MBA Entrepreneurship: Why is it a Rare Commodity?

Before I attended business school, I knew that MBA entrepreneurship was a rare commodity, but I didn’t know why. Now, having attended B-school, I have a few theories about why so few business students want to start their own businesses. This piece is not intended as a criticism of business school; instead, I simply mean to point out the realities of entrepreneurial incentives in B-school. Here, then, are the top three reasons why business school students do not become entrepreneurs:

  1. MBA Entrepreneurship Is Drowned By Risk. Ironically, the very people who are most educated in the art of starting a business (i.e., business school graduates) are also the people who best understand the risks of starting a new business. In B-school, students learn about all the things that can go wrong in a business. In investing classes, in particular, the message is loud and clear: Start-ups are risky. So, if a successful start-up is a rare commodity, a business school student willing to roll the dice by starting his/her own business is even more rare.

 

  1. MBA Entrepreneurship Is Crushed By Debt. Business school is expensive. Although B-school students tend to be good at managing their personal finances, it is hard to manage around $30,000-per-year tuition charges. By the time students emerge from a two-year business education, they are short on capital and high on debt — not exactly a recipe for entrepreneurial enthusiasm. A student who emerges from business school debt free is a rare commodity, indeed. Most students’ finances force them to take high-paying corporate jobs, rather than embarking on exciting but risky start-up ventures.

 

  1. MBA Entrepreneurship Is Abandoned By Academia. Business school professors are great when it comes to financial analysis and theory, but relatively few of them have the entrepreneurial spirit. If they did, they would be off starting businesses — not giving lectures to B-school students. The rare professor who does advocate entrepreneurial activities is usually an adjunct. Because students tend to follow their teachers’ advice, this aspect of business school faculty reduces the likelihood that students will start their own businesses.

 

Admittedly, some business school students do start their own businesses. Those who do so have all kinds of advantages. They understand accounting, finance, and various other aspects of business far better than most entrepreneurs. But the bulk of b-school students do not catch the entrepreneurial spirit. Drowned by risk, crushed by debt, and abandoned by academia, MBA entrepreneurship becomes a very rare commodity, as most business school students seek secure, high-paying jobs with large corporations.

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