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Entrepreneurs and Recessions: Do Downturns Matter?

This paper examined the question: to what extent is a company’s founding date—with a particular focus on company cohorts from weak economic periods—related to its eventual financial success?

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The relationship between company success and economic conditions at the time of a company’s founding is ill-understood. Do weak economic conditions at the start lead to fewer companies founded? Do weak conditions lead to fewer successful companies? Do companies founded in better economic times fare better than those founded during recessions? The answers to these questions are important because of the central role that entrepreneurial ventures play in our economy, from job creation, to innovation, to improvements in our overall standard of living and GDP.

In this study, titled “Entrepreneurs and Recessions: Do Downturns Matter?,” Kauffman Foundation Senior Fellow Paul S. Kedrosky presents findings from collecting and analyzing data to find out how economic conditions impact startup success.  

The Future of the Research University: Meeting the Global Challenges of the 21st Century

At the 2008 Kauffman-Max Planck Institute Summit, more than a dozen speakers from Europe, the United States, and Israel, representing some of the finest institutions and freshest thinking on the planet, convened to explore in depth the ways research universities can foster entrepreneurship in the societies around them. The result is this unprecedented volume of essays and discussion synopses, which provides ideas and practical examples for the entrepreneurial research university.

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The papers and the discussion contained in this volume explore the many facets of what it means to be an entrepreneurial university. They define the questions and propose answers, in the process shedding much light on one of the most important challenges facing the university in our time.

Improving Student Learning through Strategic Compensation

Based on the experience of accomplished teachers, this study offers new solutions for Improving Student Learning through Strategic Compensation. Published by theCenter for Teaching Quality (CTQ), the report’s recommendations are designed to acknowledge and reward professional work of teachers and meet the needs of the students, families and communities they serve.

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Accomplished teachers from across the state of Kansas worked together to develop a series of recommendations for considering a new strategic compensation system. This approach is designed to recruit, retain and reward high-quality teachers in classrooms across the state.

A central tenet of the approach is that a viable performance-pay framework must be flexible enough to allow districts and states to tailor incentives that advance their specific student-learning goals and that teachers will be partners in the design. 

The report identifies four pillars to strategic teacher compensation:

  • Knowledge and skills: Teacher training that provides new knowledge and develops skills should be part of the compensation package. The report finds fault with “one-size-fits-all” professional development and encourages a skill-building approach that takes into account teachers’ professional experience. The professional development program should be defined through teacher input, the report says.
  • Student learning: Any strategic compensation plan that includes rewards for student learning must focus on student growth, not just proficiency. Multiple measures for evaluating student learning, including classroom-based assessments, should be used to determine rewards for student learning in a strategic compensation plan.
  • Teacher leadership: Administrators must accept teachers as true partners in school improvement and help them lead, the report says. Creating incentives and job descriptions for teacher leadership provides a career path for teachers, beyond administration or other out-of-the-classroom positions. These pathways can be critical for keeping experienced educators engaged directly with students who will benefit from their expertise.
  • Market incentives: Teachers should be paid more for teaching in high-needs schools, subjects and assignments. These market incentives should be determined at the local level. Districts should examine their unique market needs when considering incentives for hard-to-fill positions (such as math, science, special education, etc.) or high-needs schools. Market incentives should include a variety of financial incentives, including student loan forgiveness, housing allowances, etc.

About The Center for Teaching Quality (CTQ):

CTQ seeks to improve student learning through developing teacher leadership, conducting practical research, and rais­ing public awareness about what must be done to ensure that every student in America has a qualified, well-supported, and effective teacher. The Center has worked on a large range of research studies and policy development initiatives designed with the goals of cultivating leadership, spreading expertise and elevating the voices of accomplished teachers so that their knowledge of students and schools can inform the next generation of teaching policies and practices. More information about CTQ is available at www.teachingquality.org.

Math, Science and Technology: Important, But Not For Me

This study details parents’ and students’ current thinking about Math, Science, and Technology education and their satisfaction with the existing curriculum which most experts see as vastly below world-class standards.

