Keywords

1 Introduction

Let us wage a positive glance into the future: the 2020s could go down in human history as a decade of social, cultural, and economic progress. True, the corona pandemic plunged society and the economy into a deep crises. But it also helped new technologies to break through, such as mRNA molecular biology. From this perspective, the start of the 2020s has been an impressive demonstration of what is possible through science and technology.

Yet we are only at the beginning. Artificial intelligence, robotics, distributed ledgers, quantum computing, and green hydrogen are all examples of new key technologies that will experience their breakthroughs in the coming years. This provides the necessary tools to overcome the vast challenges of our time, including the climate and biodiversity crises, or the resource strains caused by geopolitical conflicts and a growing world population. The ability to seize the opportunities that present themselves will be essential.

This is where entrepreneurs come into play. As central figures of economic development and social change, entrepreneurs innovate by combining the resources at their disposal in a novel way (Schumpeter, 1934). They are said to be able to recognize opportunities in change processes, implementing them with the necessary perseverance. In fact, start-ups have not only weathered the current crisis better than the average company, but have also been able to turn it to their advantage. The European and international start-up scene has been flourishing since mid-2020, providing important impulses as well as solutions to overcome or cushion the pandemic. This can be attributed in part to the special attitudes, thought patterns, inner attitudes or, in short, the mindset that distinguishes entrepreneurs.

Our chapter introduces an innovative method for teaching entrepreneurship. While underlining the importance of building an entrepreneurial mindset, we show how challenge-based learning as a special form of experiential learning can contribute to generating entrepreneurial competences and attitudes. The chapter combines education theory and psychology with our own experiences to show how challenge-based learning can be used to improve entrepreneurship education formats.

2 Entrepreneurial Mindset

Entrepreneurship research has long focused on studying the personality of entrepreneurs. Particularly with reference to the model of the “big five,” (Zhao & Seibert 2006) a possible connection between a person’s relatively stable personality traits and their entrepreneurial inclination or success has been the focus of investigation. But empirical results here have been contradictory and generally unconvincing (Busenitz et. al, 2003; Mitchell, 2007). In their meta-analysis, Zhao et al. (2010) found that the big five personality traits could explain only 13% of the differences in entrepreneurial intention and only 10% of the differences in entrepreneurial performance. These deficiencies resulted in the research problem being addressed from another angle, focusing more on how entrepreneurs think and process information. A large body of knowledge has emerged that deals with the so-called entrepreneurial mindset, its influencing factors, and effects (Naumann, 2017).

Mindsets are conceived as “cognitive operations with distinct features that facilitate a given task” (Torelli & Kaikati, 2009, p. 233). The term expresses the fact that our mind or consciousness is “set” to perceive the world according to pre-defined criteria. It acts as a kind of perceptual filter that determines what information people recognize, how they interpret it, and how they react to it (Humphrey, 1951). In terms of entrepreneurship, McGrath and MacMillan (2000, p. 15) define the entrepreneurial mindset as the “ability to rapidly sense, act, and mobilize, even under highly uncertain conditions.” McMullen and Kier (2016) align their definition more closely with the task. They describe the entrepreneurial mindset as an “ability to identify and exploit opportunities without regard to the resources currently under their control” (McMullen & Kier, 2016, p. 664). A mindset is something different than just a set of skills. Rather, it precedes and affects our skills and competencies. Take creativity, for instance. This key competence only leads to innovations if the people who possess it have a positive attitude toward change.

Instead of focusing on the cognitive skills an individual uses to identify entrepreneurial opportunities, we need to shift our focus to metacognition, the process by which entrepreneurs promote and learn about higher-order cognitive strategies (Haynie et al., 2010, Kouakou et al., 2019). Adokiye et al. (2017) state that the entrepreneurial mindset “refers to the behaviors, disposition, attributes and attitudes that are connected with creativity, [and] innovation with a view to capture opportunities in the business environment for organizational success” (Adokiye et al., 2017, p 30). Similarly, Kouakou et al. (2019) define the entrepreneurial mindset as “the state of mind of an entrepreneur which allows him to analyze the world and the opportunities and possibilities that it offers” (Kouakou et al., 2019, p. 116) and “an innovative practice which leads to discover and evolve opportunities and then set up the right behavior to effectively exploit those opportunities” (Kouakou et al., 2019, p. 117).

