“Like every acting man, the entrepreneur is always a speculator. He deals with the uncertain conditions of the future. His success or failure depends on the correctness of his anticipation of uncertain events.”—Ludwig von Mises, Human Action
A relatively recent Mises Wire article from Doug French, “Entrepreneurship Can’t Be Taught in a College Classroom,” criticizes, as the title explicitly states, the idea that entrepreneurship can be taught in a college classroom. As such, he raises an important question—namely, what is the inherent value of a formal education in entrepreneurship? The huge explosion of interest in the development of such formal programs in the college and university setting over the last several years (especially after covid) represents a worthwhile phenomenon to further explore this question of what it means to “teach” entrepreneurship. While I agree with Mr. French concerning much of what he writes in this article, I maintain that he overlooks two important contributions of these university-based programs: 1) the chance to teach tangential skills and inspire potential entrepreneurs; and, 2) the invaluable influence that Austrian thinkers wield and leverage in this space.
Before we turn to these contributions, let us first consider Mr. French’s critique. His primary criticism rests in the observations of several individuals (indeed Mises’s own observation) that what many (but not all) business curricula teach about entrepreneurship amounts to lofty statements about values, team members, and strategic planning. Moreover, he argues that facilitating new venture creation (what many programs explicitly focus on) falls short of what ultimately constitutes the process of entrepreneurship, from an Austrian perspective. While I would argue that these are extremely important topics in their own right, French is 100 percent correct in pointing out that the essence of entrepreneurship lies in something more innate.
This secret sauce lies in what Foss and Klein describe as entrepreneurial judgment, or the allocation of scarce resources under conditions of Knightian uncertainty. In layman’s terms, it consists of what we might refer to as the intuition or gut feeling of an entrepreneur. Additionally, while not totally unaffected by past market data (i.e., entrepreneurs make their judgments based in part on what has come before), this process amounts to an educated guess, or in Mises’s words, speculation about future conditions. The correctness of this “guess” rests in whether or not the focal entrepreneur secures a profit or experiences a loss. Thus, judgment constitutes the quintessential element of what it means to be an entrepreneur.
In somewhat of a contrasting approach, another prominent Austrian economist, Israel Kirzner, describes entrepreneurship as fundamentally a process of arbitrage in which “alert” entrepreneurs capitalize of various price differentials in the market that others miss. Such concepts remain and I believe always will remain a mainstay of the Austrian approach to understanding the world. In this sense, I wholeheartedly agree with Mr. French and the broader Austrian tradition argues about “teaching” entrepreneurship—namely, that it is an inherent capability that primarily develops through experience (though as argued in one of my recent works on entrepreneurial intelligence, nature and nurture both play a role here).
That being said, I argue here that there remains immense value in the proliferation of entrepreneurial education within the college and university setting. As noted in the introduction to this rebuttal, I see this value as manifesting in two ways: a unique opportunity to teach a host of useful complementary skills at scale and a prime avenue through which to educate more students in the truth of the Austrian perspective.
In relation to the first manifestation, there exist a host of worthwhile lessons that potential entrepreneurs might learn through well-crafted, experiential courses. For example, one of my current courses teaches students from all disciplines how to appropriately validate problems and needs that various customers within their respective domains might experience as well as how to ideate potential solutions for those problems/needs. This course is inherently practical and teaches a repeatable process along with various techniques that students can use to identify potential for entrepreneurial action and pursue it. In doing so, it also teaches elements of marketing, prototyping, interviewing, financing, and many other skills related to entrepreneurship.
Other courses that I teach include how to think economically as an entrepreneur (building off applications of Bob Murphy’s Choice) and how to be persuasive through research-backed principles of influence (based on Robert Cialdini’s Influence). All of these approaches teach imminently practical skills that students remain able to apply both during and after their formal education. While the certificate earned at the end of this program does provide at least a signal of basic competence in these related skills, the education they receive here likely matters more as it fundamentally transforms how they view their major area of expertise.
Lessons learned in this setting might also include various competing frameworks through which to conceptualize entrepreneurship (e.g., opportunity discovery, opportunity creation, bricolage, effectuation, judgment, entrepreneurial cognition, entrepreneurial mindset, entrepreneurial intention, and many others). While admittedly academic in nature, a proper general understanding of what the literature discusses helps individuals to better apply entrepreneurial thinking to appropriate spheres, and it reinforces the importance and value, in my opinion, of a more Austrian worldview.
As such, this leads into the second large benefit of college and university programs in entrepreneurship—academic entrepreneurship facilitates more Austrian and free market views of the world. This is inherent in the sheer influence that Austrian theorizing maintains on the broader entrepreneurship field, which unlike so many other academic disciplines, remains relatively uncaptured by more socialist and Marxist doctrines. For evidence, see this 2014 article from Peter Klein and Per Bylund illustrating how the entrepreneurship field grew out of Kirznerian influences as well as this 2024 article from Peter Klein, Per Bylund, and Matt McCaffrey discussing the growing prevalence of the judgment-based approach in modern entrepreneurship research. Given this, the entrepreneurship field remains one of the relatively safe bastions within which we as Austrians can still promote the principles and tradition which we hold dear to an audience that is perpetually inundated with often-times destructive ideologies. This benefit of supporting the development of entrepreneurship programs within the traditional higher education structure should not be overlooked.
Both of these benefits, moreover, arise from higher education’s legacy and ongoing popular perception as “the path forward” for most high-school graduates (rightly or wrongly) and its continued acceptance as a signal for many employers who are looking for individuals who demonstrate entrepreneurial ways of thinking (i.e., entrepreneurial activity can be expressed as both original judgment through new venture creation and derived judgment through the process of intrapreneurship). Newer alternatives to an entrepreneurial education, such as the recent approach found in Doug Casey, Matt Smith, and Maxim Smith’s The Preparation, provide exciting prospects for competition to the traditional higher ed model.
However, these approaches, while highly worth checking out, ultimately remain speculative, entrepreneurial ventures in and of themselves. Moreover, they tend to require and appeal to highly motivated self-starters, and as such, probably deviate from adequately serving the majority of students entering into the university system today. These students also need encouragement, motivation, and training for a future world that will increasingly require entrepreneurial ways of thinking. Such a capability will enable them to adapt to the perennial gale of creative destruction engendered by AI, blockchain, and other unforeseen technological and institutional developments coming our way.
To be clear, in order to stay relevant, the college and university system absolutely must adapt from its traditional structure, but provided it does so effectively (a process in which I am intimately and daily involved at a local level), I maintain it will continue to provide a highly worthwhile avenue through which to train potential entrepreneurs for both new venture creation and intrapreneurship through employment within a firm. As a bonus, it provides an incredibly fertile ground for promoting what we hold to be the truth of praxeology and Austrian economics. Write it off as a relic and you will miss the opportunity to promote the wide-scale development of both entrepreneurial thinking and praxeological understanding within the minds of the next generation.