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There is growing consensus among the nation’s business, government, and higher education leaders that unless schools do more to train and nurture a whole new generation of young Americans with strong skills in math, science, and technology, U.S. leadership in the world economy is at risk.

According to the study, however, just 25 percent of Kansas/Missouri parents think their children should be studying more math and science; 70 percent think things “are fine as they are now.” The report also explains why parents and students are so complacent in this area and what kinds of changes might be helpful in building more interest in and support for more rigorous Math, Science, and Technology courses.

“Important, But Not for Me” shows that parents and students are aware of the United States’ slippage in international standings on Math, Science, and Technology education and recognize that students who complete advanced courses in MST education have good employment prospects and can expect a successful future. But the report also describes a disconnect between this understanding and their own personal interests and expectations.

The full report along with the complete questionnaire and topline data is available online at: http://www.publicagenda.org/reports/important-not-me

The findings are based on 12 focus groups with parents, teachers, and students in the Kansas City region, 15 expert interviews with local business, education, and community leaders, and telephone interviews with a random sample of 1,472 parents of children grade 6-12 in public school in Kansas and Missouri and 1,295 public school students in grades 6-12.

About Public Agenda

Public Agenda is a nonprofit organization dedicated to nonpartisan public policy research and civic engagement. Founded in 1975 by former U.S. Secretary of State Cyrus Vance and Daniel Yankelovich, the social scientist and author, Public Agenda is known for its influential public opinion surveys and balanced citizen education materials. Its mission is to inject the public’s voice into crucial policy debates. Public Agenda seeks to inform leaders about the public’s views and to engage citizens in discussing complex policy issues. It is also known for its destination website, PublicAgenda.org, which has been twice nominated (in 2005 and 2007) for a Webby Award for best political site.

Entrepreneurship in American Higher Education

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The Introduction of the Report:

Higher education is basic to the future of American life. The nation’s ability to prosper and to thrive in an increasingly knowledge-based global society and economy depends on our having a progressively well-educated population. The values and practices of pure research—discovery, originality, innovation—shape and motivate American university learning. The American bachelor’s degree has other objectives as well. Among the most frequently stated are critical thinking, scientific and quantitative reasoning, preparation for citizenship, moral reflection, readiness for work, respect for diversity, broad intellectual knowledge, the transmission of culture, and appreciation of our national values. At the root of all these legitimate and important goals is an even more fundamental purpose of learning: intelligibility. We cannot improve a world we do not understand, and we cannot advance if we do not comprehend ourselves, our strengths, limitations, and motivations. By making the world and ourselves increasingly comprehensible and thereby manageable, education establishes a foundation for human growth, creativity, fulfillment, and progress.

If intelligibility is a fundamental goal of learning, then American higher education must reflect the experience and conditions of contemporary life. Higher education cannot make intelligible a world from which it is removed or does not address. College learning must teach students how to make sense of and how to affect the reality in which they will actually live. Education cannot succeed if it becomes insular and static. To be sure, studying great works of the past and the persisting questions of human nature is basic to becoming an educated person. But a distinctive strength of American higher education also should be dynamism and adaptability, a capacity to address urgent, current questions of nature, society, and human experience as well as classic ones.

Entrepreneurship is a dominant force in contemporary America. It generates ongoing innovation and improvement of our goods, services, and institutions. It makes them more efficient, affordable, and, thus, effective. Entrepreneurship enhances the quality of our collective and individual lives. It changes the way we work, the way we communicate, the way we live. Innovation and improvement depend on intelligibility. In the final analysis, we cannot devise or enhance the incomprehensible. We cannot repair what is mysterious to us. Because intelligibility is a fundamental purpose of higher education, and generating new knowledge is the highest expression of American learning, entrepreneurship and college education are inextricably bound to one another. Each has an ineluctable interest in the success of the other. Against this background, entrepreneurship should be both a legitimate subject in American undergraduate education and a pervasive approach to learning and the management of universities.