To reintegrate the sometimes very different perspectives with which research has approached the study of the entrepreneurial mindset, Kuratko et al. (2020, p. 2) propose three distinct aspects of it:

  1. 1.

    The way entrepreneurs use mental models to think: the cognitive aspect.

  2. 2.

    How entrepreneurs engage or act for opportunities: the behavioral aspect.

  3. 3.

    What entrepreneurs feel: the emotional aspect.

“Central to understanding the entrepreneurial mindset is the recognition that the three aspects described above […] do not operate independently of one another; rather they interact and reinforce each another” Kuratko et al. (2021, p. 1687). A person’s thoughts serve as an enabler and facilitator of individual actions and emotions. Emotions influence how people react, while actions themselves influence how people feel and think.

Although the model by Kuratko et al. (2020) helps to better differentiate the various dimensions of an entrepreneurial mindset, it does not yet clarify how to determine an entrepreneurial mindset. Metastudies such as those by Shaver & Commarmond (2019), Naumann (2017), Kouakou et al. (2019) have established the following list of characteristics displayed by someone with an entrepreneurial mindset:

  • Lifelong learning and openness to change.

  • Engagement in a complex and uncertain world.

  • Creative and innovative approaches to problem solving.

  • Fast decision-making based on heuristics and biases, which is very effective and efficient under high complexity and uncertainty.

  • Attentiveness and inclination to see sudden insights of value.

  • Belief and confidence in one’s own capacity and competency.

  • A belief in one’s ability to influence.

  • Ability to reflect on one’s own thinking process.

  • Desire, motivation, and intention to practice entrepreneurship.

  • Taking the initiative and personal responsibility for actions.

  • A pursuit of goal attainment through personal mastery and value-creation.

  • Recognizing opportunities.

  • Access to disparate information across the own social network.

  • Grit and perseverance in the face of challenges.

  • Taking risks that lead to learning, growth, and value.

Mindsets are never pre-programmed, but instead evolve over time, and are influenced by an individual’s interaction with the environment. Social interaction plays a significant role along with individual experience. Our mindsets are therefore constantly changing and can be influenced. Empirical research in the context of education has shown that implementing an entrepreneurial mindset is strongly correlated to entrepreneurial activities (Mathisen & Arnulf, 2014). In fact, the development of mindsets goes from elaborating to implementing and becomes compulsive, i.e., a function of repeated action (Gollwitzer 1990). This is why an entrepreneurial mindset can only be promoted using particularly suitable learning methods.

3 Entrepreneurship Education

Since the end of the 1980s in the USA, and since the 1990s in Europe, researchers have been intensively dealing with various questions concerning the goals and pedagogical and didactic models of entrepreneurship in higher education. The fact that entrepreneurship research initially concentrated primarily on traits, as described above, had a significant impact on early efforts (Kuratko, 2005; Nabi et al., 2017; Hägg & Gabrielsson, 2019).

4 The Development of Entrepreneurship Education

Halbfas and Liszt-Rohlf (2019) identify a total of four phases in the development of entrepreneurship education. The first phase that lasted until roughly 1999 had the primary idea of teaching students the methods qualifying them to run a start-up. The goal or task of entrepreneurship education in this context was to increase the number of start-ups. Later, at the beginning of the millennium, the discussion and practice of entrepreneurship education focused more on the development of competencies of entrepreneurial personalities. The aim was to develop independent thinking and proactively acting personalities who in turn would be able and willing to found innovative companies and lead them to success (Braukmann, 2002). In the subsequent phase three (from around 2004), a new expansion of the understanding of entrepreneurship education was observed. Now the impact of entrepreneurial thinking and its impact on society was also addressed. From the differentiation in phase three, an intensified discussion about the correct educational design and corresponding didactics emerged in the fourth development phase of entrepreneurship education, which continues to this day (Halbfas & Liszt-Rohlf, 2019).

