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Week of June 7 - June 11, 2004Welcome to the National Dialogue on Entrepreneurship and e-News, an electronic newsletter sponsored by the Kauffman Foundation of Kansas City for followers of the entrepreneurial economy. Through e-News, we bring you short summaries and analyses of various trends driving the innovation economy. Please feel free to share this with friends and colleagues. To subscribe, visit www.publicforuminstitute.org/nde/join/ Did you know that links to the day's entrepreneurship stories from across the nation and around the world are posted each weekday at www.publicforuminstitute.org/nde? Bookmark it and stay informed about the latest entrepreneurship news. Current and archived issues of e-News are available online at www.publicforuminstitute.org/nde/news/enews.htm |
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The Secrets of Organic Growth Fast growth is the hallmark of entrepreneurial companies. When a new firm has a new thing in a new market, it can be relatively easy to grow fast. But, what do more established firms do to stoke the growth engine? Most of the time, they grow through acquisitions. Warren Buffett’s Berkshire Hathaway is one wildly successful model of this approach, but research shows that many mergers and acquisitions do little to create shareholder value. Yet, a select group of well-known firms grew fast the hard way—via organic growth (i.e. growing bigger without acquisitions). Professor Ed Hess of Emory University recently examined these companies for Fortune magazine, and created an Organic Growth Index of 23 firms who have excelled at organic growth. Best Buy tops the list, but other well-known firms on the Index include Wal-Mart, Anheuser-Busch, Harley-Davidson, and ADP. Not surprisingly, this cohort of firms has been a real boon for investors. Over the past five years, firms on the Organic Growth Index returned 23% to investors. Meanwhile, the S&P 500 returned 3%. |
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The Best of Black Enterprise While we’re on the subject of exciting businesses, let’s look at the newly released Black Enterprise 100---Black Enterprise’s annual list of the fast growing African American-owned businesses. The BE 100 honors firms in a variety of categories, including financial services, industrial/services, and other sectors. This year’s winner in the industrial/services category is World Wide Technology, Inc. of Maryland Heights, MO., a reseller of information technology products and services. New York is home to the largest number of BE 100 firms (29), followed closely by California, Illinois and Georgia. This year’s list also honors four firms who have been on every BE100 list ever since its creation in 1973: Johnson Publishing (Chicago), H.J. Russell & Company (Atlanta), Essence Communications (New York) and Earl G. Graves Ltd. (New York). |
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Supporting America’s Manufacturers The state of American manufacturing is a cause for concern across the US, and lots of new ideas for supporting US firms are being considered in Washington and various state capitols. An interesting set of proposals has recently been developed by the International Economic Development Council (IEDC), the nation’s largest trade association for economic developers. The IEDC report, Ensuring the Future of American Manufacturing, argues that the federal government must become more actively engaged in restoring and rebuilding America’s innovative manufacturing capabilities. The report urges the White House to restore funding for critical technology and manufacturing-related programs like the Commerce Department’s Manufacturing Extension Partnership (MEP) and Advanced Technology Program (ATP). It also recommends an immediate $43 million investment in the Economic Development Administration (EDA); these funds would be used to support investments in severely distressed areas. The report also seeks to encourage entrepreneurship in the manufacturing sector by recommending new tax credits for investments in manufacturing firms that use technologies or workers spun out of existing businesses. |
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Another Take on Offshoring The studies on offshoring are coming fast and furious in Washington these days. The latest comes to us from Robert Atkinson of the Progressive Policy Institute, an offshoot of the Democratic Leadership Council.
Understanding the Offshoring Challenge is an excellent primer on the various sides of the offshoring debate, but it also includes some interesting ideas on how policy makers should respond to the challenge. Atkinson argues that offshoring’s real danger is not simply the loss of jobs. Instead, offshoring is contributing to a larger trend whereby good job opportunities for the middle class are eroding. Atkinson recommends adoption of a national innovation strategy as the best means to address the offshoring challenge. Lots of interesting ideas fall within this very broad strategy. For example, Atkinson argues that our national R&D agenda should include expanded support for investments in automation technology. As tasks become automated, the need for offshoring lessens. Instead of shipping work to low-cost overseas labor, these projects can remain here in the US and the profits from such business will remain with American firms. |
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