Understanding youth entrepreneurship in light of ecosystems

Student entrepreneurs coach other students as part of an entrepreneurial awareness campaign at the University of Lorraine. University of Lorraine

Entrepreneurship has often been viewed through the image of the entrepreneur, the sole hero of modern times. However, it would be short-sighted to limit oneself to this dimension in order to understand entrepreneurship and particularly youth entrepreneurship. In fact, over the past two decades, and notably thanks to the work of Mark Granovetter, it has become feasible to consider the importance of social networks and, more broadly, that of ecosystems.

By ecosystem, we refer to all people (the entrepreneur and his or her clients, suppliers, financiers, partners, etc.), all organisations (banks, accountants, legal experts, etc.), their production (legal status, support methods, prototypes, etc.) and their interactions (links between people, organisations and their production). If we take the notion of ecosystems as a framework for understanding youth entrepreneurship, it would be possible to adopt the typology we have implemented through the study of 22 countries between 2005 and 2008 around the “three Is”: Initialisation, Institutionalisation and Integration.

The first phase, that of initialisation, is where the idea of ecosystem is very localised through individual measures taken by pioneers in the field of youth entrepreneurship. The second phase, institutionalisation, corresponds to the willingness to go beyond the local level and individual measures here and there through a national program in the field of youth entrepreneurship. This is the case in France, namely in the framework of the successive PEE and PEPITE programs.

Through the institutionalisation phase, this mainly relates to the establishment of ecosystems conducive to the development of the youth entrepreneurial culture within universities in general, including schools of engineering and business. The third phase, integration, mainly refers to the outreach of the youth entrepreneurial culture to the whole society, beyond the scope of universities. These three phases reflect the evolution that France is experiencing in the field of youth entrepreneurship.

Emerging local ecosystems for youth entrepreneurship: Initialisation

Until recently, it was conventional to think and say that entrepreneurship is not intended for young people, and even less for students. One can probably summarise this societal attitude through the recurring question: “Why don’t students create companies?” Such questions have been present in both policy discourses and those of the business start-up agencies. In general, the stereotypical response can be defined as follows: Young people cannot create. To create, you must have work experience and money. Through this attitude, young people and even students are excluded from at the societal, educational and political levels. In other words, this means: “Finish your studies, then set up your own business.”

In this context, the answer to the previous question is “Why would students create companies when there is no ecosystem to assist their on doing so?” A typology was developed in 2005 makes it possible to compare the countries’ commitment to entrepreneurship. For the initialisation phase in France, it reflects first of all localised initiatives, particularly in schools of engineering (École des Mines d'Alès), management (HEC Paris) and some universities through the Maison de l'Entreprenariat program in universities (notably in Grenoble, Nantes and Lille). But in general, there was no generalised university ecosystem encouraging young people to start businesses.

Creating favourable ecosystems in universities: institutionalisation

The PEPITE and PEE programs mentioned above have make significant changes. In fact, their starting point is primarily the creation of generalised entrepreneurship within universities. Since 2011, France has entered the so-called institutionalisation phase. This implies above all a political and financial commitment at various levels (state-wide, regional, academic, etc.) for the development of entrepreneurship. More specifically, it is less about setting up a new business than about establishing an entrepreneurial culture. In other words, there is no development at the level of setting up new businesses if there is no development of the entrepreneurial culture. In this perspective, entrepreneurship becomes a full-fledged professionalisation path for young people alongside competence and wage-earning. The university is evolving to cover such notion in its mission.

Today it is common to see within universities, engineering schools and business schools project leaders whose task is to raise awareness and provide guidance with regard to entrepreneurship. In France, people have managed to overcome the idea that students should finish their studies, and only then set up a own business. The thinking now is: “Take advantage of your studies to dabble in entrepreneurship”. The newly established Student-Entrepreneur status has complemented and reinforced the existing mechanisms. This status can be similar to that of a high-level athlete or a working student, the challenge being to recognise that the student, alongside his enrolment in university, is involved in other initiatives.

As discussed by J.-P. Boissin, the number of students who can be classified as student-entrepreneurs keeps increasing, and in 2017 exceeds 3,000. At the national level between 2014 and 2016, the number of student-entrepreneurs increased 45%. Over the same period, they increased 57% at the University of Lorraine. Should we conclude that students are now more likely to be entrepreneurs than their predecessors? This would be premature. Instead, it would be better to consider a two-fold process: the Hawthorne Effect and the “pheromone” effect. The importance of the university ecosystem for the development of entrepreneurship is no longer to be verified, particularly through Bourdieu’s notion of share capital which is widely applicable in the case of student entrepreneurship.

