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Week of June 18 - 24, 2007

Immigrant Entrepreneurs Emerge through Education

Immigrants who originally came to the U.S. to study and work have been a key driving force in America’s technology and engineering startups for the last decade. A new study by the Ewing Marion Kauffman Foundation shows that more than half of the foreign-born founders of U.S. businesses in these areas initially came to the United States to study and nearly 40 percent entered the country following job opportunities. Only 1.6 percent came to the U.S. with the sole purpose of starting a company. The study demonstrates a strong link between entrepreneurship and educational attainment, particularly in the STEM (science, technology, engineering and math) fields. It shows that 96 percent of immigrant founders of technology and engineering companies held bachelor’s degrees and 74 percent held graduate or postgraduate degrees – 75 percent of the highest degrees were in STEM fields. Overall, immigrant-founded companies produced $52 billion in sales and employed 450,000 workers in 2005. The economies most represented are India, United Kingdom, China, Taiwan, Japan and Germany.

Access additional information about the report, Education, Immigration and Entrepreneurship: America's New Immigrant Entrepreneurs, Part II.

Entrepreneurs, Big Firms and Economic Development

A growing number of economic development professionals have stopped chasing big businesses and started chasing the entrepreneurs who create them. A recent study by the Federal Reserve Bank of Kansas City shows that traditional top-down approaches to economic development that relied on luring big firms with tax breaks and other financial incentives are being replaced by bottom-up efforts to foster an entrepreneurial culture where startups can flourish. This approach relies on developing and supporting entrepreneurs and small businesses while improving infrastructure and developing a highly skilled and educated workforce. These efforts depend in large part on improving the quality of life in the community and creating an attractive business climate. While acknowledging that big firms contribute significantly to job creation and innovation, the author contends that concentrating on organic growth is likely to be a much more successful strategy than the recruitment of new firms. The hope is then that some of these home-grown businesses grow to become the big firms that offer better jobs and benefits to area residents.

Download The Role of Small and Large Business in Economic Development, by Kelly Edmiston. 

2007 Inner City 100 

Urban America’s fastest growing companies are being honored in the 2007 Inner City 100, an Initiative for a Competitive Inner City ranking that appears in the June 2007 issue of Inc. magazine. This year’s top performer hails from San Antonio, Texas. TerraHealth is health services firm that specializes in placing skilled health care personnel at military facilities. First founded in 2001 (with a $20,000 investment), TerraHealth has grown by more than 7000% over the past five years, and now employs 358 people. Inner City 100 firms are located across the US, but local hotspots include the following: Detroit (6 firms), Boston (5), Washington, DC (4), and Oakland (4).

The listing of 2007 Inner City 100 appears in the June 2007 issue of Inc. magazine.

The State of Entrepreneurship in Denmark

The Danish and US governments recently sponsored a joint summit on entrepreneurship in Copenhagen. As part of this effort, the Danish government has been taking a close look at how Denmark stacks up in terms of entrepreneurship and innovation. The Danish government has set an ambitious goal of ensuring that Denmark is among the world’s leaders in entrepreneurship by 2015. A recent study indicates that the country is making progress toward this goal. The research finds that Danish start-up rates are fairly close to those of the United States. However, a vast majority of these new enterprises fail to reach a healthy growth trajectory. The study suggests that Denmark’s “framework conditions” for entrepreneurship may warrant reform. In particular, the government is examining ways to expand youth entrepreneurship education, and improve business access to professional coaching. It is also examining changes to both tax rates and bankruptcy rules to make them more “entrepreneur-friendly.”

Access the 2006 report from the Danish National Agency for Enterprise and Construction, Entrepreneurship Index 2006.

The Limits of Open Innovation

The open source innovation model -- pioneered in the development of Linux, Wikipedia, and other products -- has helped transform how we think about innovation. Opening up the innovation process has helped spur new ideas, new products and new technologies. A new study in Strategy+Business, a journal sponsored by Booz Allen Hamilton, cautions that peer production has many benefits, but is best deployed in specific markets and circumstances. Peer production works well if a firm is seeking to find and fix problems, collect information, or perform complex task in a more rapid fashion. However, as author Nicholas Carr notes, peer production techniques work less well in turning raw ideas into a final product. This process still works best with a small collaborative group of talented professionals. Carr’s bottom line is that peer production techniques can help bolster a firm’s creativity, but they will never be able to replace the power of “one good idea in one person’s head.” In other words, firms should harness the power of crowds but should also work to groom talented individuals and teams who can generate good ideas and turn them into innovative products and services.

Access the May 31, 2007 Strategy+Business article, “The Ignorance of Crowds," by Nicholas G. Carr.

The South's Economic Future: Convene, Connect and Commit

A new study from the Southern Growth Policies Board and the Council for a New Economy Workforce assesses what Southern states can do to foster a more prosperous economic future. The study finds that Southern states have made little progress in relative educational achievement or per capita income growth over the past twenty years. The report recommends three general strategies. The region’s leaders should convene a series of discussions to devise new approaches to public education. They should also seek to better connect public and private educational resources. Finally, they should commit to investing significant resources to upgrade the region’s economic resources. The report is accompanied by a webpage that includes information on programs and initiatives across the South.

Learn more about the 2007 Southern Growth Policies Board’s report, EnterpriseSouth.biz. The full report is available for purchase.

The National Dialogue on Entrepreneurship is an initiative of the Public Forum Institute made possible by a grant from the Kauffman Foundation of Kansas City. Through NDE-news, we bring you short summaries and analyses of various trends driving entrepreneurship around the world. Subscribe now to receive your weekly copy. Archived issues are available online.

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