Does entrepreneurial education of business owners matter? The SME Executive Development program in Kazakhstan.

  • Akemu, Onajomo (PI)
  • Colapinto, Cinzia (CoI)
  • Khanin, Dmitry, (CoI)
  • Abilova, Almira, Nazarbayev University, (MBA student)
  • Khadyr, Anibe (MBA student)
  • Rakisheva, Botagoz (MBA student)
  • Saginova, Nurgul (Administrative and clerical specialist)

Project: Research project

Call title (Call ID)

Faculty Development Competitive Research Grant Program 2018-2020

Project Description

Purpose of the Project
This project will examine the efficacy of entrepreneurial education in Kazakhstan by evaluating the impact of the SME Executive Development Program (hereafter referred to as “The Program”) at the founder-CEO level. Launched by the Kazakhstan government, the Program seeks to educate business owners who wish to advance, scale up or diversify their businesses. Since 2011, the Program has been taught by team from Duke University’s Corporate Education Division. As of 2017, 2,380 Kazakh entrepreneurs have graduated from the program.
Our goal in this project assess the impact of The Program using a multi-method evaluation study. Thus, we will employ surveys, structured interviews, focus groups sessions and participant observation to establish the efficacy of The Program. Furthermore, we will develop practical recommendations as to how this program can be improved and advanced.
Background
Scholars in the field of economics and management have long held that development of entrepreneurship, defined as creation of a new business venture or the expansion of an existing business by a team of individuals (Reynolds, Hay, & Camp, 1999), is vital to economic growth. In his classic book Capitalism, Socialism and Democracy, Schumpeter (1943, p. 132) argued for the heroic role that entrepreneurs play in the economic advancement of society:
We have seen that the function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way...This kind of activity is primarily responsible for the recurrent “prosperities” that revolutionize the economic organism and the recurrent “recessions” that are due to the disequilibrating impact of the new products or methods.
Since Schumpeter’s seminal contribution, researchers have found that entrepreneurship contributes to employment generation at national and regional levels (Baldwin, 1998; Fritsch, 2008; Shaffer, 2006), predicts industry growth (Bos & Stam, 2013), new market creation (Casson & Wadeson, 2007; Sarasvathy, 2001), firm and industry-level innovation (Baumol, 1990; Baumol & Strom, 2007; Van Praag & Versloot, 2007; Wennekers & Thurik, 1999), and is associated with varying levels of economic development (Carree, Van Stel, Thurik, & Wennekers, 2007; Wennekers, Van Wennekers, Thurik, & Reynolds, 2005), economic growth (Audretsch, Keilbach, & Lehmann, 2006; Carree & Thurik, 2003; Koellinger & Roy Thurik, 2012) and national economic competitiveness (Porter, 1990).
Given the link between entrepreneurship and national economic outcomes, policy makers around the world in the last two decades have prioritized supporting business start-up as a means to generate innovation, employment and transform their economies (Audretsch et al., 2006, pp. 1 - 11; Shane, 2009)
In Kazakhstan, the stimulation of private-sector entrepreneurship has been a key policy objective for at least a decade. This objective has added significance for Kazakhstan because entrepreneurship is expected to not only generate employment, but also to diversify the base of the economy, reduce the country’s dependence on commodity exports, and contribute to taxes necessary for public investments in welfare.
One way in which the Kazakhstan government encourages private sector entrepreneurship is by investing in entrepreneurial skills training for small and medium sized enterprises (SMEs) as part of its Business Roadmap 2020 programme (Government of Kazakhstan, 2016). Since 2011, in collaboration with Duke University Corporate Education (CE) and the Nazarbayev University Graduate School of Business (NUGSB), the government of Kazakhstan, represented by Committee of Entrepreneurship Development of the Ministry of Regional Development and the Kazakhstan Entrepreneurship Development Fund (DAMU), has sponsored entrepreneurship workshops for entrepreneurs across the country.
The Program: Business Roadmap 2020 SME Executive Development Programme
Every year since 2011, Kazakh entrepreneurs resident in Kazakhstan, who are owners of existing businesses, may apply to the program. The applicants are screened by DAMU and, where possible, participants are nominated from those sectors identified by the Business Roadmap – 2020 as national priorities. The participants then attend the SME Executive Development program at the NUGSB campus in Astana. The program is structured as follows:
Three-day Residential training. During three-day intensive training sessions at NUGSB, which typically run from 09.00 to 17.00 per day, entrepreneurs receive instruction in various topics including accessing capital, assessing entrepreneurial opportunities, analyzing the competition, understanding customer needs, market analysis, business plan development, customer segmentation, motivating their teams, time management and on leadership.
Webinars. After the residential training, participants attend three webinars lasting about one hour during which they interact with a Kazakh business expert. The expert shares his/her experience doing business and answers questions about legal, commercial and organizational issues in the country.
Market and business plan. Participants on the program are encouraged to submit a market feasibility plan designed to test their business ideas. They are provided feedback on the plan from faculty on the program. After receiving feedback from faculty, participants have the option to submit a more thorough business plan, which is also evaluated by faculty on the program. On average, 30% of the participants submit a business plan for assessment.
As of September 2017, around 2,380 entrepreneurs from various industry sectors including education, food, hospitality, textile and apparel, and light manufacturing industries, have participated in the program. In Table 1 below, we show the size of the firms represented on the program since its inception in 2011.