Here or There? A Survey of Factors in Multinational R&D Location

This study of more than 200 multinational companies across 15 industries, mostly headquartered in the United States and Western Europe, finds that emerging countries such as China and India will continue to be major beneficiaries of R&D expansion over the next three years as companies seek new market opportunities, access to top scientists and engineers, and collaborative research relationships with leading universities.

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Contrary to popular belief, it is intellectual capital and university collaboration, not just lower costs, that primarily attract companies to locate R&D activities in locations away from their home country, according to a study sponsored by the Ewing Marion Kauffman Foundation. The study of more than 200 multinational companies across 15 industries, mostly headquartered in the United States and Western Europe, finds that emerging countries such as China and India will continue to be major beneficiaries of R&D expansion over the next three years as companies seek new market opportunities, access to top scientists and engineers, and collaborative research relationships with leading universities.

The study was released at a meeting of the Government-University-Industry Research Roundtable (GUIRR) of the National Academies. It was conducted by Marie Thursby, Ph.D., Professor of Strategic Management, Georgia Tech College of Management, and Jerry Thursby, Chair of the Department of Economics, Emory University, with sponsorship by the Kauffman Foundation.

Designed to identify and rank the importance of different factors feeding into the corporate decision-making process as to where to locate R&D facilities, the study also tracked R&D work coming into the United States from abroad, as well as R&D work going in the reverse direction; addressed favored countries for locating R&D work and why; and outlined trends industry expects for R&D expansion in the future.

Among the top factors going into new R&D siting decisions in both developed and emerging countries are market growth potential, quality of R&D talent, collaboration with universities, and IP protection. How these factors influence the decision, however, depend on whether the site is in a developed or emerging country. In neither emerging nor developed countries was cost consideration the most important factor, which runs contrary to what has been reported by the media (according to an analysis of media coverage over the past few years in The Wall Street Journal and New York Times on multinational R&D locations).

Among the study’s more surprising findings, according to the researchers, was the role university collaboration plays in the decision-making process for locating R&D facilities. In fact, collaboration with universities was particularly prevalent as a factor for expanding to emerging countries, even though these countries provide lesser degrees of IP protection.

More than half of the corporate respondents who identify the United States as their home country report that they have either recently expanded or planned to locate R&D facilities in China and India vs. other developed countries. Of 63 Western European companies responding, 13 plan on expanding or locating new R&D facilities to the United States. The issue of collaborative research between universities and corporations has been a growing concern within the United States, with some observers saying legal wrangling over intellectual property rights is not only slowing the pace of innovation but also prompting companies to seek university research partners in other countries.

The study indicates, however, that while the trend toward R&D offshoring to Asia will continue despite concerns over IP protection, companies are keeping their most cutting-edge research in developed countries where IP protection is the strongest. According to the study, only 22 percent of the R&D effort in emerging countries is for new science.

Another public policy implication of the findings, say the researchers, is that the United States must focus on highly skilled worker immigration.

Teacher Quality: Regional and National Studies

A compilation of studies on teacher quality.

Regional Studies

National Studies 

  • The Education Schools Project
    Researchers from The Education Schools Project studied education leader and teacher preparations programs at colleges and universities across the country.
    • Educating Leaders: This report—the first in a series of policy papers on the education of educators—offers a candid, no-holds-barred analysis of the university-based programs that educate the vast majority of the nation’s school principals and superintendents.
    • Educating Teachers: This report is the second in a series of candid policy papers on the education of educators. It identifies several model teacher education programs, but also finds that the vast majority of the nation’s teachers are prepared in programs that have low admission and graduation standards and cling to an outdated vision of teacher education. Both state requirements and accreditation agencies have failed to assure that America’s teachers are ready for the classrooms in which they will teach.
  • Teacher Effectiveness Study
    Dan Goldhaber from the University of Washington used a database from North Carolina to explore the relationship between teacher testing and teacher effectiveness.
  • Value-Added Assessment Study
    Daniel McCafferty of the RAND Corporation is looking at the effectiveness of the Value-Added Assessment on student outcomes in districts across the state of Pennsylvania.
  • Math Teacher Preparation Study
    The Teacher Preparation Study Panel of the National Academy of Sciences is currently conducting an in-depth analysis of mathematics education teacher preparation programs.

