Entrepreneurship Education: Is There A Growing Crisis? TOPIC: ENTREPRENEURSHIP EDUCATION

Robert P. Singh University of the Pacific Eberhardt School of Business 3601 Pacific Avenue Stockton, CA 95211 office phone: 209-946-7350 home phone: 209-957-7722 fax: 209-946-2586 email: [email protected]

Bobby Magee, (STUDENT) University of the Pacific Eberhardt School of Business 3601 Pacific Avenue Stockton, CA 95211 office phone: 209-946-7350 home phone: 209-547-1184 fax: 209-946-2586 email: [email protected]

Entrepreneurship Education: Is There A Growing Crisis? Abstract Over the last decade, there has been an explosion in the number of universities that offer entrepreneurship classes, and which have established entrepreneurship programs and centers. Demand is coming from both would-be entrepreneurs and companies who are in need of crossfunctional thinkers with entrepreneurial skills. However, while growth is occurring in the numbers of available faculty openings in entrepreneurship, there is a growing shortage in the numbers of qualified new Ph.D. graduates and even senior faculty members who can fill these slots. The widening gap and the significant implications for entrepreneurship education are discussed in this paper.

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Entrepreneurship Education: Is There A Growing Crisis? Introduction Schumpeter (1934) viewed the role of the entrepreneur as a radical market innovator and discussed the important societal role of the entrepreneur as being the instigator of creative destruction through innovation. Schumpeter (1934) argued that industries within societies are replaced by other industries over time. The process of replacement of one industry (destruction) by another more modern industry (creation) is referred to as creative destruction. Tushman and Anderson (1986) illustrate the Schumpeterian model of creative destruction by research findings showing that long periods of incremental changes to markets are broken by technological discontinuities (major technological advances). We argue that the adoption and expansion of Internet technology marks a major technological discontinuity that is increasing the rate of creative destruction. In addition, not only are the numbers of newly founded entrepreneurial firms growing (Census, 2000), but there is also a clear need for existing firms to develop entrepreneurial processes (intrapreneurship) in order to survive the transformational global shifts in the economic landscape. An indicator of this proposition is that 45 companies were displaced from the 1999 Fortune 500 list in 2000 (Fortune, 2000). This is astonishing when one considers the enormous resources that are available to Fortune 500 companies (the smallest Fortune 500 firm on the 2000 list had revenues of $3 billion). Education has always been a key public-agenda item because the economy of any country requires changes in educational policies to match the changes in economic growth. There is no question that there is a growing national and international interest in entrepreneurship. As just one indicator, the growth of the Young Entrepreneurs Organization, a networking group for under-40 owners of successful new ventures, has nearly tripled its

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membership to 3,200 in the past two years (Ries, 2000).

The growing interest in

entrepreneurship has led to a rapid rise in the number of universities that offer entrepreneurship classes and which have established entrepreneurship programs at both the undergraduate and graduate levels.

It is now estimated that about 600 business schools offer courses in

entrepreneurship and over 125 have some type of organized program (Katz, 2000; Mangan, 1997). In addition, dozens of universities have established entrepreneurship centers on their campuses (Katz, 2000). The interest in entrepreneurship and the explosion of entrepreneurship programs presents a number of educational and pedagogical issues. Can successful entrepreneurs be taught? How much experience is necessary to be successful? Should courses include internships or other outreach activities? Essentially, the question is, what is the best way to teach entrepreneurship and entrepreneurial activities? Over the last decade, there has been relatively little research on entrepreneurship education, which has resulted in a lack of accepted paradigms or theories of entrepreneurship education and training (Block & Stumpf, 1992; Hills, 1988; Norton, Kaplan & Hofer, 1999). While this continues to be an issue and is a critical area for analysis and review, we believe it is important to recognize and examine a growing crisis that may be even more fundamental to entrepreneurship education – the widening gap between available university entrepreneurship faculty positions and qualified job candidates. This paper examines the changing drivers in entrepreneurship education and the growing challenges facing universities with respect to the establishment and growth of entrepreneurial programs. More specifically, we focus on the growing shortage of candidates who are qualified to teach entrepreneurship and enter universities in tenure track programs. In addition, as Shane and Venkataraman (2000) point out, entrepreneurship is still seeking academic legitimacy and

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delineation as a separate field, and we discuss how the growing gap will affect the continued progress within the field of entrepreneurship. We also discuss the implications and offer suggestions of how to address our perceived growing dilemma.

