Chapter 10. Entrepreneurial education and skills
Introduction
In many countries, policy makers are increasingly looking at ways to stimulate entrepreneurship in order to boost economic growth. This interest is underpinned by a theory of entrepreneurship elaborated by Kirzner (1973[1]) and Hausmann and Rodrik, among others: that the entrepreneur is a critical agent in driving the discovery process required to generate growth and equilibrate markets. Kirzner’s entrepreneur plays a role in equilibrating markets – s/he picks up on the profit opportunities that exist when markets are at disequilibrium until competition picks up and returns the market to equilibrium. Hausmann and Rodrik (2003[2]), meanwhile, have shown how, through experimentation, lone entrepreneurs can spawn entire industries. They cite the examples of garments in Bangladesh, cut flowers in Colombia and information technology (IT) in India. This theory underpins the idea that entrepreneurship generates growth by creating new economic opportunities, stimulating competition and driving productivity improvements in an economy.
However, the theory distinguishes another type of entrepreneur that is not so closely connected with economic growth. This is the type that Kirchhoff (1994[3]) refers to as constituting “the economic core” of a society. Such entrepreneurs constitute the majority of the self-employed and tend to provide stable employment while exhibiting low innovation and limited growth.1 They have traditionally been regarded as a group that exists and that should be maintained as a social good, but with a cost to economic efficiency. In developing economies or those undergoing rapid structural change, these entrepreneurs are often informal and tend to be found in activities related to agriculture, basic services or very small-scale industry. In these economies, their activity is often negatively linked to economic development because it is generally necessity driven and exhibits low productivity. These individuals have often been pushed into entrepreneurship, and they move away from it once opportunities for wage employment begin to open up (Acs, 2006[4])
Development economists generally distinguish three stages of development,2 with entrepreneurship being a critical growth factor only in the last. It is therefore generally advised for policy makers in low- and middle-income countries to focus first on strengthening their SME sector before tackling entrepreneurial framework conditions. Should there still be a political economy drive to improve the enabling environment for entrepreneurship in middle-income countries, interventions could focus on business climate elements that would improve the entrepreneurial environment for major established firms – for instance, enhancing the rule of law, infrastructure, labour market flexibility and financial market efficiency (Acs, 2006[4]). In ASEAN, only Singapore is classified as an innovation-driven economy, while Malaysia is classified as transitioning from an efficiency-driven to an innovation-driven economy (WEF, 2017[5]).
Building entrepreneurial and management skills – the skills required to run a productive business – is a major area where countries across different income groups can develop policies to stimulate entrepreneurship. La Porta and Shleifer (2014[6]) remark that a lack of such skills may be one of the most critical bottlenecks to growth in many lower and lower-middle economies, where a high degree of informality persists. Their observation is based on an empirical study that finds managerial human capital – and not worker human capital – to be one of the most significant differences between informal and formal enterprises,3 as well as a statistically significant determinant of productivity in production function estimates.4 In efficiency-driven economies, entrepreneurial activity5 decreases as industry consolidates to exploit economies of scale, but the skills aspect remains crucial. Since growth is now driven by progress in production efficiency, in-firm entrepreneurial skills (or, “the skills required to run a productive business and to innovate”) become increasingly important for identifying and exploiting opportunities for new products and processes, and for increasing co-ordination and communication across different production functions. This is the entrepreneurial function identified by Schumpeter (1942[7]) and others.
Given high rates of informality across the region and widely divergent development levels, boosting the supply of entrepreneurial and managerial skills – skills that can be used in both waged and self-employment6 – could be seen as a common priority across ASEAN. This is the logic underpinning the inclusion of this component in both the SAP SMED 2016-25 and the 2018 ASEAN SME Policy Index.
Assessment framework
The development of policies and programmes to promote entrepreneurial mindsets is a complex task, since entrepreneurial skills and disposition are difficult to nurture and capture. It is particularly complex to monitor the performance of programmes to foster this mindset, since such programmes often target “softer” outcomes, such as changes in attitude, rather than “hard” outcomes, such as the number of initiated business start-ups.7
Dimension 7 of the 2018 ASPI thus looks at the policy framework for developing entrepreneurship in ASEAN. It is divided into two sub-dimensions: the first (7.1) assesses policies and programmes to promote entrepreneurial education, while the second (7.2) assesses policies and programmes to enhance entrepreneurial skills.
