Dear tobael,
I have found a number of interesting resources on the relationship
between formal education and entrepreneurial success. A few of these
are informal comments, but others consist of hard numbers and analysis.
First, an article in the Russian business magazine September 1st mentions
that the popular conception of the entrepreneur as a largely self-taught
individual is inaccurate.
"While it is frequently stated that entrepreneurs are less educated than
the general population, the research indicates this is clearly not the
case. Education is important in the upbringing of the entrepreneurs. Its
importance is reflected not only in the level of education obtained but
in the fact that it continues to play a major role in helping to cope
with problems and correcting deficiencies in business training. Although
a formal education (a diploma in a pocket) is not necessary for starting a
new business, as reflected in the success of such entrepreneur high school
dropouts as Andrew Carnegie, William Durant, Henry Ford, it does provide
a good background, particularly when it is related to the field of the
venture. Entrepreneurs need education in the areas of finance, strategic
planning, marketing (particularly distribution), and management. The
ability to deal with people and to clearly communicate in the written
and spoken word is important in any entrepreneurial activity."
1September: Archive: September 2000: Characteristics of Entrepreneurs
http://archive.1september.ru/eng/2000/no23_1.htm
A brief profile of entrepreneurs in the United States remarks that the
majority of those who start a new business have attended college at some
point in their lives.
"Most of those who started their own businesses are well educated. About
59.7 percent have received at least some college education, and more than
a tenth of this group (12.6 percent) has graduate school and professional
school degrees. A little less than two fifths have reached high school
level (37.5 percent)."
Power HomeBiz: A Profile of America's Entrepreneurs
http://www.powerhomebiz.com/vol14/profile.htm
In an article by a columnist who covers entrepreneurship, the author cites
statistics showing that highly educated entrepreneurs employ others at
a significantly higher rate than their less educated counterparts.
"Strong education-jobs link: The study data show a solid correlation
between entrepreneurship, education and job creation. Nearly a third
(30 percent) of entrepreneurs with less than a high school education
expect to remain self-employed over the next five years, while 35 percent
of the most highly educated entrepreneurs expect to employ 20 or more
people over the next five years."
NewWork: November 2003: Jane M. Lommel: Entrepreneurial Enthusiasm is Rising
http://www.newwork.com/Pages/Networking/2003/Entrepreneurial%20enthusiasm.html
The Bureau of Labor Statistics, an arm of the U.S. Department of Labor,
reports figures dealing with the special case of entrepreneurs who already
have a salaried job. A significantly higher proportion of these second-job
entrepreneurs have attended college than non-entrepreneurial workers,
and significantly fewer have failed to graduate from high school.
"People who are second job entrepreneurs have primary positions in
wage-and-salary jobs and hold second jobs in which they are self-employed
in unincorporated businesses. About 70 percent of second job entrepreneurs
in 1998 had at least some college. In comparison, 55 percent of all
workers had post-high-school education.
"Only 4 percent of second job entrepreneurs in 1998 did not have a
high school diploma. Of all workers, 13 percent had not received a high
school diploma."
U.S. Department of Labor: Bureau of Labor Statistics: Education and
second-job entrepreneurs
http://www.bls.gov/opub/ted/1999/Oct/wk1/art04.htm
Another special case is that of entrepreneurs who have not only completed
an undergraduate college degree, but have taken a specialized program that
teaches entrepreneurial skills specifically. The following is a summary,
in PDF format, of a statistical study carried out at the University
of Arizona.
"Entrepreneurship education is highly advantageous for not only its
graduates but also the companies they lead or work for, according to
a new University of Arizona study. Compared to other graduates of the
UA's Eller College of Business and Public Administration, alumni of the
Berger Entrepreneurship Program make more money and their firms grow
more rapidly."
University of Arizona: Eller College of Management: Economic & Business
Research: Entrepreneurship Education Impact Study Findings Summary:
Graduate Entrepreneurs Prosper, Innovate
http://ebr.bpa.arizona.edu/impactstudies/Entrepreneurship/findingsummary.pdf
The research paper based on this study, featuring hard stats as well
as qualitative analysis, concludes that specialized education is highly
advantageous for prospective entrepreneurs. The following is a link to
the full paper in PDF format.
"There is strong evidence that entrepreneurship education
contributes to risk-taking and the formation of new ventures. On
average, entrepreneurship graduates are three times more likely than
non-entrepreneurship graduates to start new business ventures. Controlling
for the personal characteristics of graduates and other environmental
factors, entrepreneurship education increased the probability of an
individual being instrumentally involved in a new business venture by
25 percent over non-entrepreneurship graduates."
