftsmen entrepreneurs project into the future differently from the or-
ganizational entrepreneurs.

Inherent in the second dimension is the degree of structure present
in the perception of the event. The assumptions of the degree of struc—
ture present are unmanageable, although Guilford2 and others are making
heroic attempts in their investigations. There is the assumption that
a.hggh degree of structure exists in which (1) most of the significant
elements agd their relationships are seen by the actor; (2) the existing
(present) situation demands action; (3) alternative courses of action may
be ruled out or easily rationalized; and (4) the time zone into the fu-
ture is short. (Shortness is subjective; as long as the actor perceives
this particular zone as short, he will act on that basis.)

The craftsman entrepreneur tends to have shorter run perceptions
and seems limited to "model run” or"program” length. These are quite
highly structured time notions. The organizational entrepreneur, on the
other hand, is more easily able to discuss perpetuity of the firm in terms
of managerial Specialties and cost accounting, product planning over the
long run, diversity of effort designed to ensure progress and stability.
All these latter are less structured and even their short-run objectives
tend to have long-run implications.'

2P. R. Merrifield, J. P. Guilford, C. R. Christensen, and J. W.

Frick, ”The Role of Intellectual Factors in Problem Solving,‘' Psychologi-
cal Monographs (1962), LXXVI, No. 10.

-104—

Events projected into the future can be classified into a continuum
of concrete and abstract. Concrete is the here and now, easily perceived,
easily touched, enduring, complete. Abstractness is derivative, incom-
plete and not easily translated to concrete experience.

It is asserted that craftsmen entrepreneurs, because their world
of experience is somewhat limited to the concrete, operate in a more solid
state of projection. They perceive their occupation in terms of machin—
ery, solid product, and the solving of mechanical problems. Their rela—
tionships are one for one--"I do my work now; you pay me now."

There have been a few studies attempting to relate time perspec—
tive to human psychological dimensions. Following are some relevant ex-
cerpts; however, these do not separate human types, except those with
high 'n' Achievement, and those without. It is suggested, therefore,
and somewhat tenuously, that craftsmen entrepreneurs have lower 'n'
Achievement scores than do their organizational entrepreneur counter—
parts. According to McClelland,

In other words, the more unknown the situation which
demands their achievement, the more self-confident
they are as contrasted with the subjects with low 'n'
Achievement. But as reality cues become available,
they tend to face their judgment on these cues. They
are not "impractical dreamers" overestimating their
chances of success at everything; instead they rely on
facts so far as they are available, and they fall back
on generalized self—confidence. In this respect they

are behaving just the way Sloan and Dupont behave, at
least as Sloan perceived the situation.

An independent set of studies by Rickson Epley (1960)
has demonstrated that subjects with high 'n' Achieve-
ment also have a longer time perSpective on the future
in the imaginative stories they write. . . One part

 

3David C. McClelland,_gp. cit., p. 233.

-105-

of the scoring definition of 'n' Achievement refers

to "long—term involvement" in the Situations described
in the stories in which an individual is involved over
a long period of time in achieving some occupational
goal. . . The longer forward—time perspective of
individuals with high 'n' Achievement may be in part
the explanation fog their superior ability to delay
gratification. . .

In other words, subjects normally high in 'n' Achieve—
ment (those middle—class) were not influenced by the
introduction of a $10 prize, but those normally low
in 'n' Achievement (those from the working classes)
were definitely influenced by the introduction Of such
an award. All three studies point to the same con—
clusion: people with high 'n' Achievement are not
influenced much by money rewards; they are interested
in achievement. PeOple with low 'n' Achievement, on
the other hand, are influenced by money and can be
made to work harder for money or other such external
incentives.

For the individuals with high 'n' Achievement, time
is almost literally moving faster. They are, so to
speak, always a little "ahead of themselves.”

Time and Survival

There is a second nature to the problem of firm analySis in a time
Spectrum. A firm is understood to_bg a firm when it has demonstrated
survival. There are innumerable incidents which manifest or cloud this
survival notion, and this notion exists in the perceptions of mankind.
If the firm is a fast—growing one, it may display its survival ability
in many ways; however, not in the realm of profits. Rapid growth may be
a substitute for time. A firm may be able to extract legitimacy from

certain segments of the ”business world" sooner if it displays rapid growth

-_4

4Ibid., p. 238.
51bid., p. 235.

6Ibid., p. 237.

-lO6-

and manifestations of that growth. Another firm may have to wait out
the test of time (a longer time) in order to prove its survivability.
The essence of this point is, however, that survival is the passage of
time successfully (having been able to avoid being devoured) and now the
firm is enveloped in the mantle of legitimacy.

Survival is perceived as what one thinks that others think about
the ability of the firm and its entrepreneur to meet payments, to de-
liver goods of acceptable specifications in the prescribed time period,
and to show progress in each succeeding time unit. It is crucially im-
portant, then, for entrepreneurs to be able to plant the seed of survival
into the feedback perceptions of critical systems at crucial time periods
during the earning of legitimacy. He can forego a payment to the sta-
tioners in period three, but he had better not be tardy with the mill
supply house or the bank, or perhaps with his key raw material supplier.
Obviously, his strategy is based upon his own perception of the ”relative
importance” of his suppliers to his enterprise, but it is also dependent
upon the ”relative competitiveness” of the suppliers at the time of the
decision to respond or not respond. Survival in this case, then, is the

strategic use of resources in the "time spectrum."

Control

Money is purChased time. Through his own savings and those which
he can cajole from relatives, the craftsman entrepreneur Obtains just
enough to Open the door of his place of business. From this initial pump
priming, he attempts to generate enough return to meet current demands,

and through accumulation to buy the next most important ingredient to

~107-

his enterprise. In the early stages, then, the founder has an imperfect
system. He must, of necessity and because of his incapacity, forego cer-
tain types of business which he has cultivated. But Since his person—
ality is such that he cannot allow others to Share ownership, he must
consistently generate all his own purchase time. This is a highly con-
servative approach, which has been sufficiently successful that those in
our society who practice this method find high status reinforcement for
this modus Operandi. The authoritarian personality has a somewhat dis-
torted view of "control” which is obviously a throwback to earlier child—
hood learning days. One hundred per cent ownership is tantamount to con-
trol. Anything less is subject to the whims of the ”capitalist," or the
interloper, and is most disturbing to this man who is already having to
undergo tremendous efforts to achieve control in his newly emerging en-
vironment.

The organizational entrepreneur senses that time can be purchased
for his firm. He is willing and even encourages the input of capital,
because it allows him to exercise his real abilities——i.e., manipulate
resources in such a way as to maximize both cost—profit relationships
and perceptions. In this sense, the founder is purchasing time to be
able to act 39w, rather than later. In this sense, too, entrepreneurs
are not wholly different in terms of their organizational objectives,
but their differences can be seen in their time preferences and perhaps
intuitive abilities to achieve these Objectives through any time period.
The Obvious paradox lies in the noted difference that the organizational

entrepreneur is much more prone to long-range planning,7 to thoughtfulness.

 

7William Hoad and Peter Rosko, "Management Factors Contributing to
the Success or Failure of New Small Manufacturers," Bureau of Business
Research, No. 94 (Ann Arbor: University of Michigan, 1964), p. 65.

-lO8-

deliberateness, and effectiveness in the longer time span of enterprise.
Yet he is the one who engages in a form of enterprise where the short—run
goals may have precedence in terms of absolute control.

The risk which inheres in either end of this spectrum can readily
be seen. On the one hand is the craftsman entrepreneur whose short-run
liquidity preference is high, and thus he loses the advantage of present-
day control in the marketplace as well as the leverage factor of high
debt in a rising market. On the other hand, the organizational entrepre—
neur risks the demise of his enterprise due to a possible high rate of
demand for payment which is not orchestrated with his ability to exploit
that return from his marketplace. Needless to say, there are the risks
of high debt because his leverage may work against him. Witness the spec—
tacular demise of de Angelis, Billy £301 Estes, Lobo, and even Zeckendorff.
All these last were playing for a speculated condition persisting for
just one more period of time. To speculate that the entrepreneur has
made a deliberate consideration of alternatives and decisions is to over—
simplify the case; what is really the condition here is that each one

was acting from his own personal bias projected into the future.

Long—Range Planning Contrasted

The organizational entrepreneur talks about the six months of exas—
peration in Obtaining the services of a sales manager. Another talks
about patents and "training” programs. A third projects into long-term
usage in the marketplace, such as truck receiving gear, because trucking
is growing as an industry, or Sporting goods of a nature which will not

change due to age of player (e.g., golf or bowling), and still another

~109—

converts ocean freighters to lake ore carriers.

The richness of detail can better be appreciated by the following

interview excerpt with Mr. Charles Fast, founder and president of Lock-

Tite Aluminum Company:

For my education I went to Park High School and

I graduated in 1932 as president of my graduating
class. Then I went to Commerce Junior College for

a couple of years, up until 1934, and then I wanted
to be a lawyer, so I went to Cadillac College Law
School. It's a night-school, and I stayed there
until l937--about three years-—and then I quit. I
found finally that I got more interested in business,
and there was more work to do there, so I finally
quit law school.

When asked about his future plans, Mr. Fast discussed at length
several large propositions which included not only expansion but also

vertical integration, and he went on to state:

Now this is a fairly new process, and we're doing

it on a licensed basis, and are to pay for this;
it's costing us quite a bit of money to buy the
equipment necessary for this process. . . This
equipment is going to cost about half a million, and
in addition to this, I have had to get inventory
loans from Lawrence Heller and Company of Chicago.
This has cost me about 13% and the other is four

per cent. I'm up to here in debt.

And as he drew his hand horizontally across his neck, he.commented

further:

However, this will put me in a much stronger posi-
tion as far as they are concerned (the major aluminum
supplier). They would prefer to sell the pig alu—
minum, as it costs them about 12¢ to produce it.

Then they sell it for 26¢ a pound which gives them 14¢
profit per pound, but in fabricating it they make

only a 9¢ profit off the fabricated item. Consequently,
they make more profit in selling the pig.

—110—

Mr. Fast owns the majority of company stock, and there are two directors
outside the company.

On the plant tour of the Lock—Tite.Aluminum Company, the interviewers
noticed Signs affixed to all of the machinery, and in certain strategic
places on raw stock inventory and rOped—off areas, all of them indicat—
ing that these items were part of the collateral for the loans from the
Heller Company. Mr. Fast stated: ”I don't like these arrangements; that
is, having these signs up all over the place." There was a pause and then

he said,

But I received a letter from Heller the other
day, and they state that we were the nicest and
most COOperative company that they have ever
done business with. . . It made me feel pretty
good about this.

He was asked about the picture of the girl on the table by his chair,
and he said that this was his daughter, and the only child in his family.
Then he went on to state that she was going to the Sorbonne this spring:

As a matter of fact, next week we'll be going
over to France, my wife and I, and then we'll
take her down to Spain and Portugal for a
few weeks'vacation, and then we'll take her
back to the Sorbonne.
She was just graduating from Hollins College in Roanoke at that time,
where she majored in French Literature and French History.

When asked about other associations, he stated:

I've been president of two associations. I was

the founding president about 11 years ago of the
National Association of Home Improvement Manufac—
turers. we just had a show here in New York some

-111—

time ago and we grossed $65,000, and made a profit
of $35,000 which goes into the Association Fund;

and I was also the past president of the Association
of Storm Sash Manufacturers. I also belong to the
Oakland Country Club. However, so far as golf, I
don't play it very much. I don't think you can

run a business and be out on the golf course three
days a week.

The interviewers commented also that the offices in the building
were highly stylized and decorated, the sort of place that salesmen and
other people could bring customers and clients for conference and inter-
views.

The craftsman entrepreneur on the other hand has a much narrower
conception. It is not implied that this narrowness is either evil or
derogatory; in fact, it is perhaps necessary for his type of business
to succeed. The interview with Mr. Robert Eve, President of the Para—
dise Company (1961) [when gross sales were 1.85 million] included the

following comment:

I've been doing a lot of thinking about this over
the last couple of years, and had some discussion with
my brothers, and I don't really know quite what to do.
The vast majority of our business is within a ninety—
mile radius of Wheeling, and there are considerable
problems. There is the problem of the feast or famine
approach which we've solved in our own Operation because
we do not have a union. . . but because jwe are not
unionized, we've been able to instill into the men this
notion that if we do not have productive work to do,
there is considerable maintenance and repair work that
they can do. Cleaning the plant, cleaning the equipment,
maintaining and putting it in order. . . We generally
work two shifts from the standpoint that the afternoon
shift gets material ready and in order for a large move—
ment on the day shift. . . In order for us to get more
contracts we must be able to bid on larger material.
(Ed.'s note: Meaning larger dies and tooling.) This
would take the investment of money into larger equipment.
But this is not feasible because we can't use the equip—
ment and machines that regularly would pay the overhead
for them. We've reached our best position just about
now. If we get any smaller the overhead would not drOp

-112—

appreciably and we'd be unable to bid on some contracts
which are worth while. we've talked about the possibil-
ity of building another plant location, but that'd add
overhead which we might not be able to handle.

Mr. Eve then pulled out a large pile of brochures from auction
'houses and used machine dealers in the Midwest. He noted the sale of some

large tool and die shops:

This really scares me. I've been on the mailing list
to receive this information. I know some of these Op—
erations who have gone under in bankruptcy. I can't
believe in my mind that some of these people went under
because of bad management; that they did not know how
to run their shops. There is a right size for overhead
in this feast or famine Operation.

Or note the statement made by John Lather, founder of the Lather Com-

pany: "NOw I'm happy about this level, and I see no reason for working

any harder at it.”

In another vein, Mr. Himmler of the Acme Boring Company stated:

. . . and, by the way, all of the equipment that has
been purchased has been purchased by cash all the way
down the line; I've never had to use the banks to any
large extent, except maybe for minor working capital
purposes, and we've got plenty of assets and collateral
to put against that. . .

The richness of detail between the interview excerpts of the or—
ganizational entrepreneur and his craftsman counterpart is also indi-
cative of the ability to perceive the numerous sub-events involved in
a longer range scheme. The organizational entrepreneur is much more

able to sense the subtleties and implications which become intricate

as he yiews and prepares for future events. Charles Byrd, for example,

 

-ll3-

extrapolates from statistical and demographic data. Jack Holden uses
training to obtain commitments from clients and prospects. Farrell
Pinkerton employs the salient yearning for new model cars and customiz-
ing fads as part of his long-range contemplation. In contrast, Robert
Eve, who was the most verbal and rational in his dreaming among crafts—
men founders, is highly concerned with utilization factors for various
types of equipment. Carl Norse pats a large machine on the motor and
says that it can stay there for the rest of its days because it earned
such a high return during the last model year. Fred JuSt, however,
states the craftsman values most neatly when he says, "Show me what
you want done, and I'll do it."

As long as the firm and team continue to manifest their interde—
pendence, subordinates will acknowledge their subordination to the wishes
of the firm as opposed to those Of the craftsman entrepreneur who exacts
personal tribute. And as long as firms prosper from planning and the
ownership Of tools, the subordinate finds that his mobility (and his
only call to exact power) is severely reduced. Mobility to and from
craftsmen firms was continuous, and was even expected by the owner.
This mobility to and from craftsmen firms , among other implications
'it has for the firm, severely reduced the longer run status and pro-
jectability of that firm. The implication is clear--that the fruits of
high productivity, the stability of industrial life, and the subordina-
tion of personal wants and rights are inextricably interrelated. Note
here that stability is the time factory for which man lays down his

moral life. It is his life—time.

—ll4—
Time and the Emerggnce of Bureaucracy

The paradoxes of life are innumerable. The primary one here is
that it is generally conceived that the centralist—communist thesis is
one of stability, at a high level, and at the high price of the present
generation providing it for the following generation.° But this is a
bourgeoisie notion, the giving up of present—day pleasures of life for
the myth of the future.8 In reality it is the free democratic and highly
industrialized societies which have most nearly accomplished the commu-
nistic goals and the communistsocieties which have most nearly failed,
at least to date. It is the organizational entrepreneur who has devised
stable measures for his firm and his relationships. It is the craftsman
entrepreneur who by his actions is disruptive of stability, notwithstand—
ing his posture in public. He does, however, provide resources for some
nonstable personalities.

It is the bureaucratic processes whereby functions are special—
ized, segments divided and reunited, relationships of people specified,
"coordinated" records kept for posterity as well as for governmental
demand, hierarchy developed for status as well as coordination and its
ultimate effect of stabilizing both internal careers and external pos—
ture of survival and permeability. The vastness and precision of this
machinery is dependent also on the concept of continuity in various mar—
ketplaces. The profit of the organizational entrepreneur and thus the
bureaucracy is then somewhat quasi—monopolistic. The initial abilityr
of this entrepreneur to position himself in some control of the merchan—

dising system allows the machinery of the bureaucracy to fill it, to

 

8K. R. Minogue, "The Fable of Time and Class," The American Scholar
XXX, No. 2 (Spring 1961), p. 210.

 

-115-

detract from it, and to keep it supplied in proper proportions. The
ability to provide stability inheres in the notion of control which im—
plies restricted entry among others. Craftsmen entrepreneurs are highly
dependent on the client to provide outlet for their energies and, there-
fore, they are dependent on clients for restricting entry. NO self—
interested client would do this for long; first, it is against the Ameri—
can tradition of free enterprise, and, secondly, the relationship of one
bureaucracy to another (internal as well as external) does not permit or-
ganizational profit to persist long outside of his sphere.

The conclusion is that while initial efforts to establish a firm
may be seen as short range, the long—run plan of events is signifi—
cant for the outcome. The outcome is one of bureaucratic persistence
and therefore of market stability. As long as long-run stability seems
stifling, and volatility seems attractive to a segment of the population,
that segment will find a mechanism for satisfying that feeling. The
reader will find that these notions of time, time future, and the tech—
nological superiority of the "roundabout" processes have been delineated
by the famous Austrian Economist, Boehm—Bawerk.9

This superiority of technology also implies the technical capital
of the large—scale organization. The organizational entrepreneur recog-
nizes not only the personal pleasures to be derived from a highly effec—
tive team, but also he senses the capital good which he now possesses,
which he conceived and nurtured to become the effective team. He also
senses that like any other capital goods, segments become obsolete, and

with the infusion of new ingredients and the restating of new goals for

 

9Paul A. Samuelson, Economics: An Introductory Analysig (New York:

McGraw—Hill, Sixth Edition), p. 595.

 

—ll6-

”his machine,” this machine is both viable and perpetuating of itself.
While the process is more "roundabout" than that of his craftsman coun—
terpart, it also is technically superior. Needless to say, the perpetual
body of the bureaucratic or organizational system allows it to command
resources and respect which a single human unit is incapable of doing,

at least in modern-day society.

 

 

 

CHAPTER V
SUMMARY AND CONCLUSIONS

In the beginning it was stated that the purpose Of this thesis was
to relate and organize the responses of the founders or heads of thirty-
six companies so as best to eXpose the background characteristics of
these men in relation to the administrative organization which resulted.
This was demonstrated by means of comparing background characteristics
to those sociological characteristics known as "blue—collar people" and
”white-collar peOple." The business firm itself was positioned on a
scale of bureaucratic intensity suggested by Richard Hall, a sociologist.
The major hypothesis of this thesis is that business firm founders with
blue-collar backgrounds tend to develop business organizations with the
least bureaucratic tendencies, and that white—collar backgrounded busi—
ness firm founders tend to create firms which have many more bureau-
cratic appurtenances.

Bureaucracy is a model which is primarily concerned with ration—
ality, with ordering the affairs of men, with Optimizing within the total
cultural milieu, with the specialization and complementarity of work
and effort. In its ideal sense, it lays down a set of principles regard—
ing how work is to be performed, and by whom, and under whose direction,
and finally how the whole effort is to be coordinated so as to achieve
certain distinctive Objectives. Bureaucracy is concerned with relation—

ships, both internal and external. In this regard, craftsmen entrepreneurs

—ll7—

—ll8-

were found to be disruptive of the general process towards ideal bureau-
cracy, whereas the organizational entrepreneurs were found to be facili—
tative. Not only is the scope Of activity of an organizational entre—
preneur's firm much more extensive, but the ordering of activity, events,
and relationships is considerably more emphasized. The achievement of an
elegant and prosperous ”roundaboutness" is seen by the craftsman entre-
preneur as red tape and waste which can be overcome by decisiveness and
bold and direct action on his own initiative. It is not seen by the
craftsman entrepreneur as an investment in the future which will be capi—
talized.

The distinctions between ”blue—collar” and ”white—collar” back-
grounds are formulated on the basis of the education and occupation of the
father of the firm—founder, in addition to the educational and early work
history of the founder himself. Thus a founder whose father was a semi—
skilled worker and who did not complete high school, and the son—founder
who, himself, merely completed high school and then worked primarily in
a semi-skilled or a skilled laboring capacity——was classed as a founder
with a blue—collar background. Almost invariably this person would found
and develOp a firm which was classified as a craftsman firm.

This craftsman entrepreneur tends to view his firm as an exten—
sion of some larger organization. He is subordinated in the market-
place; as a result he prices his output on the basis of keeping it from
being bid away by another craftsman. He prizes his machinery and equip—
ment not unlike a skilled carpenter or machinist prizes his toolkit. His
relationship with banks, if he has any at all, is mistrustful, to be used

only for emergencies; and he never uses his equipment as collateral. His

~119—

view of the marketplace is ambiguous. He either has a supplicant's view
of purchasing agents or he sees them as pliable by lavishing gifts upon
them in the form of wining and dining. He views his own employees as
workers rather than as colleagues. He sees unions as not necessarily
evil, but certainly as unnecessary. He thinks that a man if he works
hard, is willing to try every machine in the shop, and develops a set
of marketable skills, he too can get a high—paying job, can even go out
and found his own firm. Staff people are generally unwelcome as highly
trained Specialists because their contribution is too abstract, especi—
ally white-collar workers who never go into the plant and who perform
paper work which he considers somewhat feminine.

The fathers of "white-collar" firm founders were, more often than
not, small business men, and some had notably higher educational attain-
ments than did the blue—collar fathers. However, the most remarkable
characteristic of the son was his own educational attainments. In every
case his formal attainments were significantly higher. In addition,
every son had some form of significant managerial experience ranging from
three to twenty—two years. As a result he has a broadened view of the
world and peOple as compared to blue—collar founders.

The organizational entrepreneur tends to view work more in terms of
its contribution to the organization. He understands that people working
together in complementary tasks can achieve growth, stability, and prod—
uct innovation much better than can otherwise be accomplished. He senses
that the firm is positioned in the marketplace among various customers,
vendors, employees and financial interests, and that profit, growth and

perpetuity are achieved only when certain key ingredients are under the

—120—

control or influence of his particular firm. The striving for patents,
market percentage dominance, stable work force, or uniqueness of product
is considered very important. He accords staff personnel much higher
status and prestige because their work is needed by the firm. Banking
relationships are important and useful, and are therefore cultivated.
Public or dispersed stock ownership is not viewed as loss of control,
but rather as identifying the company broadly as a form of capitaliza—
tion and as a means of perpetuity in the marketplace.

In terms of the sales efforts made by these founders, it is most
interesting to observe that the organizational entrepreneurs used a very
significant percentage of interview time in discussing their marketing
efforts. Even those firms which utilize representatives rather than
their own hired sales peOple did so. To state that the organizational
entrepreneurs establish market-oriented firms is an oversimplification,
but the entire organization has an orientation which enhances its mar—
keting efforts; there is a bureaucratic arrangement which arises to
achieve a quasi-monopolistic posture in the marketplace.

The time horizon of the entrepreneurs is also distinctive. Gen—
erally, the organizational entrepreneur has a much longer time perspec—
tive. He senses that the flow of activity and events even by diverse
people not under his direct control is important and can be useful to
the firm, both internally and externally. Short—run activities are
meaningful in terms of longer—run Objectives. By contrast, the crafts-
man counterpart tends to view organizational time in terms of tooling
programs, deadlines for delivery, invoice cycles, feast or famine, pay—

days and model runs. He has a much more concrete time perSpective. The

-121-

concreteness results in an organization which is not as orderly or sys—
tematic as the organizational entrepreneurs firms. The longer—run View
enhances routine and system. The Shorter-run view tends to dominate the
immediate, and does not as readily perceive the repetition of events which
can be incorporated. The longer View also includes a much broader sc0pe
of activity which needs to be controlled and influenced. This, too, is
incorporated in a systematic way by the organizational entrepreneur.

As is seen from Table V, there is not a great distinction between
the backgrounds of craftsmen entrepreneurs in either Class I or II. There
is about the same degree of schooling and approximately the same total
amount of managerial experience distributed among each class. The dis—
tinctions become very clear, however, when comparisons are made between
craftsmen entrepreneurs and organizational entrepreneurs (Table VI). The
number of college degrees goes from zero (craftsmen) to nine (organiza-
tional), if a nonaccredited degree from a corporation technical institute
is included. The total amount of managerial experience is also much
higher among the organizational entrepreneurs. The rosters Show quite
clearly that among the craftsmen group there is considerable blue-collar
emphasis in both the father and the son—founders. While there is notice—
able white—collar emphasis (as suggested by the father's education, occu—
pation, and the son's education and subsequent work experience), the
upward mobility for some of the founders is quite significant. There is
also greater emphasis on small business values expressed by the fathers
in the organizational tables. It is interesting to note that only two
craftsmen fathers were farmers (which is sometimes considered as a form

of small independent business) and one a small—town lawyer. All other

~122—

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mocwwummxw pmHHme opmuw sucwwm
m Hi0 wmwmdmu mums» o3u mSHm .Hoonom :wHL mmoA cmnu mmoa .Suwsmxowam .o
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monowummxo HOmH>ummsm umxuoz
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udeowm
nomw>umm5m Isms swam: paw HOHHOO
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monumm pmaaflxm mums» xfim paw HmHqumamE lama: .xuoHo wawamwsm
m N10 couaom mMMO% oBu noonHOO mo Husk Odo mHoocom swag amcu mmmq .N
monumm cmammamm mm moamflummxo
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woumom mmmao cowumooa ooaowuumwm xuoz was cowumasooo was

HHH xasamaa<

cowumospm m-aom

mogumodpm m-Hosumm

 

 

 

 

 

ZOHqubHHm<Umm In mMDmZMMmMMHzm ZMZmHm¢MU

> mAm<H

 

 

 

—123—

CQEQHOM GEN 003.

 

 

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OOGOHuomxo HmHqumamE amEmOHmm
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mpmuw
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mpmuw sucme
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moszuomxo HmHuow
ImcmE mmmom 03u msHm .momusoo cmsosnsuom mp3 nocuos
mm NID uHouuom muuxo HwHomam msHm .mwmuw sucmH mm me um DOHD umsumm .mH
moamHummxo Hmwnmwmama
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muoum Hmumumw
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cmaouom osmoon noumH
mocOHummxw noxHOB Hmuos uomsm
om HID uHouuoo poHHme msHm .oonHoo mpOO> 038 noumspwnw Hoosom fime .NH
coupHHso
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NH HID uHouuoo msHm .Hoosom swws cmcu mmmH Hm%3wH SBOuIHHmEm .HH
mocOHuomxm HmHuowmamE opmuw sucme amsu
DH HID “Houumm mumo% O>Hm msHm .Opmuw SumoH mme .smxuoa >upcdom .oH
Houmom mmmHD COHumooH oodeumaxm xuoz paw GOHummwooo paw

HHH stzmaga

 

 

 

:OHumospm m-com

COHumospm m-Honumm

 

 

 

UmscHuGOD II > MHmmH

 

 

-124—

OOcOHuomxm HmHuow

HHooaom swan
cmsu mmmHg Amuuammum0v

 

 

wH NIO uHouumn Imcma msHm .owOHHOO mummz 039 HOGBO mmoaHmsc HHmEm .m
monOHHmmxm AzcmEHow
HmHuowmcme Hmuoamw msHm :Hv HOSBO mmoaHmsc

«H NIo uHOHuOQ .udmOHsmsoo msHm Hoosom cme wcHusuommscmE HHmEm .o
Ampmuw zuusow amcu
mmOHv mmosHmsc mcHO

NH HIo uHouumm OOHuomHa mumoz ON mSHQ .m.H.H IHpoE ucmumm mo HOGBO .m

uOmH>uomdm wcHHOocstm msHa

HH NIO uHouuom Hoocom wdHuoodeco mppmk mmusH ApcmHom ch umEnmm .q
HmstmwQIumodecm

m HIo wchcmH .m.z.m.m umOusdm mumnpmuD .m
mHnmuoOBO muoum HHmuou OHODm

w NIO wchcmH mums» NN msHm .Hoosom :me GBO pomBo I umHHmuwm .N
N NIO Mocha: moamHuomxm HMHuww mououmwsup

aouaom Imama mumo% m>Hm msHa ..m.H.m.m oBu DOCBO I umHomEHmcm .H

umumom mmmHD aOHumooH mofimHummxm xuoz paw dOHumadooo paw

HHH xasamaq<

 

 

 

HHOHUIQUHHUM m .fiom

 

SOHuwodpm m-Hofiumm

 

 

ZOHHdHDHHm<Dmm II mamzmmmmmezm H4ZOHH<NHZ<DMO

H> MHm¢H

 

~125-

AcmecH cmOHHoE<

 

 

