counted among the small countries situated around the Mediterranean basin, .... students with the opportunity to work as business advisors to technological.
Learning by doing or learning by studying: Teaching entrepreneurship in a MBA setting in Israel
Abstract
Israel is considered an innovation-driven, entrepreneurial country, counting thousands of start-ups and exporting mainly technology-intensive products that originate in entrepreneurial companies. However, data reported by the 'Global Entrepreneurship Monitor' show that entrepreneurial education is relatively underdeveloped in Israel. Still, the data also show that those Israelis that do participate in entrepreneurial education and training are greatly encouraged to become entrepreneurs. In order to further entrepreneurship education among MBA students in Israel, this paper examines what type of MBA course is more effective in encouraging entrepreneurship; an experiential course emphasizing the "how" or a classic academic entrepreneurship course emphasizing the "what". Results show that both courses are similarly effective in encouraging students to consider a career as entrepreneurs, however, MBA students that are inclined towards entrepreneurship a priori, prefer the experiential course.
Key words entrepreneurship education, MBA entrepreneurship courses, Israel, innovation-driven entrepreneurship, experiential entrepreneurship education
1 GEM
expert
surveys
in
most
countries
consistently
report
that
entrepreneurship education and training is poor or inadequate in developing as well as in developed countries (Bosma et al., 2008). The 2008 GEM report further poses that adult entrepreneurship education is still lacking. Yet several studies have demonstrated links between provision of entrepreneurship education and levels of entrepreneurial activity, aspirations and attitudes (i.e. Kuratko, 2005; Peterman and Kennedy, 2003). While entrepreneurship has become main-stream within many business schools, educators are still challenged with designing effective learning opportunities for entrepreneurship students (Kuratko, 2005).
This paper will focus on
entrepreneurship education in the MBA setting, where questions remain regarding the efficacy of the different pedagogical approaches, as entrepreneurship seems to need a much more "hands-on" approach than other MBA courses (Béchard. and Grégoire, 2005). An international leader in high tech start-ups, venture capital and international business venturing, Israel is a country that offers many entrepreneurial opportunities. However,
no
Israeli
business
school
offers
a
comprehensive
MBA
in
entrepreneurship. While there seems to be need for more entrepreneurship courses in Israel's MBA programs, there are questions about the efficacy of such courses. The current paper will attempt to shed some light on this topic by presenting a case study which examines responses of Israeli MBA students to different types of courses in which entrepreneurship is taught during their studies. The paper first discusses the position of entrepreneurship in Israel and of entrepreneurship education and training specifically. Subsequently, a short analysis of the current literature is offered, leading to a research question, which is then examined by means of a case study. Finally, the results are discussed and the paper's major conclusions regarding the efficacy of teaching methods of entrepreneurship are presented.
2
Israeli entrepreneurship: A macro view Located on the East coast of the Mediterranean basin, Israel is a democratic country that has a small, open economy. In 2008 it had a population of around 7.5 million and a GDP per capita PPP $ 28,300i. The prosperity and economic success of Israel is highly dependent upon international trade and on the ability of the country to encourage Israeli firms to engage in international business as well as to attract international firms to invest in Israel. Figures presented in table 1 show that GDP per capita in PPP more than doubled between the years 1990-2008 and that exports increased time five, contributing significantly to the economical growth of Israel. The figures further show that while in 1990 about 40% of exports came from low tech industries, since 2000 about 75% of Israel's industrial exports have been accounted for by high and medium-high, technological intensive, industries (excluding diamonds). Table 1 – Israel's exports by industry type in percentages and GDP per capita (excluding diamonds)
technological intensity:
1990
1995
2000
2006
2007
2008
High tech Medium-high tech Medium-low tech
30%
37%
53%
48%
46%
42%
31%
28%
23%
27%
29%
32%
20%
21%
15%
18%
19%
20%
Low tech Total export of manufactured goods (in M. US $) GDP per capita PPP in $
19%
14%
9%
7%
7%
6%
7,697
12,302
21,005
29,336
34,276
40,634
12,830
17,040
20,600
26,700
27,700
28,300
Source: Central Bureau of Statistics of Israel, 2009
