The importance of entrepreneurial organizations: lessons from global comparisons of company age

Last week I ran a workshop for the global leadership of the growth companies division of a major professional services firm.

The Economist had just run a leader on Europe’s chronic failure to encourage ambitious entrepreneurs, including some interesting data comparing the age of leading European and American companies.

I dug into the original data from think-tank Bruegel in their excellent report The Demographics of Global Corporate Champions to create the following chart. It shows when companies in the FT500 (as of 31 December 2007) were founded, shown by geographic region.

What stands out the most from the data:

* Europe, which has many long-established companies, has almost completely failed to create large companies over the last decades.

* Japan has also underperformed as an entrepreneurial nation with very few major companies created after the second world war.

* The US continues to be a highly dynamic economic that is creating new major global companies.

* ‘Emerging‘ countries, largely in Asia, account for a large proportion of new entrants into the FT500, largely keeping pace with the US over the last 75 years, though a little less at the end of the century.

Industry structures globally are changing dramatically. In some cases long-established companies can be nimble, but in many cases of the major new industries and sectors that have emerged over the last decades are dominated by new players.

The Economist says Europe “has a problem with creating new businesses destined for growth”. Given current shifts in the structure of business, that is not a happy place to be.

As a priority, countries and regions must focus on building the capabilities and conditions from which rapidly growing new companies can emerge.