Can Entrepreneurship Be Taught?

That’s the subject of last week’s Wall Street Journal debate, with Harvard’s Noam Wasserman arguing the affirmative, venture capitalist Victor Hwang the negative. I offered my own, economics-centered answer in a 2006 article coauthored with Bruce Bullock, the Founding Director of the McQuinn Center who passed away that same year. Bruce and I argued that economists are good at teaching what entrepreneurship does, but not so good at teaching what entrepreneurship is, or how entrepreneurs do what they do.

Sarasvathy on Effectuation in HBR

A concise summary of the “effectuation” approach to entrepreneurship by its creator and champion, Saras Sarasvathy (our 2009 Hibbs Distinguished Lecturer), in the Harvard Business Review. Building on her mentor Herbert Simon, Saras characterizes effectual thinking as a mode of cognition involving experimentation, feedback, and incremental learning — in contrast to the Kirznerian notion that entrepreneurial opportunities are discovered, evaluated, and exploited in single flash of insight, or the mainstream entrepreneurship literature’s idea that entrepreneurs perceive an opportunity, then immediately assemble the resources necessary to exploit it. Saras compares the effectual method to the scientific method:

The idea that anybody can be taught to figure things out, that there is a logic to discovery and invention, would have struck our ancestors as radical and strange. Until quite recently — until science education became institutionalized and widespread — the creation of new knowledge depended on either genius or luck.

I believe we are in a similar situation now with regard to entrepreneurship. . . . The idea that anyone can be taught to be an entrepreneur, to effect things for themselves, might seem ridiculous. But consider this. Every large corporation that exists today began as a small, entrepreneurial company started by ordinary people. In retrospect, their achievements seem incredible, almost magical, by no means ordinary or learnable by ordinary people. We do not think of entrepreneurial action as a skill, one as teachable in schools as scientific reasoning. I believe it is time to change this picture.

Organizing Entrepreneurial Judgment — Now Available!

Last week I received the first desk copies of my new book, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012), coauthored with Nicolai J. Foss. You can order today on Amazon’s UK site (or pre-order on the US site, which shows a publication date of 30 April). Or order directly from Cambridge using this link and receive a 20% discount!

A brief description and some endorsements are below the fold. And here is a video from the Author Forum at last week’s Austrian Scholars Conference at which Nicolai and I talk about the book.

Nicolai Foss to Deliver Hibbs Lecture at Missouri

The McQuinn Center is co-sponsoring the 2012 Sherlock Hibbs Distinguished Lecture in Business and Economics, delivered by Nicolai J. Foss of the Copenhagen Business School and the Norwegian School of Economics and Business. The lecture, “Open Entrepreneurship: The Role of External Knowledge Sources for the Entrepreneurial Value Chain,” is Tuesday, March 6, 2012, 10:00-11:30am, in 205 Cornell Hall on the University of Missouri Campus. Further details are available here.

Maybe the University of Missouri Isn’t for You

From the frequently entertaining Failbook:

Seriously, though, I am a big fan of DeVry and others like it. Their product is quite different from that offered by the University of Missouri and other traditional educational institutions, but “education” isn’t a homogeneous good, and I’m happy to see it offered on the market in many shapes, colors, and sizes.

Entrepreneurship, or Selling Yourself to Academia

In an interesting article published on the Chronicle of Higher Education web site, Sarah Ruth Jacobs writes that graduate students who aim for an academic career need to sell themselves. And the way to do it, according to the article, is to reach outside of the traditional box – and be entrepreneurial. Jacobs refers to anecdotal evidence showing how her peers secured tenure track positions because of their skills outside of their discipline. Such skills as “experience in instructional technology” or having developed an online tool.

The point made in the article is that graduate students need to sell themselves better – and the way to do it is to engage in unorthodox (or at least non-traditional) activities to gain experience. Successes in traditional academic job candidate preparing work – to “present at conferences, network with others in your field, be active in your department, work with someone of great renown, submit papers for publication, apply for fellowships” – simply doesn’t cut it. Jacobs terms stepping out of this box “entrepreneurship.”

As someone who is currently on the job market – indeed, with such qualities (technology expertise, multilingual, non-academic work experience) that should distinguish me from the crowd – I think the article goes a little too far. The point that appears implicitly in the article is well taken – of course one has to sell oneself, especially securing additional qualities/skills, in order to get a tenure track position. But an alternative interpretation, which to me seems equally plausible judging from how the article is written, could be that what matters are those non-traditional qualities.

Brilliant Mistakes

More for our failures series (1, 2): an interesting interview with Wharton professor Paul Schoemaker on his new book Brilliant Mistakes: Finding Success on the Far Side of Failure. “Schoemaker identifies two ways to take advantage of the opportunities that can flow from mistakes: being open to learning from professional or personal errors to identify new ways forward, and deliberately making mistakes, or challenging conventional wisdom, in order to speed up learning within your organization. He argues that not making mistakes may be the greatest mistake of all.” And don’t miss the Brilliant Mistakes Contest (no, don’t suggest my university’s decision to hire me, please).

The Entrepreneur in the Firm

While the theory of the firm is struggling with the Coasean questions about its existence, boundaries, and internal organization, the entrepreneur is strangely missing. Obviously, an entrepreneur is needed at the creation of firms. By definition. But what is the entrepreneur’s function within the firm? And what is the firm’s function to the entrepreneur? These questions are seldom asked and even more rarely answered.

I make an attempt to connect the entrepreneur and the firm from a historical point of view, summarizing the evolution of the theory of the firm and attempting to identify the relationship between entrepreneurs and their firms. I drafted a theory in a recently published article that we mentioned here. In an article for a not-exclusively-academic audience published today, I discuss how the history of the economic theory of the firm suggests answers to many questions about the firm and the entrepreneur – and how they are interdependent. It was given the title: The Economic Theory of the Firm.

AoM Entrepreneurship Doctoral Consortium

The Academy of Management conference has begun, and today Sharon Alvarez and I facilitated the theory workshop for the Entrepreneurship Division Doctoral Consortium. For your viewing pleasure, here are my slides. Lots of interesting discussion followed about the opportunities and challenges for theoretical research in entrepreneurship. An exciting field to be in!

Can Entrepreneurship Be Taught?

A recently published Inc. article reports on a Babson College study that finds “overwhelming” evidence that entrepreneurship can be taught. At least, teaching entrepreneurship seems to have a positive effect on whether students start their own businesses post graduation. According to the study:

• There is overwhelming evidence that taking two or more core entrepreneurship elective courses positively influenced the intention to become an entrepreneur and becoming an actual entrepreneur both at the time of graduation and long afterward.
• Writing a student business plan also had a significant influence, but it is not a strong as taking two or more core courses.

Of course, starting a business is not necessarily the same thing as providing the entrepreneurial function to the market as economists talk about. There should be little doubt that teaching students how to overcome practical obstacles, such as bureaucratic rules and regulations, and thereby creating an awareness of such obstacles and preparing them for the craftsmanship of actually running a business may be both useful and have a positive effect on number of start-ups. Yet such statistics may not be very useful in tracing the value of (and returns to) the entrepreneurial function. They also cannot establish what are the boundaries of entrepreneurship. (And where does collective entrepreneurship fit in the entrepreneurship picture?)

Interestingly, the study also states that “[t]he proportion of alumni entrepreneurs increases with the years after graduation,” which is quite ambiguous. One can only but wonder if this means entrepreneurship students wait to start businesses until their market experience and (one may assume) their access to accumulated capital increases – or do they start businesses when they have forgotten the lessons learned in entrepreneurship courses?