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The research compares data from the Kauffman Firm Survey, which follows 4,928 firms from their founding in 2004 through 2009, with released data from various government sources on businesses overall.

While adoption and use of online activities differed depending on the business type, owner characteristics, industry, and other factors, the study showed that new businesses tended to implement e-business activities at higher rates than existing businesses did. In 2007, for example, young businesses were more likely than not to have a website, as compared to only about a quarter of U.S. businesses overall. Six percent of all U.S. businesses had online sales that year, while more than 25 percent of young businesses were selling online.

In addition to new businesses’ higher likelihood of selling online, new businesses were also much more likely to generate more than half of company sales online. Among online sellers, a quarter of young businesses generated more than 50 percent of their revenues online, almost double the rate seen in the general business population. 

New businesses that used websites, email, and online sales generally were starting bigger, with greater financial capitalization at birth (almost $55,000 more if a firm had a website, almost $46,000 more if the business owner had email and more than $25,000 more if the firm later reported online sales) and also higher levels of employment, especially for firms starting with a website.

Founders whose companies had websites at startup tended to be younger and more educated than were founders who did not have websites. They more frequently had previous entrepreneurial experience but less industry work experience, and were dedicating about eight more hours per week to the venture than were entrepreneurs whose companies launched without a website.

High-tech startups were most likely to begin operations with websites and email, but were no more likely to be selling online than were non-high-tech companies. Across industry types, companies in Manufacturing; Wholesale Trade; Professional Services; Retail Trade; Finance, Insurance, and Real Estate (FIRE); and Arts, Entertainment and Recreation were most likely to begin business with websites and email. The lowest level of Internet sales was among Professional Services and FIRE.

“Overcoming the Gender Gap: Women Entrepreneurs as Economic Drivers,” a paper from the Ewing Marion Kauffman Foundation, explores the reasons behind lower business startup rates among women and proposes actions that would help to realize the promise of female entrepreneurs in escalating the economy.

In fact, early in the startup process, women take fewer steps to position themselves to start high-growth companies, according to “Gender Differences in Patenting in the Academic Life Sciences,” a landmark study released in 2006 that tracked the careers of more than 4,000 life science research faculty at U.S. universities over 30 years.

While women tended to produce research that was equal to or slightly better than men’s, on average, female faculty patented their research at only about 40 percent of the rate of their male colleagues, the study showed. They also tended to rely on formal university conduits to help them commercialize their research, rather than making connections and seeking guidance from private industry. In addition to more actively reaching out to establish new networks—a critical step for would-be entrepreneurs—men had more exposure to industry earlier in the process, with 93 percent of them serving on science advisory boards of high-tech companies, as compared to only 6.5 percent of women.

Other studies show that women might be more inclined to seek work/life balance and therefore shy away from establishing innovative firms that aim for global scale. On average, they also have greater difficulty raising investment capital than men do.

Three steps to boost female entrepreneurship in the United States:

• Not-for-profit initiatives that advance opportunities for high-growth women entrepreneurs need greater funding and support from women executives, philanthropy leaders, and industry. Networking and collaborative events between startup founders and big companies are critical to provide women entrepreneurs access to networks that can produce potential customers.
• Successful women entrepreneurs and inventors should make themselves visible and available. Role models are critical to young women considering entrepreneurship.
• Women must be invited at a much higher rate to join science advisory boards of high-tech companies.

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The study Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation suggests that the country faces a fundamental employment challenge that pre-dates the recession by many years: A long-term trend that the researchers call a slow jobs “leak.”

The study, part of a continuing series on firm formation and economic growth, found that the new businesses that continue to generate the bulk of the economy’s net job gains in recent years have been starting up with fewer workers than historic norms and are also adding fewer workers as they grow. Analysis of government data shows that since the middle of the last decade and perhaps longer, the growth path and survival rate of new businesses means they are generating fewer and fewer new jobs. The cohort of new firms that started in 2009, for example, is on course to contribute one million fewer jobs in the next decade than historical averages would suggest.

The study draws on data sources indicating a decline in the number of new “employer businesses,” those startups that create jobs for workers other than the owner. Citing data from the U.S. Census Bureau, the study found that the number of new employer businesses has fallen 27 percent since 2006. When including new employer businesses and newly self-employed workers, the level of startups has held steady or even edged up since the recession, according to the Kauffman Index of Entrepreneurial Activity. But that encouraging sign is somewhat misleading because firms that support only the self-employed owner do not scale to generate the new jobs needed to support overall economic growth.

The study also examined young companies’ size at birth, jobs created and survival patterns of new firms. They found that historically, new firms in the United States have generated about 3 million new jobs every year, but that recent cohorts have performed much worse, creating only 2.3 million jobs in 2009. At the level of individual businesses, one data series (BLS establishment data) showed that in the 1990s new establishments opened their doors with about 7.5 jobs on average, compared to 4.9 jobs today.

The study also found that as a group, recent cohorts of new businesses have been adding jobs at a slower pace than earlier cohorts even when they do well and grow, but that growth hasn’t made up for lower employment levels at inception.

The researchers said that rather than focusing on discrete events such as the opening of a new manufacturing plant or relocation of a large business to a local community, policymakers must recognize that the long-term jobs outlook will be driven by the collective decisions of young and small businesses whose changing employment patterns are hard to identify or influence. They also warned against the false hope that growth in the number of self-employed workers can resolve the U.S. employment shortfall.