/I3J

Í3^. United States

Uw|| Department of

^^^ Agriculture

Economic

Research

Service

Rural Development

Research Report

Number 74

C

Survival and Growth of

Independent Firms and

Corporate Affiliates

in Metro and Nonmetro

America

James P. Miller
WHflHHHMBMHWM

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vsMSSUUsessssssamsM
survival and Growth of Independent Fixrms and Corporate Affiliates

in Metro and Nonmetro America. By James P. Miller. Agriculture

and Rural Economy Division, Economic Research Service, U.S.

Department of Agriculture. Rural Development Research Report No.

74.

Abstract

Analysis of new firm survival and growth during 1980-86 reveals

that local, independent firms survived better and grew faster

than corporate affiliates in nonmetro areas. Independent firms

quickly reached their optimum size after beginning operation.

The rate of employment expansion for nonmetro independent firms

was about half that of metro independent firms. Corporate

affiliates in traditional nonmetro industries dependent on

natural resources and low-wage labor continued to locate mostly

in nonmetro areas. In developing future strategies for

industrial development, the strengths and weaknesses of corporate

ownership and control should be balanced against those of local

ownership.

Keywords: Business survival, growth, location, ownership,

independent firms, affiliates.

Washington, D.C. 20005-4788 February 1990
Contents

Summary iii

Introduction. 1

Review of the Literature 2

Data and Methods 4

New Business Survival and Growth. 5

Ownership Status and Size Differences. . . . . 6

Differences by Industry Group. 7

Recent Changes in Location and Organizational Structure.... 8

Independent Firms. ••........ ........... 8

Out-of-State Affiliates 9

Conclusions. • .......* 12

References 12

Appendix 14

11
Summary

Longitudinal study of approximately 924,000 independent firms and

affiliates that started between 1978 and 1980 reveals that the

nonmetro business survival rate was 49 percent during 1980-86,

some 5 percentage points above the rate in metro areas. However,

businesses that survived in nonmetro areas expanded employment

9.3 percent between 1980 and 1986, less than half the employment

growth rate in metro areas.

New independent firms in nonmetro areas survived better and grew

faster than corporate affiliates over the 1980-86 period. Of the

independent firms that started between 1978 and 1980, 53 percent

survived through the 6-year period, and their employment

expansion rate was about 19 percent. Only 39 percent of the

corporate affiliates survived, and their rate of employment

expansion was only about 3 percent.

Changes in business and industry ownership structure have called

into question the feasibility of rural areas attracting new

independent businesses in fast-growing, high-tech manufacturing

and advanced services industries. In developing future

strategies for industrial development, the strengths and

weaknesses of corporate ownership and control should be balanced

against those of local ownership (Doeringer, Terkla, and

Topakian). Their differences imply differentiated policy

approaches, including one for improving the longer term prospects

of local businesses, and another seeking commitments from the

management of large corporations to keep their branch plants open

and to retrain and relocate workers when they restructure or

scale down their companies. State and local developers must

differentiate between dependable companies that will remain

committed to an area and those that are footloose and unreliable.

Independent firms in metro areas grew faster. Their rate of

employment expansion about doubled those in nonmetro areas.

New independent firms that survived at least 6 years in highgrowth industries were concentrated more in metro areas also.

Surviving firms in high-tech manufacturing and advanced producer

services, the high-growth industries, were the most metrooriented during the 1980-86 period. Surviving firms in naturalresource-based industries, low-wage manufacturing, and

residential services, however, were the most nonmetro-oriented

group.

Nonmetro areas have attracted more affiliates of out-of-State

firms in goods-producing industries, especially the less

sophisticated operations in high-tech manufacturing. Affiliates

in industries dependent on natural resources and low-wage labor

have also been the most nonmetro-oriented, continuing the

previous long-term trend.

