Jun
09

Kauffman Foundation Study: Over Half of Fortune 500 Companies Began in Recession or Bear Market

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Anecdotal evidence of innovation thriving in times of economic trouble have found broader confirmation in a recent study from the Kaufman Foundation. Their press release, “Kauffman Foundation Study Finds More than Half of Fortune 500 Companies Were Founded in Recession or Bear Market,” summarizes the story nicely. Here is an excerpt:

According to a new study by the Ewing Marion Kauffman Foundation, challenging economic times can serve as the rebirth of entrepreneurial capitalism, leading to the creation of much-needed new jobs.

The study, “The Economic Future Just Happened,” found that more than half of the companies on the 2009 Fortune 500 list were launched during a recession or bear market, along with nearly half of the firms on the 2008 Inc. list of America‚Äôs fastest-growing companies. The report also suggests a broader economic trend, with job creation from startup companies proving to be less volatile and sensitive to downturns when compared to the overall economy.

“You can see the story of the American economy in these numbers,” said Carl Schramm, president and CEO of the Kauffman Foundation. “History has demonstrated this time and again: new firms create new jobs and fuel our economy. Policies that support entrepreneurship support recovery.”

The study points out that while recessions often create widespread economic grief, they also can encourage potential entrepreneurs, acting “as an extra spur to founding a new company, if the founders perceive their prospective competition might be weakened.” Rising unemployment can benefit new enterprises: entrepreneurs may view unemployment as an opportunity to start a company, and seize the advantage provided by the ability to tap into a larger pool of potential employees.

This is no time to succumb to innovation fatigue, as painful as this recession is. This is the time to ramp up innovation efforts on all fronts. The winners of the future are being shaped now.

Comments

  1. Sean says:

    There’ s lots to gain in a recession, and sometimes certain organizations benefit disproportionately. It’s certainly telling that some of the most successful businesses out there – the fortune 500 – have their roots in times of hardship.

    Certainly times of system-wide weakness are opportunities for many.

    There are reasons why we need recessions, and there are benefits to them as well – there’s a great article on this over at economixt –

    http://www.economixt.com/2009/07/why-we-need-recessions

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