Entrepreneurship: Skill or Capability?

Sometimes language poses substantial limitations. These weeks, the pressure to get policy on the agenda for the new cabinet formation reaches the boiling temperature – a Dutch saying with a too limited number of Google returns to be internationally valid. On top of the stack is a new human capital agenda for the Netherlands, in which education takes prime position. To break down this broad agenda, there is broad consensus that we have to move to the better inclusion of so called 21st century skills, which on the hard side include ‘coding’ and on the soft side an emphasis on ‘communication’. In my part-time role as ‘lobbyist’ for entrepreneurship education, it is key to get ‘entrepreneurial skills’ included in these 21st century skills, which is not very easy and successful so far, I must admit. Entrepreneurship education itself is too narrow for support, at least, that is the opinion of influential decision makers.

As said, language is a big limitation here. Thinking about entrepreneurship, many would argue that it is the ability to do something with 21st century skills. But this is not a skill in itself, it is what business scholars call a capability. But then it starts to become difficult, because Dutch language has no proper word for capability. Close is capaciteit, but this also has the non-personal generic feeling, the same as capacity. Closer is competency, however, competency driven teaching is completely discredited after big failure in vocational education, so lobby-suicide. We need a good word to capture what we mean when arguing that 21st skills alone will not save you if you do not know what to do with them.

So, let’s for the moment stick to entrepreneurship as a capability in English, and then return to the business school literature inspired by the great David Teece. In the resource based view of the firm, its is well understood that people in the firm (should) have skills and that these skills have to be a bit ‘vrio’, which means unique in creating a competitive advantage. In the early literature, key of creating vrio capabilities at the firm level lies in the combination of skills that may be unique. However, over time, there has come more emphasis on creating so called dynamic capabilities that are on a higher level than skills, as these skills will become a commodity in the end, starting probably by the treasured with coding approach – I start to bite a bit here….Hence, it is more useful to think of capabilities as existing on the organization level, not at the individual level. We can think of firm level entrepreneurial culture, learning abilities, and orchestration capabilities as skills at the organization level that make a competitive difference.

In the modern literature, this distinction between skills and capabilities may serve as an inspiration for framing future investments in entrepreneurship education. If we conclude that entrepreneurship is both an individual skill as an organizational capability, it may well be that the skills component is close to those already in the 21st century skills, so need no further mentioning. We can then focus on entrepreneurship education as a capability at the organizational level to facilitate the entrepreneurial use of 21st century skills. This then opens up the discussion to the large literature on organizational learning that moves from awareness and sensing, to exploration and ends in exploitation and execution. In this, primary education, secondary education and vocational and academic higher education as supply chain can find a proper role: The start of a entrepreneurship strategy to improve competitiveness of the Dutch economy through the human capital agenda.