Ill
Survival and Growth of Independent Firms

and Corporate Affiliates in l\/Ietro and

Nonmetro America

James P. Miller

Introduction

Structural changes in business and industry in the early 1980's

have caused many rural communities to reassess their economic

development strategies. Rural unemployment has remained above

the urban rate since 1978, and rural job expansion has not kept

pace with that in urban areas. Part of the problem is that new

businesses in growth industries, such as advanced producer

services and high-technology manufacturing, have contributed to

job growth less in rural than in urban areas (Miller and

Bluestone; McGranahan). Urban areas have attracted the new fastgrowth, "glamour" industries, while rural areas have had to

depend more on businesses in traditional industries—agriculture,

mining, and labor-intensive manufacturing—that did not expand

employment much in the 1980's. Nonmetro employment grew by only

4.2 percent between 1980 and 1986, about a third of the metro

growth rate.

Recent findings that small, independent businesses have created a

disproportionate share of new jobs in the 1970's and 1980's have

piqued the interest of rural policymakers seeking new ways to

reduce unemployment (Birch; Armington and Odie; U.S. Small

Business Administration). Many State and local development

organizations believe that small businesses create jobs and

promote economic prosperity, and have started programs to help

nurture small fledgling businesses—incubator facilities,

venture/equity capital programs, enterprise zones.^ But little

is known about the growth and locational stability of new

independent businesses in rural areas.^

^ Throughout this report, the term "business" is used

generically to refer to either an establishment or a firm. The

term "firm" refers to the unit of ownership. It can be a

multiunit firm or an independent (single-unit) firm. The term

"establishment" is used to denote a single workplace, which can

be a headquarters, an independent firm, or an affiliate (i.e., a

branch or subsidiary of a multiunit firm). The terms

"establishment" and "business" are thus synonymous.

^ The phrase "locationally stable" is borrowed from Barkley. It

denotes the tendency of firms to remain in business and to retain

employees in any given area, regardless of whether the period is

one of expansion or recession.
Some studies have found that small independent firms are more

likely to fail and have more variable growth than the affiliates

of large firms (Barkley; Brock and Evans; Jackson)• Some

researchers have argued that small firms are more likely to face

"liquidity constraints," and thus close or lay off workers more

quickly than do large firms, particularly during a recession.

But, little evidence exists to document this in rural areas.

This report presents some preliminary results of a longitudinal

analysis of new business survival and growth during the 1980-86

period, which started with two recessions and ended with

prolonged recovery. The analysis tracks the survival and

employment growth, through 1986, of nonmetro and metro businesses

that started between 1978 and 1980, by their ownership status.

Review of the Literature

Over the past 10 years, literature on regional and local

development policy for rural areas has emphasized the advantages

of local ownership over external control (Coffey and Polese?

Jacobs). The argument for local ownership, first, is that

independent firms are more likely to be integrated into the local

economy than externally controlled affiliates (Watts).

Independent firms tend to purchase more from the local area and

sell less outside the local area, keeping most of their revenue

in the area. Studies by Klimasewski and by Cöcheba, Gilmer, and

Mack, for example, have demonstrated that rural manufacturing

affiliates were weakly linked to regional economies in the South•

Stable employment is the second major advantage of local

ownership. Jobs in independent firms are believed to be more

locationally and cyclically stable than jobs in affiliates.

Several studies have shown that independent firms in a recession

tend to have lower closure rates than do branch plants. Watts

observed that corporate affiliates, particularly in nonmetro

areas, are the first to experience cutbacks of employment and

closings during downturns of economic activity. Independent

firms tend to have lower closure rates primarily because they are

forced to adjust onsite or to face the prohibitive cost of

moving, whereas parent firms abandon affiliates in hard times and

possibly expand at other sites to compensate for the affiliates

they have closed. Parent firms are more likely to serve wider,

more diversified markets than are independent firms, which gives

parent firms more freedom to spatially shift production over the

business cycle.

U.S. studies, thus far, have presented only a partial picture of

business growth and survival in nonmetro areas. Most research

has focused on national trends and has failed to consider

differences between locally owned and absentee-owned businesses.

Birch, using 1969-76 Dun and Bradstreet (D&B) data, found that

regardless of its age, the odds of an establishment closing in

this 7-year period were quite high. Only about 45 percent of all

businesses survived. The probability that a firm will fail over

a given time period decreases with firm size for firms of the
same age, and decreases with firm age for firms of the same size.

