Monday, June 06, 2005
[IWS] Entrepreneurship in the U.S.: 2004 Assessment [1 June 2005]
IWS Documented News Service
_______________________________
Institute for Workplace Studies Professor Samuel B. Bacharach
School of Industrial & Labor Relations Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor Stuart Basefsky
New York, NY 10016 Director, IWS News Bureau
________________________________________________________________________
Entrepreneurship Research Institute
The Eugenio Pino and Family Global Entrepreneurship Center/Florida International University
Entrepreneurship in the U.S.: 2004 Assessment [1 June 2005]
http://www.entrepreneurship.fiu.edu/entrepreneurship_us.htm
or
http://www.entrepreneurship.fiu.edu/pdf/all.pdf
[full-text, 142 pages]
[excerpt]
Entrepreneurship, an important feature of economic growth and adaptation, is a major
activity in the United States. About 18 million in the U.S. were actively engaged in starting or
managing a new firm in 2004. The U.S. continues to be a majorbut not the largestsource
of global entrepreneurial activity. The importance of new firm creation to the future of the
U.S. economy has led to a program of annual assessment of U.S. entrepreneurship. The U.S.
Entrepreneurial Assessment project is the only source of longitudinal data that is based directly
on individual reports of entrepreneurial activity; the procedures are consistent over time and
harmonized with those implemented in 43 other countries.
The major findings in 2004 include:
Levels of Activity
Evidence of a substantial rise in U.S. activity from 1993-2000, and a subsequent decline
through 2004.
In the year 2000, about 23 million between 18-74 years of age were actively engaged in a
start-up or new fi rm management; this declined to about 18 million in 2004.
There has been a statistically signifi cant drop in activity of 20% from 2003 to 2004;
representing a one-year reduction of 4 million involved in the entrepreneurial process.
This decline in participation is concentrated among young adult men and women, 18-34
years of age, and mid-career men, 35-54 years of age.
This decline is associated with a less positive personal context for entrepreneurship
among these gender-age specifi c groups.
Global Comparisons
The U.S. continues to be in the upper third of all countries in terms of overall and
opportunity based entrepreneurship, creating fi rms that may have a major market impact,
and creating growth fi rms.
The U.S. remains the dominate context for entrepreneurial activityin terms of total
countsamong developed or high income countries; the U.S. has more than twice the
total activity of all of Western and Central Europe.
There are, however, substantial levels of activity in developing countries, with high
participation rates and much higher levels of total activity in the Third World; particularly
China and Indiaeach of which have five times as many involved in entrepreneurship as
the U.S.
Regional Differences within the U.S.
There are statistically significant differences across the nine U.S. census divisions, but
these are differences of 25%, compared to differences of 3 to 5 times when smaller, more
homogenous U.S. labor market areas are compared.
Counties included in major metropolitan regions with service-oriented or diverse
economic bases appear to have higher levels of entrepreneurial activity; these counties
are home to the majority of the U.S. population.
Differences across the Firm Life Course
About 31 million people are involved as business principals in the U.S., with 13.7 million
involved in 7.4 million start-ups; 7.6 million owner-managers of 4.5 million new fi rms
[less than 3.5 years old]; and 15 million as owner-managers of 8.6 million existing fi rms.
Business entities at all stages of the life course are representative of all U.S. economic
sectors.
A small proportion of firms, about 2%, expect to have a major impact on the markets or
the economic structure; more than half are concentrated among the start-up efforts. The
majority 91% of all start-up, new, and established fi rmsexpect to little or no impact
on the market structurethey are replicating existing business activity.
A small proportion of firms, about 3%, consider that they are technologically
sophisticated; more than half of high-tech firms are in the start-up phase. About
15% consider that they have some technological emphasis, and 91% has low or no
technological component.
Human Participation in Start-ups and the Business Life Course
About one in five (18%) people active in the business life course is involved in two
business activities at the same time, such starting a new firm while managing an
established business.
Men are about twice as active as women in all phases of the business life course; younger
adults are more prevalent in the start-up phase, and older adults are more prevalent as
owners of established businesses. There are, however, individuals of all ages and both
genders involved in all stages of the business life course.