The Changing Drivers of Entrepreneurship Education During the 1980s and early 1990s, corporate America responded to the influx of highquality, low cost foreign imports by downsizing and moving to offshore manufacturing (Cascio, 1993). The early 1990s also saw a major increase in the numbers of layoffs within middle management, white-collar ranks (Cameron, 1994). It was at this same time that entrepreneurship gained popularity as newly fired workers often needed to learn how to start successful ventures, small business owners needed to learn how to grow their companies during trying economic times, and new college graduates began to view entrepreneurship as an exciting and financially rewarding career choice (Bardach, 1997). However, it is important to understand the changing trend in terms of the major drivers of entrepreneurship education. There is now more of a need than ever for employers to hire adaptive problem solvers who can address the dynamic needs of their firms (Fortune, 2000). Firms are beginning to recognize that graduating entrepreneurship majors have the ability to think cross-functionally across departments (Giges, 2000), which can help to break down structural inertia (Hannan & Freeman, 1977). Five to ten years ago, it is unlikely that established firms would advertise for entrepreneurship graduates to fill openings. In the past, such candidates were likely viewed as short term employees who would gain experience and then leave to found their own ventures. Conventional thought was why take the time and effort to train someone who may leave to start his/her own firm. Today, many large organizations are seeking people who think and act like entrepreneurs to address global competition and

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technological change. The following are two examples of portions of job advertisements that highlight the importance of entrepreneurship to existing companies:

Ford Motor Company: Within their description of the requirements for a process manager, the company stated that, “Preferred candidates will have a business focus, entrepreneurial spirit, and bias for action.” A.M. Todd Group: A major supplier of specialized flavor and functional ingredients for the beverage, oral care and food industries, the company recently advertised for a chemist position. “Qualified candidates must have a BS in Chemistry, Food Chemistry, Biochemistry or Chemical Engineering and 6 years experience. Excellent organoleptic aptitude, demonstrated record of success, excellent communication and presentation skills, a team player, and desire to be an entrepreneur are essential.”

Neither of the businesses listed above would come to mind as being entrepreneurial or as needing entrepreneurs by the average person, yet they now need and advertise for such job candidates. It is the growth in corporate entrepreneurship that is becoming a dominant factor in the growth of entrepreneurship education and is forcing universities to make major curricular shifts incorporating entrepreneurship into both mainstream, open-enrollment programs and customized programs reflect the desire of many large corporations to grow entrepreneurial leaders. Clearly, this demand has arisen as an outgrowth of downsizing, decentralization, and cost reduction, coupled with a renewed emphasis on growing the top line profitably. As a result of the growth in programs and the development of theory, entrepreneurship as a field is gaining further legitimacy. Given the rising interest, the growth in the numbers of founding entrepreneurs, the complexity of business in today's highly competitive international marketplace, and the interest in larger firms to improve operations by integrating entrepreneurial processes and philosophies within infrastructures, it is unlikely that we will see a significant reduction or even a slowdown in the growth of entrepreneurship programs. This, in turn, is

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putting pressure on universities to grow programs at a time when there are a limited number of qualified Ph.D.’s who can teach entrepreneurial processes. The next section discusses the unique challenges that universities and the field are now facing.

Growing Challenges Shortage of Tenure Track Candidates The most immediate problem facing universities that are in need of establishing or growing their entrepreneurship programs is the severe shortage of qualified Ph.D. candidates to fill those positions. This is in sharp contrast to other disciplines which face a glut of Ph.D. scholars who cannot find academic positions (Hartle & Galloway, 1996; Hodges, 2000; Lapidus, 1997; Pfannestial, 1998). During the 2000 Academy of Management Meeting there were 94 position openings that listed entrepreneurship as at least one of the preferred teaching criteria; however, there were only 64 candidates that listed entrepreneurship as one of their skill sets/teaching preferences. Based on the first author’s experience going through the job search process two years ago, there has been a 50 percent increase in the number of universities advertising for entrepreneurship faculty (Unfortunately, attempts to gather prior data on entrepreneurship openings on the Academy Placement website were unsuccessful.

