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Interest In Entrepreneurship Spikes At Elite Business Schools

Written by Tim Morral
Published: 6/16/2014

At some of the nation's most prestigious business schools, as many as one in five graduates are eschewing traditional career paths and immediately launching their own companies.

Each year, revered business schools like Harvard, Yale, Stanford and Wharton send thousands of new graduates into finance, consulting, tech and other fields. But recent crops of graduates are shaking things up, embracing the risks and launching their own businesses right out of the gate.

MBA Student Entrepreneur Risks

The Appeal of Entrepreneurship Among Business School Grads

The Harvard MBA Indicator has historically followed the trajectories of Harvard Business School grads to gauge the development of "bubbles" in specific fields. According to a report in the Washington Post, the Harvard MBA Indicator showed that for the last three years, 7 percent of graduates launched their own companies after graduation, compared to 4 percent just five years ago.

And Harvard isn't alone. At Stanford, one in five members of the 2013 graduating class indicated an intention to start a business rather than work as an employee at an existing company. MIT, Wharton and other top-tier business schools are reporting similar trends, as more and more business school grads turn to entrepreneurial career opportunities.

"It's built from about 3% back in 1990 to that number (18%), with big bumps up to 10-12% during the late 1990s era, a drop-off after that, and a steady rise over the last few years," Paul Oyer, an economics professor at Stanford's Graduate School of Business who has studied career trajectories of MBAs, told the Washington Post.

Do Business School Grads Face Less Risk?

On the surface, the decision to launch a business might seem like a risky career path. After all, risks and rewards for entrepreneurs go with the territory. But for individuals attending elite business schools, the risks may not be as daunting as they seem.

In an opinion piece in Newsday, Catherine Rampell said that graduates at the nation's top business schools are ideally positioned for entrepreneurial success. "It's about an advantage bestowed upon the United States' elites, thanks to the skills and networks they have inherited or acquired. When you are highly educated and well-connected, you have the freedom to try new things and take big risks because those risks turn out to not be so risky after all," said Rampell.

Rampell may be on to something. While the Brookings Institution and other organizations are reporting that the average American's appetite for entrepreneurial activity is in decline, business school grads are embracing entrepreneurship in record numbers--a sign that a business degree may be gaining value as a prerequisite for the most successful entrepreneurs.

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