Learning from Entrepreneurial Failure: Leo Baekeland's Exit from Europe

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150 years after the birth of Leo H. Baekeland (1863-1944), one of Belgium’s most celebrated chemists and high-tech innovators, it has become a priority of policy-makers and academic administrators on both sides of the Atlantic to make university
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  150 years after the birth of Leo H. Baekeland (1863-1944), one of Belgium’s most celebrated chemists and high-tech innovators, it has become a priority of policy-makers and academic administrators on both sides of the Atlantic to make university science students and/or faculty more entrepreneurial. It is therefore signicant that Baekeland became a successful entrepreneur only after his move to the United States and departure from academia in 1889. Drawing on new source material and various conceptual frameworks regarding the determinants of successful entrepreneurship, this article will reconsider why this was the case. Consistent with recent evidence in entrepreneurship research, it will pay special attention to the institutional incentives faced by Baekeland and examine whether these were responsible for the failure of his rst business endeavor. Yet this article will also consider the possibility that non-institutional factors mattered more than the inuence of institutional considerations. Leo Baekeland’s Exit from Europe LEARNING FROM ENTREPRENEURIAL FAILURE - Joris Mercelis 1  -  47 Learning from Entrepreneurial Failure Academia has long been a congenial setting for various types of actions and behaviors that could reasonably be termed “entrepreneurial”. The pursuit of organizational innovations, such as the creation of new departments and programs or the adjustment of existing ones in response to changing societal needs and demands, provides one of the more obvious examples. Others include fundraising efforts, the establishment of networks of contacts and resources and of scientic “research schools”, and the conversion of scientic authority and prestige into nancial capital by means of industrial consulting work 2 . However, in popular usage as well as in the academic literature, the term entrepreneurship is often equated more narrowly with the founding of new rms. Furthermore, it is widely believed that in this sense, entrepreneurship did not gain a rm footing in academia until the second half of the twentieth century, which witnessed the emergence of university tech- nology transfer ofces, venture capital insti- tutions, and several thousand academic bio-technology start-ups, among others things. 1.   I am grateful to the anonymous referees of the  Journal of Belgian History   for their valuable comments and suggestions and to Joseph Dunlop for his editing work. In addition, I would like to thank Anna Guagnini and Matteo Serani for sharing their views on the history of academic entrepreneurship, and Ruben Mantels for his advice regarding the situation at the State University of Ghent. Finally, I am indebted to Nico Wouters and Willem Erauw for their help and encouragement in working towards the denitive version of this article . 2. For examples, see S TATHIS  A RAPOSTATHIS  & G RAEME  G OODAY , Patently Contestable : Electrical Technologies and Inventor Identities on Trial in Britain , Cambridge, MA, 2013; G ERALD  L. G EISON  & F REDERIC  L. H OLMES  (eds), “Research Schools : Historical Reappraisals”, in Osiris , 1993 (8), p. 1-248; S USAN  M ORRIS , Resource Networks : Industrial Research in Small Enterprises, 1860–1930 , Ph.D. dissertation, Johns Hopkins University, 2003; N ATHAN  R OSENBERG , “America’s Entrepreneurial Universities”, in D AVID  M. H ART  (ed.), The Emergence of Entrepreneurship Policy : Governance, Start-ups, and Growth in the US Knowledge Economy  , Cambridge/New York, 2003, p. 113- 137. On the historical development of the relations between academia and industry in Belgium, see K ENNETH  B ERTRAMS , Universités & enterprises : milieux académiques et industriels en Belgique, 1880-1970 , Bruxelles, 2005 . 3.   Early in his career Baekeland typically gallicized his name as “Léon Baekelandt” or “Backelandt” . 4.   State Archives in Ghent, collection 285, folders 648 and 670 (Archives of Teacher Training College of Bruges, 1879-1888). Baekeland had offered his resignation by 30 December 1887. In April 1888,scientist Paul Pelseneer (1863-1945) was selected as his successor. The Belgian-American chemical innovator Leo H. Baekeland (1863-1944) was among the academic risk takers who, many decades earlier, did found a business start-up while re- maining afliated with his educational insti- tution(s). When Baekeland co-established Dr    Baekelandt et Compagnie , a photochemical enterprise, in late December 1887, his ap-pointment as an assistant to the course in general chemistry at the State University of Ghent had just been renewed 3 . In addition, it was still unclear how long it would take to nd a suitable candidate to replace him at the Middelbare Normaalschool of Bruges, a teacher training college, where he had been teaching chemistry and physics since the academic year of 1886-87 4 . On the face of it, the history of Dr Baekelandt et Cie, a limited partnership ( société en commandite simple ), supports popular notions as to the incompatibility of “traditional” universities and commercial risk taking. Unlike later Belgian-born entrepreneurial scientists such as Marc Van Montagu (b. 1933) or Désiré Collen (b. 1943), Baekeland, the inventor of  48 Learning from Entrepreneurial Failure “Velox” photographic paper and “Bakelite” plastic, achieved business success only after having departed from both academia and his home country 5 . Moreover, while his teaching and research obligations at the University of Ghent and the Teacher Training College of Bruges clearly did not prevent him from venturing into business, they have been cited as a reason for his initial difculties 6 .entrepreneurial decisions and opportunities that Baekeland made and perceived in these years to his upbringing in a relatively poor family and his technical secondary education – an unusual background from which to enter academia. Accordingly, a primary goal of this article is to offer new insights into a crucial part of Baekeland’s career, about which relatively little is known. 