Birch did not focus on independent firm survival, but showed that

they generated about 52 percent of net employment growth.^

Mills, and Gray and Phillips present evidence, based on D&B data,

bolstering the argument that independent firms provide more

stable employment over the business cycle than do affiliates.

Small and mostly independent firms with fewer than 500 employees

acted as shock absorbers to cyclical fluctuations by retaining

employees and remaining in business during recessions, thus

moderating wide fluctuations of larger firms during economic

downturns. Closure rates for small firms were lower than for

large firms during the 198 0-81 recession, and were higher during

the recovery. A recent study by Phillips and Kirchoff found that

on average, 40 percent of businesses (most of them independent

firms) started between 1978 and 1980 survived at least 6 years.

Studies by Erickson and by Erickson and Leinbach found that

manufacturing branch plants in nonmetro areas are more adversely

affected during periods of slumping demand than are metro plants

in the same organization. As product demand falls and

inventories accumulate, production is curtailed at the nonmetro

sites. Parent organizations centralize their activities in fewer

plants. Erickson believes that "where there is limited capital

investment in labor-intensive nonmetro branch plants, there is

considerable incentive to discontinue operation there before

doing so in main plants." Nonmetro areas are thus the first to

suffer and the slowest to recover from cyclical downturns.

Barkley found that in rural Iowa, independent firms exhibited a

higher tendency for failure than did branch plants. But in terms

of relocation rates, branch plants were more locationally

unstable, or more likely to move than were independent firms.

The corporate objective during a cyclical downturn or period of

long-term retrenchment is to consolidate branch operations to

reduce overhead costs, whereas independent firms are more likely

to remain in the area.

Large corporations have a wider range of strategy options than do

independent firms. They may see the abandonment of affiliates in

mature product lines as the best strategy. Returning to the core

function of the company may help build competitiveness and may

add stability to the remaining jobs provided.

Hansen and Carlsson believe that mature economies may be entering

a new phase of "vertical disintegration," or contracting out

functions once performed in the company. As employment is

reduced in older, mass-production facilities, more jobs are

created in flexible, small-scale operations able to efficiently

produce an increasing variety of goods and services in small

^ Miller, however, who used a different, edited version of the

D&B data, documented that independent firms were responsible for

only 32 percent of net employment growth in nonmetro areas

between 1976 and 1980, compared with 40 percent in metro areas.
batch runs. The result has been an increase in the number of

plants and a decline in average plant size.

Little is known about the effect of corporate vertical

disintegration on ownership structure and employment in nonmetro

areas. Hansen maintains that a return to flexibility and smallscale operations has favored metro areas and has revitalized

industrial agglomerations. This result may help explain the

resurgence of metro employment growth in the 1980's and the

slower growth of nonmetro areas. Schoenberger agrees with Hansen

that vertical disintegration has increased concentration of metro

economic activity. Branch plants of mature companies, as well as

small innovative firms, are drawn to urban markets.

On the other hand, Bergman and Goldstein believe that much of the

Nation's future economic activity will continue to be vertically

integrated in large corporations and to be geographically

decentralized. They attribute much of the rural

industrialization over the past two decades to an increase in

corporate control of the economy. The pull of urban

agglomeration weakens, rather than strengthens, as firm size and

concentration of ownership increase.

Data and Methods

The analysis in this report covers four issues that have not been

accurately and thoroughly addressed in previous studies: (1) The

survival rates of new firms in nonmetro areas, and how these

rates compare with metro rates; (2) How rapidly surviving

businesses expand employment; (3) Whether or not ownership status

is a factor in the rate of survival and growth; and (4) The

relationship between ownership status and the location of

surviving jobs.

Data for the analysis were derived from the U.S. Establishment

and Enterprise Microdata (USEEM) files of the U.S. Small Business

Administration.^ The USEEM database is extremely useful for

examining how firms operate after they are formed. We can

identify new businesses in a given period and then track their

survival and growth in later periods.^ Data on new formations

that survive and grow are more likely to reflect changes in

^ The USEEM files cover approximately 93 percent of full-time

business activity in the United States, generally firms with at

least one paid employee or with a Dun and Bradstreet credit

rating. For a full discussion of the USEEM file, see U.S. Small

Business Administration (1988).