Turmoil and Growth: Young Businesses, Economic Churning and Productivity Gains

While the current economic turmoil arouses anxiety and concern over job losses and business failures, this research shows that the “churning” of jobs and businesses also sows the seeds for future growth and productivity gains. New firms play a vital role in the process that links churning to productivity gains.

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According to “Turmoil and Growth: Young Businesses, Economic Churning and Productivity Gains,” new and growing businesses create millions of jobs each year. At the same time, exiting and declining businesses destroy millions of jobs. The study, conducted by researchers from the University of Chicago, University of Maryland, and the U.S. Census Bureau, points out that the contribution of new businesses extends beyond initial entry, with surviving businesses having very rapid employment growth in their early years.

The report’s analysis of productivity data shows that young businesses have higher productivity levels and faster productivity gains than more mature businesses, particularly in the early years. In effect, the churning process replaces lower productivity businesses with new, more productive ones, thereby increasing productivity and raising living standards.

The Triple Helix: University, Government and Industry Relationships in the Life Sciences

This working paper, authored by leading experts Professors David Blumenthal, Eric Campbell, and Greg Koski of Harvard University, focuses on the implications for university, government, and industry relationships. In particular, the paper pays special attention to this issue in the context of emerging drug discovery and development practices in the pharmaceutical and biotechnology industries.

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Both Congress and the National Institutes of Health have been actively engaged in reviewing conflict of interest policies for government researchers. Sponsored by the Kauffman Foundation, The Future of the Triple Helix: Finding the Balance Among Government, Industry and Academic Research Relationships was presented at the AEI-Brookings Joint Center for Regulatory Studies symposium held Thursday, June 10, 2004.

Results from the Kauffman Firm Survey (KFS) Baseline and First Follow-up Surveys

The data from both the Baseline and First Follow-Up Surveys provide an understanding of how businesses are organized and operate in their first two years of existence (2004 and 2005), and provide some indicators of survival and growth.

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Although entrepreneurial activity is an important part of a capitalist economy, only small amounts of data are available about U.S. businesses in their first years of operation. As part of an effort to gather more data on new businesses in the United States, the Ewing Marion Kauffman Foundation sponsored the Kauffman Firm Survey (KFS), a panel study of new businesses founded in 2004 and tracked over their early years of operation. The Kauffman Foundation contracted with Mathematica Policy Research, Inc., (MPR) to conduct the KFS, which collects data about the nature of new business formation activity; characteristics of the strategy, offerings, and employment patterns of new businesses; the nature of the financial and organizational arrangements of these businesses; and the characteristics of their founders.

The data from both the Baseline and First Follow-Up Surveys provide an understanding of how businesses are organized and operate in their first two years of existence (2004 and 2005), and provide some indicators of survival and growth. Other measures describe the characteristics of the panel, such as the extent to which these businesses are involved in intellectual property innovation (patents, copyrights, or trademarks). A series of twenty-seven tables in this report gives a broad overview of the business characteristics, owner demographics, and financing patterns for the base year, as well as business dynamics over the 2004-2005 period. The KFS dataset provides researchers a unique opportunity to study a panel of new businesses from start-up to sustainability, with longitudinal data centering on topics such as how businesses are financed; the products, services, and innovations these businesses possess and develop in their early years of existence; and the characteristics of those who own and operate them.

The KFS’ main objective is to address the informational gaps related to the study of entrepreneurship. Understanding new business development and sustainability is essential for creating policies that encourage new business development and innovation. These initial findings provide numerous insights into the earliest years of a firm’s existence.

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