Small is Beautiful

Regional economic growth is highly correlated with the presence of many small, entrepreneurial employers not a few big ones, according to a new analysis by Harvard professors Ed Glaeser and William Kerr.  Reported in the latest Harvard Business Review, the analysis found "that cities whose number of 'firms per worker' was 10% higher than the average in 1977 experienced 9% faster employment growth between 1977 and 2000." 

Glaeser and Kerr adjusted their findings for differences in industry structure, tax policy, and other special circumstances to rule out their impact.

Research also shows that "once entrepreneurship gets established, it tends to be self-perpetuating."  It's the gift that keeps on giving.

As HBR writes, "Politicians enjoy announcing a big company's arrival because people tend to think that will mean lots of job openings.  But in a rapidly evolving economy, politicians are all too likely to guess wrong about which industries are worth attracting.  What's more, large corporations often generate little employment growth, even if they are doing well."

The new study amplifies two messages CEOs for Cities has been sending to urban leaders:
If you are going to make only one bet, bet on talent.  And, especially to university presidents, if you are not graduating students who can create the next economy through their entrepreneurial efforts (including the invention and re-invention of their own careers), you are shortchanging your community and your institution. 

  

Andy, June 28, 2010

can you provide the complete citation, please?

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