More MBAs Loving The Entrepreneurial Life

Source: GMAC 2014 Alumni Perspectives Survey

Source: GMAC 2014 Alumni Perspectives Survey

It’s no secret that interest among MBAs in entrepreneurship has been at record levels in recent years. More graduates are starting companies straight out of school, and a greater percentage of alumni have also caught the entrepreneurial bug.

A new survey published today (March 16) by the Graduate Management Admission Council not only confirms the trend, but shows just how extensive it has become. More than one in 10 business school alumni are self-employed, and the longer they’ve been out of business school the more likely they are to have taken an entrepreneurial career path, according to the GMAC survey of nearly 21,000 B-school alumni from the classes of 1959-2013.

It’s still relatively rare for an MBA to start a company on campus, however. While a record 18% of the 2013 graduating class at Stanford University’s Graduate School of Business launched companies at graduation, generally in the U.S. it’s not much more than 4%.

The vast majority of self-employed alumni, roughly 80%, reported that they worked for an employer a number of years after graduation before pursuing their entrepreneurial ambitions. This stands in sharp contrast to the 45% of self-employed alumni from the most recent classes of 2010–2013 who launched their own businesses directly after graduation (see table above). Only 24% of self-employed alumni from the classes of 2000–2009–and even fewer in prior years–launched entrepreneurial careers straight out of graduate business school.

BIG CHANGE IN HOW RAPIDLY MBAS GO INTO BUSINESS FOR THEMSELVES

On average, the study found, alumni who graduated between 2000 and 2009 waited three years before going into business for themselves. Business school graduates in the 1990s waited nine years on average before beginning their business, an even faster acceleration to self-employment compared with alumni from the 1980s, who waited 15 years and those graduates from prior to 1980 who waited an average of 20 years. Regardless of the time frame in which alumni started their businesses—whether at graduation or years later—the vast majority (91%) are satisfied with their experience of being an entrepreneur, according to the study.

“While entrepreneurship is a hot topic and is a very popular course of study at today’s business schools, these findings suggest that business schools have always prepared students to launch and manage their own businesses,” says Sangeet Chowfla, president and CEO of GMAC, in a statement. “Even if alumni don’t become entrepreneurs at graduation — something more common with today’s graduates — their business education provides the career flexibility and the skills that help them start businesses years later.”

What’s more, MBA students from several countries outside the U.S. seem far more likely to do their own thing.  Surprisingly, the percentage of MBAs in entrepreneurship who graduated from 2010 to 2013 is lowest, in fact, in the U.S. and the Middle East. Entrepreneurship rates among business school alumni vary by world region, with higher entrepreneurship rates in Asia/Pacific Islands, Canada, and Latin American than the United States. MBAs from Latin America–8%–were twice as likely as Americans in that period to start their own companies (see table below). About 7% of 2010-to-2013 MBA alumni in Europe and Asia became entrepreneurs versus only 4% of those in the U.S. Across all regions, the proportion of alumni who are self-employed increases with time out of business school.

Source: 2014 GMAC Alumni Perspectives Survey

Source: 2014 GMAC Alumni Perspectives Survey

Surveying alumni from 132 business schools around the world, the 2014 Alumni Perspectives Survey is the largest and most far-reaching alumni survey GMAC has ever produced and offers insights into career progression, job and degree satisfaction, and school engagement with alumni spanning more than five decades.

The survey found that overall, 79% of alumni from the classes of 1959-2013 currently work for an employer, 11% are self-employed, and 5% were retired. About 14% of recent (2010-2013) alumni MBAs in entrepreneurship work in the technology sector, compared with just 2 percent of those graduating before 1990. More than 3 in 10 self-employed alumni work in both products and services and consulting (each 31%).

“Without the entrepreneurship education I received [while at business school], I would very likely not have started my own company and therefore I would not have become financially independent and surely not have become a professor for entrepreneurship myself,” commented one alumnus.

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