With the Web Summit moving on to pastures new, one of its great legacies has been a renewed focus on start-ups and entrepreneurship. As Ireland looks to develop more domestically owned businesses, Anna Scally of KPMG reflects on whether it is possible to teach entrepreneurship.
According to the latest Global Entrepreneurship Monitor (GEM) report for Ireland 4.4% of Irish adults are actively engaged in the early stages of starting a business. While the majority of these people are still working for somebody else they have spent an average of nine months working on their business idea. This puts Ireland in 15th place among 25 European countries and slightly below the overall average of 4.6%.
We are also below the European average when it comes to the new business start-up rate. Although a very impressive 20,400 individuals started a new business in Ireland in 2014 our rating for new business owners is 2.5%, significantly behind the average of 3.2%.
Of course, this score might be artificially depressed by impact of the recession. Figures for new business start-ups are broadly speaking in line with those from 2010 onwards and the recovery may well spur an increase in coming years.
Quite apart from the headline figures, one of the most interesting aspects of the GEM report was its findings in relation to entrepreneurial education. The various experts and entrepreneurs consulted for the report had a pretty low opinion of the formal entrepreneurial education delivered through our schools and colleges.
Ireland is not alone in this regard and the experience is repeated in more than half of the European countries covered. Notwithstanding the European experience, however, just 16% of Irish adults say that they received entrepreneurial training at primary or secondary school, while only 20% received such training since leaving school.
While this may sound very low we still have to ask ourselves if entrepreneurial education actually matters. The GEM survey showed that the difference in the rate of new business start-ups among those who had received entrepreneurial education and those who had not was not very significant – 3.2% as opposed to 2.3%.
The fundamental question is perhaps whether or not we can teach entrepreneurship at all. Is it a question that entrepreneurs are born and not made? Or is it a combination of nature and nurture where environmental factors in terms of the role models and workplaces we encounter are responsible for the nurturing of entrepreneurial traits?
The only thing we know for sure is that we need more of them. And we are not short of ambition in that regard. The GEM report also finds that one in ten Irish adults under the age of 35 aspire to be an entrepreneur. Will education help them though?
In my view the answer is most definitely in the affirmative. While there will always be a certain cohort of highly driven people who will realise their goals regardless of the absence of supports or the obstacles placed in their path there are many others who need a little help along the way.
And that certainly applies to those individuals who may not come from a business background. There is a phenomenon which has become known as the European Research Paradox and this is particularly relevant in this context. Europe has an enormously strong research base which turns out a huge number of academic papers but this does not translate into the commercialisation of these ideas into innovative new products and services.
The same situation pertains here in Ireland. We have been very successful in developing a very high quality research base across our higher education institutes but not so successful when it comes to generating the entrepreneurial mind-set required to identify the ideas with most commercial potential and bring them to market. Inevitably how we reward entrepreneurs is part of the equation. Despite recent budgetary moves in the right direction, tax policy in support of entrepreneurs still has some way to go to ensure a more favourable environment.
Meanwhile in its recent report on entrepreneurial education, IBEC proposed one remedy for this by calling for entrepreneurial thinking to be embedded in the all research programmes in order to aid the transformation of the knowledge and technology created into commercial products and services. The stated goal is to continue to produce high quality research and graduates but to educate them in critical and independent thinking in order to bring their research to the next level.
The same report also states that “building creativity, innovation, problem solving and risk taking including entrepreneurship, at all levels of education is necessary for our economic future… the development of entrepreneurial thinking will ensure individuals are adaptable and capable of dealing with the challenges of the dynamic environment of our global economy.”That really does strike at the heart of the issue. It may not be possible to devise a specific course which will take a 12 year old and turn them into an entrepreneur by the time they complete their Leaving Cert or their college degree but it is certainly possible to arm them with the tools they require should that be their chosen path.
Knowledge of business and how it works, the start-up and development process, the innovation and creative processes, should be an integral part of our education system from the earliest stage possible.
Of course, there is no guarantee that such efforts will result in more entrepreneurs coming out of the system but they should at the very least increase the prospects of success for future generations of entrepreneurs.
Furthermore, there is a more profound reward to be reaped from an investment in entrepreneurial education. By embedding it in our schools and colleges across all disciplines from art to zoology a culture of entrepreneurship will be fostered. Entrepreneurship will be viewed as a legitimate career choice in its own right rather than as something you might think of after working for someone else for a period of time.
The jury will remain out on the issue until further evidence is available. However, innovation and entrepreneurship go hand in hand and by putting more resources into entrepreneurial education we will be investing in the country’s innovative capacity and that alone should justify the effort.