Policies that promote entrepreneurial education (sub-dimension 7.1) are assigned 40% of the weight, while policies that help develop the entrepreneurial skills of SMEs (sub-dimension 7.2) are assigned 60%. While both sub-dimensions look at building knowledge and skills in entrepreneurship, 7.2 focuses on building entrepreneurial capabilities among SMEs: management skills, accounting, marketing and technical knowledge.
Sub-dimension 7.1 centres on shifting people’s attitudes towards recognising and capitalising on entrepreneurial opportunities. Since any shift in mindset does not happen overnight, ASEAN Member States (AMS) need to embed entrepreneurship education in their long-term national strategies. This sub-dimension assesses the extent to which governments have endorsed the elements of entrepreneurial learning (EL) in their national education policies and integrated them into other national strategic plans. It also covers how EL has been institutionalised at all education levels. It specifically looks at the level of adoption of a common entrepreneurship curriculum, entrepreneurial education in universities, capacity building of teachers for EL programmes and how EL policies, programmes and projects are monitored and evaluated. How private entities are incentivised to provide entrepreneurial education is also assessed.
Sub-dimension 7.2 centres on the design of strategies and implementation of measures to promote the entrepreneurial skills of SMEs in each ASEAN member country. Small firms serve as a vehicle for entrepreneurship (Acs, 1992[8]; Thurik and Wennekers, 2004[9]), and it is therefore essential to upgrade such skills among SMEs. Entrepreneurship can contribute to economic development when a country has high-growth enterprises or firms that can serve as a source of income and employment for vulnerable populations (Valerio, Parton and Robb, 2014[10]).
Analysis
The ASEAN region as a whole received a moderate score (4.1) for Dimension 7, indicating that more can be done across the region to develop policies and programmes in entrepreneurial education and skills. Among AMS, Singapore and Indonesia score highest in this dimension and in the associated sub-dimensions.
Variation in country scores for this dimension suggests a development gap among AMS. While Singapore and Indonesia have developed relatively advanced policies for an entrepreneurial ecosystem, Cambodia, Lao PDR, Myanmar and Viet Nam are still in the early stage of developing policies and programmes to promote entrepreneurship. Malaysia, the Philippines, and Thailand scored moderately high in the dimension overall as well as in the two sub-dimensions, ranking slightly below Indonesia. Brunei Darussalam just made it into the mid-stage group of countries.
Aggregate scores suggest that the region as a whole has moderately well-developed policy frameworks in place to promote entrepreneurship. This suggests that the majority of AMS have a number of programmes and policies in place to promote an entrepreneurial ecosystem, but that further work could be done to build on this, for instance through the development of more robust monitoring and evaluation mechanisms.
Sub-dimension 7.1: Promotion of entrepreneurial education
The development of entrepreneurial mindsets is generally regarded as a long-term process, and for this reason the European Commission identifies entrepreneurship as one of eight key competencies that should be targeted in lifelong learning programmes.8 Studies also show the importance of investing in entrepreneurship education early on. Based on Global Entrepreneurship Monitor data, (Acs and Szerb, 2007[11]) argue that it is important for middle-income countries to start promoting entrepreneurial skills and mindsets early in an individual’s life. Their study identifies perceptual variables as being the main determinants of entrepreneurial drive and talent, which are difficult to change in the short run.
Based on these assumptions and findings, this sub-dimension looks at policies and programmes that promote entrepreneurial mindsets, particularly from school age. It covers three key components of the policy cycle, and weights each according to its perceived importance. The first, planning and design, has been assigned a weight of 35%; the second, implementation, has been assigned a weight of 45%; and the third, monitoring and evaluation, has been assigned a weight of 20%.
Across the region as a whole, the “planning and design” thematic block receives the highest score, placing the region in the advanced category here. This masks significant variation in scores across countries, however, indicating that a number of AMS may lag behind others in this policy area. Scores for Lao PDR, Myanmar and Viet Nam suggest that they may be at an early stage of developing policies to promote entrepreneurial education, while Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand appear to be relatively advanced in this area.
