Business school masters programs have long been considered factories for investment bankers and management consultants, or senior managers of S&P 500 companies. Yet business schools are, increasingly, keen to teach entrepreneurial skills to their students, who are showing more interest in creating companies rather than working for them, including some that are seemingly successful.
According to a 2018 survey of 820 business schools by AACSB International, an accreditation body, 70, or 11 percent of schools, offered specialized masters degree programs in entrepreneurship. That is up from seven percent of schools in AACSB’s 2015 survey. The programs teach core courses like finance and strategy, but also specialist skills associated with entrepreneurial success, such as ideation and how to scale.
A quarter of prospective business school students intended to start a business on graduation, up from 20 percent in 2009, according to a survey last year by the Graduate Management Admission Council, an exam administrator.
One in 10 business school alumni are entrepreneurs today, and there are plenty of success stories. Take, for example, Michael Bloomberg, who built his financial media empire after graduating from Harvard Business School. Or Taavet Hinrikus, the co-founder of disruptive money-transfer company TransferWise, who more recently got a business education at INSEAD.
Some scoff at this, arguing that entrepreneurs are born rather than made. Elon Musk, the mercurial Silicon Valley entrepreneur, has even paid youngsters not to go to university and instead start a business, such is the scepticism of business education among some star founders.
Even so, business schools have been keen to jump on this trend. Today, business schools all over the world, from USC’s Marshall School of Business to the National University of Singapore (NUS), offer masters programs in entrepreneurship and related courses.
Simon Hulme, director of the MSc Entrepreneurship program at UCL School of Management in London, says entrepreneurial attributes, like being happy to take risks and having a strong desire to create, cannot be taught. “But if you do have them, then the frameworks we teach are of significant value, and will provide the entrepreneur with a far greater chance of success,” he adds.
How should entrepreneurship be taught, then? Dr Luca Berchicci, associate professor of entrepreneurship and new business venturing at Rotterdam School of Management in the Netherlands, argues that a hypothesis-driven approach to teaching the entrepreneurial process is more effective than a heuristic approach.
A study of 116 Italian startups that received entrepreneurial training, found startups that were taught to conduct rigorous tests and develop frameworks for predicting performance, were less likely to pursue ideas with false positive returns than startups that followed their intuition.
Another study concluded that teaching a proactive mindset that focuses on entrepreneurial behaviours such as opportunism or resilience can increase firm profits by 30 percent, compared with 11 percent for traditional training focused on basic financial and marketing practices.
“Teaching tools make a great difference in terms of nurturing and executing business ideas,” says Berchicci.
Entrepreneurial training has evolved to reflect this, from teaching knowledge via lectures to developing skills and competencies practically. On the MSc in Entrepreneurship at the University of Bath School of Management, for instance, students go through the whole entrepreneurship process. This includes identifying an opportunity (ideation), developing a business model to exploit it (design), obtaining resources to support that business (incubate) and developing a growth plan (scale).
“The course is designed to challenge students’ and prepare them to develop an entrepreneurial mindset that allows a more inquisitive, dynamic and innovative approach to problem solving,” says Dr Bruno Oliveira, director of studies for Bath’s course, adding: “With the right pedagogical approach, entrepreneurship can indeed be learned.”
Business schools stress that master’s degree programs in entrepreneurship can yield several benefits for students and that the costly tuition fee investment can pay off.
Aside from the fact that business school is a safe environment to test a business idea, Dr Jeremy Hutchison-Krupat, co-director of the entrepreneurship centre at University of Cambridge’s Judge Business School, points to networking as an example of how a business education benefits entrepreneurs.
After all, you’ll rub shoulders with other like-minded entrepreneurs who could become customers, co-founders, investors, or simply offer their advice or lend a favor. On the MSt in Entrepreneurship at Cambridge Judge, for instance, classes are complemented with events and activities, including pitching sessions. Each student is paired with a mentor based on the student’s individual needs.
This creates “an environment that facilitates the formation of a strong community of entrepreneurs”, says Hutchison-Krupat.
There are many reasons for the growth in number of students pursing startups rather than corporate careers. Since the mid 1980s, there has been a shift towards self-employment in the UK: a necessity for some because traditional industries declined, says UCL’s Hulme.
“Attitudes have progressively changed and governments have been very supportive of startups,” he says, adding that over the last two decades the growth of the internet has made starting a business far easier and quicker.
Increasingly, people are seeking more freedom and interesting challenges in their working lives, which are becoming longer, says Bath’s Oliveira. For some, creating a company satisfies these needs. “It allows people to obtain more flexibility and independence, which is more aligned with the millennial mentality.”
Younger people want to make a positive impact on society through pursing their passions and working on what is important to them, says RSM’s Berchicci. But this can be done through “intrepreneurship”, or driving innovation from within a big company. About 20 percent of alumni from RSM’s MSc Strategic Entrepreneurship program started their own company, while 20 percent work for a startup, but others go into big corporates to gain experience and spot opportunities.
“Many entrepreneurs have a solid corporate experience before starting their entrepreneurial venture,” says Berchicci.
This is also a way for students to hedge their bets while they pay off student loans — one of the biggest barriers to starting a business while at business school, or shortly after graduating. Entrepreneurship is, after all, an inherently risky business, with multiple studies suggesting that the vast majority of startups are destined to fail.
“It is undeniable that a university course incurs sizeable fees and potentially some debt,” says Oliveira at Bath.
But he sees this as an investment rather than a cost. “The kind of experiences and preparation that students get in a course like this will be valuable for the rest of their lives.”