Relative to their representation in the population, blacks and Hispanics are much more
active in the start-up phase than whites. Whites, however, are much more prevalent as
owners of established businesses.
While basic sociodemographic factorsage, gender, ethnicity, educational attainment,
household income and net worthall have a systematic relationship to participating in
business start-ups; these factors appear to have a major impact on a positive personal
context for entrepreneurial activity. Those with a positive personal entrepreneurial
context, in turn, are much more likely to be involved in start-ups and new firms.
A positive personal entrepreneurial context reflects confidence in personal skills to
implement a new business, knowing others engaged in entrepreneurship, and perception
of good opportunities for new firms; targeted programs and public policy initiatives may
affect all components.
Informal and Accredited Investors
The prevalence and number of informal investors has declined in proportion to the level
of entrepreneurial activity, reflecting a strong association but no clear causal relationship;
there were about 8 million informal investors in 2004 in the U.S.
The aggregate amounts of informal funding considerably surpass $100 billion per
year, far greater that the $20 billion provided to start-ups in 2002 and 2003 by the
venture capital sector or the $200 million from SBA programs. This is the same order of
magnitude as the $175 billion a year required by start-up firms.
There appear to be from 6 to 9 million accredited investors1 in the U.S.; about 80% are
accredited households, the remainder accredited persons. They are 3 to 20 times more
active as informal investorsparticularly with regards to amounts in excess of $50,000.
The major implications of this assessment are that:
Entrepreneurial activity continues at a high level in the United States, compared to all other
advanced economies.
The U.S. context continues to be unique in several ways: the potential for substantial informal
financial support, the presence of a substantial research and development sector, a system
of regulations and procedures that is not excessively burdensome for business creation and
termination, and a society that accepts entrepreneurship as an appropriate and respectable
career option.
There is no evidence that significant regulatory or policy issues require immediate attention.
There is substantial evidence that the U.S. should not be complacent regarding the entrepreneurial
sector and should continue to assess, adjust and refine the national, state, and local
entrepreneurial context.
[Thanks to Gary Price at Resourceshelf.com for the tip]
_____________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky *
Director, IWS News Bureau *
Institute for Workplace Studies *
Cornell/ILR School *
16 E. 34th Street, 4th Floor *
New York, NY 10016 *
*
Telephone: (607) 255-2703 *
Fax: (607) 255-9641 *
E-mail: smb6@cornell.edu *
****************************************
_______________________________
Institute for Workplace Studies
School of Industrial & Labor Relations
Cornell University
16 East 34th Street, 4th floor
New York, NY 10016
________________________________________________________________________
Entrepreneurship Research Institute
The Eugenio Pino and Family Global Entrepreneurship Center/Florida International University
Entrepreneurship in the U.S.: 2004 Assessment [1 June 2005]
http://www.entrepreneurship.fiu.edu/entrepreneurship_us.htm
or
http://www.entrepreneurship.fiu.edu/pdf/all.pdf
[full-text, 142 pages]
[excerpt]
Entrepreneurship, an important feature of economic growth and adaptation, is a major
activity in the United States. About 18 million in the U.S. were actively engaged in starting or
managing a new firm in 2004. The U.S. continues to be a majorbut not the largestsource
of global entrepreneurial activity. The importance of new firm creation to the future of the
U.S. economy has led to a program of annual assessment of U.S. entrepreneurship. The U.S.
Entrepreneurial Assessment project is the only source of longitudinal data that is based directly
on individual reports of entrepreneurial activity; the procedures are consistent over time and
harmonized with those implemented in 43 other countries.
The major findings in 2004 include:
Levels of Activity
Evidence of a substantial rise in U.S. activity from 1993-2000, and a subsequent decline
through 2004.
In the year 2000, about 23 million between 18-74 years of age were actively engaged in a
start-up or new fi rm management; this declined to about 18 million in 2004.
There has been a statistically signifi cant drop in activity of 20% from 2003 to 2004;
representing a one-year reduction of 4 million involved in the entrepreneurial process.
This decline in participation is concentrated among young adult men and women, 18-34
years of age, and mid-career men, 35-54 years of age.
This decline is associated with a less positive personal context for entrepreneurship
among these gender-age specifi c groups.