^ A new firm is established by its first appearance in DSEB

files. Disappearances from the D&B files determine the level of

survival. However, many disappearances (an unknown number)

result from changes of ownership. Thus, a survival rate could be

biased downward by a large number of businesses changing

ownership and company titles, i.e., divestitures and mergers.
recent location than do data for all establishments. As Malecki

has pointed out, firm births (the flow of new entrants) more

accurately measure the recent competitive advantage of regions

than the stock of firms, which is the only type of data available

from national databases. USEEM data are also useful for

identifying whether the kinds of new firms that survive in

nonmetro areas are headquartered locally or out of State.

Finally, with the USEEM files, we can get a better focus on the

sources of job growth and stability by examining categories of

new firm survivors classified by their firm size, ownership

status, and industry group.

New Business survival and Growth

The USEEM survival-rate data may enhance

new businesses in the United States. Bus

imprecise, but the standard estimates are

percent of new businesses survive 5 years

only about 1 in 5 is still operating (Sol

results show that about 45 percent of the

started between 1978 and 1980 survived at

consistent with the findings of Phillips

the bleak portrait of

iness failure data are

that as few as 3 3

and by the 10th year,

omon). Our preliminary

924,000 new firms that

least 6 years, which is

and Kirchoff (fig. 1) .

Even more striking, the nonmetro survival rate was 49 percent, 5

percentage points above the rate in metro areas. However, the

firms that survived in nonmetro areas expanded employment only

Figure 1

Survival and employment growth of new establishments« 1980-86^

Survival rate

U.S. IHHHBi'^^-1

Metro miHl^^-'i

Nonmetro

Employment growth rate of surviving firms

|49.1

US. HHHHHi^HJHHJI 20.8

Metro

Nonmetro miiiiiiimiiii9.3

1 1 1 1

0 10

1/ Establishments starting 1978-80.

20 30

Percent

40 50
9.3 percent between 1980 and 198 6, less than half the rate of

employment growth in metro areas.

Ownership Status and Size Differences

New independent firms in nonmetro areas appeared to be more

locationally stable and quicker to expand employment than did new

affiliates over the 1980-86 period. The independent firm

survival rate of 53.5 percent was substantially higher than the

38.7-percent rate of survival for affiliates (fig. 2). And the.

19.5-percent rate of job growth of independent firms was well

above the 2.6-percent job growth for affiliates.

Chances for survival appeared to improve with the size of firm

regardless of ownership status, corroborating earlier findings by

Birch. The largest independent finns and affiliates of the

largest parent companies had the highest survival rates.

On the other hand, larger independent firms and affiliates were

slow to expand employment in nonmetro areas. Most large

establishments may have been close to their optimum employment

size soon after they began operating. Employment even declined

in affiliates of the largest firms. New affiliate employment of

large (1,000 or more employees) companies headquartered out of

State declined 5.2 percent between 1980 and 198 6.

The low survival rates of new affiliates may indicate that

large, absentee corporations were not only closing affiliates to

Figufe 2

Survival and employment growth of new establishments In nonmetro areas, 1980-86

All firms

0-19 employees

20-99 employees

100+ employees

-20

Independent firms

Survival rate

153.5

153.2

163.2

1 1 1

^64.2

1

20 40 60 80

All affiliates

In-State headquarters

Out-of-State headquarters

Large out-of-State

headquarters^

Corporate affiliâtes

Survival rate

¡ H 38.7

¡¡^■■ 37.3

l_ 1 1 1

-20 20 40 60 80

All firms

0-19 employees

20-99 employees

100+ employees

-20

Employment growth rate of

surviving firms

132.8

14.9

17,5

20 40

Percent

X

60 80

1/ Affiliates with out-of-State headquarters with 1.000 or more ernployees.

All affiliates

In-State headquarters

Out-of-State headquarters

Large out-of-State

headquarters^

-1.71

-5.2

Employment growth rate of

surviving affiliates

2.6

-20

[10.7

-L X

20 40

Percent

60 80
reduce production, but were also actively streamlining their

operations by selling off new affiliates in the 1980's. This

would support the position taken by Hansen and by Schoenberger

that large corporations have been vertically disintegrating and

consolidating their operations.