Planning and design: Concrete policies on entrepreneurial education are needed
Myanmar, Lao PDR and Viet Nam are currently at an early stage of designing policies to promote entrepreneurship. Myanmar’s education policy does not yet include a component on EL. Lao PDR has incorporated EL into its Five-Year Education Development Plan, but it has only recently started to develop pilot programmes with development partners. Viet Nam has incorporated EL into secondary and tertiary curricula, but concrete EL programmes are still under construction.
Singapore, Indonesia, Brunei, Malaysia and Thailand are currently in an advanced stage of designing policies to promote entrepreneurship. In these countries, EL is a component of national education plans and a number of concrete policies and programmes are already in place. In Brunei and Malaysia, EL is promoted at all levels of education. In Indonesia, the enhancement of entrepreneurial skills has been listed as a strategic goal under the National Education Plan 2015-2019, but to date EL has only been incorporated into the mandatory national curricula of vocational students at secondary level. Nevertheless, Indonesia has made EL a key competency for selecting public school principals at both primary and secondary levels9.
In Singapore, meanwhile, entrepreneurial education is optional, not mandatory. However, the country has identified entrepreneurial skills and drive as one of its Desired Outcomes of Education, as well as a key focus area under the Ministry of Education’s 21st Century Competencies framework. Starting from secondary school, students in Singapore can choose to engage in entrepreneurship programmes such as the Applied Learning Programme in Business and Entrepreneurship, elective modules on business and entrepreneurship, or co-curricular activities that focus on business and entrepreneurship. Through this approach, the government attempts to provide the highest possible quality of learning and training, targeted at interested students.
Implementation: National curricula should include entrepreneurial learning
This thematic block explores how EL policies have been translated into action. It looks at the level of funding for given programmes and policies; the availability of teaching materials, curricula and pilot projects on entrepreneurship; and whether vocational schools and universities offer courses on entrepreneurship. It also measures the availability of degrees on entrepreneurship, the existence of university alumni networks for entrepreneurs and the number of universities that have adopted the ASEAN Common Curriculum For Entrepreneurship as well as its six-month practicum, Consulting-Based Learning for ASEAN SMEs (CoBLAS). Finally, this block evaluates the availability of training programmes for EL trainers and incentives for private service providers of entrepreneurship education.
Only one AMS, Singapore, is scored as being at the advanced stage of implementing policies and programmes in this area. The dispersion of scores for this block is moderately low, indicating a relatively even level of development across the region. Indonesia, Philippines, Brunei, Malaysia, Thailand, and Lao PDR are identified as being at the mid-stage of development, while Myanmar, Viet Nam and Cambodia follow closely but are still at the early stage of implementing actions that support entrepreneurial education.
Many AMS have developed a national curriculum on entrepreneurship to some extent. Most have integrated EL into national curricula at either vocational, secondary or tertiary level. Myanmar, Lao PDR, the Philippines and Malaysia have integrated EL at university level. Brunei Darussalam has adopted a national entrepreneurship curriculum for vocational and university studies.10 Its university syllabus has been developed as part of the country’s National Entrepreneurship Agenda, which aims to encourage young people to think in a more entrepreneurial way. Cambodia and Indonesia have so far only incorporated EL in national curricula at the vocational secondary level.
By contrast, neither Singapore nor Thailand has yet incorporated EL into national curricula, though Thailand’s Basic Education Core Curriculum does convey a certain entrepreneurial spirit. In Singapore, initiatives to promote entrepreneurial skills and drive are incorporated into national curricula for each subject area and level of education where it is considered relevant, for instance the country’s polytechnics and Institutes of Technical Education.
Notable pilot projects to promote entrepreneurship in school include Thailand’s One College, One Business project, which is run at the vocational level, and Brunei’s Junior Achievement Programme. Through its Ministry of Education, Indonesia is expanding a pilot project to transform appointed schools into entrepreneurship-based high schools. In 2016, there were 204 such pilot high schools spread across 34 provinces in Indonesia (Banten Raya, 2016[12]). In Lao PDR, the Department of SME Promotion has started to develop programmes to promote entrepreneurship among secondary school students, which is done in partnership with the International Labour Organization. Myanmar and Viet Nam do not have pilot projects in place yet.