Global Comparisons
The U.S. continues to be in the upper third of all countries in terms of overall and
opportunity based entrepreneurship, creating fi rms that may have a major market impact,
and creating growth fi rms.
The U.S. remains the dominate context for entrepreneurial activityin terms of total
countsamong developed or high income countries; the U.S. has more than twice the
total activity of all of Western and Central Europe.
There are, however, substantial levels of activity in developing countries, with high
participation rates and much higher levels of total activity in the Third World; particularly
China and Indiaeach of which have five times as many involved in entrepreneurship as
the U.S.
Regional Differences within the U.S.
There are statistically significant differences across the nine U.S. census divisions, but
these are differences of 25%, compared to differences of 3 to 5 times when smaller, more
homogenous U.S. labor market areas are compared.
Counties included in major metropolitan regions with service-oriented or diverse
economic bases appear to have higher levels of entrepreneurial activity; these counties
are home to the majority of the U.S. population.
Differences across the Firm Life Course
About 31 million people are involved as business principals in the U.S., with 13.7 million
involved in 7.4 million start-ups; 7.6 million owner-managers of 4.5 million new fi rms
[less than 3.5 years old]; and 15 million as owner-managers of 8.6 million existing fi rms.
Business entities at all stages of the life course are representative of all U.S. economic
sectors.
A small proportion of firms, about 2%, expect to have a major impact on the markets or
the economic structure; more than half are concentrated among the start-up efforts. The
majority 91% of all start-up, new, and established fi rmsexpect to little or no impact
on the market structurethey are replicating existing business activity.
A small proportion of firms, about 3%, consider that they are technologically
sophisticated; more than half of high-tech firms are in the start-up phase. About
15% consider that they have some technological emphasis, and 91% has low or no
technological component.
Human Participation in Start-ups and the Business Life Course
About one in five (18%) people active in the business life course is involved in two
business activities at the same time, such starting a new firm while managing an
established business.
Men are about twice as active as women in all phases of the business life course; younger
adults are more prevalent in the start-up phase, and older adults are more prevalent as
owners of established businesses. There are, however, individuals of all ages and both
genders involved in all stages of the business life course.
Relative to their representation in the population, blacks and Hispanics are much more
active in the start-up phase than whites. Whites, however, are much more prevalent as
owners of established businesses.
While basic sociodemographic factorsage, gender, ethnicity, educational attainment,
household income and net worthall have a systematic relationship to participating in
business start-ups; these factors appear to have a major impact on a positive personal
context for entrepreneurial activity. Those with a positive personal entrepreneurial
context, in turn, are much more likely to be involved in start-ups and new firms.
A positive personal entrepreneurial context reflects confidence in personal skills to
implement a new business, knowing others engaged in entrepreneurship, and perception
of good opportunities for new firms; targeted programs and public policy initiatives may
affect all components.
Informal and Accredited Investors
The prevalence and number of informal investors has declined in proportion to the level
of entrepreneurial activity, reflecting a strong association but no clear causal relationship;
there were about 8 million informal investors in 2004 in the U.S.
The aggregate amounts of informal funding considerably surpass $100 billion per
year, far greater that the $20 billion provided to start-ups in 2002 and 2003 by the
venture capital sector or the $200 million from SBA programs. This is the same order of
magnitude as the $175 billion a year required by start-up firms.
There appear to be from 6 to 9 million accredited investors1 in the U.S.; about 80% are
accredited households, the remainder accredited persons. They are 3 to 20 times more
active as informal investorsparticularly with regards to amounts in excess of $50,000.
The major implications of this assessment are that:
Entrepreneurial activity continues at a high level in the United States, compared to all other
advanced economies.
The U.S. context continues to be unique in several ways: the potential for substantial informal
financial support, the presence of a substantial research and development sector, a system
of regulations and procedures that is not excessively burdensome for business creation and
termination, and a society that accepts entrepreneurship as an appropriate and respectable
career option.
There is no evidence that significant regulatory or policy issues require immediate attention.
There is substantial evidence that the U.S. should not be complacent regarding the entrepreneurial
sector and should continue to assess, adjust and refine the national, state, and local
entrepreneurial context.
[Thanks to Gary Price at Resourceshelf.com for the tip]
_____________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 8:35 AM