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Academy just began keeping such statistics this past year.) Clearly, there is a need for tenure track faculty but there are only a handful of universities that offer Ph.D. courses in entrepreneurship. Entrepreneurship is considered an interdisciplinary field and positions are being filled by candidates who have degrees in other disciplines (strategy, marketing, HR, etc.) and who demonstrate some interest in entrepreneurship and small businesses. While this may be necessary to fill tenure track openings and certainly helps to

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establish the community of entrepreneurship faculty as multi-disciplinary, this hiring practice may not be the best way to advance the field from a theoretical perspective, and may be limiting student learning. Students may not be receiving the quality theoretical and practical background they need because they are being taught by a professor who may not be following the entrepreneurship literature (both academic and popular press). In addition, many universities are using adjunct faculty to fill their entrepreneurship staffing needs. Many adjunct lecturers do not have Ph.D.’s and are given lower academic ranks and have little power to affect change at a university that can lead to feelings of isolation (Mangan, 1997). This can have a negative impact on a program, as stability in the program may be affected and the quality of adjunct faculty may vary. Another factor is that while entrepreneurship theory has developed over the last few years, it has still not developed the academic legitimacy of other more well established disciplines. This results in a classic “chicken and egg” dilemma. Entrepreneurship theory may not be well developed enough to train Ph.D. students, but how will it develop if universities do not recognize the field as a serious area of academic study and hire tenure track faculty in entrepreneurship?

Unfilled Endowed Chairs The growing gap in the numbers of qualified new tenure track faculty is carrying over to more senior positions. A review of the list of endowed positions in entrepreneurship shows that there are now 271 endowed positions - up from 123 positions in 1994 (Katz, 2000). To put this in perspective, based on these numbers, a new endowed chair is being is funded every two weeks. Normally, this would be an exciting development, but almost 50 positions (17 percent) are currently open and many of the positions which are filled are filled by faculty members from

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other disciplines. Once again, these findings illustrate the growing gap in the field and do not bode well for the continued growth of the field. At our university, the search for a candidate to fill the university’s endowed chair position is entering its third year. The university is a small, high-quality institution for higher learning. The endowment is about twice as large as the national average of $900,000, and while faculty salaries are competitive they are not at the higher end. The first author has first hand knowledge of the difficulty recruiting senior entrepreneurship faculty as a member of the faculty search committee. In reviewing the vitae of various candidates it has become clear that there are not enough qualified entrepreneurship candidates, and it is difficult for a smaller school like ours to compete for top candidates when we are still trying to improve the entrepreneurship program and further develop the entrepreneurship center. Many senior faculty members when given a choice would rather choose a more established program where there may be a group of peer cocollaborators over a smaller university that has a developing entrepreneurship program and center.

Faculty Movement to Other Universities The current situation is creating a very strong job seekers market for entrepreneurship faculty. In the rush to build up programs, many universities are recognizing the fact that the pool of qualified faculty is limited and anecdotal evidence, personal experience, and discussions between the first author of this paper and junior faculty from universities across the country have revealed the strong market. It is not uncommon for universities serious about entrepreneurship education and program development to aggressively pursue faculty from other universities. A balanced mix of publications, teaching ratings, and outreach activities for an entrepreneurship faculty member can make him/her into a very attractive candidate. The end result is that the

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rising turnover rate makes it very difficult for universities to establish stability and build their entrepreneurship programs. Students nationwide are demanding the increase in entrepreneurship programs. Small school programs that are experiencing difficulties in filling teaching positions will have to hire faculty from the local community, because of the movement of high quality faculty to larger, more established programs. While these local business leaders turned part-time professors may provide a wealth of personal experience, they lack the background to provide a theoretical approach to the academic discipline of entrepreneurship. Ultimately this problem serves neither the students’ best interests or progresses the field of entrepreneurship as a whole. In addition, the long-term implications of the unfilled needs of these smaller universities are simply being pushed back.

