Higher Education and Entrepreneurship: The Relation between College Educational Background and Small Business Success in Texas

Mohammad Al-Zubeidi

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Entrepreneurship Studies and Influences Firm Innovation and Growth Migration, Ethnicity, and Economy

Abstract

This study examined the relationship between success of small businesses and the educational backgrounds of their owners. A survey composed of questions concerning demographics, educational backgrounds, and business success was mailed to 1100 businesses in Dallas, Denton, and Tarrant counties in Texas. There were 228 usable responses which were analyzed by using the Statistical Package of Social Sciences (SPSS12). Data were sorted so that educational level, sales volume, number of employees, and longevity, were identified on a 5-point ordinal scale. Educational major was identified on a 5-point nominal scale. Pearson's correlation was used to determine whether relationships existed between founders' educational background and small business success. Spearman's correlation was used to determine the direction and strength of the relationships. Then educational level and major were combined with age, gender, ethnicity, and industry, to determine the relationships between founders' educational background, and business success. For this purpose a canonical correlation was used. Five opinion questions concerned influence of college education on business success among college graduates and non-college graduates were identified on a 5-point Likert scale and tested using one-way ANOVA, and independent sample t-test. When educational level and major were the only predictors of business success, a statistically significant relationship was found between years of formal education, and sales volume. When educational level and major were combined with age, gender, ethnicity, and industry, a statistically significant relationship was found between founders' educational level and age, and business success. A statistically significant and negative relationship was found between founders' educational major and industry, and business success. All opinion questions revealed statistically significant relationships between owner's college education and business success. These relationships indicate the ability for the owner to learn, adapt and maintain a successful business. The influence of a college education on small business success was noticeable and reflects the continuing need for higher education to cope with technological advances, business competition, and the changing global economy.