The distinction made by Gibb and Nelson (1996) that describes three intentions of entrepreneurship education is generally accepted: education for, through, and about entrepreneurship. At the “about” level, the main aim is to impart theories and knowledge from entrepreneurship research and create an understanding among learners of the process of entrepreneurship and its significance for society. Education “for” entrepreneurship provides methods and tools that enable learners to implement ideas and launch a business at a later stage. Finally, education “through” entrepreneurship aims at making learners entrepreneurial by providing them with entrepreneurial experiences.

All three objectives of entrepreneurship education are relevant and important. Selecting the appropriate approach means distinguishing where and how the learners should be educationally connected with. One example here would involve whether the learners already have an idea of their implementation status (Lindner, 2018). Depending on the target group, the learning objective is also different, and ranges from awareness and development (Phase 1) to the concretization of ideas and implementation (Phase 2).

Until recently, teaching methods in higher education mainly focused on education about entrepreneurship by concentrating on imparting knowledge using teaching methods such as lectures and seminars (Neck & Corbett, 2018). Examination regulations and curricula usually never permitted teachers to take their students out of class for longer periods of time to give them a “holistic” start-up experience. However, research has advocated that learning entrepreneurship means students must engage in entrepreneurial activities and processes to gain experiential knowledge (Read et al., 2011). In the following, we discuss concrete experiences from the use of challenge-based learning (CBL) in higher education. CBL can be understood as a specific implementation of experiential learning theory. Other forms include problem-based learning, project-based learning, co-operative learning, service learning, and reflective learning (Furman and Sibthorp, 2013). We single out CBL because we are convinced that this technique has an especially positive effect on the formation of an entrepreneurial mindset; we will present our concrete experiences with this method after discussing the underlying educational theory.

5 Underlying Educational Theory

In experiential learning theory, learning is understood as “the process whereby knowledge is created through the transformation of experience” (Kolb, 1984, p. 38).

Learners go through four steps, as shown in Fig. 1.

  1. 1.

    Concrete experience: A concrete experience with real character, i.e., it has an observable consequence for the learner.

  2. 2.

    Reflective observation: The experience is brought back to mind and, for example, the possible cause of the experience is mentally played through.

  3. 3.

    Abstract conceptualization: The reflection process leads to abstract conceptualization, i.e., concrete experience influences the learner’s knowledge structure. In this step, a generalization occurs in which the concrete experience is abstracted, and underlying principles are recognized.

  4. 4.

    Active experimentation: In the fourth and last step, the learner becomes an actor again: By actively experimenting with newly acquired knowledge, he or she tries out new real-life situations. As a result of this last step in the learning cycle, concrete experiences become possible again for the learner, and a second cycle begins.

Fig. 1
figure 1

The experiential learning cycle (Kolb, 2015, p. 51)

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In principle, it is possible to start the learning cycle at any of the four points, i.e., also when teaching abstract concepts (e.g., theories), which are tested in practice through active experimentation, and thus become concretely experienced by the learner (Kolb 1984). It is in fact important that all four steps are completed, and that reflects upon what has been experienced occurs. Only through this step do the insights gained from the experience become knowledge that can be transferred to other situations. The optimal entry point can be made dependent on the learning environment, but also on the different learning styles that learners can adopt (Corbett, 2005; Kolb, 2015).

Experiential learning thus breaks with the doctrine of behaviorism, which is based on a more mechanical learning process in which outcomes, routines, and having the “right” response to each stimulus are the dominant learning goals. From the perspective of educational psychology, experimental learning can be assigned to the theories of social learning (Bandura, 1997) or situated learning (Lave & Wenger, 1991). Here, the most important aspect is that individuals experience some kind of mastery of specific practices, and that this mastery matters to others as well (Bandura, 1997).