University of Arizona: Eller College of Management: Economic &
Business Research: Alberta Charney and Gary D. Libecap: The Impact of
Entrepreneurship Education
http://ebr.bpa.arizona.edu/ImpactStudies/Entrepreneurship/final%20draft%208.pdf
A good source of entrepreneurial studies is the Kentucky Long-Term
Policy Research Center. One chapter from an online book states that
the cumulative implication of 43 different studies on the link between
earnings and education is that an undergraduate college degree increases
earnings by 12.4 percent. Note that this figure applies to all workers,
not only entrepreneurs.
"Research confirms what common sense suggests: higher education
generally leads to higher earnings. Formal acknowledgement of the close
relationship between education and income occurred in the early 1960s
in the work of Schultz, Becker and Mincer. Becker defined investments
in human capital as those that increase an individuals skills and
competencies. Education was identified as a type of in-vestment in
human capital from which positive returns are expected. Since the books
publication, the relationship between earnings and education has been
studied extensively. In a meta-analysis of 43 studies of this type,
Leslie and Brinkman estimate the mean rate of return to completing an
undergraduate education at approximately 12.4 percent. This estimate is
typical of most studies and represents the returns to higher education
in the form of higher earnings. Studies acknowledging the wider array
of higher educations benefits claim that these estimates considerably
underestimate the true returns and that the actual rate is quite possibly
twice the standard estimate."
Kentucky Long-Term Policy Research Center: LTPRC bookshelf: Amy L. Watts:
Social Benefits of Going to College
http://www.kltprc.net/books/educationcommongood/Chpt_04.htm
On the same website, a chapter from another book relates the conclusions
of a Kentucky-wide study focusing on entrepreneurs. The study shows that
entrepreneurs have significantly more education than workers in general.
"Kentucky entrepreneurs tend to have more education, on average, than the
general population, a circumstance that correlates with other studies of
small business owners. Indeed, other studies have found that an educated
population is associated with entrepreneurism. In fact, successful
entrepreneurs average about 13 years of education. And when the firm
is involved in technology, the average increases considerably. Figure 3
compares the educational attainment of Kentuckys entrepreneurs with the
states general population. Around 40 percent of Kentuckys entrepreneurs
have at least three to four years of college and about 30 percent have
at least a bachelors degree. By comparison, approximately 27 percent of
adult Kentucky respondents (over age 18) to the University of Kentuckys
general population telephone survey report having at least three to four
years of college and around 21 percent report having at least a bachelors
degree. This sample, however, may overstate the educational status of the
general population given that it includes only those Kentuckians with
a telephone. March 1996 Census Bureau estimates placed Kentuckys adult
population (25 years and older) of college graduates at 17.5 percent."
Kentucky Long-Term Policy Research Center: LTPRC bookshelf: Michael
T. Childress, Michal Smith-Mello, and Peter Schirmer: Who Are Kentucky's
Entrepreneurs?
http://www.kltprc.net/books/entrepreneurs/Chpt_7.htm
This chapter includes a helpful graphic to which I link directly here.
Kentucky Long-Term Policy Research Center: LTPRC bookshelf: Michael
T. Childress, Michal Smith-Mello, and Peter Schirmer: Who Are Kentucky's
Entrepreneurs?: Figure 3: A Comparison of Educational Attainment Between
Kentuckys Entrepreneurs and the General Population
http://www.kltprc.net/books/entrepreneurs/Gifs/Fig_06.htm
Finally, here is the prize of the bunch. You will surely be interested in
this 43-page scholarly paper, published in the Swedish Economic Policy
Review, which addresses precisely the question of how formal education
affects the success of an entrepreneur. The paper concludes, from its
empirical data and statistical analysis, that education is a significant
benefit to entrepreneurs. Indeed, education is evidently more beneficial
to entrepreneurs than to other kinds of workers.
"To what extend does formal schooling, one of the most
prominent manifestations of human capital, affect entrepreneurship
performance? [...] We discuss two recent applications of more advanced
empirical strategies. The first of these studies shows that in the US,
the returns to education are much higher for entrepreneurs than for
employees (14 and 10 percent, respectively)."
University of Amsterdam: Faculty of Economic Science and Econometrics:
Justin van der Sluis and C. Mirjam van Praag: Economic returns to
education for entrepreneurs
http://www1.fee.uva.nl/fo/mvp/SEPR_2004.pdf
I hope you are pleased with the materials I have been able to locate on
short notice. If you find that they are not quite what you were looking
for, please give me further guidance through a Clarification Request so
that I can fully meet your needs before you assign a rating.
Regards,
leapinglizard |