3 Despite the fact that Israel is located at the periphery of the EU and is counted among the small countries situated around the Mediterranean basin, it has a disproportionate number of entrepreneurial firms listed on foreign stock exchanges such as NASDAQ and the London Stock Exchange (Sperling, 2005). As early as 1995, the number of Israeli firms listed on the NASDAQ nearly equalled the number of all other foreign firms combined excluding Canadian companies. Until 2005, more than 145 Israeli companies, most of which are technology based, had taken their initial public offering (IPO) to foreign stock exchanges such as NASDAQ and the London Stock Exchange (Almor & Sperling, 2008). Israeli firms that choose to take their IPO to NASDAQ are young, innovative, high-tech, and export-oriented (Blass & Yafeh, 1998). In addition to having a high proportion of high-tech industries and companies, Israel is one of the largest centres in the world for start-up enterprises, and reportedly had more than 3,850 start-ups in 2008 (Senor and Singer, 2009). A relatively large percentage of these start-ups become international traders that are responsible for the high percentage of high-tech export. The Global Entrepreneurship Monitor - GEM 2008 (Bosma et al., 2008) reports that Israel is categorized as an innovation-driven economy, which is defined as follows: "As an economy matures and its wealth increases…[it] opens the way for the development of innovative, opportunity seeking entrepreneurial activity that is not afraid to challenge established incumbents in the economy. Often, small and innovative entrepreneurial firms enjoy an innovation productivity advantage over large incumbents, enabling them to operate as ‘agents of creative destruction'." (Global Entrepreneurship Monitor, 2008)
The Global Entrepreneurship Monitor, which conducts a yearly survey among individuals in over 40 countries regarding their entrepreneurial inclinations, addressed entrepreneurship education and training in their 2008 report.
4 Its major findings regarding Israel in 2008 were somewhat surprising, considering the phenomena and data provided above. The percentage of working age adults who received training in starting a business in Israel was only 13%, the lowest in the innovation-driven group, as compared for instance to Finland, which reported 48%. Among the 38 participating countries in this specific survey, Israel scored very low on any type of entrepreneurial training up to the age of 18, either voluntary or compulsory. Most training provided at a later age in Israel was through institutions of higher education, either in a formal course or through informal activities. Results showed that training does have a positive impact on skills selfperception, as well as on expectations to start a business within the next three years. However, while in certain countries compulsory courses were more effective; in other countries voluntary courses had the highest impact. The Israeli data showed a statistically significant difference between those who had either voluntary or compulsory training and those that did not, regarding their perception of good business opportunities in the next six months. Moreover, differences were significant as well between those groups regarding their perceptions of skills, knowledge and experience to start a business. Therefore, the GEM data show that in Israel, entrepreneurial training has a significant effect on the proclivity of an individual to engage in subsequent entrepreneurship.
The efficacy of teaching entrepreneurship in a MBA setting: A short literature review
Research shows that entrepreneurship can be taught (Drucker, 1985; Gorman, Hanlon, & King, 1997; Kuratko, 2005). Therefore, questions regarding the efficacy of teaching entrepreneurship center on (1) "what" should be taught and which underlying theory, and (2) the process of "how" it can be taught best (Fiet, 2001; Ronstadt, 1987).
5 In regards to what should be taught, literature focuses, among others, on entrepreneurial strategies (Hitt, Ireland, Camp, & Sexton, 2001), corporate entrepreneurship (Miles & Covin, 2002; Kuratko, Ireland, Covin, & Hornsby, 2005) and born global companies (Almor and Hashai, 2004; Hashai and Almor, 2004; Jones, 2001; Jones and Coviello, 2005; Knight and Cavusgil, 2004; McDougall et al., 1994). Other topics include the economic contributions entrepreneurs make to job creation, innovation, and economic growth (Eden, Horesh, Almor & Kariv, 2005), theories explaining entrepreneurial drive (McGrath, MacMillan, & Scheinbert, 1992) and special interest groups of entrepreneurs, such as women and minorities (Chaganti & Greene, 2002; Gundry & Welsch, 2001; Lerner & Almor, 2002; Lerner, Kahvul & Hisrich, 2007). Solomon, Duffy, and Tarabishy (2002), who conducted a comprehensive empirical analysis of entrepreneurship education, examined the 'how'. In their review of entrepreneurship pedagogy, they stated: "A core objective of entrepreneurship education is that it differentiates from typical business education. Business entry is fundamentally a different activity than managing a business (Gartner & Vesper, 1994); entrepreneurial education must address the equivocal nature of business entry (Gartner, Bird, & Starr, 1992). To this end, entrepreneurial education must include skillbuilding courses in negotiation, leadership, new product development, creative thinking, and exposure to technological innovation (McMullan & Long, 1987; Vesper & McMullen, 1988)."
