Management Education: Any Use?

Management Education

“The Key is not giving more money, more market access…. There is nothing more important than giving future manager a good education.” Philip Yeo, chairman of Spring Singapore.

In general there was wide acceptance that education, in the longer term provides results and behaviors in reinforcing innovation, creativity, flexibility, capacity to respond to widely different situations. It also provides autonomy, self-direction and self-expression. Often statistical information from institutions suggests a causal effect between education and profitability (Spring Singapore, Mar 2007)

Studies suggest a correlation between education, survivability and entrepreneurial qualities (van der Sluis et. al., 2004). Laura Galloway and Wendy Brown (2002) in their paper wrote that the key to improving perceptions and attitudes within society lies in education. In addition to developing skills for business start-up and ownership, entrepreneurship education in universities can represent a positive influence in terms of general attitudes to entrepreneurship, and in turn promote entrepreneurship. The case for education is that it will produce better qualified managers and so will the quality of management, then the more likely it is that improved organisational performance will result. A survey by Business Week indicated that 72% of American executives of 25 Years and older said that going to school would get them ahead in the corporate world (Business Week, 2006). It is still not certain that formal education ensures business survivability although empirical studies show of higher number of firms succeeding with better qualified employees. Professor Andrew Oswald was reported to have said that entrepreneurs do not tend to be highly educated, may often even have dyslexia but are more likely to take risks and very often take advantage of a windfall gain (such as an inheritance) to make their fortunes (TimesOnline, 2006).

In an article in the Financial Times (UK), Body Shop founder Anita Roddick claimed that determination was key in business success and not MBA style type skills; she said: 'I never went to business school. I went to the business school of life.' But she did acknowledge that 'an MBA can give you useful skills' (The New Paper, 2006). A recent study on the profile of Singapore entrepreneurs showed that many of them were well-qualified entrepreneurs with 50% having 10 or more years of relevant work experience and 42% possessing at least a Bachelor degree (EnterpriseOne, 2007).

In Singapore, Government often prompt entrepreneurs and SMEs to subject themselves to the rigour of structured programs to obtain better qualification even an MBA as it could revitalise the management. To that end, Government makes a general case for the relationship between education and economic benefits the specific case is for entrepreneur education (Straits Times, 2006). Entrepreneurs and SMEs were generally supportive of the Government’s call to further education. The crucial question is whether formal education is necessary at all come under scrutiny.

If entrepreneurship is about creativity, innovation and risk-taking then there may be doubts that conventional forms of courses are useful at all without ruining entrepreneur’s special potential. Since, managerial techniques are for order, rationality, predictability, tried and tested methods and the general de-personalisation for a economic endeavour (Garavan, Cinneide, 1994)

Further, when entrepreneur education is about the sum of all functional parts of business such that it is entirely based on teaching of information and logic, then such education would largely be irrelevant. Analytical and logical thinking is only a small part of entrepreneurial thinking, especially when there is imperfect information, typical of real world situations. In fact, an over reliance on analysis only can lead to decision paralysis as rationality do not always solve problems that are irrational. On the other hand, total reliance on intuition can equally be detrimental for that entity. (Langley,1995). Therefore when it comes to a decision it is not uncommon to see entrepreneurs go along with intuition since they are known to thrive in areas of ambiguity and uncertainty.

However, this is not to say that the building of functional knowledge is not important aspect of education, it is, as it provides basic functional skills - the implication of this is that entrepreneurship goes beyond the functional component to areas that are of independent of it. Shephard and Douglas (1999) advance the notion in saying that entrepreneurship is an art which was defined as “…ability or mastery based upon profound theoretical knowledge and the ability to apply these creatively and with initiative in practice.“ Education would benefit the entrepreneur, if their educational course would move towards the perception, creative thinking and more important the concept of learning. Equally so was Sexton and Kasarda (cited in Garavan, Cinneide, 1994) views’ that the two goals of most business education programmes are to prepare people for career success and to increase their capacity for future learning. The Learning component should take into account the experiential element along with creativity and complexity of the environment. One college in America believes that it cannot be taught to be an entrepreneur rather an entrepreneur can be taught entrepreneurial skills for success.

Although the alleged benefits of entrepreneur has been extolled by many on the positive effects of education to entrepreneurship, there is little literature addressing directly how some of the celebrity entrepreneurs succeed without attending business schools (e.g. Anita Roddick (Body Shop), Richard Branson (Virgin)). In an empirical study by Sluis et al, (2004), personal ability was by far more important consideration to entrepreneur’s income than education. It therefore highlights the point that the motivation factors to be in an entrepreneur lie in some other element and not necessarily with education.

Even as entrepreneurs are prepared to attend a formally structured course in a business school, systematic problems with the entrepreneurial course content/materials and infrastructure even at Masters and higher levels arises. (Henderson and Robertson, 2000)

The early exposure to entrepreneurial activities at a young age could contribute to an entrepreneur zeal and potential for business at later stages in life. Peterman and Kennedy (2003) in their study believed that the early exposure as young as childhood does have a positive effect to entrepreneurial ideas and children were keen to pick up such skills if given the chance (Peterman & Kennedy, 2003). However such a debate lies beyond this scope of this paper.

Adcroft et. al. (2004) points out that it was difficult to reconcile the effects of education on entrepreneurs and suggest that it remain a case of academics creating an unrealistic demand. The case for entrepreneurial skills of creativity, leadership and innovation is almost universal and can exist independent of education factors. Therefore chronological elements like being at the right place at the right time involves judgement, intuition and luck, in addition to the practical composition of relevant skill sets, character traits and the cognitive ability of identifying opportunities as and when it presents itself.

According to Laukkanen (2000), formal education has be focussed too much on generalization with too little contextualizing . It seems to be assumed that new or small businesses always require the same set of capabilities, when in fact they are context-specific, e.g. by industry, stage of development, business strategy, internationalization, etc. Its beliefs are too optimistic in the average students’ capabilities to absorb general, context-free knowledge and devise valid local solutions. Where education is too general, entrepreneurs may not be really equipped for any meaningful action in any business context. The education may end up with little real impact except conveying the admittedly important social stature and legitimacy of a university. The more ‘real’ education will then be left to social and experiential learning in working life.

In our research we figure all the policy statements and schemes are essentially targeted at managers working in corporates or SMEs. SMEs that are in stage ii or in stagnation. “You can give more money. You can give more help. At the end of the day, where are the future CEOs? You have no good CEOs, you can never do business. Giving more money to people who don’t know how to spend it well, it doesn’t help.”

Mitzberg (2001, 2003) tells of management education not being about obtaining superior paper qualifications but rather about getting educated. Mintzberg’s moot point is that Management is a practice that has to blend a good deal of craft (experience) with a certain amount of art (insight) and the some science (analysis).

Equally important is the learner′s personal fulfilment and contribution to society. The ultimate measure of entrepreneurship education is how well it fosters all these aspirations and leads to entrepreneurship.

Even then the true benefit comes only when there is proper application of frameworks. However, when abilities and education were absence it had a profound effect on entrepreneurs.

Base on the research we find that there is no conclusive evidence to suggest that formal education makes for better entrepreneurs, however we find increasing evidence that formal education makes better managers. We find that cognitive skills of correct judgement of risk and opportunities are more important than analytical or logical approach toward entrepreneurial decisions. Furthermore, earlier evidence show that many entrepreneurs are likely to begin out of circumstance rather than by pure intention and are unlikely to be too concerned about the rate of return to the investment (GEM 2005; Steinmetz, 1969)