Elitist Britain: how can we make business more meritocratic?
The UK may have been spared an all-Etonian Tory leadership contest, but Britain is still an undoubtedly elitist country. While just seven per cent of Brits were educated privately, 65 per cent of senior judges, 59 per cent of top civil servants, 39 per cent of cabinet ministers, and 44 per cent of newspaper columnists attended an independent school.
Elitist Britain, a recent report by the Sutton Trust and the Social Mobility Commission, highlights that the UK’s elites are still drawn from a narrow set of institutions, such as a fee-paying private school or Oxford and Cambridge universities.
Interestingly, the report, which updates similar research from 2014, includes data for the first time on top entrepreneurs and chief executives in the tech sector.
It found that in almost every aspect of British society – with football being the sole exception – the privately educated are over represented at the top.
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The world of business is actually one of the more meritocratic parts of society, with only 26 per cent of tech chief executives and 34 per cent of entrepreneurs having attended a private school (although readers should be wary of the latter number, which is based on an arbitrary list where appearances on Dragon’s Den and The Apprentice seem to count for more than jobs created or successful exits).
Still, the data is worth thinking about, as clearly there is room for improvement, both in terms of better representation and maintaining business as being a more meritocratic world than politics or the judiciary.
Importantly, the report highlights the power of Oxbridge. While less than one per cent of the public went to a college at Oxford or Cambridge, over half the current cabinet studied there. And once again, Oxbridge grads are over represented among tech chief executives at 12 per cent.
Are there excuses for this, and should we care? You might wonder, does it really matter where entrepreneurs went to school? Unlike cabinet ministers, senior judges, or top civil servants, it isn’t the job of entrepreneurs to represent the people.
Besides, markets have a habit of sniffing out underperformers and providing opportunities to those who offer new perspectives, wherever they come from.
It’s interesting to note that tech and FTSE 350 chief executives were more likely to have been educated abroad than to have gone to a private school, demonstrating that, while there might be barriers to entering the world of business, geography isn’t one of them.
Nor should it come as a surprise that tech bosses and entrepreneurs tend to have attended world-leading research institutions.
Top universities select students based on many of the characteristics that are sought after in an entrepreneur. It could be less that Oxbridge produces tech chief executives, but that would-be tech bosses are the academic high-achievers who are more likely to apply and get into Oxbridge.
However, we should still care.
Entrepreneurial talent is precious. We should be careful not to waste it, and think hard about how best to nurture it.
Studying the problem
The value of an elite education isn’t just excellent teaching, it’s about the people you meet. There’s a wealth of research highlighting the importance of entrepreneurial role models and mentors.
These people play a number of crucial roles, and can pass on know-how by explaining to budding entrepreneurs the basics of attracting investment, writing a business plan, and developing a product.
The very act of meeting someone like you who is an entrepreneur can make starting your own company seem like a less daunting task.
Role models matter for innovation too. Research from economists Raj Chetty and John Van Reenen studied the lives of over a million inventors in the US. Using a database that linked patent records to local tax and school data, they were able to track the key factors that determine whether or not someone becomes an inventor.
Their research found that a person is much more likely to become an inventor if they grew up in a high-income household.
However, income isn’t the only factor that’s important – exposure to innovation is also key. They found that children who grow up in areas with more inventors are more likely to go on to innovate themselves.
In fact, exposure to innovation doesn’t just affect whether or not you invent, but what you invent. So if you grow up around medical device inventors, you’re more likely to go on to invent medical devices.
Crucially, universities can help to level the playing field. At the most innovative institutions like MIT, students from high and low-income families patented at similar rates.
Chetty and Van Reenen’s research also has implications for gender equality. For women, exposure to male innovators has no impact on their propensity to innovate, but exposure to female innovators does.
If you could find a way to get women, ethnic minorities, and people born to low-income households to innovate at the same rate as white men born to high-income households, it would quadruple the innovation rate in the US.
The steps ahead
The stark divides revealed by the Elitist Britain report suggest that similarly large gains are on offer by expanding the pool of entrepreneurial talent and exposing more disadvantaged people to innovation.
The challenge now is to find ways of getting more relatable role models from business into classrooms and after-school clubs.
Private schools and elite universities tend to benefit from a virtuous cycle, with students being exposed to entrepreneurship and then going on to expose others in the years below.
We need to find ways of kickstarting that cycle in other institutions to ensure that more people see entrepreneurship as a viable path.
Otherwise Britain risks remaining an elitist country.