.HOOH mSOHSOmIOOHSHV
mm NIo “Hons-mm 833038 awn-3950 “mu-.83 HHHzIS-wm .mH
mocOHummxo HmHnwwmamE
Nm HIo uHouqu mummh 0H mSHAH ..<am.m.m umHuu< was quOH£OH¢ .qH
ooCOHuwmxm
HmHumwmde msHm nHoo-Hom
mN NIo uHouqu ufiwHa dem Hoosom stm AmpmcmD SHV Hmsumm .MH
mOcOHumaxw HmHumwwamE
mums» usom mDHm .m.m AEMHH
wN NIo uHouuom mo Hopssom uoa omBOH>umuaHv czocxcb .NH
monOHHomxm HOCBO
RN HIo uHouqu quEowmcmE mOHmm mDHm ..m.¢ ououm Hmuwcmw HHmEm Acv
mofiOHuomxo
HmHuowmcmE mOHm .HOOSOm 3mH
RN HIo uHouqu mummx o3u msHm ..m.:D ..m.m assumom .Houchm dem AmVHH
oocm
IHHOQNO HMHuowmcmE .mM% NH chOEH< Eouwv
SN NIO uuouumm msHa .mOH msHa Hooaom swam samuwaaeH smHHmecs .oH
OHHH GH mumH awe
mocmHuomxo IOHOH osmomn mumxuoa
NN HIo uHouuoo HMHHmwmcmE msHm ..m.z.m3m huouomw pmHHmeIHEmm .m
Ampmuw
omCOOHH uoHHm mOHMH mus cmSH mmmHv deo
oH HIo uHouuom ummHD msHm .mpmuw suusom IHHuOOHm DOHHHHwIHEom .w
umumom mmmHD SOHumOOH moaOHumaxm xnoz paw aOHHQQSOoo paw

HHH xasamaa<

 

 

GOHumospm m-dom

 

SOHumospm m-Hmnumm

 

 

 

smscaucoo I- H> mqmay

 

—126-

moaOHuomxo HmHuommamE
msHm .A.m.< nouwmv

 

 

mm HIo uHouuom Hoocom 30H mums» saucy noxuos umHHOOIOuch .mH
moawHHOon
HmHHmwmcmE .mnm0% usom
msHm .mmuuxm msHm OwOH mem>0HmocoouD
IHOO waHuoocsto muwmm 039 CH porousm ADV
mOHaOHuOOHO 0H
mucoumm om wouHsvom mm: mom
Iuom mHfiuv ODOHHOO mummk 03H assumom AOV
.m.m.m.m .meH umsumm .Anv
qm HIo uHouuom IHOD wcHuomandm mums» OOHnH umeoB pOHHme AmvoH
Houmom mmmHD GOHumooH oodoHumnxm xuoz was SOHumosooo was

HE fleas-Ea.

 

 

 

GOHumospm m-aom

 

GOHumospm m-umnumm

 

 

pmsfiHuCOD II H> mHm<H

 

 

 

-127—

fathers were blue-collar workers, although one father moved up to be-
come a plant manager and another became a foreman, and another moved
into a white-collar clerical job. The amount of skilled worker experi-
ence among craftsmen entrepreneurs is notable. However, this fact
should be related to the discussion in Chapter I, page 20, which states
that skilled workers do not become middle-class or white-collar in their

value structure.

Implications

 

The first major reflection of this thesis and the research which it
reports is that considerable follow—up interviews are needed. These fol-
low-up surveys would attempt to learn how successful were the adaptions
made to changing environment as well as how successful, at least in the
eyes Of the founder, were his projections for the future of his firm. Only
in a very few cases were follow—up interviews made. The studies reported
herein were cross—sectional, in that they viewed various aspects of the
organizational structure at a given point in time. Future studies could
point out the changing character of these organizational devices. The
types of changes would allow even better insight into the organizational
perceptions of the founders.

Another major problem which is only touched on in this thesis-—is
the changing perceptions of the founder himself. While it is evident
that the style of administrative organization which results from his
life—set of experiences, these life—sets do change to some extent accord—
ing to the perceptions of on-going experiences of these same men. The

real question to be ascertained is: What is the nature of the experiential

 

-128—

growth patterns, and what organizational changes result? It is suggested,
for example, that certain founders who have highly sensitized perceptual
processes (which may be a learned characteristic in itself) may move very
rapidly from blue—collar outlooks to high—level white—collar values, and
that this movement will have drastic reaction on the firm. It would be
even more interesting to discover whether high-level white-collar value
constructs are a necessary precondition for the firm "take-off” as de-
scribed by Allen C. Filley.1

One of the more measurable conclusions suggested by this thesis is
that formal education seems to be a necessary condition for firm bureau-
cratization and, therefore, growth to any viable size. ”Education is the
Royal Road to Success" seems to be as Operative in the characterization
of new firms as it is a personal success ingredient in large-scale enter—
prise with a long bureaucratic history. This does not mean that nonbur—
eaucratic firms (or craftsmen firms) are less than satisfactory for many
purposes. It does mean, however, that these distinctions can be useful
for a great number of purposes. It suggests, for example, that bankers
and other lenders of equity and working capital while looking very care-
fully at the character of the borrower may wish to emphasize their weighted
judgment toward the "better educated," if the requisites are stability and
growth, resourcefulness, and collateral. This thesis suggests that crafts-
men entrepreneurs are not likely to be seeking equity capital from usual
lending sources but from personal or kinship resources, so that this arena
may not appear to be much different from current practices. On the other

hand, or in the other direction, it is suggested that highly educated

 

1Alan C. Filley, A Theory of Small Business and Divisional Growth,
_92. cit.

 

 

 

—129—

entrepreneurs with some managerial experience may be better credit risks
than are entrepreneurs on the average, and therefore should be granted
lines of credit on an easier basis or larger scale.

Banks and credit agencies are also vitally interested in the per-
formance characteristics Of their borrower, and this is usually judged
on the basis of records and pro—forma projections. It suggests, not sur—
prisingly, that for craftsmen entrepreneurs and others interested in going
into business for themselves, forward projections are vital, and the po-
sitioning of these projections on paper is essential for future success.
It is felt that lengthening forward time projections and the processes of
making imaginery events become concrete can be learned, and this is an
essential ingredient for business success.

In this same light, the concept of control will have to be laid
out, analyzed, and perhaps perceptions altered. As business firms move
from craftsmen firms to organizational style firms, the founder in many
ways gives up a certain form of control, in return for which he obtains
other forms which are of a much higher order, much subtler, and much more
rewarding, at least as viewed from a middle-class perspective. .At least
such training would present another alternative to some founders who
otherwise employ a very narrow view of enterprise control. Given alter-
natives, they would be better able to make rational choices of the style
of control mechanisms they may wish to use.