In the ASEAN region, entrepreneurship education at the university level is generally less inclusive than at the secondary level. Only a few universities in most AMS offer an entrepreneurship degree, although many business majors take short courses or subjects on entrepreneurship. The Philippines is a notable exception, with 285 of its 1 934 higher education institutions offering stand-alone degrees on entrepreneurship.11 Some universities in Malaysia12 and Thailand13 also offer degree programmes on entrepreneurship, but there are fewer dedicated degrees than in the Philippines.
The provision of training-of-trainers programmes for EL is rather weak in the region. There are some unstructured training-of-trainers activities in Brunei, Cambodia and the Philippines, while Singapore, Malaysia and Indonesia have programmes that are more specific. To address this gap, a number of regional initiatives have emerged. This includes the ASEAN SME Academy, which was launched in May 2016 as an open-access, online training platform for SMEs. After completing a series of training sessions, participating trainers were then expected to provide training to SMEs within their own networks on how to use the academy. In 2016, the academy conducted training-of-trainers sessions in Lao PDR, the Philippines, Indonesia and Cambodia.
Finally, specific incentives for private service providers of entrepreneurship education are non-existent in the region. Some countries have instead focused on developing links between the private sector and schools. Indonesia, for instance, has developed a mandatory internship programme for vocational students in both state-owned and private companies.
Monitoring and evaluation: Malaysia is the regional leader in monitoring EL
The region scores lowest on this thematic block. Countries were scored on two components: i) the presence of monitoring and evaluation mechanisms for EL policies, programmes and projects; and ii) the availability of university networks for EL that regularly review or monitor the implementation of EL courses.
Among AMS, only Malaysia has both of these components in place. The Malaysian Qualification Agency monitors the implementation of EL in universities, while government agencies regularly monitor specific EL programmes and projects such as the TEKUN National Entrepreneurship Institute and the Tunas Usahawan Belia Bumiputera programme. In other AMS, EL projects and programmes are monitored as part of the general monitoring conducted by assigned government agencies, but only Malaysia has a specific network in place for monitoring the development of EL in universities.
Sub-dimension 7.2: Entrepreneurial skills
This sub-dimension looks at the sophistication and intensity of policies and programmes to develop entrepreneurial skills among SMEs. Equal weights are applied across each thematic block.
Planning and design: Background studies should be used in policy design
Only five AMS currently use background studies to inform the development of programmes on entrepreneurial skills. Research on entrepreneurial skills among SMEs is mostly conducted by independent academics or non-government institutions, and their findings are generally not considered in the policy planning process.
The five AMS that do conduct background studies are Singapore, Thailand, Malaysia, Indonesia and the Philippines. In Indonesia, every government agency has an internal planning or research division that conducts background studies to inform policy design. In the Philippines, the Department of Trade and Industry conducts background studies before developing entrepreneurial skills strategies for SMEs. One notable Philippine programme in this area is the SME Roving Academy, which is a continuous learning programme for the development of skills among MSMEs.
Implementation: Concrete initiatives are needed to upgrade entrepreneurial skills
Implementation levels vary across AMS. A number of AMS have already begun to implement programmes to foster entrepreneurial skills among SMEs. In Indonesia, for instance, these programmes are implemented by a number of different ministries and are incorporated into the strategic plans of the Ministry of Research, Technology and Higher Education and the Co-ordinating Ministry of Economy. In Malaysia, these programmes are spearheaded by SME Corp. In the Philippines, training programmes and research projects are implemented under the “Tara Na, Negosyo Na” initiative, while in Myanmar entrepreneurship camps and incubators are run by the country’s Young Entrepreneurs Association.
Few initiatives seem to be implemented in other AMS. In Viet Nam, a government decree14 has identified the agencies responsible for these activities, but no concrete programmes have yet been implemented. In Lao PDR, the Five-Year National Socio-Economic Development Plan 2016–2020 outlines measures to enhance the capacity of entrepreneurs, but few concrete programmes appear to be in place. However, some activities are incorporated into donor-backed projects, such as the Regional Economic Integration of Lao PDR into ASEAN, Trade, and Entrepreneurship Development (RELATED) project, which is being implemented with GIZ.
