Deloitte Survey: Mid-market Executives View U.S. as Less Accommodating to Entrepreneurialism Due to Weak Economy, Tax and Regulatory Challenges

Despite challenges, 35 percent of companies have become more entrepreneurial, benefiting from greater productivity and profit margins.

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Deloitte

Nov 16, 2012, 08:30 ET

NEW YORK, Nov. 16, 2012 /PRNewswire/ -- High levels of economic uncertainty are affecting business and shifting opinions among mid-market executives, according to findings in Deloitte's Mid-market perspectives: America's economic engine- why entrepreneurs matter. Specifically, only 59 percent of executives surveyed ranked the United States as the most accommodating country for entrepreneurs -- a 32 percent drop from how those same executives said they felt in past years.

Moreover, while 35 percent of mid-market executives claim their own organization has grown more entrepreneurial, 15 percent state their company is less entrepreneurial, despite the clear benefits in terms of greater productivity and profit margins. Among respondents who did not choose the U.S. as the most attractive environment for entrepreneurs, 42 percent selected China, followed by India (26 percent), Brazil (21 percent) and Australia (18 percent) as most accommodating.

"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, Deloitte LLP. "The good news is that entrepreneurialism exists everywhere and all of the factors cited as inhibiting it can be addressed."

Entrepreneurial Behavior

In defining "entrepreneurial," 81 percent of respondents say any company, large or small, can behave in entrepreneurial ways. Mid-market executives say that being creative, unique, different, innovative and taking risks with the acceptance of failure are most important for keeping their companies successful.

Among mid-market executives who indicated their companies had become more entrepreneurial, they cited innovation to create entirely new businesses, enhancing products and services, and discovering and penetrating new markets as primary behaviors driving their organizations.

Mid-market executives citing a decline in entrepreneurialism attributed it to C-suite leaders' desire to be risk-averse (36 percent) while 17 percent expressed their desire to avoid volatility by sticking to tried and true business practices.

Entrepreneurialism as a Catalyst for Growth

Overall, the survey shows entrepreneurial companies are succeeding at a faster pace in the marketplace.

Compared to all survey respondents, those who identified their companies as more entrepreneurial are more likely to have:

Increased capital investment (38 percent).
Experienced greater worker productivity (59 percent) and generated higher profit margins (49 percent).
Nearly one-third (30 percent) of mid-market executives were more likely to cite ongoing investment in technology and people as a driver of success.

The Bigger Economic Picture

Companies that have become more entrepreneurial are likely to have increased their workforce by more than 10 percent during the past year, and plan for the same in the year to come. Additionally, this segment of survey respondents expects their revenue to grow by more than 10 percent next year.

Uncertainty, however, has not diminished. In fact, the survey shows consistent increases in the level of uncertainty, particularly in an election year in which fiscal policy, taxes and regulation hang in the balance.

Research Methodology

In September 2012, a Deloitte survey conducted by OnResearch, a market research firm, polled 652 executives at U.S. mid-sized companies about their views on the economy overall, with an added focus on how, or if, entrepreneurial behavior had an impact on their company's operations. Respondents were limited to senior executives at companies with annual revenues of between $10 million and $1 billion.

Eighty percent of the companies represented in this survey were privately held; 42 percent of the respondents were owners, board members, or C-suite executives.

About Deloitte Growth Enterprise Services

Deloitte Growth Enterprise Services' team delivers a distinctive client experience through service offerings tailored to address the unique needs of mid-market and privately held companies. View the entire Mid-market perspectives: America's economic engine- Why entrepreneurs matter report here.

As used in this document, "Deloitte" means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

SOURCE Deloitte