Peer Effects in Entrepreneurship Education

Abstract

Although important both for educational production (e.g. Sacerdote 2001) and the formation of entrepreneurial activity (e.g. Nanda and Sorensen 2010), the effects of social interactions on the development of entrepreneurial skills in entrepreneurship education have been completely ignored so far. At the same time there is a large potential for leveraging social interaction effects to increase the formation of entrepreneurial skills among the students: team-based business planning is a prevalent component of entrepreneurship education (Krueger et al. 2000). And due to restricted education budgets, an efficient measure, for example the reshuffling of teams to maximize beneficial social interaction effects for skill formation, is welcome to instructors and course planners. A quantification of externalities deriving from social interactions would be valuable to several stakeholder groups involved in entrepreneurship education, that are concerned about efficient educational production given heterogeneous student quality (Foster 2006).