Executives Say US Does Not Welcome Entrepreneurialism
Even as the U.S. steadily climbs its way out of a recession, mid-market executives have little confidence in the American economy. This, coupled with the country's relatively high taxes and regulations, leads these professionals to view the U.S. as increasingly less accommodating to entrepreneurialism, according to a recent Deloitte survey.
The study, which polled 652 senior executives at American mid-sized companies, found only 59 percent of respondents ranked the U.S. as the most accommodating country for entrepreneurs. This represents a 32 percent drop from how the same respondents have replied in years past.
"Mid-market companies are the growth engine of the U.S. and entrepreneurship is critical to their success," said Tom McGee, national managing partner of Deloitte Growth Enterprise Services. "The good news is that entrepreneurialism exists everywhere and all of the factors cited as inhibiting it can be addressed."
The majority of Deloitte's respondents said any company, large or small, can behave in an entrepreneurial way, which consists of being creative, different and unique and taking risks while accepting potential failure. Only 35 percent of executives said their companies had grown more entrepreneurial this year. They cited innovation to create entirely new businesses, enhancing products and services and discovering and penetrating new markets as the primary actions fueling their organizations. Respondents who didn't consider their companies entrepreneurial stated decision makers were too risk averse and stuck too closely to traditional practices, from business intelligence to budgeting processes.
Meanwhile, companies that fit the description of entrepreneurial are doing better. They have higher capital investments, generate greater profit margins and experience greater worker productivity, according to Deloitte.
An organization's willingness to venture into new markets, take risks and test new practices often depends on its economic and legislative environment. Of the survey respondents who did not rank the U.S. as the most accommodating country, 42 percent selected China, 26 percent said India and 21 percent chose Brazil.
These three countries ranked high on Deloitte's separate "2013 Global Manufacturing Competitiveness Index." While the U.S., Germany and Japan have been the kings of manufacturing for decades, they're now confronted with competition from these developing countries' booming specialization in the industry.
Factoring in manufacturing
The U.S. Council on Competitiveness president and CEO Deborah L. Wince-Smith said the decline in American manufacturing is a call to action.
"We need to better understand the highly complex forces driving the future of manufacturing and many of the structural changes reshaping the global economy," she said. "Emerging nations are growing fast and strong. Wise policies and practices could unleash American strengths, turbo-charge our manufacturing engines and raise technology commercialization to new heights – driving U.S. economic growth and job creation."
While the U.S. is ranked third by Deloitte's index, it's expected to drop to fifth place in just five years. However, as manufacturing is increasingly centralized around technology, the U.S. will retain some leverage over other nations. Meanwhile, countries like Brazil and India will eventually need to reconcile their growth with the demand for regulatory legislation and economic infrastructure.
Share what you think: Does the U.S. foster entrepreneurialism?