Control implies that there is an orderliness and rationality to
the enterprise system within a framework of system objectives. The con—
templation and statement of short and long—run objectives would result
not only in more concerted action on the part of the enterpriser, but

by its very nature would force him to act in a more rational manner with

-l30-

regards to his enterprise system. Currently, the blue—collar worker and
lower—level white—collar worker live in a cultural milieu in which long-
run objectives are beyond their graSp or their way of life. (One might
conjecture that social security retirement has great appeal to these
people, not for its own remunerative appeal, but because it allows for
some long—run contemplation and control over those long-run events lead-
ing up to retirement—-in the same way that upwardly mobile people may
have career aSpirations over the same long run.) If the founder were to
address his immediate employees regarding the long-run activities for his
firm; along with a statement of objectives, this would force some rationale
into the system, and would cause rank—and—file people to behave with some
consideration beyond the most immediate and pressing demands.
Control implies also the evaluation of performance, which demands
some sort of record-keeping system beyond the mere recording of events
or COStS. It requires a real-time, on—going informational feedback with
immediate checkpoints or alert points. Again, education seems to change
social values, in that paper work is not seen as a feminine occupation,
but as a method for abstracting events and dollars so that virile judg-
ments and subsequent action may ensue. It is profitable for a very
small enterprise to Operate as a one-man enterprise as long as the size
and complexity are sufficiently small, so that he can compute, control
and coordinate all angles within his own mind and perceptions, or at any
rate on the back of a borrowed envelope. This notion suggests, however,
that governmental demands for certain records, and bank demands for pro-
forma record systems are all tendencies in the right or bureaucratic di-

rection. It suggests, too, that small accounting firms which merely render

 

 

 

~131-

accounts payable and taxes paid may not be fulfilling their function for
smaller firms.

The implications of this discussion suggest that the role of educa—
tion in the training for small business begins not with a formal plan,
organization and control, or recognition of the distinctions between a
partnership and a corporation, but rather with some fundamental psycho—
logical therapy whereby the subject is brought out of his cultural milieu;
and thus his new personality can transcend his biases and therefore his
firm is infused with a new outlook on the nature and possible blessings
of bureaucracy in enterprise. It is further suggested that neCessarily
this not be done until after the occurrence of two significant events in
the life of the enterpriser.

One of these events is surmounting the initial phases of getting
the enterprise into being. It may well be that the personality of the
craftsman entrepreneur is a vital ingredient in this early success. The
data now available in these interviews are insufficient to make a judg-
ment about this point, however, and the author is unwilling even to con—
jecture a prediction on such research findings.

The second event has to do with the feeling of success enjoyed by
the founder as he looks at the results of his enterprise. It may well
be that the psycho—therapist will have to wait for the founder to point
with some emerging pride at his enterprise organization before he dares
to annihilate the old personality in order to build the new personality.
To date, our society has been unwilling to insert itself directly into
an enterprise system, privately owned, in order to force this occurrence,
even though it might have great social value if it were to do so. Society

does, however, assert itself so far as financial penalties are imposed on

 

—l32-

firms for unstable activities which could have been ameliorated by more
careful planning.

Another major consideration in this discussion is the role played
by the present "free enterprise" system, in that it allows such socio—
psychological personalities to relieve their frustrations and tensions
as employees and become "free" agents to try their own hands at develOp—
ing new administrative forms as they wish: with only certain limitations.
On some occasions these do become successful enterprise systems and of
great value to society. In addition, there seems to be some value, of
no small amount, for these particular administrative forms to employ per—
sonalities who would otherwise not be productive agents as employees in
other system types. As the interviews progressed, the author was impressed
with the lack of unionism among the smaller (and particularly among) crafts—
men firms; and he began to inquire for some reasons. Mr. Carl Norse of
Norsemen Broach supplied perhaps the most insightful and concise answer,
"We've got a bunch of rebels here!” Then he went on to describe the con—
tinuous comings and goings of semi-skilled and highly paid skilled em-
ployees who seemed to have some sort of gypsy blood. He mentioned, too,
how he had horse-breeders among his group and how the holiday schedules
were gerrymandered (into a form which would be completely unacceptable
to large—scale enterprise). The gist of his comments was that when bore—
dom set in or personalities flared, they would go looking for employment
elsewhere. And because of their skills they could easily command employ—
ment elsewhere. This suggests that society needs an accommodation for these
types of peOple lest unrest in large-scale industry become really unman-

ageable. (It may suggest further that variety and Spontaneity even at

 

—l33—

the work place are a value that society should not forego even in an era
of large-scale enterprise.)

The implication Of these findings for overseas development are
curious. The author deeply feels that craftsmen entrepreneurs are needed
in underdeveloped (technically and economically) countries. However, he
equally believes that craftsmen entrepreneurs are not suitable grist for
overseas firm formation. In the first place, they seem to need too much
structure. 'Secondly, there is a serious question Of their ability to
function at all in a foreign environment. Since they are operating to
act out their own frustrations rather than forming a new enterprise
(Which may very well be an incidental resultant), their usefulness or
even desirability may be questioned.

This further suggests that the profit motive may not be Operative
in new firm formation. It does suggest that new craftsmen firms are more
a result Of compulsion to escape one form of work and to achieve a sem-
blance of control in another system, with perhaps a little bit of status
thrown in. Perhaps profit motive is a more acceptable excuse for enter—
prise than is an uncontrollable psychological urge without sociological
acceptability. Profit, rather, is society's measure of whether the en—
terprise ought to be allowed to continue to exist. Very few Of the inter—
views mention that the reason for embarking on the new enterprise is to
"make a bundle.” Among craftsmen entrepreneurs, it seemed a suitable way
to escape from domination and unhappy on—the-job relationships. Among
organizational entrepreneurs it was to achieve a goal, to achieve status,
and to form new alliances which were seen as happier or more pleasant.

This suggests that communities wishing to encourage new enterprises

 

 

—l34-

being formed within their own jurisdiction will need to allow for new
forms to begin in their midst which displace old kinship and profit

myth patterns. .Assurance of profit is not enough. Perhaps governmental
and academic enterprises have spurted ahead because status and new rela—
tionships were easier to acquire in these arenas than in the manufactur—
ing or merchandising arenas. Palo Alto and Highway 128 are not accidents;
they are contrivances which were emplaced with enterprise as their objec-
tive. It is in these locations that high talent and high status con—
gregate.

