Education and entrepreneurship

November 27th, 2015   •   no comments   
Education and entrepreneurship

Entrepreneurship is recognised as a key element in economic growth and job creation. Moreover, as a wider set of attitudes and approaches to problems, it is seen as crucial to innovation beyond business – in government, the social sector, and across society. Increasingly, therefore, governments are seeking ways to promote entrepreneurship, including through education systems.

Doing the latter is not straightforward. Any number of highly successful entrepreneurs – from Thomas Edison to Bill Gates and Richard Branson – famously left formal education early. This has helped build the popular perception of a disconnect between education and entrepreneurship, perhaps best exemplified by the common contention that entrepreneurs are born, not made.

The relationship between education and entrepreneurship, however, is far more complex. On the one hand, education can help those future entrepreneurs who don’t give up on it. A 2009 study, which looked at 20 years of American data, found significant returns to education – as measured by increased average income for every year of schooling completed – for entrepreneurs. Equally striking, these returns were higher for entrepreneurs than employees, even after taking into account any disparities between the two groups. Those working for themselves, the authors argue, have more flexibility in how they use their human capital, which leads to better returns on it.[1]

On the other hand, the same study found that more years of formal education in the United States made individuals less likely to want to become entrepreneurs. Worse still, the success of education systems worldwide in inculcating skills apparently has a negative relationship with how able graduates think they are to start a business.

Professor Yong Zhao, Associate Dean for Global Education at the University of Oregon (US) recently compared national PISA math scores of economically developed countries with those nations’ scores of perceived entrepreneurial ability, derived from Global Entrepreneurship Monitor survey data. The results (see chart) suggest counter-intuitively that better skills correspond to less self-confidence over the ability to start a business. A better explanation is that the way skills are taught undermines the attitudes needed to start a business. Mr Zhao contends that “Traditional schooling aims to prepare employees rather than creative entrepreneurs. As a result, the more successful traditional schooling is (often measured by test scores in a few subjects), the more it stifles creativity and the entrepreneurial spirit.”[2]

Presumably education more focussed on encouraging entrepreneurship would promote such creativity. This is exemplified by existing entrepreneurship programmes. According to the European Commission, around 15% to 20% of secondary school students taking part in a mini-company scheme – in which participants create and run an actual small company with the advice of local entrepreneurs – eventually start a business of their own. This is three to six times more than in the general population. This kind of programme also has the potential to support learning more broadly. Junior Achievement, a worldwide organisation providing such schemes in schools, says that third-party analysis by the Worldwide Institute for Research and Evaluation has shown a correlation between participation in Junior Achievement programmes and significantly higher critical thinking and problem solving skills.

These figures need to be taken with caution. Existing research on the wider impact of entrepreneurial education is scant. Nevertheless, its potential explains why an increasing number of countries are looking to integrate entrepreneurship education into mainstream curricula. Over half of European Union states have made it compulsory in some way – either integrated into other subjects or, in a few cases, as standalone courses. The required learning outcomes tend to be a combination of attitudes – such as self-confidence – and abilities – such as critical thinking, communication, planning and teamwork. These abilities are frequently among those associated with efforts to make education systems more capable of providing the wide range of skills which will be in demand in the future workplace.

Like current efforts to better inculcate such skills – described in ‘21st century skills’, an article previously published on The Learning Curve – better entrepreneurship education will demand a strong element of reform and modernisation of how education as a whole is delivered. In the words of a European Commission report, entrepreneurial skills “are difficult to teach through traditional teaching and learning practices in which the learner tends to be a more or less passive recipient…. The implication of these changes for teachers is substantial. They mean nothing less than a new role for every teacher: that of ‘learning facilitator.’” As a result, “these changes will require significant changes in the way teachers themselves are educated,” in order to be able to promote creativity.[3]  To help focus these efforts, the EU coordinated the drafting of the Budapest Agenda on Enabling Teachers for Entrepreneurship Education, which outlines a range of steps needed to be taken by various school and community stakeholders.

The success of entrepreneurship education obviously depends on the programme in question, but far from Europe, a Johannesburg secondary school is already showing the substantial impact it can have. The African Leadership Academy teaches Entrepreneurial Leadership as a core curriculum subject along with other traditional ones. Moreover, in their final year, students are required to design and deliver a service-based learning programme. The school is far from representative – it selects 15-19 year-old students from across the continent who have demonstrated leadership potential and an entrepreneurial spirit – but the impressive results so far show just how quickly education including entrepreneurship can have positive outcomes. Some 97% of students go on to university, but they also begin to drive change right away. Although the first class graduated only in 2010, alumni have already created 38 non-profit and for-profit enterprises, including ones such as Emo Art – an NGO which uses the arts to empower young girls in their communities – and Aroma Emporium – a commercial provider of beauty products which secured a supplier deal with Palmolive, an American consumer products company.

Education and entrepreneurship can be mutually supportive. Finding ways to make them so brings out the best in both, benefiting everyone.

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