Differences by Industry Group

In six major industry groups in both nonmetro and metro areas,

independent firms show a consistent pattern of higher survival

and growth rates than do affiliates (fig. 3)• However, there is

considerable variation in employment expansion rates among

industries.

New independent firms grew much faster in metro than in nonmetro

areas, particularly in industries considered to be dominated by

innovative, fast-growth, and high-paying firms. High-tech

independent firms expanded employment 74 percent in metro areas,

which was about five times the expansion rate for high-tech

independents in nonmetro areas (fig. 3). Independent

firms in advanced producer and distributive services industries

grew about 58 percent, almost twice the rate in nonmetro areas.

The lowest rate of expansion by new businesses occurred in the

corporate sector in nonmetro areas. Affiliates expanded less

rapidly than independent firms in all industry categories, and

Figure 3

Employment growth rates of new establishments by Industry group, 1980-86

Independent firms Corporate affiliates

All firms

High-technology

Resource/Labor intensive^

Advanced services

Residential services

-40 -20 0 20 40 60 80

Percent

S Nonmetro Metro

1/ Natural resource-based and labor-intensive Industries.

All affiliates

High-technology

Resource/Labor intensive^

Advanced services

Residential services

-40 -20 0 20 40 60 80

Percent

S Nonmetro Metro
employitient declined by about 27 percent in high-tech

manufacturing industries (fig. 3).

The decline of employment in new high-tech affiliates indicates

that corporations were scaling down their operations during a

period of slumping demand and intense competition for many hightech products. As product demand falls and inventories

accumulate, parent companies curtail production at marginal

branch operations in nonmetro areas before doing so in main

plants, which are usually in metro areas (Erickson). The

incentive to cut back the more labor-intensive operations in

nonmetro areas first may have decreased employment in new as well

as old branches.

New affiliates in rural industries dependent on natural resources

and low-wage labor expanded employment faster in nonmetro areas.

The nonmetro employment growth rate was 15.6 percent, about twice

the rate of new-affiliate employment growth in metro areas.

New businesses in nonmetro residential services did not expand

much over the 6-year period. Independent firms expanded

employment 12.3 percent, and affiliates, 5.4 percent. The small

size and slow growth of rural markets might constrain the growth

of new residential services. These businesses start small and do

not expand much because of the small number of rural residents.

Recent Changes in Location and Organizational Structure

Survival and growth rates of new firms tell only part of the

story of how new businesses are affecting rural America. Another

critical question is whether the industrial base and its

ownership structure in rural areas are changing as a result of

these new businesses. Are recent employment shifts to or away

from rural areas attributable mainly to new independent firms in

new and innovative industries, or to externally controlled

affiliates in traditional rural industries?

Employment location quotients indicate recent changes in the

location of independent firms and affiliates of firms with outof-State headquarters in various industry categories (figs. 4 and

5). The location quotients also indicate relative changes in the

distribution of employment in surviving firms among regions and

types of businesses. The quotients are obtained by dividing the

share of 1986 employment resulting from 1978-80 starts that

survived through 1986 by the shares of total employment in 1980.

A location quotient greater than 1 shows that employment is

becoming more concentrated in a particular type of business or

industry in a specific Census division and type of county. A

quotient less than 1 indicates that the industry is becoming less

concentrated.

Independent Firms

Employment in independent firms in high-tech manufacturing and

advanced services shifted little toward nonmetro areas. Location
quotients for the nonmetro portions of Census divisions were

consistently below 1, except for high-tech manufacturing in

adjacent metro counties in the East South Central division (fig.

4). The recent tendency, as expected, was for new high-tech and

advanced-services employment in independent firms to concentrate

in metro areas.^ Location quotients were above 1 in the metro

portions of three Census divisions for high-tech manufacturing,

and in five Census divisions for advanced services.

Employment in new locally owned firms in industries dependent on

natural resources and low-wage labor tended mostly to remain

located in nonmetro areas. Location quotients for the nonmetro

portions of Census divisions were consistently above 1, except in

the North Central and Mid-Atlantic divisions (fig. 4).

