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MBA Entrepreneurs Flock To Tech Sector And Emerging Markets

New GMAC data shows that MBA entrepreneurs are turning to the technology sector and are more likely to set-up camp in emerging markets. But less students are now launching start-ups.

Mon Mar 17 2014

Entrepreneurship is often hailed as the fastest-growing MBA career path and business schools report increases in entrepreneurial-track demand. But the percentage of MBAs starting their own businesses has dropped to 5 per cent, according to a new survey of alumni by the Graduate Management Admissions Council.

However, today’s graduates are more likely to start businesses immediately after graduation and the technology sector has seen the biggest increase in MBA entrepreneurship, according to GMAC.

Eighteen per cent fewer MBA graduates are entrepreneurs or self-employed than before the 1980s, when 23 per cent categorized themselves as such, according to the data. 

“While entrepreneurship is a hot topic and is a very popular course of study at today's business schools, these findings suggest that business schools have always prepared students to launch and manage their own businesses,” says Sangeet Chowfla, president and CEO of GMAC.

But 45 per cent of today’s MBA entrepreneurs launched businesses immediately after graduating, according to GMAC, while just 7 per cent of alumni entrepreneurs who graduated before 1990 created start-ups directly from graduate business school.

The report notes that the quick transition from graduation to entrepreneurial ventures reflects the increased academic focus on entrepreneurship, and economic opportunities available to start-up businesses.

The growing popularity of the tech sector was also confirmed; 14 per cent of self-employed graduates from 2010-2013 work in technology, compared with 2 per cent who graduated before 1990, according to GMAC.

The report surveyed 132 business schools world-wide and alumni who graduated as far back as 1959.

The likelihood of graduates becoming self-employed also increased the longer they were out of business school.

Average time from graduation to self-employment varies by graduation decade: three years for the classes of 2000-2009, nine years for 1990s graduates, 15 years for 1980s graduates, and 20 years for those who graduated before 1980.

“Even if alumni don't become entrepreneurs at graduation – something more common with today's graduates – their business education provides the career flexibility and the skills that help them start businesses years later,” adds Sangeet.

The survey found that one in ten (11 per cent) of graduates surveyed are entrepreneurs, and that entrepreneurship rates among business school alumni vary by region.

There are higher entrepreneurship rates among the classes of 2010-2013 in the Asia Pacific region (7 per cent), Canada (5 per cent) and Latin America (8 per cent), than in the United States (4 per cent). Europe has 7 per cent.

Overall, only 13 per cent of business school alumni are currently employed outside their country of citizenship, according to GMAC, with U.S citizens least likely to move abroad.

Just 3 per cent of Americans surveyed work abroad, compared with 48 per cent of Chinese citizens.

About a quarter of alumni surveyed work outside their home nation, with Central Asians and Middle East and African citizens among the most likely to work abroad, both on 37 per cent. 28 per cent of Europeans surveyed work abroad, along with 23 per cent of Canadians and 29 per cent of Asians and Pacific Islanders.

Solomon George, an MBA alumnus of Lancaster University Management School, said that an MBA was the “perfect qualification” for an entrepreneurial career. Solomon, who graduated in 2006, set-up a specialist recruitment start-up this year called GlobalMBAcareer.

“Critical thinking – Lancaster is renowned for it. And that help’s form an entrepreneurial perspective. Leadership was also a key thing that I learnt on the MBA,” he said.

Riccarda Zezza, an EMBA graduate of MIP Politecnico Di Milano, launched her start-up, Piano C srl, after graduation. The company consults corporate players on gender equality initiatives and provides a co-working space for women in Italy.

“It helped me a lot. I couldn’t do this [run a start-up] if I didn’t have any idea of how the business plan works; how the numbers work; the business concepts,” she said.

She studied part-time in Milan while working as a communications and corporate PR manager before making the switch to start-ups. “It [an MBA] gave me the self-confidence to do all this. I’m very grateful to MIP and I am glad I did it,” said Riccarda.

Saïd Business School MBA Faisal Butt has launched and invested in several businesses since graduating from the school’s MBA program several years ago. He says it has been “instrumental” in his entrepreneurial career and provided a solid alumni network.

“I loved it and recommend it [for entrepreneurs],” Faisal says. “I’m an outsider in the UK so it was a stepping stone for me. It gave me a platform to springboard,” said Faisal.

Elsewhere in the report, the most popular MBA jobs in recent years are in finance/accounting (26 per cent) and marketing/sales (21 per cent). Fifteen per cent of alumni surveyed work in consulting.

The 21,000 graduates who responded to the GMAC survey were also asked to rate the value of their business degree and 91 per cent of those who graduated between 2010 and 2013 would still pursue management education, in hindsight.

The survey was conducted in October and November 2013. Findings in the report are based on an analysis of data from 20,704 alumni representing 132 business schools world-wide that partnered with GMAC.

The average response rate for each school was 10 per cent.