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Article Excerpt
Entrepreneurs who evolve into philanthropists make contributions on broad fronts, for example, to the economic effects in their communities and nations and to the social issues of various kinds that they embrace as challenges. This article is an early excursion into understanding the process by which entrepreneurs make the transition from entrepreneurs in the economic realm to philanthropists involved in various social issues. The article draws its insights from the evolution of Ewing Marion Kauffman, founder of the successful pharmaceutical company Marion Laboratories and also the Kauffman Foundation, which has had a unique entrepreneurship focus addressing the needs of entrepreneurs, researchers, and educators throughout the United States and beyond. The Kauffman case study demonstrates that the entrepreneur's leave taking of his or her company and the entry into the nonprofit or philanthropic world are processes. The research identifies a number of issues associated with these overlapping and integrated processes.
Keywords: entrepreneurship; philanthropy; Ewing Marion Kauffman; qualitative research
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When a prominent city citizen was raising money for the local art museum, entrepreneur Ewing Kauffman reportedly said, "He's not going to get any out of me. I don't give a damn about the art museum! I create jobs for the community!"
The company board member and close colleague who related the story said of Mr. Kauffman, "He was not a philanthropist." The colleague from the "Marion Laboratories, an uncommon company," was reflecting on founder Ewing Marion Kauffman's charitable activities during the company's first two plus decades. The colleague reported that when approached by colleges and universities offering honorary degrees and other honors, Mr. Kauffman observed, "They're just after my money." Instead, Mr. Kauffman suggested that the colleges buy Marion stock and he would guarantee the school against a loss on the investment!
But, when Ewing Marion Kauffman, the man many knew affectionately as "Mr. K," died more than 20 years later, much of Kansas City mourned the entrepreneur--and the philanthropist; family and friends, senior executives he had mentored for 20 years, janitors and warehouse workers from Marion Laboratories, Royals baseball players past and present, Mr. K's "kids" (those who had graduated from high school and gone on to college educations thanks to his generosity), leading citizens, people of humble origin who had benefited from Mr. K's philanthropic activities, and, of course, the politicians. Kansas City united in tribute to Ewing Kauffman. There were so many they lost count. Each in his own way paid tribute to one of Kansas City's leading success icons, a poor boy who had come up the hard way and founded one of Kansas City's most important companies and one of the nation's largest foundations (Skodack, 1993).
What led to the transformation from entrepreneur to philanthropist? On one hand is the entrepreneur who resisted requests from the community for contributions of time, talent, and funds emphatically arguing, "I provide jobs!" in defending his contributions to that community. On the other hand is the philanthropist who wrote in his foundation's annual report before his death:
Although we relished the challenge of founding and building a small company into a very large and successful one, nothing in life has given us greater pleasure than helping the children of this country. (Crumpley, 1993, p. A8:3)
We are well aware that entrepreneurs make significant contributions to our society. They make major contributions through the highly visible companies they initiate and run. But some entrepreneurs also make enormous contributions to the social issues with which our communities wrestle. Important though it is, this transition from entrepreneur to philanthropist has received little attention. This exploratory research focuses on the founder of "an uncommon company," entrepreneur Ewing Marion Kauffman and his transition to philanthropist.
Exploratory research often uses qualitative case methods to develop deep insights into behavior and processes, in this case the process of transition. The original intended focus of the most recent fieldwork in this research effort was the entrepreneur's philanthropic activities. However, as with all grounded theory research, issues emerged far beyond the initial focus--issues that are both fascinating and rich in content. One level of issues is sequential in nature, for example, the stages through which the entrepreneur transitioned to philanthropist moves. The major stages are the entrepreneur's formative and early experiences, the business success in the entrepreneurial venture, followed by the entry into philanthropy. At a second level are the factors associated with each of these stages. Associated with early formative years are motivation factors and values such as work ethic and paternalism. Associated with the business are issues inside that firm that either encourage or enable the philanthropic activities including availability of resources and released time through delegation. Entry into philanthropy may be initiated following internal events such as employee's expressions of gratitude and external events such as encountering drug difficulties among those for whom the entrepreneur feels responsibility. At another level we may view the entrepreneur as acting in two spheres--the firm or entrepreneurial venture and the set of philanthropic activities ultimately, in this instance, focused within the foundation (see Figure 1). This research explores and provides insights into the factors that affect the processes within and between these levels. The practical application possibilities of the research include identification of potential "leverage points" for encouraging entrepreneurs to "give-back" to the community through their philanthropic activities.