Ulrich and Cole (1987) report that entrepreneurial learning style preferences tend toward active experimentation with some balance between concrete experience and abstract conceptualization. In a similar vein, Stumpf, Dunbar and Mullen (1991) argue for the applicability of behavioral simulations to teaching entrepreneurship. Vesper and McMullan (1988) also argue for skill-building courses in addition to knowledge-based courses pertaining to entrepreneurship. Gorman, Hanlon and King (1997) discuss a framework and methodology for teaching entrepreneurship that includes the following elements: opportunity identification, strategy development, resource acquisition and implementation. Thus, they conclude that entrepreneurship
6 education has to focus on attributes and skills as well as tasks and needs to address elements of concrete experience derived from active participation through projects and the like, as well as content directed to stage of venture development and emphasizing functional integration. Whereas
much
literature
regarding
entrepreneurial
education
has
emphasized the need for experiential learning, relatively little research exists regarding the efficacy of this approach in the business school as compared to more classical MBA courses. While the experiential approach intuitively makes sense, the question is if the students become more "entrepreneurial" as a result of this experience compared to other courses. In the next section we will examine a case study addressing the question which form of academic education is more effective in encouraging young Israeli adults to pursue entrepreneurship. The case study presented in this paper will compare the efficacy of different courses taught in a MBA setting in Israel in their encouragement of students to become entrepreneurs as well as their attitudes towards entrepreneurship. The two courses are different from each other in so far that one is based on experiential learning while the other is designed as a classical MBA course. Both courses were taught by the same lecturer.
Teaching entrepreneurship in a MBA setting in Israel: A case study The setting Most MBA students at the School of Business Administration, The College of Management – the largest business school in Israel – perceive their MBA studies as a good way to further their career as managers, to receive better career opportunities and to increase their salaries, which are frequently related to their level of education. The approach professed at this business school is based mostly on the conventional
7 method of studying business, ergo emphasizing the "what" and less the "how". Most courses are classical business courses which teach the basics that are needed to become a manager in an average Israeli company. Thus, entrepreneurship has mostly been developed as an add-on to the core curriculum of business education provided by the School. In order to familiarize students with entrepreneurship, the School offers conventional courses, which deal with the topic by emphasizing research and various aspects of entrepreneurship. In addition, a seminar is offered in an experiential setting which allows the students to get acquainted with the topic through "doing" rather than through classic academic learning. The experiential seminar provides students with the opportunity to work as business advisors to technological entrepreneurs who are planning to operate in international markets. Each entrepreneur is assigned a small group of students who, for one semester, become the entrepreneur's business advisors and eventually prepare a business plan for the entrepreneur, which they present at the end of the semester to a panel of potential investors. The seminar is closely monitored by two business consultants as well as the professor of the seminar who together act first and foremost as mentors to the students. Thus, while available on an ongoing basis, they allow the students to lead the way. The classical course is based on the traditional in-class experience, which involves frontal lecturers as well as in-class case studies by means of videos and class discussions. The course is strategy based, emphasizing business strategy theories and relating them to venture establishment. During the semester students have to analyze (entrepreneurial) ventures and at the end of the course they may write a feasibility study for an entrepreneurial idea (which does not necessarily have to be their own). Data and method
8 Both courses took place during the 2009 spring-summer semester. The experiential seminar included 31 students and the classical course included 37 students. Response rates for both groups were similar; the first group had a response rate of 36%, the second group of 41%. A total of 26 questionnaires was filled out and returned. Both groups were approached at the same time by e-mail and were asked to fill out a short questionnaire in Hebrew. The students were asked 7 questions graded on a three point scale: very much, somewhat, not at all; question 8 was open. The following questions were asked: 1. To what degree did you considerer becoming an entrepreneur before this semester? 2. To what degree do you consider becoming an entrepreneur after finishing this semester? 3. To what degree is it necessary, in your opinion, to try out the entrepreneurial process in order to want to become an entrepreneur? 4. Did participation in the course/seminar help you understand the meaning of becoming an entrepreneur? 5. Will additional experience with entrepreneurship during your studies help you decide to become an entrepreneur? 6. Will additional academic knowledge of entrepreneurship help you decide to become an entrepreneur? 7. Do you think that a MBA study is conductive for entrepreneurial success? 8. How do you think this study program can encourage MBA students to become entrepreneurs? Results
