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Business Dynamism in High Tech (view source)
Revision as of 14:10, 24 February 2016
, 14:10, 24 February 2016→Article
During the period of aggregate productivity and job growth in the 1990s, the high tech sector and newly listed public companies exhibited increases in indicators in dynamism and entrepreneurship. However, since 2000, the high tech sector and publicly traded firms have exhibited a decline in dynamism. The number of IPOs has fallen in the post-2000 period and those that have entered have not exhibited the same rapid growth as earlier cohorts. [http://econweb.umd.edu/~haltiwan/Haltiwanger_Kauffman_Conference_August_1_2015.pdf]
Why the decline? The primary challenge start-ups in general face is access to capital. Only 29 percent of small business owners said they’ve applied for a business loan over the last two years. Millennials report turning to friends and family for loans, rather than taking out a traditional loan from a bank. [http://newsroom.bankofamerica.com/sites/bankofamerica.newshq.businesswire.com/files/press_kit/additional/Fall_2014_Bank_of_America_Small_Business_Owner_Report.pdf] *young ppl saddled w Millennials also have less access to personal capital in that they take on significant student debt when they go to college. A [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2417676 study] from Penn State University found "a significant and economically meaningful negative correlation between changes in student debtand net new businesses employing one to four employees, the firms most dependent on personal debt for financing." Personal debt and lack of access to capital are particularly problematic in the high tech sector, so don't have where millennials compose a lot majority of the workforce and are more comfortable making advances in technology older members of the workforce do not. [https://www.pwc.com/gx/en/managing-tomorrows-people/future-of money to -work with/assets/reshaping-the-workplace.pdf]
The overwhelmingly large presence of millennials has contributed to the decline in business dynamism particularly in high-tech sectors at least partially because these members do not have the means or desire to finance a small business given that they are often saddled with debt from college.
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