Greener Pastures in Private Industry In the first quarter of 2000, venture capitalists invested $22.7 billion into companies (Providence Business News, 2000). This represents a 266 percent increase over the first quarter of 1999 when $6.2 billion was invested (Richtel, 2000). With venture capital funding at all time highs, there are greater consulting opportunities for entrepreneurship faculty who often have students and former students with business plans in need of funding. The ability to critique business plans and introduce students with business plans to sources of capital can often be exchanged for equity (Inc., 2000). But going one step further, the “dot com” mania has enough lure for some academics to leave academia to pursue lucrative industry opportunities (Inc., 2000). In recent months, a number of articles have been published in the Wall Street Journal and other national publications that detail the exodus of many business school faculty members to

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technology companies and new venture startups. Most of this movement is happening on the West Coast; however, it is becoming more prevalent across the country. The chance to work for well funded startups that have the potential to go public offers some faculty members the chance to achieve financial security in a relatively short period of time. For two to three years of effort in a startup, a person could be rewarded with a windfall that would take two to three lifetimes to earn as a faculty member. In the past, university faculty may not have been viewed as a significant source of human capital, but entrepreneurship faculty offer firms cross-functional analysts who often have significant experience putting together and reviewing business plans. This specialized expertise is in high demand and is placing another pressure on university retention efforts.

Discussion Whether or not students ultimately start their own businesses, entrepreneurship education gives them a different way of seeing the world. Some would argue that there is an intersection between strategy and entrepreneurship. At many universities, faculty in one area are tapped to teach the other; however, it does limit the potential growth of the entrepreneurship field as a separate discipline. As Shane and Venkataraman (2000) point out, entrepreneurship research has been criticized in the past as having breadth but little depth. Much of the research has drawn from theories and frameworks from other fields such as economics, psychology, marketing, and strategy; however, without clear boundaries and/or unique variables entrepreneurship cannot develop into a separate field. Together the four factors described above represent significant factors that must be addressed by universities and entrepreneurship faculty in order to ensure that students receive high quality education and training in entrepreneurship, as well as to further the development of

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the field. Without active entrepreneurship scholars who are well versed and knowledgeable of current literature, the field cannot be furthered. In the past, tenure track faculty may have viewed careers as entrepreneurship faculty as risky.

However, the establishment and continuous improvement of journals such as

Entrepreneurship Theory and Practice, the Journal of Business Venturing, and Journal of Small Business Management, as well the improved quality of entrepreneurship papers at conferences such as the Academy of Management Annual Meeting, the annual Babson College-Kauffman Foundation Entrepreneurship Research Conference, the U.S. Association for Small Business and Entrepreneurship Annual Meeting, and the UIC/AMA Research Symposia on Marketing and Entrepreneurship is helping establish theories of entrepreneurship and creating further legitimacy for the field. This, in turn, is reducing the risk for those who choose entrepreneurship as a career track, by reducing the stigma of entrepreneurship as being simply a relatively nontheoretical interdisciplinary field. More programs that focus on entrepreneurship as a Ph.D. course of study will need to develop to meet current needs. This will take time but in our humble opinions, the body of literature has expanded to the point where doctoral seminars that examine “classic” entrepreneurship literature articles can be offered without concern for being light on theory. Perhaps expressing entrepreneurial optimism, we view the current situation as an incredible opportunity for faculty members who may be just starting their careers or who may already be established in the field. The current statistics reveal a major “market gap” that lead to opportunities for entrepreneurship faculty members to establish their careers. Based on the figures cited in this paper and our belief that the gap between tenure track positions in entrepreneurship and qualified Ph.D. faculty will remain due to the fact that few universities train

