Friday 26 June 2009
Innovation gives birth during recessionary times
According to a new study by the Ewing Marion Kauffman Foundation, challenging economic times can serve as the rebirth of entrepreneurial capitalism, leading to the creation of much-needed new jobs.
Their study, "The Economic Future Just Happened," found that more than half of the companies on the 2009 Fortune 500 list were actually launched during a recession or bear market, along with nearly half of the firms on the 2008 Inc. list of America’s fastest-growing companies. The report also found a broader economic trend, in that job creation from startup companies proved to be less volatile and sensitive to downturns when compared to the overall economy.
The study points out that while recessions often create widespread economic grief, they can also encourage potential entrepreneurs, who act "as an extra spur to founding a new company, if the founders perceive their prospective competition might be weakened." Rising unemployment can in fact benefit new enterprises: entrepreneurs may view unemployment as an opportunity to start a company, and seize the advantage provided by the ability to tap into a larger pool of potential employees.
"While startups may not begin with the intention of reaching the Fortune 500 list, they're hard at work under the radar," said Dane Stangler, senior analyst at the Kauffman Foundation and author of the study. "These companies may remain invisible to most of us, or they may one day grow into household names. Either way, they’re steadily recreating our economy—generating jobs and innovations."
The full study may be accessed at the Kauffman Foundation website, or by clicking here.
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