Year Number of participants Percentage of participants’ companies with given number of employees
Less than 6 6-20 21-50 51-100 100-300
2011 210 N.A. N.A. N.A. N.A. N.A.
2012 210 4 55 22 10 8
2013 420 N.A N.A. N.A. N.A. N.A.
2014 423 46 34 13 5 2
2015 420 45 33 13 5 4
2016 421 38 34 17 6 5
2017 (June) 286 49 31 12 3 5
N.A. means “not available”
Table 1--Overview of participant numbers and company size in Business Roadmap 2020 SME Executive Development Programme (2011 - June 2017).
Outcomes of the Program
The SME Executive Development program, which is now in its seventh year, is highly rated by participants (average rating 4.8/5.0). Cased-based and anecdotal evidence suggests that participation in the program may be associated with revenue and employment growth. For instance, a 2013 survey of entrepreneurs who had participated in the program in 2011 showed that 9% of the participants had increased the number of employees after completing the program while 22% of entrepreneurs had achieved growth in revenues (Rosenfeld & McLean, 2013). Though interesting, such surveys are not systematic assessments of the impact of the program on the participants and their enterprises. Thus, given the Kazakh government’s commitment to the program and its interest in accelerating the development of local SMEs, a more systematic evaluation of the program is needed.
Research Question
Our key research question is two-fold: First, “what is the effect of the SME Executive Training Development on the entrepreneurs who have participated in the program?” Second, what were the concrete improvements in business performance of the SMEs as a result of the information, knowledge and training provided to program participants?” We conceive of the skills training program as a policy intervention in the entrepreneurial process within the participating enterprises. We present a brief review of the literature on policy interventions in the entrepreneurial processes in small and medium sized enterprises (SMEs) around the world.
Governments around the world have invested in stimulating entrepreneurship. Based on an analysis of 20 studies focused on improving management skills and business practices, Grimm and Paffhuasen (2015) find that training interventions seldom lead to improved business performance. With very few exceptions, most of the reported training programs do not result in increased profits, employment or sales. However, training programs, especially those that include business plan development sessions, report a significant improvement in business skills of entrepreneurs, firm productivity and average wages.
Other reviews of entrepreneurship training (see Bruhn et al., 2013; Cho & Honorati, 2014; McKenzie & Woodruff, 2013) reach similar conclusions. For example, McKenzie and Woodruff (2013) evaluate the impact of business training programs as reported in 14 rigorous studies conducted in Latin America, Sub-Saharan Africa and South Asia. According to the authors, entrepreneurs in existing firms have implemented some of the practices that they learnt during the training. However, the magnitude of business improvement was often modest. Furthermore, they report that there is little evidence of sustained increase in sales, profit or employment.
Research on the impact of business training—and policy interventions, more broadly—suffers from at least three shortcomings. First, many studies that evaluate the impact of business training also include an element of capital injection (e.g., De Mel et al., 2014). Therefore, it is difficult to isolate the effect of training. Second, these studies often suffer from methodological weaknesses. Most of them were conducted using small sample sizes whereas the impact of training was typically evaluated within a short time horizon of one year following the training intervention. Furthermore, these studies suffer from survey attrition as survey response rates tend to drop as time passes after an intervention. This limits the validity of the conclusions that researchers can confidently draw from their analysis (McKenzie & Woodruff, 2013).
Third, and perhaps most important for our project, previous studies suffer from the problem of empirical generalization. Due to a dearth of comparable evaluation studies for Kazakhstan and Central Asia, it is not clear how generalizable the findings from other parts of the world are to Kazakhstan.. For example, of the 20 business training studies reviewed by Grimm and Paffhuasen’s (2015), only two were focused on Europe and Central Asia. Similarly, in McKenzie and Woodruff’s (2013) review, there was not a single country located in Central Asia.
While we have a good reason to believe that some of the findings of the previous studies of business training efficacy may be replicated in Kazakhstan, it is not clear whether or how Kazakhstan’s Post Soviet, resource-rich, and rapidly-changing institutional context may moderate or challenge the results that have been reported in the literature. In our project, we intend to address these research gaps by: (1) developing an empirical assessment of the potential impact of the Kazakhstan’s culture, business environment and business climate on entrepreneurial training’s efficacy, and (2) using our findings to contextualize, enrich and advance previous research on policy interventions in the entrepreneurial process.
Our research also has important practical implications. In addressing these research gaps we will not only contribute to the scholarly debate on policy interventions and firm outcomes, we will also provide a useful evaluation for an influential stakeholder: the government of Kazakhstan. We will address the following issues in our research: what aspect(s) of entrepreneurial practice does the SME Executive Development Program influence; how does the program enhance entrepreneurial self-efficacy and identity; and how does it influence entrepreneurs’ relational capital.
StatusActive
Effective start/end date3/20/1812/31/20

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Owners
Small and medium-sized enterprises
Kazakhstan
Entrepreneurship education
Entrepreneurs
Entrepreneurship
Government
Business plan
Economics
Policy intervention
Roadmap
Efficacy
Training program
Evaluation
Industry
Central Asia
Entrepreneurial process
Innovation
Commodities
Business performance