Could the recession be the best time to start a new business?
Cambridge high-tech businesses founded in the recession of the 1990s enjoyed consistently better survival rates than companies started in the boom years. This is one of the findings of a University of Cambridge study examining the fortunes of the Cambridge hi tech cluster over the past two decades.
Looking at firms founded in 1992 during the last recession the report comments: "The survival rates for Cambridge hi tech firms were unusually high, and exceeded rates for all East Anglia firms and UK firms."
In contrast the survival rates for firms founded in the second half of the 1990s and early 2000s, both in Cambridge and the rest of the UK, was significantly lower. The difference persists for many years after companies were founded. The report suggests one reason for the difference may be that only firms with good prospects were founded in the recession of the early 1990s. The survivors then benefited from the economic expansion later in the decade.
The report, entitled The Cambridge High Tech Cluster: resilience and response to cyclical trends and co-authored by Dr Elizabeth Garnsey of the Institute for Manufacturing's Centre for Technology Management, looks at the impact on the Cambridge cluster of major economic trends, such as the IT revolution and the technology crash, analysing the data in terms of industry sector, company size and year of foundation.
Download the working paper (PDF document)