The first section of this article briefly overviews related current literature and examines relevant issues in the entrepreneurship literature. The second section focuses on the research design. The third and fourth sections summarize Ewing Marion Kauffman's experiences as an entrepreneur and then as a philanthropist. The discussion section overviews our findings and presents the model which summarizes factors that appear to be involved in the transition from entrepreneur to philanthropist. We conclude with comments about the limitations of the research and suggestions for future scholarly inquiry.
Background Literature
The entrepreneurship literature has burgeoned in recent years. Definitions of entrepreneurship abound. (1) One of the simplest may be that an entrepreneur is an individual who undertakes a venture and musters the resources to fund it. Another way of viewing an entrepreneur is as an individual who recognizes opportunity and organizes to pursue it. Thus, entrepreneurship is evidenced from the beginning of the firm and throughout its history.
[FIGURE 1 OMITTED]
Although the characteristics of entrepreneurs have been explored extensively, (2) to date little systematic attention has been paid to entrepreneurs as philanthropists. In their 2002 article, Acs and Phillips noted that there has been little systematic study of the phenomena. However, they identified frequent focus in the popular press on well-known figures as Ted Turner (Sellers, 2003) or the recent difficulties encountered by Alberto Villar when he did not proffer charitable pledges he had made earlier ("Business: The Man," 2003). The 2002 article compared the philanthropy of the 19th century with 20th century's "Gilded Age" of the 1980s and especially the 1990s. The authors argue for an analysis of philanthropy to more fully understand the development of American economic dominance. These authors link the recent accumulation of wealth in private hands to the increase in philanthropists' interest in being involved in the philanthropic activities (Acs & Phillips, 1999).
Certainly there are literatures related to the issue of entrepreneurs and their philanthropy. As Acs and Phillips (2002) noted, the popular press has continuing interest with the wealthy and their effect on the nonprofit world. (3) The burgeoning philanthropic literature yields insights into the nonprofit world and how it functions. (4) A few more recent business journal articles have paid attention to the nonprofit arena (e.g., Letts, Dyer, & Grossman, 1997; Porter & Kramer, 1999). The financial planning literature urges preplanning for the wealthy, whether the wealth source is inherited (e.g., Karoff & Marble, 1998; Manning, 1995), family businesses (e.g., Potts, Schoen, Loeb, & Hulme, 2001), or entrepreneurial efforts. Work in social entrepreneurship looks at innovations in philanthropy and those who take on those roles (Boschee, 1995). Of special interest in this domain is the work of Greg Dees of Stanford (Jacobson & Dees, 2000). However, the social entrepreneurship stream of work often looks at nonprofit leaders who take on new programs with an entrepreneurial flair.
As Acs and Phillips noted, there is little systematic research into understanding entrepreneurs as philanthropists. There are exceptions, for example, the work of Edmondson and Carroll (1999), which focuses on Black-owned businesses. A recent work by Schervish, O'Herlily, and Havens (n.d.) presents the analysis of interviews with high-tech entrepreneurs in New England. None of these examines the process of the transition from entrepreneur to philanthropist.
This article responds to a paucity of research on entrepreneurs as philanthropists. The research underlying this article is a first step in understanding the processes that lead successful entrepreneurs to diminish their attention in their entrepreneurial activities and the dynamics that lead to the philanthropic activities in which they become involved.
Research Design
Case studies are especially appropriate for exploratory research where the focus is on (a) documenting a phenomenon within its organizational context, (b) exploring the boundaries of a phenomenon, and (c) integrating information from multiple sources (Eisenhardt, 1989; Glaser & Strauss, 1967; Yin, 1991). The field data for this research were summarized in a two-part case series. One case focused on Ewing Marion Kauffman and his company, Marion Laboratories (M. Taylor, 2003). The other focused on the history of the foundation and the issues the foundation confronted at the time of his death (M. L. Taylor & Altman, 2004).
Data for the case studies were drawn from three sources--interviews, internal documents, and public information. The lead author interviewed executives from the company and the foundation and friends of the entrepreneur-philanthropist. To provide reliability, some of the executives were interviewed multiple times during a period exceeding two decades. The multiple interviews helped to confirm the observations and the opinions expressed (Eisenhardt, 1989; Yin, 1984). Multiple interviews of the same individuals over time provide validation of the information. Using multiple interviewees reduces the risk of undue influence that an individual interview may have on the case study, brings a richer portrait of the case, and provides better data for analysis (Eisenhardt, 1989; Yin, 1991).
In addition to transcribed interviews and notes, the organizations made internal documents available. The accumulation of private and public documentation had begun in...
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