Before the 1850s, only governments had created recessions, usually by bone-headed decisions around devaluing currency, and then only rarely. ![]() Big companies rarely do anything new.īig businesses also create recessions, something no small business has ever done. One of the reasons large companies want to acquire small ones is because they produce 16.5 times as many patents per employee than large companies, and virtually all the game-changing innovations come from the Smalls. ![]() All of General Motors’ successful car lines were created by entrepreneurs, then swallowed up by GM, which itself has only created one internal car line in its 105 year history, the Saturn line, which failed. One of the serious side effects of big businesses growing by acquisition is the effect it has on innovation. “The best strategy is to help people start new businesses and firms locally and help them grow and be successful.” “We can't look outside of the community for our economic salvation,” Goetz said. “Many communities try to bring in outside firms and large factories, but the lesson is that while there may be short-term employment gains by recruiting larger businesses, they don't trigger long-term economic growth.” Goetz says a better strategy to promote economic growth is to encourage local businesses rather than recruiting large outside firms. In his research, “Big companies that employ more than 500 workers and that are headquartered in other states are associated with slower economic growth.” Stephan Goetz, professor of agricultural and regional economics at Penn State and director of the Northeast Regional Center for Rural Development, says small businesses are good for the economy and big businesses are generally not. Everybody touts the 200,000 jobs GM provides, but if you take into account the jobs they have destroyed over the last 100 years by swallowing other companies, the net effect is more like a negative 200,000 jobs. Every time it acquired on of those companies, GM laid off a high percentage of “redundant” workers. ![]() Started as a holding company in 1908, it bought companies like Buick, Chevrolet, Cadillac, Oldsmobile and many others. Startups that will almost all exclusively stay small are the engine of job growth, and bigger, older businesses destroy jobs. 98% of those startups will never be bigger than nineteen employees, 99.6% will never have more than one hundred. ![]() government called Business Dynamics Statistics (BDS), Kauffman concluded that all business more than one-year old, including those that are centuries old, are “net job destroyers, losing 1 million jobs net combined per year.” It turns out 100% of job growth actually comes from brand new companies in their first year of growth. Since then a lot of other researchers have confirmed their findings. In 2010, the Kauffman Foundation published its groundbreaking research on who creates jobs (The Importance of Startups in Job Creation and Job Destruction – July 2010). It is the small and local businesses, particularly those starting up, that data shows are the engine of economies and job growth. A wide array of research has recently proven they actually have the opposite effect they hurt economic growth and destroy jobs. Why Small Business Is The Engine of Every Growing Economyīig businesses work great for investors, but when it comes to building economies or creating jobs, they are a failed experiment.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |