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AMES, Iowa — Go to college. Choose a major. Complete a couple internships. Graduate and get a job. Mission accomplished. Or is it? What if rather than taking a job, a college graduate created a job or jobs by becoming an entrepreneur?

Today’s need to grow the Iowa and U.S. economy is obvious. Robert Jolly, an economics professor at Iowa State University, says entrepreneurship can be a driving force in economic growth. “There is increasing evidence entrepreneurship that stems from a high level of human capital and creativity is the most likely to produce the goods, services, and ultimately, the jobs that fuel economic growth and competitiveness,” Jolly said.

Between 1982 and 2006, 95,016 students received bachelor’s degrees from Iowa State. In early 2008, 25,000 of those graduates were surveyed to gather information on career paths, employment status, further education, entrepreneurial activities, community engagement and current income. About 5,500 Iowa State grads completed the survey.

Jolly and others have been sifting through the responses to develop a series of papers that outline how the university experience impacted graduates’ lives.

The most recent paper deals with entrepreneurial activities of graduates. Peter Orazem, university professor of economics, said the researchers decided to use a simple definition of entrepreneurship. “We asked undergraduate alumni if they had ever created a for-profit business. If the answer was yes, we consider them an entrepreneur,” he said.

Nearly 16 percent of respondents reported starting at least one business. The entrepreneurship rate increased from 6.8 percent for the most recent graduates to 23.8 percent for the oldest group — those who were 25 years into their careers. “Entrepreneurship is a surprisingly common career step and one that the university needs to factor into undergraduate experience,” Orazem said.

The economic consequence of alumni entrepreneurship can be assessed in part by the number of businesses and jobs created. In total, the survey showed nearly 20,000 businesses were created, along with 223,000 jobs. About 72 percent of the businesses were established in Iowa or nearby Midwestern states.

Most businesses were small. Nearly two-thirds had average annual sales less than $250,000. Only 3.5 percent reported annual sales greater than $10 million. Average employment rates per business were in the two- to eight-employee range.

Firms serving agricultural markets were the most common, followed by retail and information technology. Undergraduates from the colleges of Design and Agriculture and Life Sciences had higher entrepreneurship rates than other areas of study.

Interesting tidbits about entrepreneurial Iowa State graduates include:

- On average, undergraduates founded their first business 10 years after they left Iowa State.
- Nearly 79 percent of all businesses were still in operation. This is a much higher survival rate than the national average of 31 percent.
- Entrepreneurs tended to locate their business in their home community.
- Entrepreneurs have held significantly more jobs, occupations or job titles and have worked in more industries than their non-entrepreneur counterparts.
- Entrepreneurs are more likely to grow up in larger families, and were more likely to have worked in a family business.
- Entrepreneurs were less involved in high school band or academic clubs. Their high school rank also was lower than those destined to be employees but their performance as undergraduates was not significantly different.
- Entrepreneurs demonstrate a stronger bond and involvement in their home communities than do non-entrepreneurs.
- On average, entrepreneurs earn more than their non-entrepreneur classmates. But so do former entrepreneurs. Apparently starting a business has value to future employers.

Kevin Kimle is director of Iowa State’s Agricultural Entrepreneurship Initiative and Rastetter Chair in Agricultural Entrepreneurship in the economics department. The initiative provides educational experiences for students, assists in the development of student and faculty entrepreneurial skills and encourages interaction with agricultural entrepreneurs.

“Innovations and business creation are fundamental to long-term economic growth,” Kimle said. “We believe helping Iowa State students and faculty strengthen their entrepreneurial skills will contribute to Iowa’s economy, and these alumni survey results support that belief.”

Jolly said one of the frequently asked questions about entrepreneurs is whether they are made or born. “If entrepreneurs can be made, or at least helped along their way, then we at Iowa State have an obligation to help develop needed skills. If, on the other hand, entrepreneurs are born, then we must play a screening role, helping potential entrepreneurs identify their potential and act on it,” he said.

Either way, Jolly said the survey shows entrepreneurial activity offers hope to a sluggish economy, and higher education has a significant role to play in developing the entrepreneurial spirit in students.

A report that provides an overview of the survey’s results is available on the economics department website here.