6 Experiences from Implementing Challenge-Based Learning in Higher Education

The basis of our implementation of CBL is the “challenge-feedback learning circle” (Sternad, 2015). Learning begins as shown in Fig. 2 with a challenge posed to the students by the teachers. In the next step, the students themselves actively act to solve the challenge. The action usually takes place in group work. During and after the active completion of the challenge, the students receive feedback on their performance and behavior. Afterward, they are given the opportunity to reflect on their own actions and particularly the feedback in a structured way. In doing this, the learning experience can be made conscious, which facilitates the memorization of what has been learned and its recall in future challenging situations. The learning circle can be repeated thereafter, ideally with progressively more complex or more difficult challenges (Sternad & Buchner, 2016) (Fig. 2).

Fig. 2
figure 2

The challenge-based learning cycle (Sternad & Buchner, 2016, p. 8)

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Challenge-based learning does not stand in contrast to traditional lectures. It can in fact be used as a learning supplement. Corresponding elements of direct knowledge transfer, for example, can be integrated if a certain basic knowledge or certain contexts are necessary for mastering a challenge.

The authors have been using CBL in courses categorized as “Education about Entrepreneurship” and “Education through Entrepreneurship” for over two years now. The lessons learned to date are described below.

6.1 Formulating Challenges

A challenge should provide a demanding, complex task that students can master in cooperation with others, without a model solution, and with a high degree of freedom while proceeding down the solution path. An important prerequisite is that the challenge is relevant to the students and can be connected to their realities of life. Otherwise, it may be perceived as difficult in terms of the solution, but not as challenging in terms of personal development. Designing this kind of challenge means teachers must place themselves “in the shoes” of their students even more than usual. At the same time, it must also be ensured that the challenge is embedded in the overall context of the curriculum, and adapted to the prior knowledge of the students. Without this, the challenge may not be taken seriously by students and dismissed as a gimmick. A conflict of goals can arise here. The reference to basic knowledge and the formulation of clear learning objectives, which are also recommended for making learning and the learning process visible and comprehensible for students, and thus have a positive effect on learning motivation (Sternad & Buchner, 2016), are partly at odds with demanding maximum freedom for students in their approach.

In our experience, it is important to distinguish between long- and short-term challenges. An example of a long-term challenge is a business venturing course in higher semesters, whose participants have already taken “for” entrepreneurship classes such as in the fields of entrepreneurial marketing and entrepreneurial finance. The aim of the business venturing course would be for the students to develop and implement a start-up idea in a team. In this context, we believe it makes sense to structure the approach by formulating intermediate goals, but not structure the solution path. For example, learning objectives during the course could be: “Identify an attractive market.” Here it remains fundamentally open what attractiveness refers to: The size of the market? The severity of problems faced by users in the market? Their willingness to pay? The competitive situation? For the solution, the students can fall back on already-known basics, while they choose the approach themselves. Another learning objective includes: “Develop a minimum viable product and offer it to real customers.” Both the technical implementation of the product or service and the simulation of the sales situation are again left completely open. The goal is achieved when the product has been sold to customers and customer feedback has been collected and processed.

In contrast, short-term challenges pursue less extensive learning objectives that can be experienced in a very short period of time, and may have less direct relevance to the start-up. Short-term challenges without a direct connection to an entrepreneurial setting can be related to overcoming certain fears or leaving comfort zones, e.g., assisting in elderly care or hospice work; talking in front of (large) audiences; being involved in a debate session; or visiting intensive livestock farms. Short-term challenges also can include physically and mentally connected challenges such as skydiving or bungee jumping. In these cases, students need to have options, because some of them might not see a challenge as such in them, while others might be pushed too far and associate facing the challenge (or having to neglect the challenge) as being a negative experience void of the desired learning outcomes.

An example of a short-term challenge in relation to entrepreneurship is an investor interview. Here, the students learn to convince others of their idea by putting themselves in another person’s shoes, and arguing from his or her point of view rather than their own. This challenge can be completed in its entirety in a 180-minute session. First, the students are told they are vying for a maximum amount of money that the investor is willing to give to only one of several teams. In order to create real competition for the investment, two prerequisites are necessary: 1) a sufficient sum (i.e. 250 euros for a course in Germany) and 2) a direct benefit of the investment for the students. The students can suggest investments such as plants to beautify the classroom, the purchase of software, free lunch for the team, or the purchase of a game console to be shared by the team members. They merely have to succeed in convincingly presenting the added value to the investor in a real negotiation with the teacher and/or guests (being or playing the role of investors).

