New Businesses are Key to Surviving the Recession

10 08 2009

According to a Study by The Kauffman Foundation, new businesses are crucial to economic recovery.

“The Economic Future just Happened,” examines business start up’s during previous economic downturns, and concludes that over half of America’s Fortune 500 companies, started up during a recession or bear market.

The study provides a silver lining to the dark cloud that is currently hanging over the economy and shows that new businesses could lift the USA (and subsequently the UK) out of a recession through;

  • Job Creation – economic policy’s top priority
  • Innovation – driving economic growth

“Every generation of start-ups is often invisibly, both a renewal and restructuring on the economy.”

Kauffman Foundation: The Economic Future Just Happened.  June 2009

The media is saturated with doom and gloom stories about companies making large job cuts, or collapsing altogether, resulting in high levels of un-employment.

However, in the background many new companies are starting up every day, creating 6-8 jobs on average each time, thus silently lifting the economy.

A poll conducted by the Kauffman Foundation in March 2009 on Entrepreneurship and the Economic Recovery draws the same conclusions;

“Seventy-nine percent of Americans say entrepreneurs are critically important to job creation, ranking higher than big business, scientists and government.”

(Statistics taking from a random national sample of 2000 Americans.)

Vince Cable, Deputy Leader for the Liberal Democrats, speaking to business leaders in Milton Keynes recently said;

“Compared with a generation ago, we have more flexible labour markets, excellent entrepreneurs and companies who have niches, intellectual property rights and a very good position in international markets.”

“I suspect that some of them will become big players in the world. I also believe there is sufficient entrepreneurial spirit here to get us through this crisis.”

The Kauffman study shows that during the 2001-2002 recession, the number of new business start ups actually increased.

During an economic down turn, people may be less likely to leave secure job to ‘go it alone.’ However, with un-employment increasing rapidly there is a higher number of potential entrepreneurs, who may prepared to take a risk.

Therefore, it seems that the recession does not have a significantly negative impact of the formation and survival of new businesses, and entrepreneurship could be providing the economy with the lift that it needs.





Entrepreneurship, HE and the Recession

20 02 2009

entrepreneur_recessionThe debate rumbles on. Does the present economic downturn hold opportunity for entrepreneurs, or is the situation too bleak to yield success? Can entrepreneurs lead economies out of recession on a wave of innovation and start-ups?

Governments and business have high expectations. The higher education sector must also contribute to bolstering entrepreneurship and economic recovery.

The Higher Education Funding Council for England (HEFCE) has already responded, launching its Economic Challenge Investment Fund (ECIF) to enable higher education to respond rapidly to the needs of employers and individuals during the economic downturn.

Ten larger collaborative proposals will be supported by up to £1 million each in HEFCE contributions. A further 40 smaller proposals, normally up to £500,000 each from HEFCE, will be approved after the 27th February deadline as part of this £50 million scheme.

Announcing the ECIF on 27th January, Professor David Eastwood said: “The new initiative is designed to meet urgent and short-term economic challenges facing individuals (whether in work or unemployed), new graduates and businesses. We are looking particularly to help small and medium enterprises.

“Higher education has never been closer to business. The strong links developed over the past few years put universities and colleges in an excellent position to make a flexible response to current economic challenges at a time when it is vital that we continue to invest in enterprise and skills.”

A vice-chancellor’s perspective

Just before Christmas, several vice-chancellors were called to a meeting with Secretary of State for Innovation, Universities and Skills John Denham MP to discuss how higher education can contribute to bringing the UK out of recession.

One who contributed to that meeting was Professor Tim Wilson, Vice-Chancellor of the University of Hertfordshire, a university that places its relationships with industry at the heart of what it does. Professor Wilson advocated ‘Innovation Vouchers’, such as those already piloted in the West Midlands, where businesses can “spend” a sum – say £1,000 – at a university to get support and advice on specific issues.

“What a fantastic way not only to get universities to support small businesses, but also to get small business expertise into universities,” Professor Wilson said in an interview with Lucy Hodges in The Independent on 29th January.

He also supports ‘Training Vouchers’ for people who are made redundant to improve their skills through short university courses; and he promotes the idea of universities welcoming more ‘spin-in’ companies which need to be helped in the early stages of start-up and development. “This is one of the biggest opportunities the university sector has ever had to make a real impact on economic regeneration,” he said.

Towards a ‘new entrepreneurship’

In principle, ‘entrepreneurial spirit’ should determine what new opportunities are available and seek out the resources needed to exploit these. Easier said than done. A leading thinker on entrepreneurship, Professor David Rae, Director of the Centre for Management & Business Research in the Lincoln Business School, suggests that universities are well placed to contribute to the development of a ‘new entrepreneurship’, “led by education, in which social responsibility, environmental sustainability and the practice of ethical and moral frameworks become integral”.

In his inaugural lecture at the University of Lincoln on 28th January 2009, Professor Rae examined whether ‘entrepreneurship’ is ‘too risky to let loose in a stormy climate’. He revealed that he graduated at the cusp of a recession in 1981 and founded his first business a decade later during the recession in 1991, but acknowledged that the challenge seems greater now.

“The ability of graduates to find jobs and start their careers, and of entrepreneurs to run their businesses successfully during a recession, is of great concern,” he said. “I hope this lecture will start a debate which is urgently needed on what better ways we can create which enable us to do these important things and what the contribution of the University can be to achieve this in the next few challenging years.”

Professor Rae, who is ISBE‘s Vice-President for Education, offered three “suggestions to advance the development of entrepreneurship in the new era. One is the value of mutual and collective enterprise[…]. The second is the need to use latent resources to regenerate economic activity. The third is the role of learning in creating the new entrepreneurship.” In examining the role of learning, Professor Rae stated: “I believe that Higher Education has a responsibility to work with business people and wider communities to create and apply knowledge which leads to new solutions, and at this time that is more critical than ever.”

He added that: “Students need to be enterprising to create life and career opportunities by being resourceful and imaginative in applying their skills and talents to a range of opportunities.”

Rae concluded that: “The University can provide an intellectual and creative arena where different models of enterprise, economic activity and value creation can emerge and be taken forward into the community by our students. We cannot do this alone and we welcome people from business, communities and public sector agencies to work with us.”

With the ECIF fund and a prioritised and more proactive approach to business, many universities are seeking to respond to the challenges of the new global economic environment, an increasingly competitive higher education marketplace, and changes to research funding. The work of organisations such as the NCGE will prove a valuable catalyst for improving collaborative links between HEIs, business and government.





Entrepreneurship Research & Policy Network grows

24 09 2007

In a little more than a year, the Entrepreneurship Research & Policy Network (ERPN) has grown to more than 3,300 papers that have been downloaded approximately 413,000 times. Sponsored by the Ewing Marion Kauffman Foundation, the site is a part of the larger Social Science Research Network which is devoted to the rapid worldwide dissemination of research on twelve topics, including economics and entrepreneurship. ERPN provides licenses to nearly 750 schools, university departments, firms and other organizations.  [Source: NDE-news]