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Determinants of graduates’ entrepreneurial activity

Abstract

Despite the depth and breadth of the existing literature on university entrepreneurship, research has focused almost exclusively on licensing patents and founding spin-offs by faculty and staff. In comparison, much less evidence has been produced on start-ups created by students and graduates, mainly due to a lack of comprehensive data. This paper evaluates the impact of education—academic subject and foreign education experience—on the creation of firms by university graduates. In terms of the academic subject, the focus is on the distinction between science, technology, engineering, and math (STEM) fields and non-STEM fields. With respect to foreign education experience, the focus is on graduates’ experience studying outside their home country. Our analysis extends the scope of existing research in two ways. First, we consider the entire education history of graduates, not just from the researched university. Second, the paper extends the traditional focus on international students and analyzes the foreign education experience of both domestic and international students. The results indicate a positive relationship between having a non-STEM degree and entrepreneurial activity. A combination of STEM and non-STEM degrees is also positively related to the entrepreneurial propensity of graduates. Students with foreign education experience are significantly more likely to become entrepreneurs than those without such experience. Many governments focus their policy on attracting and retaining foreign students, especially those with degrees in STEM fields. Our results suggest that it is more important for a government to focus on both foreign-born students and domestic students who have foreign study experience.

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Notes

  1. 1.

    Genetic factors are encoded in DNA and transmitted biologically. In particular, Nicolaou and Shane (2009) discuss two approaches, namely quantitative genetics and molecular genetics, which can be used to identify specific genes that contribute to variation between individuals in social outcomes.

  2. 2.

    In these studies, the main focus is in fact on immigrants, and the topic of foreign students is addressed indirectly.

  3. 3.

    For instance, a 2007 alumni survey of Tsinghua University was sent to 26,700 graduates and received 2966 replies, for a response rate of 11.2% (Eesley 2016).

  4. 4.

    The importance of entrepreneurship in the non-profit sector as well as social entrepreneurship has been increasingly emphasized (Badelt 1997). The shift is led by the recognition that for-profit entrepreneurship is related to inequality (Isenberg 2014; Piketty 2014; Halvarsson et al. 2018). As such, entrepreneurship needs to address pressing social problems such as poverty, social exclusion, and the environment (Dacin et al. 2011). While for-profit firms could also take on these missions, non-profit organizations are more actively engaged in them. It is this rationale that leads us to consider entrepreneurial activity in both the for-profit and non-profit sectors.

  5. 5.

    Respondents were asked to provide all their educational background at the U of T and anywhere else.

  6. 6.

    Respondents with foreign education experience include both foreign students at the U of T and domestic Canadian students who have studied outside Canada.

  7. 7.

    Little research has been conducted on the impact of foreign education experience on graduates’ entrepreneurship. Eesley (2016) considers the role of foreign experience in graduates’ entrepreneurship at Tsinghua University, China, but in that study foreign experience comprises either education or work experience abroad.

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Acknowledgments

The authors thank Vivek Goel and Stephannie Roy for their insights and support. Sana Maqbool and Brendan Hills provided valuable research assistance throughout the project.

Funding

The authors acknowledge financial support from the Office of the Vice-President, Research and Innovation (OVPRI), University of Toronto.

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Breznitz, S.M., Zhang, Q. Determinants of graduates’ entrepreneurial activity. Small Bus Econ 55, 1039–1056 (2020). https://doi.org/10.1007/s11187-019-00171-8

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Keywords

  • Entrepreneurship
  • Foreign education
  • STEM
  • Policy

JEL classification

  • F22
  • I23
  • I28
  • L26