6.2 Act

In this phase, the teacher’s restraint is the most important factor for success: Here it’s necessary for learning success that the students are left alone with their thoughts and doubts for a certain period of time. Only in this way will the students take responsibility for choosing the solution, and have the chance to be proud of something they have achieved on their own. In the beginning, this is difficult for the teachers to do, as they are typically used to intervening immediately in case of mistakes or unfamiliar approaches in order to prevent “wrong” learning. Students are also used to being able to rely on the teacher’s advice and will approach him or her at the first sign of a problem. Actively refusing help is here an unfamiliar feeling for the teacher, and can cause resentment among students. Teachers should be prepared to encounter students’ reactions (including expressing the need for help and/or frustration) and remain adamant about not intervening in the learning process at this stage.

We, however, do not recommend ignoring students’ needs; they should instead be motivated to find their own pathways and solutions. Depending on the challenge, students may discuss with their peers, ask external experts, and use all information available, for assistance on the Internet or in literature. In this way, a real-life scenario is created without providing a pre-defined solution to handling the challenge. Finally, the students have to make decisions and experience consequences. In most scenarios, especially in entrepreneurial challenges, they learn that there is no one right or wrong way, but many different solutions that fit. It also has to be taken into account that the students themselves have varying personalities and strengths, while also being the respective “stakeholders” included in the challenges, e.g., potential investors or customers, whose expectations, demands, and personal favors can vary significantly. So instead of teaching by-the-book “recipes,” we make them leave their comfort zones and find out what they need to know on their own. We create challenging tasks and situations that, although they include some guidelines, still allow for a maximum amount of realistic freedom. Students then learn how to take this diversity of situations and people into account, which typically results in them displaying less fear of failure and a higher degree of (entrepreneurial) self-efficacy.

6.3 Feedback

Without adequate feedback, efficient learning is not possible, and improvement can only be rudimentary, even with highly motivated participants. So in the next step, the teachers return to a more active role, providing and moderating feedback. After phases of independent, creative work by the students, feedback from the teachers becomes necessary. The basic idea of feedback in this context is to allow the teacher to work through, classify, and evaluate the large amount of freedom that the students had in working on the set challenge, which they met through independent reflection and corresponding explanations. It is also a matter of absorbing the uncertainty that can arise at various points in the learning cycle, and transforming it into greater certainty by appreciating what has been achieved (Sternad & Buchner, 2016).

Feedback comes in many different forms, including one-on-one coaching between the teacher and student, a group setting where the teacher gives feedback to the entire team, or peer feedback from student to student. Following the model of Hattie and Timperley (2007), a differentiation should be made between (1) the subject level, where the focus is on content-related feedback on student performance; (2) the process level, where the focus is on how the solution was developed; (3) the self-regulation level, i.e., how students evaluate their own development and performance; and (4) the personal development level of each student. Levels (2) and (4) are particularly important for effective CBL.

But exactly when should this feedback be provided? With challenges such as business venturing, building on a higher level of knowledge and experience, which are often associated with longer phases without the intervention of the teachers, and in which both competences and content-related knowledge play an important role, it is advisable for the feedback to be concentrated on individually decisive points in the project. At the same time, the teams should give each other regular feedback throughout the project work. In our experience, it is essential to learn how to give and receive feedback from the students in advance. In the case of short-term challenges, feedback should be given directly afterward, after the entire challenge has been completed, by both the entire classroom and the teachers. Practicing peer feedback at this point trains providing feedback to those taking on long-term challenges.

The challenging thing about feedback for teachers in CBL is that there is no model solution to the challenge. This is also a problem when it comes to awarding grades. In order to show students as much development potential as possible on the basis of their performance, it is advisable to separate feedback discussions and the awarding of grades from each other, discussing grades only after feedback has been fully completed, ideally with a time delay.