Nonmetro areas also appear to be attracting a relatively large

share of independent residential activities. Location quotients

were above 1 in the nonadjacent nonmetro portions of four Census

divisions. Residential services (retail stores, service

stations, fast-food franchises, and others) accounted for an

increasing percentage of employment in small, remote rural

communities.

Out-of-State Affiliates

New affiliates of out-of-State firms in goods-producing

industries are concentrating and surviving best in nonmetro

areas. Location quotients for industries dependent on natural

resources and low-wage labor were greater than 1 in the adjacent

nonmetro portions of all Census divisions except the Pacific

(fig. 5). Location quotients were also greater than 1 in the

nonadjacent nonmetro portions of all Census divisions, except New

England and the Mid-Atlantic. Location quotients were less than

1 for the metro portions of all Census divisions, except the East

and the West South Central.

Nonmetro areas have also been the preferred location of new

affiliates in high-tech manufacturing industries in recent years.

But because most were controlled by out-of-State headquarters,

affiliates were mainly routine manufacturing operations that were

moved there by parent companies, mostly to reduce labor costs

(Malecki, Miller). Fewer affiliates in advanced producer

services industries have recently located and survived in

nonmetro areas. Location quotients were less than 1 in all

Census divisions, except in adjacent nonmetro portions of the New

England and Pacific divisions (fig. 5).

Several recent studies have documented the tendency of

innovative, high-tech firms and advanced producer services to

locate in densely populated regions and urban areas. Malecki,

Noyelle, Miller, and Miller and Bluestone found that these

activities are typically not drawn to peripheral areas.
Figure 4

Location quotients of new Independent firms, by industry

Metro ^ Nonmetro adjacent to MSA^ Nonmetro nonadjacent to MSA

Location quotient

3.0

ENC

High-technology

^ ^

WNC SA ESC

U.S. Census Divisions^

WSC

Location quotient

3.0

MA WNC SA

U.S. Census Divisions

Location quotient

3.0

2.5

2.0

1.5 h

1.0

0.5

0.0

Advanced services

~m\ m^ %r\ ^^ mn ;^ fcn

NE MA ENC WNC SA ESC

U.S. Census Divisions

WSC

Location quotient

3.0

2.5

2.0

1.5

1.0

0.5

0.0

Residential services

NE MA ENC WNC SA ESC

US. Census Divisions

1/ Metropolitan etatisficaf area. 2/NE: New England MA: Mki-Atlantic. ENC: East Nortti Central. WNC. West North Central. SA: South Atlantic.

WSC: West South Central MT: Mountain. PPC: PaaTic.

South Central.

10
Figure 5

Location quotients of new affiliates with out-of-State headquarters, by industry

Metro S Nonmetro adjacent to MSA^ Nonmetro nonadjacent to MSA

Location quotient

WNC SA

U.S. Census Divisions^

Location quotient

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

m.

NE

Location quotient

3.0

1

MA

Resource/labor intensive

ENC WNC SA

U.S. Census Divisions

121.

ESC

I

wsc MT PAC

2.5

2.0

1.5

1.0

0.5

0.0

^

NE

Location quotient

w^-\

Advanced services

m^A

^

I mi Kin Mn lf\

MA ENC WNC SA ESC

U.S. Census Divisions

WSC MT

WNC SA ESC

U.S. Census Divisions

1/ Metropolitan statistical area. 2/ NE: New England. MA: Mid-Atlantic. ENC: East North Central. WNC: West North Central, SA: South Atlantic.

WSC: West South Central. MT: Mountain. PAC: Pacific.

11
Conclusions

Independent firms survive better than corporate affiliates in

nonmetro areas. But independent firms, particularly in

residential services industries, quickly reach their optimum size

shortly after starting iip. Independent firms»rate of expansion

in nonmetro areas was about half the rate in metro areas. Most

new independent firms are small and do not expand much in

nonmetro areas because they are limited by the small size and

slow growth of rural markets.

