MBA and Entrepreneurial Success

MBA effects on entrepreneurship

Regarding being a successful entrepreneur, Charney and Libecap collected data from alumni of Business school of Arizona state university. Analyzing the data of sales and size of start-ups of alumni entrepreneurs, they empirically showed that MBA alumni performs better than those of other master degree programs. However, their analysis do not identify the impacts of MBA program effect with other latent effect of such as talents and skills.

As Lange discuss the effect of MBA on entrepreneurship, although obtaining MBA degree and an entry into ventures are positively correlated as a whole, why and how the program effect on students bear various ways of interpretations. Simpson suggests that while leaving previous position and replacing professional identity, Chinese MBA alumni who obtained the degree in the United Kingdom earned creativity thorough the program. While Lerner and Ulrike focus on peer effects among classmates, Krishnan is on self-monitoring which enables an entrepreneur to be more self-monitoring; managing one’s internal states, impulses and emotions.

In application process, a MBA candidate is usually selected with academic talent and occupational experiences. They are both effective to entrepreneurial success as many previous literature mention. By differentiating with effects of these personal propensities from effect of accomplishment of MBA program, we contribute to the why and how issues as above.

Entrepreneurial success factors

Previous literature, such as Davidsson and Honig commonly reassembly the factors of an entrepreneur’s performance into four parts; human capital, social capital and financial capital of an entrepreneur and the firm’s character. Each factors are proxied by entrepreneurs’/ firm’s indicators. We utilize this framework of three kinds of capitals of an entrepreneur in the following chapters.

Rich human capital affects positively on his/her entrepreneurial performance as well as other two entrepreneur’s capitals do Shane, Bosma, Colombo, Parker and Van Praag. Entrepreneurs’ talents and experience we mentioned is included in these proxies of human capital. Van Der Sluis reveal that there is positive relationships between academic performance and entrepreneurial outcomes. Previous work experience such as management professional experience in a previous firm is essential. Brush indicates that by exercising management skills before start-up an entrepreneur’s own business enhance the possibility of success. Also, duration of service as an ordinary employee, not as a manager, positively affects the performance of a start-up Davidsson and Gordon Bosma et al. indicate that skills and experience of particular industry in which he/she starts-up is advantage for an entrepreneur. This suggests that investor experience as an angel investor or a venture capitalist and starting up in the same industry in which he/she was employed before can positively affect the entrepreneurial performance.

Secondly as for social capital, Nahapiet and Ghoshal and Adler and Kwon define it is linkage with friends or acquaintances which bring us information and/or knowledge thorough communication with them. Adler and Kwon explain that thorough social capital, we can access variety of information, enhance credibility of information and shorten the duration until we get necessary information. Ostgaard and Birley verified that social capital of an entrepreneur positively impact on sales, profit and size of employee of the start-up. Honig also verified that social capital positively impact on revenue of an entrepreneur.

Thirdly an entrepreneur needs financial capital when he/she starts the business and invests thereafter. When a founder obtained richer financial capital, the performance of the start-up becomes better Cooper. The financial capital can be owned by an entrepreneur her/himself or by his/her family, and can be invested by venture capital or loaned by commercial banks.

Lastly, firm characteristics are not surprisingly critical to firm performance as much as three capitals of an entrepreneur. Kaplan furthermore suggest that firm characteristics affects more than the others even when the firm has just founded.

harshi

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