In conclusion, then, the data described in this thesis strongly support
the hypothesis that blue-collar people found business enterprises with
limited administrative devices and organizational appurtenances, and
the white-collar people with higher educational attainments and a modi—
cum of managerial experience create business enterprises with much more
elaborate administrative devices and broader organizational appurtenances.
This thesis makes no judgment on the goodness or badness of this finding
nor its effects in a free enterprise society. It does suggest, however,
that the resulting organizational patterns have profound effects on a

great number of people in diverse walks of life in this society.

 

 

APPENDIX I

BUSINESS FIRM OPERATIONS IN THE UNITED STATES

 

4,752,000 Business Firms operating in the United States1

New firms started between 1946 and 19572 averaged 400,000

(mbstly in retail and service industries).
Firms that discontinued business 1946—19572 averaged 341,000.

Average gain each year, 1946-1957, was2 90,000.

 

'Survey of Current Business (washington: Office of Business
Economics, United States Department of Commerce, June 1962), p. 24.

2Historical Statistics Of the united States: Colonial Times
to 1957, A Statistical Abstract Supplement (washington: Bureau of
Census, United States Department of Commerce, 1960).

-l35—

-l36—
APPENDIX II
NATIONAL POLLS

In two nationwide polls conducted by FORTUNE MAGAZINE, the reSpon—
dents were asked whether they would like to go into business for them—
selves. In both polls approximately one—half of the employed respondents
answered, ”Yes." Those answering in the affirmative were then asked:

“Do you think you will ever actually try to go into business for your-
self?" This much more specific question was also answered affirmatively

by fifty per cent of those asked.l

Data compiled by the University of California Institute of Indus-
trial Relations in Oakland, California, in 1949—1950. . . show that
both the desire for ownership and the actual attempts to realize this
aspiration were greater among blue—collar workers than among those in
white—collar occupations.

Authors of this study interpret this differential between manual
and non—manual workers as an indication that today the creed of indivi-
dual business ownership has become largely a working-class goal. It
is one of the few positions of higher status obtainable today by manual
workers whose educational limitations preclude an executive or profes—

sional career.3

 

1Fortune Magazine, XLV (February 1940), p. 28; also Vol. LII
(January 1947), pp. 5-16.

2Seymour M. Lipset and Reinhard Bendix, ”Social Mobility and
Occupational Career Patterns,“ American Journal of Sociolqu, LXVII
(January, March 1952), pp. 366 and 494.

3Ibid., p. 501.

#

 

 

-l37—

-— ROSTER OF INTERVIEWS

APPENDIX III

 

 

 

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—l38—

APPENDIX III —— Continued

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mEmuH

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muumsch 0>Hu

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wdHuHmmaH

pom waHuuso Hooum

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manEEOD mH030H>umumH NMHD >cwaEOD m0 mamzs usoaouamuucm .02
m0 06m2¥

 

 

 

 

 

 

 

 

 

~139—

APPENDIX III -— Continued

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—140—

*- Continued

APPENDIX III

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-141—

APPENDIX IV

ALPHABETICAL LIST OF INTERVIEWEES
with Cross References to Tables V and VI and Appendix III

KEY: Class: "C" indicates "Craftsman Entrepreneur (Chapter II, p. 30)
”0" indicates "Organizational Entrepreneur" (Chapter III,
p. 61)
Indicates Recapitulation Table No. V, page 122; and
Recapitulation Table No. VI, page 124
The number following V or VI refers to the listing number
on each table
Appendix: Indicates Appendix III, page 137, "Roster of Interviews,‘
and the number given is the listing number for
each interviewee in the roster.

Table:

l‘

 

 

Table Reference 'hppendix III
Namg Class & Listinngo. Listing No.
Acme Boring Company C—l V I 17 30
Alexander Corporation O-2 VI S 10 24
Auer Spring Company C—l V E 10 16
Auto—Shine Company O—2 VI g 2 8
Auto—Trim Company C—l V g 9 15
B&B Corporation C—l V g 5 6
Basic Industries C-l V i 8 l3
BMT Stamping Company C-l V g ll 17
Book Recorders, Inc. C—2 V g l 1
Byrd Industries & Plastics 0-2 VI g 15 33
Die Electric Company 0-1 VI 3 9 22
Electronic Controls, Inc. O-l VI §l6a,b,c,d, 34
Five Machines Company 0—2 VI 3 6 l4
Foremost Manufacturing Co. C-2 V"? 7 10
Gable Perforating Company C—l V 13 21
Green Inter-Lakes Lines O-l VI 5 8 l9
Hiawatha Products C-l V 14 23
Just Tire Equipment Co. C-2 V 16 26

 

 

 

 

 

—142—

APPENDIX IV -- Continued

See KEY on page 141

 

 

Table Reference Appendix III
Name Class & Listing No. Listing No.

Lather Manufacturing Co. c-l V g 3 4

Lock—Tite Aluminum Co. O-l VI 3 17 35
Mars Corporation O-l VI g 3 ' 9
Materials-Matic c—l V g 12 20
Metal Binders, Inc. c-2 V i 18 31
Mid—Central Sand Paper CO. O-l VI illa,b 27
Mid—West Refractories Co. 0-2 VI g 12 28
Minor Spline & Gear Co. c—2 V g 15 25
No-Peer Company 0—2 VI 5 13 29
Norseman Broach Company c-2 V E 19 36
Omega Machine Tool Co. 0-2 VI 5 4 ll
On—Line Instruments CO. O—l VI 3 14 32
Paradise Tool & Engineering CO. c—2 V E 4 5
Peach Door Company 0—2 VI 5 7 18
Plastic Trinkets Co. O-l VI 3 5 12
Straight Mfg. CO. 02 VI 3 1 2

Wheeling Die Sinking Co. c—l V E 6 7

Zip Die Casting Co.’. c—Z v f 2 3

 

 

 

 

 

—143—
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