Regarding the Hawthorne effect, it could be argued that because we are interested in students’ entrepreneurship, their motivation in this area will increase. As a matter of fact, by creating new spaces of expression, we see students commit themselves to develop knowledge and skills that are varied and even new with regard to their specialisations.

Then there’s the “pheromone” effect: The importance of the traces left by the first students-entrepreneurs should be indeed noted. The process required a kind of “pathfinders” who tested the system in order to allow others, the followers, to get involved in the space that is offered to them. There are certainly students-entrepreneurs who would have set up new businesses even without the student-entrepreneur status and those who would have tried it because this status provides them with a certain security especially with regard to their professional future. These “followers” represent the success of this institutionalisation phase. This “pheromone” effect is highly noticeable when we take for instance the case of the students-entrepreneurs in Lorraine. With fewer than 10 students-entrepreneurs at the time the PeeL (Pôle entrepreneuriat étudiant de Lorraine) program was first introduced, five years later, the number increased to nearly 200 supported students-entrepreneurs.

Internationality seminar.

From a university ecosystem to a societal ecosystem: integration

The third phase of youth entrepreneurship is in progress. This is the integration phase whose aim is to move beyond the development of a favourable ecosystem within the university. What is the benefit of this development? It is twofold.

First, the university as a whole is only one piece of the puzzle. It is therefore a matter of building a much broader support ecosystem. To promote youth entrepreneurship, it is necessary to develop state and local policies in line with the characteristics of youth entrepreneurship so that their academic programs are more secure. The same applies to funding, collaboration efforts and support. All too often these actions focus on the start-up phase. Paradoxically, student-entrepreneurs do not all project themselves into setting up new businesses but above all into their project. The objective is to collectively examine how to help student-entrepreneurs to develop their projects in the first place. The main focus shifts toward the systemic interest in establishing the relationship between the entrepreneur, his or her project and the associated ecosystem, and on the progress of such relationship. It is particularly this triptych that should be reinforced.

In practice, this is reflected by introducing scholarships, such as for example, in the Greater East Region, the “Youth Challenge” scholarships. The benefit is not only financial; instead such scholarships bring to light two highly important notions with young entrepreneurs: self-confidence and self-esteem. The integration phase must lead to considering youth entrepreneurship as a professionalisation path in its own right and well beyond university. Thus, those supporting youth entrepreneurship can be parents, relatives, instructors, politicians, media, etc. without this being viewed as an uncommon way of professionalisation. One should be indeed able to grasp entrepreneurship as a stage like all others in the professional life.

The second benefit is going beyond the university. Even if many young people are in universities and schools, others do not go through these systems. While entrepreneurship is already present as in the craft trades, two-tier youth entrepreneurship should be avoided. Currently, the PEPITE program does not reach young people outside the university sector. The stakes are high and cannot be addressed if we remain restricted to the university. Consideration should be given to the mutual enrichment of all youth, whatever their sector. Moreover, if the PEPITE program is to be considered a success, it should be taken advantage of in order to increase entrepreneurship awareness-raising, training and support. For example, it should be noted that there is a focus on supporting entrepreneurship through a multitude of stakeholders, and whose effectiveness should be discussed. There are also few tools for raising awareness among the general population.

In light of these elements, new questions emerge concerning the challenges to be encountered in the future, such as:

  • How can we ensure the sustainability of young entrepreneurs? Since it is not enough to just set up a business, it is also necessary to be able to sustain it over time;

  • How can the desire to set up a business be oriented towards assuming control of an existing business? The number of firms is significant in France, and if it’s essential to establish a program dedicated to setting up new businesses, it’s also important to establish one on “repreneurship” – company takeover, as a particular form of entrepreneurship;

  • How can we increase entrepreneurial accompaniment and implement policies adapted to youth entrepreneurship? Being aware of youth entrepreneurship leads to the sophistication of tools, approaches and funding methods in relation to the uniqueness of this particular audience.

Christophe Schmitt is a Professor of Universities in Entrepreneurship and Vice-President at the University of Lorraine (Institute of Business Administration of Metz and European Center for Research in Financial Economy and Business Administration). He holds the _Entreprendre Chair and is the head of the PeeL program (Pôle entrepreneuriat étudiant de Lorraine). He is also an Associate Professor at the Louvain School of Management (Belgium) and at the Higher Business School of Fribourg (Switzerland). His articles and books are for the most part supported by the concept of value creation and the construction of knowledge for action, as well as by the development of entrepreneurial practices. He received the EFMD-FNEGE award for his work published by the University of Quebec Press, «L’Agir entrepreneurial : repenser l’action des entrepreneurs.»_

This article was originally published in French