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 Mathematical confirmation: Rewiring financial networks reduces systemic risk
22.06.2017 | International Institute for Applied Systems Analysis (IIASA)

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

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: Neutron star merger directly observed for the first time

University of Maryland researchers contribute to historic detection of gravitational waves and light created by event

On August 17, 2017, at 12:41:04 UTC, scientists made the first direct observation of a merger between two neutron stars--the dense, collapsed cores that remain...

Im Focus: Breaking: the first light from two neutron stars merging

Seven new papers describe the first-ever detection of light from a gravitational wave source. The event, caused by two neutron stars colliding and merging together, was dubbed GW170817 because it sent ripples through space-time that reached Earth on 2017 August 17. Around the world, hundreds of excited astronomers mobilized quickly and were able to observe the event using numerous telescopes, providing a wealth of new data.

Previous detections of gravitational waves have all involved the merger of two black holes, a feat that won the 2017 Nobel Prize in Physics earlier this month....

Im Focus: Smart sensors for efficient processes

Material defects in end products can quickly result in failures in many areas of industry, and have a massive impact on the safe use of their products. This is why, in the field of quality assurance, intelligent, nondestructive sensor systems play a key role. They allow testing components and parts in a rapid and cost-efficient manner without destroying the actual product or changing its surface. Experts from the Fraunhofer IZFP in Saarbrücken will be presenting two exhibits at the Blechexpo in Stuttgart from 7–10 November 2017 that allow fast, reliable, and automated characterization of materials and detection of defects (Hall 5, Booth 5306).

When quality testing uses time-consuming destructive test methods, it can result in enormous costs due to damaging or destroying the products. And given that...

Im Focus: Cold molecules on collision course

Using a new cooling technique MPQ scientists succeed at observing collisions in a dense beam of cold and slow dipolar molecules.

How do chemical reactions proceed at extremely low temperatures? The answer requires the investigation of molecular samples that are cold, dense, and slow at...

Im Focus: Shrinking the proton again!

Scientists from the Max Planck Institute of Quantum Optics, using high precision laser spectroscopy of atomic hydrogen, confirm the surprisingly small value of the proton radius determined from muonic hydrogen.

It was one of the breakthroughs of the year 2010: Laser spectroscopy of muonic hydrogen resulted in a value for the proton charge radius that was significantly...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

ASEAN Member States discuss the future role of renewable energy

17.10.2017 | Event News

World Health Summit 2017: International experts set the course for the future of Global Health

10.10.2017 | Event News

Climate Engineering Conference 2017 Opens in Berlin

10.10.2017 | Event News

 
Latest News

Ocean atmosphere rife with microbes

17.10.2017 | Life Sciences

Neutrons observe vitamin B6-dependent enzyme activity useful for drug development

17.10.2017 | Life Sciences

NASA finds newly formed tropical storm lan over open waters

17.10.2017 | Earth Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>