9 The results of the survey are presented in Table 2. The first two questions examine change in attitude. Interestingly, while 53% of the students who took the classical course did not consider becoming an entrepreneur before, only 18% of those who took the experiential course gave that answer. Despite this difference in initial inclination, interest in becoming an entrepreneur after the course increased about 20% for both courses. Thus, while the experiential course initially attracted more entrepreneurial type students, both courses seem to be as effective in creating a positive attitude among those who did not consider entrepreneurship beforehand. Further interesting to note is that while 47% of those students who took the classic course believed that participation in the course helped them very much to understand entrepreneurship, only 27% of those who participated in the experiential course felt the same (question 4). Moreover, while 60% of those in the classical course believed that additional experience with entrepreneurship during their studies will help decide to become an entrepreneur, only 45% of those who participated in the experiential course believed the same (question 5).
Table 2. Answers to survey in percentages according to course classic course Questions 1. considered becoming an E before 2. considered becoming an E after 3. need to try out E before 4. participation in course helped understand E 5. will E experience help you decide 6. will academic knowledge help you decide 7. can a MBA contribute to E's success?
very much
experiential seminar
somewhat
not at all
very much
somewhat
not at all
13
33
53
45
36
18
33
47
20
64
36
0
47
47
7
55
27
18
47
40
13
27
73
0
60
27
13
45
36
18
33
47
20
36
55
9
67
27
7
55
36
9
10
Both groups did not believe that additional academic knowledge would add much to their decision to become an entrepreneur (question 6), however they did think that a MBA can contribute to entrepreneurial success (question 7). Also, both groups believed that trying out entrepreneurship will encourage them further down the road. The open question resulted in four recommendations: (1) invite entrepreneurs to class to talk about their experiences, (2) allow students to work on their own entrepreneurial ideas under supervision of the academic staff, (3) establish an innovation center which can provide services for start-ups of students, (4) allow students to write business plans for their own ventures and provide them with feedback. Besides that a lot of suggestions involved risk-sharing, investing in ventures of students and providing tutoring, mentoring and close supervision while students would work on their ventures.
Discussion and conclusions
The case study presented in this paper shows some surprising results. While literature makes a strong case for experiential learning, most students who participated in the experiential course did not feel that the course helped them understand entrepreneurship better. Interestingly, most students who took the classical course felt that the course was effective that way. Efficacy of both courses in terms of increase of percentage of students interested in the topic seemed to be similar. The main difference between the two could be found in the way students in each course perceived themselves. Thus, it seems that in this case, the experiential seminar attracted more 'would be' entrepreneurs. However in terms of encouraging the MBA students to become entrepreneurs down the road, both courses seem to be effective. Moreover, the classical course, which had a much stronger theoretical
11 background, seemed to provide a stronger backbone for the students to want to become entrepreneurs. This case study shows that there are different ways to encourage students to consider entrepreneurship. While experiential learning seems to make sense intuitively, the results of this case do not provide clear support for this notion. Still, the students believe that mentoring, tutoring and supervision of academic staff will help them become entrepreneurs. In any case, teaching entrepreneurship in different ways seems to encourage Israeli MBA students to consider making a career as an entrepreneur. This finding, combined with the fact that Israel is dependent upon startup activities for its economic, long term success, shows that the country should start investing more resources in entrepreneurial education both in the school environment as well as in the higher education sector. As the case study shows, it seems worthwhile to pursue different types of entrepreneurship courses, at least at the MBA level, as various pedagogical approaches seems to be effective in encouraging these students to become entrepreneurs. Therefore, while this is only a case study, it seems to create a foundation for further study of the contribution of various pedagogic approaches. While more studies are needed to create a better understanding of how effective entrepreneurship courses for MBA programs in Israel should be developed, the initial findings seem to encourage further examination of the topic.
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