Startups or Behemoths?

September 9, 2010

Vivek Wadhwa reports that a new study from The Kauffman Foundation demonstrates that not only are new businesses the engine of job growth (while existing firms shed jobs), but the cumulative job creation is remarkably sustainable despite the high failure rate of new firms.  Those that do succeed dwarf, in job creation, the many that fail. 

When a given cohort of startups reaches age five, its employment level is 80 percent of what it was when it began. In 2000, for example, startups created 3,099,639 jobs. By 2005, the surviving firms had a total employment of 2,412,410, or about 78 percent of the number of jobs that existed when these firms were born. 

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