5.   As indicated in table 1, Baekeland would return to academia in 1917, when Columbia University engaged him as an honorary professor . 6.   Cf. below, p. 5 . Table 1 : Baekeland as Scientific Entrepreneur Based on new evidence, this article will reconsider the history of Dr Baekelandt et Cie, from the partnership’s foundation at the end of 1887 up to its dissolution in 1890. This will include an analysis of Baekeland’s move to the U.S. in the summer of 1889 and his decision to settle down there, which brought an end to his direct involvement in the Ghent-based photochemical rm. It will also connect the My second and more ambitious aim is to suggest more general lessons for entrepreneurship research on the basis of my case study. Consistent with a recent trend in this eld of study, I will put a special emphasis on the role of “institutions”, that is, the formal and informal rules and norms that enable and constrain the actions of socio-economic agents. Following in the footsteps  49 Learning from Entrepreneurial Failure 7.  See , for example, W ILLIAM  J. B AUMOL , The Microtheory of Innovative Entrepreneurship , Princeton (NJ), 2010, chapters 8-10; B RADLEY  A. H ANSEN , Institutions, Entrepreneurs, and  American Economic History : How the Farmers’ Loan and Trust Company shaped the Laws of Business from 1822 to 1929 , New York, 2009; D AVID  S. L ANDES , J OEL  M OKYR  & W ILLIAM  J. B AUMOL  (eds), The Invention of Enterprise : Entrepreneurship from Ancient Mesopotamia to Modern Times , Princeton (NJ), 2010; W IM  N AUDÉ , “Entrepreneurship is Not a Binding Constraint on Growth and Development in the Poorest Countries”, in World Development  , no. 1, 2011 (39), p. 33-44. 8.   G EORGE  C. B ITROS  & A NASTASSIOS  D. K ARAYIANNIS , “The Liberating Power of Entrepreneurship in Ancient Athens”, in Y OUSSEF  C ASSIS  & I OANNA  P EPELASIS  M INOGLOU  (eds), Country Studies in Entrepreneurship : A Historical Perspective , Houndmills, Basingstoke (Hampshire)/New York, 2006, p. 11-22; F ERRY   DE  G OEY  & J AN  W ILLEM  V ELUWENKAMP  (eds), Entrepreneurs and Institutions in Europe and Asia, 1500-2000 , Amsterdam, 2002; P AOLO  D I  M ARTINO , “Legal Institutions, Social Norms, and Entrepreneurship in Britain (c. 1890-c. 1939)”, in The Economic History Review,  no. 1, 2012 (65), p. 120-143; L ANDES , M OKYR  & B AUMOL  (eds), The Invention of Enterprise .  9. A further challenge is that the impact of institutions is hard to measure quantitatively – one of the reasons why in-depth qualitative case studies remain important. See S TEFAN  V OIGT , “How (Not) To Measure Institutions”, in  Journal of Institutional Economics , 2013 (9), p. 1-26. 10. H OKYU  H WANG  & W ALTER  W. P OWELL , “Institutions and Entrepreneurship”, in S HARON  A LVAREZ , R AJSHREE  R. A GARWAL  & O LAV  S ORENSON  (eds), Handbook of Entrepreneurship : Interdisciplinary Perspectives , New York, 2005, p. 201-232 (here p. 201) . 11. F REDRIK  B ARTH  (ed.), The Role of the Entrepreneur in Social Change in Northern Norway  , Bergen et al., 1967; M ARK  G RANOVETTER , “The Economic Sociology of Firms and Entrepreneurs”, in R ICHARD  S WEDBERG  (ed.), Entrepreneurship : The Social Science View  , Oxford/New York, 2000, p. 244-275, and “Economic Institutions as Social Constructions : A Framework for Analysis”, in  Acta Aociologica , no. 1, 1992 (35), p. 3-11. of Douglass C. North, William J. Baumol, and others, many economists and economic his-torians have come to regard the supply of “productive” entrepreneurs in a given society as dependent upon the reward structures for its entrepreneurially-minded inhabitants. The presence of these potential entrepreneurs is taken for granted, but it is argued that they will only attempt to exploit perceived market opportunities if provided with incentives to do so. Whether or not this is the case hinges, in this view, on institutional arrangements and attitudes with regard to the rule of law, novelty seeking and risk taking, among other things 7 .The empirical evidence supporting this insti-tutional theory of entrepreneurship, drawn from case studies ranging from ancient Meso-potamia and Greece to twentieth-century industrial and developing countries, is strong and highly diverse 8 . But the application of the “new” variant of institutional economics, developed from the 1960s onward, to entre-preneurship research has not been uniformly successful. Three drawbacks or risks are espe-cially relevant to this article 9 . The rst stems from the combination of a focus on institutions and entrepreneurs as the main units of ana-lysis with a sometimes overly individualistic notion of entrepreneurial agency, reecting a “liberal creed” of “individual autonomy and discretion” 10 . As sociologist Mark Granovetter and others have emphasized, this perspective does not always do justice to the complexity of the social structures in which entrepreneurs were embedded and the ways in which these affected their actions and decisions, particularly but not exclusively in non-Western settings 11 . To avoid this pitfall, the social pressures that inuenced Baekeland’s entrepreneurship will be an important theme in my analysis and the autonomy of his decision making will not be taken for granted.  Leo Baekeland during his rst years in the United States. (Ghent University, Museum for the History of Sciences)
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