Back to Top

Human capital and business stay-up: the relationship between education, skills, and entrepreneurial success

In recent decades, governments worldwide have employed an array of different policy tools to try to increase start-up rates in their countries, but relatively little attention has been paid to how to support ‘business stay-up’. In that it is among the fastest growing small businesses that employment growth, innovation and productivity gains are strongest, this lag in the progress of entrepreneurship policy should give us cause for concern.

Of those approaches to supporting business sustainability that have been tried, efforts to improve management practice have shown promise. This report adds to a growing body of evidence in this area, new research supporting the importance of human capital to entrepreneurial outcomes.

Download a copy of the report here.

Author Gabriel Heller Sahlgren’s research substantiates a relationship between business owners’ specific areas of qualification and the growth of their enterprises. Moreover, and more importantly, he further finds that not all areas of qualification are equal in terms of stimulating success. The training obtained through programmes in business, social science, and law, and in technical areas, such as engineering, appear to lead to employee growth – whereas others types do not.

Accordingly the author argues that governments should seek ways to incentivise training in high impact areas, and in management skills specifically. The most promising approaches, he finds, appear to focus on task-related training, in both an operational and content-specific sense. To maximise the probability of firm success, owners must therefore learn the operational skills of organisation and management, while at the same time keep up-to-date with the latest developments in the field in which they operate.

As the most probable avenue for such training lies in adult job- or career-related learning initiatives rather than formal education, Heller Sahlgren argues it is important that support be given specifically to such initiatives. More bespoke, accessible and on-demand learning opportunities are necessary. There is a need for incentives to stimulate both the demand and supply side. Business owners need capital investment reliefs to prompt their commitment. Providers need this financial commitment to encourage them to work more closely with SMB owners, and engage their education and training needs more realistically.

But it’s imperative also that this stimulus be accompanied by the establishment of proper research frameworks for identifying more precisely what works. Without randomised trials of promising training approaches, the author argues, where education and training for entrepreneurial quality is concerned, we will simply end up with more of the same.

Download a copy of the report here.

 


 

About the report

‘Human capital and business stay-up’ provides a new quantitative analysis of about 10,500 business owners in 21 European countries, using data from the OECD’s Programme for the International Assessment of Adult Competencies (PIAAC) survey.

The analysis indicates that in comparison to general programmes, qualifications specifically in business, social science, or law are more strongly related to firm size, once other important predictors are adjusted for.

The publication reports the findings of research commissioned by The Entrepreneurs Network (TEN) and funded by the Association of Business Executives (ABE) to inform its Business Stay-Up campaign.

Business Stay-Up is a research-led campaign to raise awareness of the pressures and challenges business owners face as they seek to survive and scale, and understand what can be done to increase the probability of success.

ABE is a not-for-profit organisation which provides internationally recognised qualifications and a worldwide professional association for business executives. The Association’s social purpose is to improve business education for aspiring entrepreneurs, particularly those in developing countries.

The Entrepreneurs Network is a think tank working to bridge the gap between entrepreneurs and policymakers. It provides the Secretariat for the All Party Parliamentary Group (APPG) for Entrepreneurship, which sits across the House of Commons and House of Lords, and is the instigator and campaign manager of The Leap and Female Founders Forum.