Entrepreneurship has come a long way. Gone are the days when aspiring entrepreneurs faced a bricks n mortar model requiring a significant amount of startup capital. Now with the internet well established and the digital economy underway, entrepreneurs have more pathways to pursue their dream. Over the course of this decades’ long transition American educational institutions embraced entrepreneurship, becoming a major resource through their teaching, as well as through the commercialization of its faculty research.
In secondary education there are now hundreds of colleges and universities that offer some type of entrepreneurship program for their students. Some universities have even gone one step further, teaching entrepreneurship as part of a career plan across schools and disciplines—introducing all of their student body to the “entrepreneurial mindset”. The latter step was taken in recognition that large corporations are no longer net job creators for the American economy—something very critical yet now attributed to successful startups and their early growth years.
Given the prominent position that entrepreneurship now has in secondary education, two NYU professors, Ashish Bhatia and Natalia Levina, examined how business schools are teaching entrepreneurship education. They focused on the approaches of three MBA programs: The Wharton School of the University of Pennsylvania, University of Virginia Darden School of Business, and University of Toronto Rotman School of Management.
In their research paper titled, “Diverse Rationalities of Entrepreneurship Education: An Epistemic Stance Perspective,” they observed that entrepreneurship has some very unique elements that distinguishes it from other academic disciplines. They explored those differences and what it might mean in how entrepreneurship is taught.
Professor Bhatia explains, “One unique challenge of entrepreneurship education is that at least to some degree, entrepreneurship involves disruptions of the usual business rules, norms, and models. There is a dilemma as to how a business school that adheres to a well-defined scientific method of teaching is able to teach entrepreneurship that at its core does not conform to traditional ideas of rationality.”
The professors noted that many business school programs teach entrepreneurship like their other academic programs using Scientific Management Rationality (SMR) that focuses on the efficient use of resources to gain an organizational result. This approach is very analysis and data driven that teaches students principles such as ROI and Cost/Benefit analysis. For those directly pursuing entrepreneurship in their career, they may find other approaches more appealing.
“We found that while Wharton largely leverages a SMR approach to entrepreneurship education, the two other programs had new and alternate approaches,” said Professor Levina. “We saw that Darden School has an effectual approach which is rooted in pragmatism while Rotman’s program emphasizes intuition”.
According to the study, the Darden faculty formalized effectuation in their program based on their own research which discovered that expert entrepreneurs behave in a pattern that utilizes effectual logic. This approach begins with the entrepreneur identifying the means or resources near at hand to them, including their surrounding network, and from there they envision possible entrepreneurial goals. The authors say this is a natural approach of entrepreneurs, but not commonly taught at business schools.
Anecdotally, this approach is similar to the public advice often given by successful entrepreneurs who advocate that aspiring entrepreneurs find something they are passionate about in their lives and explore the means to commercialize it. They encourage them to identify resources and tap into any expertise or knowledge base they may already have or that others’ may have to facilitate their pursuit of launching a startup.
In contrast to effectuation the co-authors note that the traditional SMR teaching approach often relies on causal logic, which begins with a vision or goal such as a building an app or opening a retail store and then placing emphasis on the entrepreneur gathering resources and people to achieve their goal.
Professor Bhatia describes the separation between the two approaches further, stating, “SMR principles were developed to study the underlying “rules” and “patterns” that govern the world around us, not “to break” them. Yet, the point of entrepreneurship, especially the breakthrough type, is to change the world. SMR principles have limitations when it comes to creating something new that breaks with the existing business and industry constraints.”
The professors offer Airbnb as an example to better understand effectuation versus SMR. They describe the circumstance in which Airbnb’s co-founders came to the idea of renting out their apartment during a room shortage when a conference is held in their city. As an effectual approach, it began when the two roommates realized they have unused air mattresses that they could rent out to those unable to find accommodations.
They did not start out with a vision of a mass amount of people renting out rooms in their homes all over America. Rather they began with what they observed firsthand and decided to explore their idea by launching a web site to promote it. This is effectual logic and it includes the founders establishing their “affordable loss”, the amount they put at risk in order to gain greater insight about their model’s potential. In a business school with a greater focus on SMR, the two professors suggest that students in this circumstance might be advised instead to do research on the market potential for such an idea and plan out ways to minimize their losses and exposure to risk. If the roommates had approached AirBnB that way, they may never have launched their startup.
In the case of Rotman, the school aggressively focuses on experiential learning. Through their Creative Destruction Lab (CDL) they developed a unique learning program whereby students spend a year with early stage startups surrounded by a mentor network of expert entrepreneurs. This approach the co-authors found is driven by the beliefs of the school’s faculty and staff —who feel entrepreneurship is best learned through direct interaction with expert entrepreneurs. They place students in situations outside the classroom to build “intuition”—something they would not gain through classroom lectures.
In the Airbnb case the founders began with an effectual approach and also attributed much of their success to the support provided by mentors and the experts of YCombinator, a prestigious incubator which accepted them. There they became immersed in the community that YCombinator describes as an immersive experience, noting on their site that “…practical advice is redundant, but there’s value in it even as such—if you hear the same things over and over again from different angles, especially from prominent people, it tends to sink in more.”
Professor Levina explains that intuitive thinking is encouraged “through student’s participation in an apprenticeship model, where students learn through situated learning as members of a community of experts.”
Upon seeing these broader approaches to entrepreneurship education, the professors drew conclusions for both entrepreneurs and those who teach entrepreneurship. For the former they concluded that having other approaches to SMR should result in students having greater confidence for having absorbed entrepreneurship in different ways outside of a classroom setting. Pragmatism and intuition become part of an entrepreneur’s expanded tool kit that they may draw upon as they move forward in their risk taking career paths.
For those teaching university entrepreneurship programs, the research highlights the importance of creating more diverse approaches/philosophies, so that those entering MBA programs are given greater choice in finding a program that appeals to their view about becoming an entrepreneur. They also note that those teaching entrepreneurship greatly influence the approach taken in a program, reflecting their own values and beliefs. This they see as positive because it creates a spectrum of approaches for students, while assuring them that these alternative innovative approaches have valid rationalities with legitimacy outside of SMR.
Through this research Professors Bhatia and Levina present insight about university entrepreneurship programs and how they are evolving to advance entrepreneurship. Schools are continually refining their curriculum that is also changing how they are engaging with their local entrepreneurial ecosystems where the community of entrepreneur experts reside.
Further to this but not addressed in their research, more and more universities are reaching out to their local communities to be a resource for aspiring entrepreneurs which is serving to stimulate entrepreneurial activity in the ecosystem. In other words there is much more to be learned about how business school entrepreneurship programs are taught and the changes underway that are expanding their roles in advancing American entrepreneurship and innovation.
Ashish Bhatia is a Clinical Associate Professor of Management & Entrepreneurship and the Academic Director of the B.S. in Business, Technology, & Entrepreneurship at NYU Stern. He teaches courses in entrepreneurship and social impact.
Natalia Levina is a Professor at New York University Stern School of Business. Professor Levina is the Director of the Fubon Center for Technology, Business and Innovation. She also teaches courses on Global Sourcing and Open Innovation as well as Information Systems and Organizations Doctoral Seminar.
The full study may be found here.