In Cambodia, the government is in the process of setting up a committee to develop entrepreneurship programmes. The country also has a number of private-sector initiatives to nurture entrepreneurs, for instance those organised by the Young Entrepreneurs Association of Cambodia.
Monitoring and evaluation: Skills programmes need independent assessment
This thematic block focuses on monitoring and independent evaluation of entrepreneurial skills training programmes. Results show that Myanmar, Lao PDR and Cambodia have put in place neither monitoring mechanisms nor independent evaluations of those programmes.
Malaysia has monitoring mechanisms, but independent evaluation of its training programmes is unavailable. In Singapore, while many training programmes are conducted by private-sector providers and are therefore not covered by the government’s monitoring mechanism, they are regularly evaluated by the private institutions themselves.
In Thailand, only SME training programmes that fall under the country’s integrated budget for SME development are concretely monitored, and this is done by the Office of SMEs Promotion. In some cases, Thailand’s Department of Industrial Promotion hires third parties (university or research institutions) to provide independent evaluation of training programmes, but this is done on an ad hoc basis. Since the government often sponsors the activities of these third parties, issues may arise concerning the impartiality of results.
Overall, the region is making significant efforts to promote entrepreneurial skills among SMEs. Singapore, Indonesia, Thailand, Malaysia and Philippines have relatively more advanced policies, followed by Brunei. The variation in scores among the countries is wide, however, with Cambodia, Lao PDR, Myanmar and Viet Nam trailing far behind. By improving their policy design mechanisms and embedding more structured monitoring and evaluation schemes into their programmes, these four nations can get in step with the other AMS, paving the way for a more equal level of development.
The way forward
Dimension 7 of the index aims to evaluate the extent to which EL has been adopted within national curricula and the extent to which policy instruments are in place to develop entrepreneurial skills. The 2018 ASPI assessment of different AMS is illustrated in Figure 10.3.
The median score for the dimension as a whole suggests that most countries have not yet reached the advanced stage of policy development and implementation. Singapore and Indonesia have reached this stage, and other ASEAN-6 countries follow. The newer AMS (Cambodia, Lao PDR, Myanmar, and Viet Nam) are currently at the early stage of policy development in this area, but have the potential to leapfrog in this area.
Note: The graph demonstrates the level of policy development in each AMS indicated by the 2018 ASPI scores.
Among the “early stage” countries, the main challenge is to integrate EL programmes into their national education systems, which tend to face greater resource constraints than other AMS. Few EL programmes have been included in government strategies.
Countries that fall within the “mid-stage” have generally adopted EL programmes in their national education systems. They are now attempting to integrate them in a more structured way, and incorporate them into different levels of education. Many countries, for instance, do not yet provide EL programmes at secondary education level. Another challenge for the countries in this group is to ensure the sustainability of training programs for EL trainers.
Countries that fall within the “advanced stage” are generally seeking to further develop monitoring and evaluation mechanisms for programmes to promote entrepreneurial drive and skills. The sustainability of training programmes for EL trainers may also be a challenge for some countries within this group.
Overall, great efforts and resources seem are needed to intensify the strength of policies to mainstream entrepreneurship in ASEAN countries. Going forward, policy makers could prioritise the following:
References
[4] Acs, Z. (2006), “How is entrepreneurship good for economic growth?”, Innovations: Technology, Governance, Globalization, Vol. 1/1, pp. 97-107, https://doi.org/10.1162/itgg.2006.1.1.97.
[8] Acs, Z. (1992), “Small business economics: A global perspective”, Challenge, Vol. 35/6, pp. 38-44, https://doi.org/10.1080/05775132.1992.11471626.
[11] Acs, Z. and L. Szerb (2007), “Entrepreneurship, economic growth and public policy”, Small Business Economics, Vol. 28/2-3, pp. 109–122, https://doi.org/10.1007/s11187-006-9012-3.
[12] Banten Raya (2016), Banten Raya Pilot Programme, http://bantenraya.com/banten-raya/serang/21459-sma-jawilan-jadi-pilot-project-program-kewirausahaan.
[13] Bridge, S., K. O'Neill and S. Cromie (1998), Understanding Enterprise, Entrepreneurship and Small Business, Macmillan Press, Basingstoke, https://doi.org/10.1007/978-1-349-26171-0.
