Novel method projects growth potential of new firms
New businesses spring up all the time in the U.S. But which ones have the greatest ability to become big? A method developed by MIT researchers, based on an empirical study, projects the growth potential of high-tech firms with new precision — and could help local or regional policymakers assess their growth prospects. “A central question in evaluating the impact of policies toward business creation, startups, and innovation, is simply how to measure the kinds of entrepreneurs who are likely to build growth businesses,” says Scott Stern, the David Sarnoff Professor of Management at the MIT Sloan School of Management, who led the study. For all the theorizing about the subject, he adds, “There has historically been a big gap, in terms of how to measure and do analytics in a systematic way.” But now, based on a uniquely comprehensive analysis of businesses in California, Stern and his colleague Jorge Guzman, a...