Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Multinationals snuffing out some of Britain's most promising new companies

11.07.2007
New research from economists at The University of Nottingham's Globalisation and Economic Policy Centre (GEP) reveals that multinationals are killing some of Britain's most promising start-ups.

The research shows that the presence of multinationals on UK soil increases significantly the chances of an enterprising new business going bust in its first year.

Ordinarily around one in five new ventures dies within its first year and two in five fail to survive beyond three years. But in dynamic economic sectors — where companies compete on the innovation of their products or services — the likelihood of failure increases substantially as a result of competition from multinationals locating in Britain.

One of new Chancellor Alistair Darling's last initiatives as Secretary of State for Trade and Industry was to set up an action group to identify innovation and share the lessons of Britain's best new enterprises. At the same time the UK is still keen to encourage multinationals firms to locate here and has attracted more foreign direct investment than any other EU country.

GEP's Dr Holger Görg said: “Attracting foreign investment and encouraging enterprise are cornerstones of most governments' economic policy, but little research has been done on whether the two are mutually compatible. Our research raises some difficult questions.

“The chance to attract a big company and hundreds of jobs to the UK may make the demise of a new enterprise seem unimportant, but the impact could be enormous over the longer term.

“The companies being killed off are the Microsofts and Virgins of the future.

“The instant gain of employment and investment by a multinational locating in Britain could be outweighed by its potential to kill off a small start-up that in future could employ a greater number of people.”

Latest figures from UK Trade and Investment show that Britain attracted record levels of global investment last year, the fourth consecutive year the record has been broken. The UK is the largest recipient of foreign direct investment in Europe and second only to the US worldwide. According to GEP, in 1998, 12 per cent of UK employment was in foreign-owned multinational companies. By 2002, the last year of data, this share rose to 17 per cent — a 42 per cent increase over the period.

“This research could have public policy implications and may encourage the government to be more discriminating in terms of the types of multinationals it entices to come to the UK and the level of benefits and perks it offers different overseas companies looking to locate here. Alternatively the government may need to consider how it can support and encourage start-up enterprises that face competition from multinationals,” said Dr Görg.

This is the first in-depth analysis of the link between multinationals and the survival of start-up businesses in the host country. The research was based on data from over 179,000 start-up businesses in the service and manufacturing sectors between 1997 and 2002, compiled by the Inter-Departmental Business Register held at the Office for National Statistics.

Data was also drawn from the Inter-Departmental Business Register (IDBR) database at the UK Office for National Statistics This register captures VAT-registered businesses and covers about 98 per cent of UK business activity.

Martin Stott | EurekAlert!
Further information:
http://www.nottingham.ac.uk

More articles from Business and Finance:

nachricht Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

nachricht Europe's microtechnology industry is attuned to growth
10.03.2017 | IVAM Fachverband für Mikrotechnik

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Wafer-thin Magnetic Materials Developed for Future Quantum Technologies

Two-dimensional magnetic structures are regarded as a promising material for new types of data storage, since the magnetic properties of individual molecular building blocks can be investigated and modified. For the first time, researchers have now produced a wafer-thin ferrimagnet, in which molecules with different magnetic centers arrange themselves on a gold surface to form a checkerboard pattern. Scientists at the Swiss Nanoscience Institute at the University of Basel and the Paul Scherrer Institute published their findings in the journal Nature Communications.

Ferrimagnets are composed of two centers which are magnetized at different strengths and point in opposing directions. Two-dimensional, quasi-flat ferrimagnets...

Im Focus: World's thinnest hologram paves path to new 3-D world

Nano-hologram paves way for integration of 3-D holography into everyday electronics

An Australian-Chinese research team has created the world's thinnest hologram, paving the way towards the integration of 3D holography into everyday...

Im Focus: Using graphene to create quantum bits

In the race to produce a quantum computer, a number of projects are seeking a way to create quantum bits -- or qubits -- that are stable, meaning they are not much affected by changes in their environment. This normally needs highly nonlinear non-dissipative elements capable of functioning at very low temperatures.

In pursuit of this goal, researchers at EPFL's Laboratory of Photonics and Quantum Measurements LPQM (STI/SB), have investigated a nonlinear graphene-based...

Im Focus: Bacteria harness the lotus effect to protect themselves

Biofilms: Researchers find the causes of water-repelling properties

Dental plaque and the viscous brown slime in drainpipes are two familiar examples of bacterial biofilms. Removing such bacterial depositions from surfaces is...

Im Focus: Hydrogen Bonds Directly Detected for the First Time

For the first time, scientists have succeeded in studying the strength of hydrogen bonds in a single molecule using an atomic force microscope. Researchers from the University of Basel’s Swiss Nanoscience Institute network have reported the results in the journal Science Advances.

Hydrogen is the most common element in the universe and is an integral part of almost all organic compounds. Molecules and sections of macromolecules are...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Dortmund MST Conference presents Individualized Healthcare Solutions with micro and nanotechnology

22.05.2017 | Event News

Innovation 4.0: Shaping a humane fourth industrial revolution

17.05.2017 | Event News

Media accreditation opens for historic year at European Health Forum Gastein

16.05.2017 | Event News

 
Latest News

New approach to revolutionize the production of molecular hydrogen

22.05.2017 | Materials Sciences

Scientists enlist engineered protein to battle the MERS virus

22.05.2017 | Life Sciences

Experts explain origins of topographic relief on Earth, Mars and Titan

22.05.2017 | Physics and Astronomy

VideoLinks
B2B-VideoLinks
More VideoLinks >>>