Managers and Entrepreneurs: A Useful Distinction?

The rationalization of industrial management has limited the -role of innovation and encouraged the substitution of the concept of manager for that of entrepreneur. The author shows that the distinction is still useful if entrepreneurship is redefined in terms of formal authority. This requires the replacement of Schumpeter's classical emphasis upon innovation with Weber's concept of the entrepreneur as the source of all formal authority within the organization. A survey of German management suggests that Weber's definition and the author's concepts are operational. Other bases of differentiation such as decision making, functional role, and charismatic qualities are analyzed.* Heinz Hartmann is assistant professor and research associate in Princeton University.