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doctoral students in the field of entrepreneurship, we feel that those who do choose entrepreneurship as a career path will enjoy tremendous upward mobility opportunities. The field is growing and will continue to grow, simply because of the student and private industry demands for entrepreneurship graduates. While the risk of trying to establish an academic career in entrepreneurship may be diminishing, there is still much work that needs to be done to educate peer faculty and administrations about the growth of the field of entrepreneurship. It is incumbent on current entrepreneurship faculty to promote positive attitude towards entrepreneurship education through talks, seminars, courses, and even campaigns. Through formal talks and informal discussions with non-entrepreneurship faculty the stage can be set for better understanding of progress in the field. In addition, by improving communications and maintaining collegiality with peer faculty, there may be opportunities to develop cooperative efforts on joint papers. These efforts will help spread the knowledge of entrepreneurship theories and further legitimate the field. For administrators, the opportunities to develop relationships with potentially large financial donors can be explored. Aside from the growth in endowed chairs that was discussed earlier, there is evidence that many business owners and individuals who have capital to invest are seeking out universities that offer entrepreneurship programs (Evanson & Beroff, 1998). The current trends will force both universities and faculty members to change and adapt to market demands. One thorny issue is the growing numbers of faculty members who work with former, and even some cases, current students in exchange for equity (Inc., 2000). Not only are there potential conflict-of-interest issues (COI), but often times, outside consulting is looked down upon by peer faculty members. With respect to the latter, “real-world” expertise translates well to the classroom and given the inherently “hands on” nature of entrepreneurship it is

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important for developing credibility with students. In addition, times are changing and outside consulting offers the opportunity to supplement the lagging salaries professors receive when compared to industry counterparts. The solution to the COI issue is less clear and must be addressed on a university by university basis. Harvard Business School recently became the first university to bar its faculty from developing exchange relationships with student run businesses (Auster, Petit, Gest, Whitelaw, & Marcus, 1999). This may be required to maintain academic integrity; however, it may also limit student learning and the development of student businesses. The debate on the potential COI issues will certainly continue as more student businesses are founded on campus. However, in order to create the greatest win-win opportunities, fair partnerships which benefit both industry and academe must overcome the potential conflicts (Campbell & Slaughter, 1999). This may require universities to establish new rules and/or unique partnership agreements that have not yet been developed and used in the past. Finally, for their part, universities will have to find a way to recruit high quality candidates. With 33 percent fewer candidates than job listings on the Academy Placement Website and the number of open endowed chairs, it is likely that universities will have to be prepared to offer attractive compensation packages and may be required to find innovative ways to attract candidates. Recruiting Ph.D.s who are currently in industry may be one new source of candidates. By promoting the flexibility, intellectual freedom, and rewards and challenges of academic life, universities may be able to attract these candidates. However, for the vast majority of viable candidates who are currently completing Ph.D. programs or who are already in academia, universities may be required to take steps that they are not usually familiar with. For example, encouraging faculty members to pursue consulting arrangements, offering generous summer grants for research, and perhaps time releases to develop courses and/or pursue outreach

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or research activities may be required to recruit top candidates. Obviously, departments must compete for scarce resources, but recognizing that entrepreneurship programs are growth areas within business schools, it would appear logical that additional resources should be applied to grow these programs. They will likely be significant revenue generating programs for the foreseeable future.

Conclusions Companies and students are converging in their view of entrepreneurship education as an ideal way to meet the challenges of the new century. Companies that are facing increasing global competition and rapid adoption rates of new technologies need cross-functional entrepreneurial thinkers to help them grow and students recognize that entrepreneurship education gives them tools they can use in any career--whether or not they elect to open their own business. As a result, student demand for entrepreneurship education is at a high point and there are no clear indicators that show any reason for a slowdown in interest. This paper has sought to bring attention to an issue that could threaten the quality of university entrepreneurship education in the near term, as well as the longer term development of the field of entrepreneurship – the growing gap in the number of qualified Ph.D. candidates who can fill the needs of universities for tenure track entrepreneurship faculty. With no clear “pipeline” of trained Ph.D.s in entrepreneurship, and a willingness on the part of universities to fill entrepreneurship teaching positions with adjunct faculty there is a growing danger of stagnation in the field. This will have a negative impact on student experiences and learning, as well as the distinct possibility that entrepreneurship will not achieve the same levels of legitimacy as other business school disciplines. It will be looked upon simply as an interdisciplinary area that falls under the domains of other disciplines.

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