MBA students see the business sense in both doing well and doing good

Business schools are responding to a surge in demand for education that equips students to become social entrepreneurs. But the structure of those organisations that are “doing good” is changing rapidly and these changes have implications not only for schools’ positions in rankings tables but also for how students will fund their business education.

“In the 1980s there was almost no talk at all in business schools about anything that we might now call social entrepreneurship,” says Peter Tufano, dean of Saïd Business School at the University of Oxford.

“Over the last 30 years I think I’ve seen a marked shift. It has come in waves. I think we’ve seen an explosive growth in demand for social entrepreneurship in the last 10 years,” he adds.

Some, such as Cass Business School at City University in London, are responding to this huge jump in demand by developing their first dedicated programme for would-be social entrepreneurs. Others, such as Stanford Graduate School of Business, are building on their long-term strength in the field.

“While it’s unclear whether the 2008 financial crisis has generated more interest in social entrepreneurship, this movement has grown stronger and stronger over the past 20 years,” says Bernadette Clavier, director of public management and social innovation programmes at Stanford GSB.

She points to the fact that 97 MBA students from Stanford graduated with a certificate in public management and social innovation (an add-on to the MBA) in 2012, an increase from 37 in 1990.

The challenge is to identify a proper source of funding to support students who choose this for-profit route

Saïd is also building on a long-term commitment. Prof Tufano says social entrepreneurship has been “baked into the personality” of the school. Its Skoll Centre for Social Entrepreneurship opened in 2004 and last month Saïd hosted the Skoll World Forum on Social Entrepreneurship for the 10th time.

Pamela Hartigan, director of the Skoll centre, has gathered data on the number of students accepted on to the MBA programme who apply for Skoll scholarships (awarded to students who can demonstrate exceptional entrepreneurial ability in the social field).

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“Since the Skoll scholarship was initiated in 2005, there has been more than a threefold increase in the interest in pursuing careers that bring together financial and social goals,” Dr Hartigan says.

Out of a cohort of 220 MBA students in 2005-2006, 41 students applied for Skoll scholarships. However, by 2011-2012 the number of applications had jumped to 110 out of a cohort of 247. Early indications are that this year will be as high, if not higher, despite the fact that the criteria for gaining the scholarship have become more stringent. Students are also coming from a broader eographic area with more south­east Asian, Latin American and African candidates who are highly qualified.

“We have moved from candidates who had experience in development organisations to looking at those who have undertaken social entrepreneurial venture creation in a serious way,” says Dr Hartigan.

That shift in scholarship criteria reflects a change in the way that people think about social entrepreneurship. There is a growing trend to move away from non-profit organisations as a way of delivering social good towards for-profit organisations, or at least hybrid companies that combine a philanthropic donation with a profit motive.

“More and more of our students are interested in setting up for-profit rather than non-profit social enterprises. This is definitely a trend,” says Ms Clavier.

“We realise that top-down charitable approaches are not effective in dealing with complex problems of poverty,” agrees Dr Hartigan.

The shift in focus to for-profit models for creating social value has created its own set of problems. In the US there are mature systems in
place in some schools that offer scholarships, or loan forgiveness programmes, to those entering non-profit organisations. The schemes are not available to graduates entering for-profit enterprises, even though their salaries might be low.

“We are looking to find ways to extend our loan forgiveness and fellowship programmes to social enterprises. The challenge is to identify a proper source of funding to support students who choose this for-profit route,” says Ms Clavier.

Similarly, schools have to consider what the trend towards for-profit social entrepreneurship models does to their position in rankings tables – a higher ranking can help to secure a business school’s financial future.

“I do think that a business school that encourages social entrepreneurs is quite brave because MBA ranking tables do take into account the salaries of MBA graduates and typical salaries in social entrepreneurship tend to be lower,” says Tim Jones, newly appointed entrepreneur in residence at the centre for entrepreneurial learning at Judge Business School at the University of Cambridge and associate fellow at Saïd.

While the Financial Times rankings tables exclude data for alumni who enter non-profit organisations, those who choose a for-profit route are included in calculations.

“Rankings tables are the bane of my existence,” says Dr Hartigan.

“How do we shift that idea about the importance of a high salary? If we’re really going to sustain ourselves in the next millennium we need sustainable models. Schools that emphasise social entrepreneurship should not be penalised.”