The entrepreneurial engagement of Italian university students: some insights from a population-based survey

ABSTRACT

Start-ups founded by university students and graduates play a substantial role in bringing new knowledge to the market and in employment creation, a role that appears to be even more important than that played by the typical technology transfer activities carried out by universities. We use a population-based approach to explore entrepreneurship among 61,115 graduate alumni of 64 Italian universities. In order to assess the potential supply of highly educated entrepreneurs, we develop a novel empirical approach to analyse engagement in entrepreneurship, based on the idea that entrepreneurship is a process that begins with intention and ends in action. We find that the share of intentional entrepreneurs, among recent cohorts of graduates in Italy, is large in comparison to the small share of actual entrepreneurs detected five years after graduation. We discuss which barriers may deter intentional entrepreneurs from being engaged in entrepreneurship and how universities can trigger the entrepreneurial process and close the gap between entrepreneurial intentions and action.

KEYWORDS:

• Entrepreneurship education
• university
• diffusion of innovation
• students

JEL Classification:

• j21
• j24
• l26
• i23

Acknowledgements

We would like to acknowledge valuable comments by two anonymous referees. The usual disclaimer applies.

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Francesco Ferrante http://orcid.org/0000-0002-4154-6451

Notes

1 The waves of technological, organizational and financial innovations that started 40 years or so ago with the ICT revolution brought about an acceleration in the pace of economic and social change that has implied a compression of the knowledge life cycle. Analysis of technological revolutions and of the diffusion pattern of the major technological breakthroughs seems to show that the typical technology life cycle has shrunk; i.e. the process of ‘creative destruction’ (Schumpeter 1942) has become more intense, thus leading to also shrink the life cycle of industries and firms (Bloom et al. 2017; Nordhaus 2015).

2 Schivardi and Torrini (2011) show that the propensity of Italian firms to hire graduates is three times greater for entrepreneurs with a university diploma than for other entrepreneurs. Bugamelli et al. (2012) argue that the adoption by firms of more efficient organizational settings and human resources strategies (e.g. decentralized organizational settings, incentive-based wage schemes, etc.) is positively affected by entrepreneurs’ education.

3 The total entrepreneurial activity index computed by GEM is given by the percentage of the working age population starting an entrepreneurial activity and those running a new business which is less than 3 and a half years old.

4 A share, which varies greatly according to the field of study, with a minimum of 0.3% for medicine and a maximum of 4.4% for agricultural studies. Indeed, the comparatively low general educational attainment of entrepreneurs in Italy has much to do with the low level of educational attainment of the Italian population as a whole: in 2015, the share of the population with at most compulsory education was 51% against a share of 13% with a university degree (ISTAT 2015). The long recession may have affected the relative value of occupational options (e.g. being an employee rather than a self-employed worker) in particular in Italy, which has suffered from high unemployment rates (in 2015, 12.1% for the 15–64 age bracket), especially among young people (18–29, 29.6%) even if they hold a university diploma (25–34, 16.2%). Indeed, although the outside option of becoming an entrepreneur has been negatively affected by the recession, entrepreneurial opportunities have also been negatively affected by the bad macroeconomic climate.

5 AlmaLaurea is an inter-university consortium set up in Italy in 1994. Today, it involves 73 universities and approximately 91% of Italian graduates. The Consortium is supported by the universities taking part in it, by the Italian Ministry of Education, University and Research and by all companies and institutions using the databank and the services offered by AlmaLaurea. AlmaLaurea engages in three core activities: Graduates’ profile: an annual survey and report on the internal efficiency of the higher education system; Graduates’ employment conditions: an annual survey and report on the external efficiency of the higher education system; Online graduates’ databank: a tool intended to improve the match between the supply and demand of graduates and their transnational mobility. The members of the AlmaLaurea consortium numbered 64 at the time of the survey (2014) and 72 in 2015 (see the Appendix for the list of universities included in the sample).

6 The empirical evidence on the effects of cognitive and non-cognitive abilities on an individual's life is impressive. In particular, a remarkably long list of characteristics and socio-economic outcomes of an individual are correlated with the standard measurement tests of cognitive abilities (Kuncel, Hezzlet, and Ones 2004; Schmidt 2002). Such abilities include analytical style, memory, reaction time, reading, creativity (craftwork, musical ability), health and fitness, interests (breadth and depth of interest, sports participation), morality? (delinquency, lie scores, racial prejudice, values), occupational status and income, perceptual (ability to perceive brief stimuli, field-independence, myopia), personality (achievement motivation, altruism, dogmatism) and practical skills (practical knowledge, social skills). Indeed, they are all characteristics that may be expected to affect the intrinsic and extrinsic reward of different occupational choices and, therefore, the incentive to make them. Psychology and neuroscience furnish strong evidence that most cognitive and non-cognitive skills are acquired up to a person's twenties, an age bracket below which the prefrontal cortex is still malleable (Cunha and Heckman 2007).

7 For instance, an enforced entry regulation can reduce entry and income risk and thus create rents for incumbents in some occupations (thereby increasing returns to education); conversely, entry regulations that are not enforced owing to bribery may simply affect the type of entrepreneurial selection, with zero or even positive effects on entry (Klapper, Laeven, and Rajan 2004).

8 ‘Entrepreneurship researchers largely ignore the concept of self-efficacy despite its importance and proven robustness at predicting both general and specific behaviours. For instance, role models affect entrepreneurial intentions only if they affect self-efficacy. In addition, self-efficacy has been associated with opportunity recognition and risk-taking’ (Krueger, Reilly, and Carsrud 2000, 418).

9 Students will be followed after graduation through a survey on their occupational status (1, 3 and 5 years after graduation).

10 We verified that there were no observable differences among graduates at different times of the year which might affect our estimation results.

11 However, we were not interested in assessing the process and the causes of discontinuation.

12 The population size was 64,710, and the response rate was 94%. The survey includes administrative data, available for the population at large, and the responses to the questionnaire.

13 We were less interested in the group of students who had started a business before enrolling at university because it was reasonable to expect that their choices were independent of their subsequent academic experience unless we made the strong assumption that their decision to start the business was linked to their decision to enrol at university in the future.

14 We selected just one of the sentences contained in the survey providing proxies to detect entrepreneurial intentions because of the very high correlation among them (82–84%).

15 See also column (e).

16 Unfortunately, the questions on whether students had attended courses on entrepreneurship or if they had received stimuli from the university were put only to those students who had started a business or who had taken concrete actions to do so. Therefore, we cannot detect the specific impact of those university factors on both the decisions.

17 On the impact of experience on optimism, see Fraser and Greene (2006).

18 Italy is often criticized for being characterized by high institutional barriers to entrepreneurship (e.g. World Bank 2017).

19 Davidsson argues that business education is targeted to provide the skills needed as employees in large firms.