The COVID-19 pandemic has triggered a surge in new business creation in many of the world’s largest economies, with entrepreneurs seeking to tap into the changing needs of consumers and companies, and create their own jobs after being laid-off.
The US, UK, France, Germany and Japan have all reported substantial increases in company registrations in recent months, despite the economic pain inflicted by the pandemic.
Some of these entrepreneurs will come from business schools, which are seeking to burnish their startup credentials and diversify beyond traditional career paths such as investment banking and management consulting, even as some prominent entrepreneurs speak out against MBAs.
In recent years, more and more Online MBA students have jumped off the corporate rungs and launched themselves into entrepreneurship. The coronavirus has accelerated existing trends, as evidence grows to suggest that a formal business education can make people better entrepreneurs.
Cash-strapped small business owners have typically been hesitant to return to school full-time for a traditional MBA. Technology, however, has made such training more accessible. Online MBA programs, which can be taken part-time alongside work, appeal to entrepreneurs.
“The current recovery from pandemic has ushered in a startup boom,” says Regan Stevenson, assistant professor of entrepreneurship and management at Indiana University Kelley School of Business in the US. “Students that have traditionally not considered entrepreneurship as a post-MBA option are now starting to see new opportunities emerge.”
Other students that want to stay in the corporate world have found value in learning about the entrepreneurial process, adds the Donna Shoemaker faculty fellow in entrepreneurship. They see a much greater need to become corporate innovators in response to new opportunities and challenges that their firms are dealing with.
“Majoring in entrepreneurship or at least taking a few entrepreneurship electives during your MBA studies has become such a high demand option in recent years,” says Stevenson. “Corporate employers and growth ventures today need entrepreneurial thinkers and innovators more than ever before.”
The strongest startup boom in a decade
In the UK, the coronavirus pandemic has ignited the strongest startup boom in a decade. In the past year, there were 810,000 business incorporations in Britain, up from 22 percent on the same period last year. The rate of company incorporations in the third quarter of last year was the highest in some 10 years.
UK business creation is strongest in retail, wholesale and logistics, reflecting the rise in companies trying to address the pandemic-era need for online shopping and home delivery. Low interest rates and government support have also been key drivers.
But do entrepreneurs really need an MBA, which can cost a hefty sum? “I am obviously biased, but believe that the benefits of an MBA far outweigh the costs,” says Craig Markovitz, assistant teaching professor of entrepreneurship at Carnegie Mellon University’s Tepper School of Business of the US.
His approach is to provide the foundational principles via classroom instruction and encourage students to get out into the world and talk to customers to test their solutions.
“The skills our students learn and the networks they create provide extraordinary value as they build their companies,” he says. “As an entrepreneur, you are always looking for advantages that will put your company in the best position to be successful — and an MBA is a huge asset.”
A growing body of research suggests that an MBA can foster the kind of resiliency that companies will need to weather the coronavirus crisis. The Global Entrepreneurship Monitor, a research group, has found that formal education is a leading indicator of success in establishing resilient companies.
“Whilst an MBA is not the only possible route to becoming an entrepreneur, an MBA can be hugely beneficial to entrepreneurs,” says Lesley Pender, head of postgraduate programs at Edinburgh Napier University and former director of MBA programs at Newcastle University, in the UK.
“It is not unusual for applicants to have a successful startup that has reached a critical point that has led the entrepreneur to reflect on their own developmental needs in order to help them grow the business,” she says.
Is an Online MBA better for aspiring entrepreneurs?
And while traditional full-time MBAs have attracted more bankers and consultants than people from startup land, the online format is a better fit with those running businesses, a challenging and time-consuming pursuit. But Pender cautions that it’s just one potential route to consider. “The optimum choice depends on both individual circumstances and learning preferences.”
Business schools have substantially increased the amount of entrepreneurial content in the MBA curriculum in recent years as they seek to attract students from a broader range of backgrounds to their cohorts.
Edinburgh Napier, for example, has had expert speakers run webinars on topics such as innovation, logistics and supply chain management. On campus, the school hosts a hub for innovation which supports students and alumni to develop enterprise skills and capture opportunities, as well as explore, test and develop business ideas.
Indiana’s Kelley School teaches “action based” entrepreneurship classes. As part of the school’s Online MBA program, students attend an intensive weekend experience. Over the weekend, entrepreneurial teams of MBAs focus their collective efforts toward developing new solutions for customer pain-points or societal challenges.
“The traditional MBA is phenomenal at giving students a systematic way to solve problems,” says Stevenson. “But entrepreneurship isn’t always straightforward and the standard tools often don’t apply.”
Some of the most successful entrepreneurs — among them, Tesla’s boss Elon Musk and PayPal founder Peter Theil — have railed against the MBA, saying it’s better to save the time and money to learn in the real world. What is Stevenson’s riposte?
“I can understand why some entrepreneurs push back against MBAs, but gone are the days of boring lectures and old textbooks. The game has changed,” he says.
“Entrepreneurship courses in the MBA reduce the learning curve for those looking to start or grow their own companies,” he adds. “The tools and methods that we unpack in our entrepreneurship courses can definitely help get students moving in the right direction.”