6.4 Reflection

Reflection gives the students an opportunity to process their personal experience and development. This step positively influences the students’ belief in their ability to succeed in specific situations or accomplish a task and is a fundamental element of an entrepreneurial mindset. Since students often tend to focus on their shortcomings, effective reflection should take place shortly after the completion of the challenge, and the teacher should provide the students with key questions that help them reflect on their positive outcomes. Another very important aspect is that it be clear for the students that the reflection is not part of their evaluation, and its purpose is not to provide feedback to the teacher, but instead to allow a focus on themselves.

It is very important that reflection is done, and that it is separate from feedback. In the long-term challenge described above, the students are required to write a written reflection based on guiding questions following the actual project work. Previously, reflection was practiced several times in basic courses as part of short-term challenges. In the beginning, students often would only describe what they had done without reflecting on why they did it, or they omitted something else. Identifying mistakes, which is a prerequisite for learning, is also difficult for many at the beginning due to fear of their own failure. Guiding questions here can be on a more general level, e.g., What went well and what was difficult? What was most challenging? How did you get through this? How did you feel? Additional questions can help reflect on specific situations and/or with regard to certain tools and methods used, for example, What did you do/How did you feel when [certain key aspects/situations]? Did you find any tools/methods/structures for dealing with [certain key aspects/situations]? What did you pick and why? What happened? How was it useful? These guiding questions have to be carefully designed and applied to the specific context.

7 Conclusion

The use of CBL in higher education has numerous advantages, and we believe that more CBL should be used—not only in entrepreneurship education but for education in general. We conclude with the most important reasons for this, following the work of Sternad & Buchner (2016, p. 9):

  1. 1.

    Students learn through CBL to accept, deal with, and solve complex challenges and are thus best prepared for similar situations in practice.

  2. 2.

    Since the focus is on the process of overcoming a challenging and complex task, rather than the challenge itself, CBL can be applied to almost any teaching context. The method can be used in the humanities as well as in design studies or engineering courses.

  3. 3.

    Challenges can be designed as short-term, self-contained learning units. This feature makes it possible to integrate CBL into any existing semester plan without much additional effort.

  4. 4.

    Because students should choose their challenges themselves, or at least the teachers should establish a connection to the learners’ immediate reality, the students are more activated and often intrinsically motivated.

  5. 5.

    Social and cooperation skills are always implicitly promoted, since challenges have to be overcome together.

  6. 6.

    Since familiar approaches and thought patterns have to be questioned, and new solutions developed to solve the challenges, it promotes the development of self-reflection and self-development skills, contributing to the formation of a long-term entrepreneurial mindset.

CBL is a approach to teaching which requires time and effort from both teachers and students. The good news is that it is easy to get started with its short-term challenges, and further develop it over time. What is essential from the beginning, however, is a changed understanding of the teacher’s role. The teacher has to shift from transmitting knowledge to facilitating the learning process by creating a framework in which students can discover knowledge and acquire problem-solving skills themselves (Robinson et al., 2016). Students on the other hand have to be active. They are no longer on the receiving end of education, but are now responsible for their learning process. In the end, CBL is ultimately a dialogue between the teacher and student. It also helps if the teachers themselves serve as role models by embracing entrepreneurial qualities such as doing things they have not done before, and starting things even when they are not sure how they will turn out. Although this may strike some as being the exact opposite of a teacher, our experience shows that it works. Teachers offering CBL need to stand back and not intervene too quickly, even if something goes wrong. The team needs to be provided space for failure and conflicts, while focusing on the process of the team, not primarily on the task that is given.

Our experiences underline the benefits stated above. The work is worth it: We observed a promising combination of imparting relevant knowledge and entrepreneurial skills with increased entrepreneurial attention, solution orientation, and openness toward innovation as well as an increasing entrepreneurial self-efficacy. We thus strongly recommend using and analyzing challenge-based learning approaches in entrepreneurship education. By conducting research on how challenge-based formats affect students’ competence development and their entrepreneurial mindsets, and on factors influencing the implementation of these kinds of formats, future research can have a positive impact on educating future change agents.