Advocacy has had many calls lately about how small businesses are weathering the current recession. The hard answers about how they fared in this recession, compared with earlier ones, will have to wait for data that are not yet available.
At the same time, much talk is in the air in Washington about how best to support small firms in doing what many of them do so well—innovate and create economic activity that can lead to job growth. What is most likely to help firms succeed?
Part of the answer might be in the latest edition of The Small Business Economy. Paul Reynolds and Richard Curtin’s chapter, based on the Panel Study of Entrepreneurial Dynamics, takes an analytical look at business creation. Several factors—such as age, gender, supportive context—contribute to the likelihood of a person trying to start a new venture. Six years into the attempt, about a third of the would-be entrepreneurs have quit, another third are still trying, and a third have a going business.
What leads to the successful startups? None of the demographic factors supportive of the startup attempt are particularly relevant. What’s most important for success in starting up is knowing the industry and aggressively pursuing the opportunity. It’s what entrepreneurs know and do, not who they are, that makes the difference.
Knowing and doing—no rocket science there! So are there infrastructure adjustments that can improve the environment for knowing and doing—and entrepreneurial success? In The New Pioneers Thomas Petzinger suggested that “connection, connection, connection” has replaced “location, location, location” as the mantra of the marketplace. More than the location of businesses, it’s “the free and wide-ranging collaboration between and among them” that accounts for America’s prosperity.
In this age of instantaneous information (and a tech-savvy administration), how do connections / networks contribute to entrepreneurs’ knowledge and innovation? How can the information highway and its social networking bridges help them be more competitive and successful in a 21st century global economy?
— Kathryn Tobias