Education in innovative entrepreneurship

– What does research tell us?

One often hears that entrepreneurs do not benefit from education. Innovative and successful entrepreneurship would rather require skills, such as creativity and perseverance, that one can learn in practice rather than in school. Drop-out entrepreneurs, such as Bill Gates, Ingvar Kamprad and Steve Jobs are great examples of this proposition. Given this common belief, it is rather surprising that many Western countries, including Denmark, invest vast and steeply increasing amounts in entrepreneurship education. What is wisdom here?

To address this question, research has been undertaken answering the following questions: Is (successful) entrepreneurship something one can learn or is it a genetic matter? In other words, is entrepreneurship success caused by nurture or nature? Studies using twins and adopted children can be used to address this question and show that entrepreneurship is certainly not only a genetic matter: nurture plays a twice as important role.

The follow-up question then is: Can entrepreneurship be learned through formal education? The answer is yes, as research shows: Entrepreneurs benefit a lot from their education, even more than employees. The important aspects one learns in school are, among others, analytical skills and technical skills. However, the largest part of the effect of education in general on entrepreneurship outcomes is yet unexplained and kept in a black box.

The third question that has been addressed by research is: Does specific entrepreneur education add value to teaching relevant knowledge, skills and attitudes to potential entrepreneurs? As it turns out, so far, the effects of entrepreneurship education programs have been scarcely tested in credible ways. Existing evaluation studies show disappointing effects. However, in particular, entrepreneurship education at a very young age contributes to relevant skill development, such as perseverance, motivating skills and creativity. We conclude that education can certainly be a valuable manner in which entrepreneurship skills are obtained. However, the optimal design of entrepreneurship education programs at a later age still needs to be determined.

Based on the following articles
Lindquist, M., Sol, J. & van Praag, C.M. (2015), Why do Entrepreneurial Parents have Entrepreneurial Children?  Journal of Labor Economics,  Vol. 33, No. 2, 4.2015, pp. 269-296

Rosendahl Huber, L., Sloof, R. & van Praag, C.M. (2014), The Effect of Early Entrepreneurship Education: Evidence from a Field Experiment  The European Economic Review, Vol. 72, 11.2014, pp. 76-97

Van Praag, C.M., van der Sluis, J. & van Witteloostuijn, A. (2012), The Higher Returns to Formal Education for Entrepreneurs versus Employees  Small Business Economics, 40, pp. 375-396

Hartog, J., van Praag, C.M. & van der Sluis, J. (2010), If you are so smart, why aren’t you an entrepreneur? Returns to cognitive and social ability: entrepreneurs versus employees   Journal of Economics and Management Strategy, 19 (4), pp. 947-989

Oosterbeek, H., van Praag, C.M. & Ysselstein, A. (2010), The impact of entrepreneurship education on entrepreneurship skills and motivation   The European Economic Review,  54 (3), pp. 442-454

Van Praag, C.M., van Der Sluis, J. & Vijverberg, W. (2008), Education and Entrepreneurship selection and performance: a review of the empirical literature  Journal of Economic Surveys, 22 (5), pp. 795-841

Parker, S. & van Praag, C.M. (2006), Schooling, capital constraints and entrepreneurial performance: The endogenous triangle  Journal of Business and Economic Statistics, 24 (4), pp. 416-431

Ivory Tower and Entrepreneurship

In order to answer the question ‘Are universities, often perceived as ivory towers, a right place for prospective entrepreneurs to learn and grow?,’ INO researchers Toke Reichstein and Jing Chen have made an analysis based on data from Statistics Denmark to find out how many university graduates actually become entrepreneurs.

You can read what they have found out in the article in the CBS Observer: http://cbsobserver.dk/ivory-tower-and-entrepreneurship-0

 

Blog post on Social Entrepreneurship

Under the heading Social Entrepreneurship Mirjam van Praag gives her view on the contribution of Social Entrepreneurship to the mainstream Entrepreneurship area. It is becoming more and more common to see new ventures that challenge the traditional ways of markets and profit, and who wants to help the solve the societal challenges of our time.

People have always had strong, but shifting, opinions about entrepreneurs and their role in our economy and society. The shift I now see developing is an interesting one to follow. It has to do with social entrepreneurship.

For centuries, entrepreneurs were held in low esteem. No wonder: general opinion was based on Aristoteles’ notion of society´s economy as a ‘zero sum game’. Value creation went unrecognised. One person´s profit was necessarily another person´s loss. Making a profit, which is part and parcel of entrepreneurship, was regarded as theft. This image changed around 1800 when J.B. Say explicitly rejected the rather silly notion of a zero-sum economy. Since then, the contribution of entrepreneurs to both positive and negative value creation has grown.

But what is value creation? What boosts welfare? Again, this changes over time. Today´s citizens and consumers have different priorities to past and future generations. We are fortunate that our most basic needs are met. What has become important is self-realisation and the creation of a sustained and pleasant living environment. Job opportunities for people with a disability, banning harsh labour from the production chain of chocolate or coffee for instance, or reducing energy consumption by using new light sources or cars are typical examples of today´s unfulfilled needs, as are clean air, or creating a fulfilling life as we age. And the list goes on. Negative and positive external effects of production and consumption have become more important in the valuation of products and services of entrepreneurs.

Changes in demand require changes in supply. Moreover, the need to contribute to a better society reflects not only consumption preferences, but the preferences of entrepreneurs also. More and more entrepreneurs demonstrate a strong intrinsic motivation to incorporate into their business targets value creation and destruction associated with externalities. Many of today´s and tomorrow´s entrepreneurs will offer new goods and services. They may offer their entrepreneurial skills to support the government in managing its sheer unmanageable care responsibilities, which has our collective preference. They may halt production to promote an economy with room for swapping and sharing. They may offer alternatives to meat to help reduce animal misery and the burden on the global food chain.

These are the ‘social entrepreneurs’. Social entrepreneurs are a growing group of entrepreneurs who regard solving a social problem as their first priority. Social enterprises fit seamlessly into the trend of increasing awareness among entrepreneurs and their effect on society. We see this reflected in corporate social responsibility and the emergence of the circular economy, for instance. But views on the matter vary, and it may very well have to do with the name; after all, if social entrepreneurship exists, does asocial entrepreneurship also have a place in society? The believers say that social entrepreneurs will save the Netherlands. But sceptics claim that social enterprises are no different from other enterprises and that we shouldn’t pay them too much attention. It´s difficult to categorise social enterprises. The term does not cover all organisations that solve social problems. And because they are not a distinct group, it is difficult to collect data on what exactly social entrepreneurs contribute. Then again, perhaps categorising them isn’t so important.

Are social entrepreneurs the vanguard of a new movement in entrepreneurship that takes on a different role in society, namely solving tough social issues? For one, it’s a movement that is greatly valued, also by other entrepreneurs. Thousands of visitors to this year´s Week of the Entrepreneur event in the Netherlands were asked to name the best Dutch entrepreneur. The award of “Best Entrepreneur” went to Jaap Korteweg of Vegetarische Slager (vegetarian butcher). This entrepreneur wants to change the food chain by making meat redundant. Another entrepreneur in the top ten, selected by a cross-section of thousands of entrepreneurs, was a platform for lending and borrowing goods. Entrepreneurs who make money solving tough social problems are also appreciated by other entrepreneurs. Do social entrepreneurs form the vanguard of a movement of new large-scale entrepreneurship? I hope so. I, for one, will be following them.

 

The Role of Role Models

In the discussion of what makes an entrepreneur, the role of role models is being investigated as an influential factor in the choice of career path. In this blog Mirjam van Praag gives a short account of the current research.