[2] Hausmann, R. and D. Rodrik (2003), “Economic development as self-discovery”, Journal of Development Economics, Vol. 72/2, pp. 603-633, https://doi.org/10.1016/S0304-3878(03)00124-X.
[3] Kirchhoff, B. (1994), Entrepreneurship and Dynamic Capitalism: The Economics of Business Firm Formation and Growth, Praeger Publishers, Westport.
[1] Kirzner, I. (1973), Competition and Entrepreneurship, University of Chicago Press, Chicago.
[6] La Porta, R. and A. Shleifer (2014), “Informality and Development”, Journal of Economic Perspectives, Vol. 28/3, pp. 109-26, https://doi.org/10.1257/jep.28.3.109.
[14] OECD (2009), “Evaluation of programmes concerning education for entrepreneurship”, Report by the OECD Working Party on SMEs and Entrepreneurship, https://www.oecd.org/cfe/smes/42890085.pdf.
[7] Schumpeter, J. (1942), Capitalism, Socialism and Democracy, Harper & Brothers, New York.
[9] Thurik, R. and S. Wennekers (2004), “Entrepreneurship, small business and economic growth”, Journal of Small Business and Enterprise Development, Vol. 11/1, pp. 140-149, https://doi.org/10.1108/14626000410519173.
[10] Valerio, A., B. Parton and A. Robb (2014), Entrepreneurship Education and Training Programs around the World: Dimensions for Success, World Bank Group, Washington D.C., http://hdl.handle.net/10986/18031.
[5] WEF (2017), Global Competitiveness Report 2017-2018, World Economic Forum, Geneva, https://www.weforum.org/reports/the-global-competitiveness-report-2017-2018.
Notes
← 1. High-growth firms can also “leap out” from the economic core. (Bridge, O'Neill and Cromie, 1998[13]) cite the example of WalMart, which only achieved substantial growth after 30 years of operation.
← 2. Broadly, this is the structural shift of an economy from agriculture (and small-scale production) to manufacturing to services. The first phase is marked by high rates of self-employment, while the second is marked by more sole proprietors moving into waged employment as more economic opportunities open up and the returns from waged employment increase. In the third and final stage, entrepreneurial activity increases as the share of manufacturing in the economy declines and the share of services increases. Service-sector firms tend to have a smaller optimal size than manufacturing firms, and competition tends to be greatest in industries where entrepreneurial activity is important (Acs, 2006[4]).
← 3. The study found that only 7% of managers in informal firms had a college degree, compared to 76% of managers in formal firms.
← 4. Their findings suggest that while informality decreases with economic growth, this transition is hindered where the supply of educated entrepreneurs – or those that can run a firm competitively in the formal sector – is lacking.
← 5. This mainly refers to the rate of self-employment, but could also apply to the number of individuals within a managerial function.
← 6. And increased either through immigration or education and training.
← 7. This approach has been advised by the OECD (2009[14]) and others.
← 8. Entrepreneurship has been included as one of the EC’s key competencies for lifelong learning since 2006 (Recommendation 6/962/EC). For further information see http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32006H0962&from=EN.
← 9. Peraturan Pemerintah Republik Indonesia No. 19 Tahun 2005 tentang Standar Nasional Pendidikan (Indonesian Government Rule No. 19/2005 on National Education Standard).
← 10. Universiti Brunei Darussalam, for example, is aiming to embed the concepts of entrepreneurial learning in all modules by 2019.
← 11. Universities offering degrees in entrepreneurship include the Polytechnic University of the Philippines in Quezon City (which offers a Bachelor of Science in Entrepreneurial Management) and the University of Makati (which offers a Master of Business Administration (MBA) in Entrepreneurship).
← 12. For instance, Universiti Malaysia Kelantan offers a Bachelor degree in Entrepreneurship.
← 13. For instance, Bangkok University, Mahidol University, the University of the Thai Chamber of Commerce and Assumption University.
← 14. Government Decree No. 56/2009/ND-CP mandates the Ministry of Planning and Investment to co-ordinate with other agencies to provide assistance and training programmes for SMEs, and the Ministry of Science and Technology to formulate policies for SME business incubation.