Recession brings out the entrepreneurial spirit in MBAs

Like the Pacific Ocean trenches, the true depth of the global recession remains to be seen. International business experts, like oceanographers, are unsure as to exactly how long and how deep either will run. Both are extremely complex issues based on conflicting opinions as well as scientific principles and both, for entirely different reasons, are fascinating, need-to-know sets of calculations.

In the UK for example, in July 2009, financial figures for the first quarter of the year showed a worse-than-expected set of results, though predictions for the latter half are more buoyant. In the US there are tones of quiet caution in some quarters, but few commentators want to say for certain when the upswing will occur. Nobody, in short, wants to predict inaccurately for fear of being criticized as they were when they failed to predict the crisis in the first place.

The inevitable results of a shrinking economy are job losses at worst and, at best, hiring freezes. The MBA sector is no exception. Some of the biggest recruiters in the finance and consultancy sectors have gone to the wall – Lehmann Brothers most famously – leaving qualified, experienced and talent MBA graduates and candidates searching for their next step.

Upturn

 For some of those talented young people, business school is the ideal next step as they weigh up their career opportunities. Looking at the big picture, now could well be the best time to spend a year or two in business school, get that MBA and hit the ground running when the upturn happens.

Careers in finance and consulting still dominate and probably always will in the MBA space. However the most recent research suggests that MBA candidates are using the recession to acquire the learning to start their own businesses, to be self-employed or to move into less traditional areas of MBA employment, such as non-profit organizations.

The QS TopMBA.com Applicant Survey, released in July 2009, is the most exhaustive research ever done on MBA candidates across the globe. With almost 4,000 respondents, all MBA candidates who attended QS World MBA Tours in fall 2008 and spring 2009, the survey aggregates opinions and attitudes annually. From this, experts unearth interesting differences and comparisons year on year and region to region among MBA candidates.

Program creators

In 2009, almost 29% of international respondents say they want to take an MBA in order to improve their chances of starting their own business, a significant increase on the 24% in 2008. Considering the number contemplating an MBA degree is in the hundreds of thousands globally, that 5% shift is extremely significant and will have deans and MBA program creators thinking hard.

The Survey also shows that associated entrepreneurial skills are of increasing importance to the would-be classes of 2010-2012. ‘Building a professional network’, which is associated with many facets of MBA recruitment, but especially entrepreneurship, is a key reason for taking an MBA, according to 53% of the survey, again a major increase from 45% in 2008.

Interestingly, taking an MBA to ‘boost salary’ or ‘primarily for education’ come relatively low down on the respondents’ priority lists. Discussing MBA specializations, a massive jump from 34% to 42% of respondents indicated they want to take courses in entrepreneurship. Leadership is up to 42%, from 36% last year.

Table 1 shows that, although the more general management skills and strategy remain the most popular, the biggest increases have been in entrepreneurship and leadership. It’s interesting that CSR is up 4% in popularity on 2008 and that marketing is down year on year to an all time low of 29%. 

Table 1 – Preferred MBA specializations 2007 - 2009

Source: QS TopMBA.com Applicant Survey 2009.

But why is this happening? Nunzio Quacquarelli, editor of the TopMBA Career Guide and TopMBA.com, believes that the growing number of MBA applicants interested in the entrepreneurial field can be seen as a need for a safety net for some, and a rejection of traditional MBA careers by others. “With the credit crunch and subsequent global recession, more and more young professionals are rejecting big corporations which they feel have acted irresponsibly. They see an entrepreneurial career as a way to make a difference and to be part of a business which is socially responsible for sure, because they are running it.” 

Of course an entrepreneurial spirit does not only mean the desire to start a business but it involves skills useful in almost all business environments. Michael Aldous of IE Business School in Spain points out that it is important to think of entrepreneurship as more than just a process of new venture creation. “We look to equip our participants with an entrepreneurial vision that encourages them to identify opportunities, pull together the resources needed to achieve them and implement the plans. This way of thinking is equally valuable whether you are looking to set up a venture, work within a multinational corporation or wish to develop a social enterprise.”  Schools such as IE in Madrid are seeing increasing interest, from recruiters, for MBAs with attributes associated with an entrepreneurial spirit. Yet these are valuable skills within existing and established corporations too. “The ability to identify and plan business opportunities are skills which may be used well by corporate too. However we certainly expect many more MBAs to launch their own businesses in 2010 and 2011 than the recent average of 5% of graduates,” Quacquarelli says.

Table 2 – Where candidates see themselves in 10 years time.

Source: QS TopMBA.com Applicant Survey 2009.

Aldous, of IE, agrees that in recent years there has been a strong increase in social enterprise projects. “The recent downturn in the job market has led to a number of participants pushing ahead with new ventures, which might otherwise have been mothballed,” he says. The combination of entrepreneurial spirit and social awareness leads to the new term ‘social entrepreneurship’ and it is evident that numbers interested in such courses will increase rather than decrease in the near future. It is clear that, unlike the scientists of the Pacific deep, entrepreneurial MBAs are spending most of their time looking up.