Colette Henry - Entrepreneurship Education and Training: The Issue of Effectiveness

Colette Henry
Centre for Entrepreneurship Research,
Dundalk Institute of Technology

Frances Hill
School of Management and Economics
Queens University, Belfast

Claire Leitch
School of Management and Economics
Queens University, Belfast

First published 2003 by Ashgate Publishing

Reissued 2018 by Routledge
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ISBN 13: 978-1-138-71601-8 (hbk)
ISBN 13: 978-1-315-19722-7 (ebk)

In the OECD's Bologna Charter on SME Policies it is recognised that SMEs are increasingly important in 'economic growth, job creation, regional and local development, and social cohesion', that 'entrepreneurship and a dynamic SME sector are important for restructuring economies and combating poverty', that 'globalisation, the acceleration of technological change and innovation create opportunities for SMEs but also involve transition costs and new challenges', and that 'SME policies need to be tailored to the circumstances and priorities of individual countries and sectors, while contributing to sustainable development and progress'.

Furthermore, the Bologna Charter identifies a number of contributors to enhanced SME competitiveness. First, 'a regulatory environment which does not impose undue burdens on SMEs and is conducive to entrepreneurship, innovation and growth'. Second, 'education and human resource management policies that: foster an innovative and entrepreneurial culture, including continuous training and lifelong learning; encourage mobility of human resources; and reduce skill disparities by improving the match between education and labour market demand'. Third, 'effective access to financial services, particularly to seed, working and development capital, including innovative financial instruments to reduce the risks and transactions costs of lending to SMEs'. Fourth, 'an environment that supports the development and diffusion of new technologies by and for SMEs to take advantage of the knowledge-based economy'. Fifth, 'strengthening public-private partnerships and political and social dialogue involving territorial and institutional actors as a tool for exchange of information, utilisation of knowledge and elaboration of policy'. Finally, 'ensuring the cost-effectiveness of SME policies and their consistency with other national policies, as well as with existing international programmes'.

Many of these areas have been, and continue to be, the subject of extensive academic research and debate. For example, there is now an extensive literature on the contribution of SMEs to innovation, vis a vis the role of large firms, both as innovators and as adopters of innovation, and much of this research has examined specifically the emergence, role and characteristics of the new (or high) technology-based firm. Equally, the operation of the capital markets and the flow of finance into the SME sector has been the focus of considerable research, which has examined the operation of the banking system, the provision of venture capital and, more recently, the operation and development of the business angel, or informal venture capital, market. The growth of interest in the economic (and social) contribution of the SME sector to job generation, innovation, economic development and social inclusion has also been reflected in an increased level and variety of public and private sector policy initiatives at local, regional, national and supranational scales to stimulate and support the development of the sector. This in turn has stimulated a growing body of academic research and literature evaluating the impact of these initiatives.

The result of this accumulated research evidence is that we now know much more about how the SME sector operates, its role in the development of economies at a range of scales, the issues that affect the future development of the sector, and the constraints that limit its development. Within this, however, there remain significant areas that have not yet been subject to the same level of debate and formal analysis, where we remain less knowledgeable than is appropriate about how the SME sector performs. In particular, to date the issue of human capital formation in an entrepreneurial and SME context, in its broadest sense, has been an under-researched and under-discussed field. This is not because issues of education and human resource management policies, the fostering of an innovative and entrepreneurial culture, continuous training and lifelong learning, the mobility of human resources, and skill disparities (in OECD's terms) are unimportant.

Indeed, the opposite is the case: attempts to improve the innovation performance and capability of the SME sector (and in particular to increase the absorptive capacity of the sector) or to improve the flow of finance into SMEs and entrepreneurial firms will be improved if the owners and managers of these firms have the aptitude, capability and skills to take or create the opportunities for the development of their businesses. In a very real sense, achievement of the goals of other policy initiatives (to improve access to finance, to increase innovation, to reduce the regulatory burden to allow SMEs to develop, and so on) requires increased levels of human capital in the sector, and without this, other interventions and support mechanisms will be less successful in meeting their goals. Equally, initiatives to increase the overall level of new firm formation (by encouraging the development of a more entrepreneurial culture, publicising effective and successful role models, addressing the stigma of failure, introducing education and awareness initiatives in schools and higher education institutions, removing the actual and perceived barriers to entry to an entrepreneurial career), as well as initiatives to support the survival and growth of those firms which do start, require effective mechanisms to support human capital formation.

This is an area where academic research has tended to lag behind practice. There have been studies of the impact of investment in training in SMEs, mostly using cross-sectional panel data rather than longitudinal process-based data, which have suggested that there are few identifiable returns to training. Yet most researchers and policy makers if not SME owner/managers continue to believe (rightly in my view) that effective and appropriate training can and should make a difference to firm performance. There is growing interest in the phenomenon of 'entrepreneurial learning', much of the literature on which consists of little more than accounts of training and learning interventions and programmes within SMEs or among collectives of SMEs. However, such literature is at least redirecting attention to the need to formally consider and address the issues of what training (by which I include by extension education and learning needs) should be provided, by whom, using what delivery channels, to what client bases and with what effect. Nevertheless, in entrepreneurship, as in other areas of management studies, issues of education and training remain something of a Cinderella activity, which is only now beginning to come out of the shadows. What we need more of, therefore, are robust studies and evaluations of entrepreneurship education and training initiatives across the full range of provision, and across national boundaries (to reflect variations in priorities and circumstances), because what works and is appropriate at the pre-start stage, for example, will not necessarily be appropriate for the established business. Only then will we begin to fully understand how to meet the challenge of maximising the contribution of entrepreneurial activity to local, regional and national economic development.