Entrepreneurship has reached its lowest level of interest among MBAs in eight years.
Financial Times reports that up only 16% of students surveyed had started a business within three years of graduating. In 2015, 22% of surveyed students had started a business.
Among schools surveyed by Financial Times, the Olin Graduate School of Business at Babson College reported the highest proportion, 52%, of graduates starting a business.
Rise in MBA salaries being offered
Experts say a rise in salaries offered to MBAs by large, established companies has caused a drop in entrepreneurial activity among graduates. According to Financial Times, average salary growth among 100 schools sampled rose nearly 10% in the past three years. From 2008 to 2014, average MBA salaries rose 4%.
Jeff Lynn is a graduate of Oxford’s Said Business school and co-founder of Seedrs – an equity crowdfunding platform. Lynn tells Financial Times rising salaries for MBA grads makes it difficult for students to justify starting a business of their own.
“The opportunity cost factor is a big one,” Lynn says. “It is so much easier to take the plunge if your classmates are finding it difficult to get high-paying jobs.”
‘Start-up culture’ at large companies
Another potential reason why entrepreneurship has dipped in recent years is the change in culture at large companies.
Mark Potter is associate dean of Babson College’s Olin Graduate School of Business. Potter tells Financial Times that a number of companies now seek to provide entrepreneurs with positions where they can develop new business ideas.
“Organizations around the world are getting much better at trying to bake in an innovation and start-up culture,” Potter says. “This is a very attractive alternative for our students.”