Based on a quantitative analysis of 10,500 companies, ground-breaking research from the Centre for Education Economics finds that:
- Businesses in which the owner has been trained through programmes in business, social science, and law employ more people.
- The United Kingdom is only 18th out of the 30 OECD countries we have data for, in terms of the share of business owners engaging in job-related adult education and training. 35% of UK business owners engage in job-related adult education and training, considerably lower than 49% in Germany and 54% in Finland.
- The government should provide tax relief for small-business owners to invest in training programmes focused on improving their businesses.
Of all firms started in the UK in 2010, only 41 per cent remained active five years later. Future entrepreneurship policy must not merely focus on increasing the rates of entrepreneurship, but also identify and set in motion mechanisms to support business survival.
Existing research suggests that human capital increases high-quality entrepreneurship. It also indicates that education in business and scientific subjects is especially important to ensure firm success, an effect that appears to operate through better use of management practices.
While some entrepreneurs will obtain their training in full-time formal education, it is reasonable to assume many will obtain it through relevant adult education and training. The paper shows that there are large differences in the take up of job-related adult education and training among business owners in different countries.
Based on PIAAC data, author Gabriel Heller Sahlgren finds that the United Kingdom is 18th out of the 30 OECD countries we have data for, in terms of the share of business owners engaging in job-related adult education and training. Finland (1st at 54%), the Netherlands (2nd at 52%) and Germany (3rd at 49%) are top, while the Russia (30th at 7%), Turkey (29th at 13%) and Greece (28th at 14%) trail other OECD countries.
Commenting on the report’s findings, Heller Sahlgren said:
“Governments worldwide have sought to produce environments conducive to start-ups, but much less attention has been paid to the factors necessary for those start-ups to sustain themselves. This research shows that education and training are crucial components in this endeavour. Governments would therefore be wise to incentivise business owners to invest in education, while also carrying out trials to find the most effective training approaches from an entrepreneurial perspective. It’s time we focus on the quality rather than just the number of start-ups.”
The report is published by the Centre for Education Economics (CfEE) following research commissioned by The Entrepreneurs Network (TEN) and funded by the Association of Business Executives (ABE) to inform its Business Stay-Up campaign.
ABE’s Chief Executive, and campaign lead, Rob May, said:
“Entrepreneurship around the world is now promoted by policy-makers as a ‘low cost, high impact’ approach to economic growth, but the Business Stay-Up campaign was born out of a contrasting reality, that as many as 6/10 otherwise successful firms are doomed to early failure because of poor management practices. This research demonstrates clear benefits if governments incentivise training in impactful management skills for working entrepreneurs. Through various levers, including tax reform to encourage leadership training, more start-ups can survive, stay-up and grow into flourishing businesses.”
‘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.
To download a pdf of the full report, with executive summary, visit this website.
The report is published by the Centre for Education Economics (CfEE). CfEE is an independent think tank working to improve policy and practice in education through impartial economic research.
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.