SOURCE: Kauffman Foundation

Kauffman Foundation

June 09, 2009 08:16 ET

Kauffman Foundation Study Finds More Than Half of Fortune 500 Companies Were Founded in Recession or Bear Market

Suggests There's an Entrepreneurial Silver Lining in Today's Economy

KANSAS CITY, MO--(Marketwire - June 9, 2009) - 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's 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.

"While startups may not begin with the intention of reaching the Fortune 500 list, they're hard at work under the radar," said Dane Stangler, senior analyst at the Kauffman Foundation and author of the study. "These companies may remain invisible to most of us, or they may one day grow into household names. Either way, they're steadily recreating our economy -- generating jobs and innovations."

Stangler said companies that reach the Fortune 500 and Inc. lists demonstrate the strength and flexibility of successful entrepreneurial enterprises.

"We imagine the Fortune 500 to be giant dinosaurs lumbering across the landscape," Stangler said. "That's not the case. The turnover and churn on the list is remarkable. Successful, big companies have to be entrepreneurial, and they are."

The complete study is posted on www.kauffman.org.

About the Kauffman Foundation

The Ewing Marion Kauffman Foundation is a private nonpartisan foundation that works to harness the power of entrepreneurship and innovation to grow economies and improve human welfare. Through its research and other initiatives, the Kauffman Foundation aims to open young people's eyes to the possibility of entrepreneurship, promote entrepreneurship education, raise awareness of entrepreneurship-friendly policies, and find alternative pathways for the commercialization of new knowledge and technologies. It also works to prepare students to be innovators, entrepreneurs and skilled workers in the 21st century economy through initiatives designed to improve learning in math, engineering, science and technology. Founded by late entrepreneur and philanthropist Ewing Marion Kauffman, the Foundation is based in Kansas City, Mo. and has approximately $2 billion in assets. More information, visit www.kauffman.org, and follow the Foundation on www.twitter.com/kauffmanfdn.

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