The hypothesized vertical disintegration by large corporations

does not appear to be changing the traditional industrial base of

rural America. Affiliates of out-of-State firms in industries

dependent on natural resources and low-wage labor continued to

locate mostly in nonmetro areas. The less sophisticated branch

operations of high-tech firms also have begun to filter down to

nonmetro areas. New independent firms and externally controlled

affiliates in advanced producer services industries remained

concentrated in metro areas.

References

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The Brookings Institution. Vol. 1, No. 1 (Winter 1982), pp. 14-

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12
Doeringer, P.B., Terkla, D.G., and Topakian G.C. Indivisible

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Gray, T., and Phillips, B., The Role of Small Firms in

Understanding the Magnitude of Fluctuations in the Economy.

Washington, D.C.: Office of Advocacy, U.S. Small Business

Administration, 1983.

Hansen, N. "The Regional Consequences of Structural Changes in

the National and International Division of Labor," International

Regional Science Review, Vol. 11, No. 2, 1988, pp. 121-3 6.

Jackson, R. "Conjoining Interindustry Linkages and Ownership

Data: An Empirical Application," Growth and Change, Vol. 19, No.

1, Winter 1989, pp. 34-54.

Jacobs, J. "Why TVA Failed," New York Review of Books, Vol. 31,

No. 8, May 10, 1984, pp. 41-47.

Klimasewski, T. "Corporate Dominance of Manufacturing in

Appalachia," Geographical Review, Vol. 68, No. 1, Jan. 1978, pp.

94-102.

Malecki, E.J. "Industrial Location and Corporate Organization in

High-Technology Industries," Economic Geography, Vol. 61, No. 4,

Oct. 1985, pp. 345-69.

McGranahan, D.L. "Recent Employment Gains," Rural Development

Perspectives, Vol. 5, No. 1, Oct. 1989, pp. 44-45.

Miller, J.P. Recent Contributions of Small Businesses and

Corporations to Rural Job Creation, U.S. Dept. Agr., Econ. Res.

Serv., Staff Report No. AGES861212, Feb. 1987.

Miller, J.P., and Bluestone, H. "Prospects for Service Sector

Employment Growth in Nonmetro America," Rural Economic

Development in the 1980's. Preparing for the Future, U.S. Dept.

Agr., Econ. Res. Serv., July 1987, pp. 6-1 to 6-21.

Miller, J.P. "The Product Cycle and High-Technology Industry in

Nonmetropolitan Areas, 1976-80," Review of Regional Studies,

forthcoming article (Fall 1989).

Mills, D.E. Industrial Fluctuations, Firm Size and Employment,

Final Report SBA-7152-AER-83. Washington, D.C: U.S. Small

Business Administration, Aug. 1982.

13
Noyelle, T.J. "Advanced Services in the Systems of Cities,"

Local Economies in Transition. Policy Realities, and Development

Potentials, E.M. Bergman, ed. Durham, N.C.: Duke Univ. Press,

1986, pp. 143-64.

of New Firm Survival

the Babson

Phillips, B.D., and Kirchoff, B.Ä. "Analysis

and Growth," Unpublished paper presented at _„

Entrepreneurship Research Conference, Calgary, Ganada, May 1988

Schoenberger, E. "Multinational Corporations and the New

International Division of Labor: A Critical Appraisal,"

International Regional Science Review, Vol. 11, No. 2, 1988, pp.

105-19. / t-J^

Solomon, S. Small Business USA. New York: Crown Publishers,

1986.

U.S. Small Business Administration. The State of Small Business.

May 1985. "~~~ ~"

The Linked 1976-1986 USEEM Useras Guide.

Washington D.C.: Office of Advocacy, 1988

Watts, H.D. The Branch Economy: A Study of External Control.

London: Longman Group Ltd., 1981.

Appendix

The following is a list of major industry groups by standard

industrial classification (SIC) code.

I- High-technology manufacturina

1. Chemicals and allied products (28)

2. Ordnance and .accessories (348)

3. Machinery (except electrical) (3 5)

4. Electrical equipment (36)

5. Motor vehicles and equipment (371)

6. Aircraft and parts (372)

7. Guided missiles and space vehicles (376)

8. Instruments (38)

II- Resource-intensive industrv/labor-intensive manufacturing

9. Agriculture/forestry/fishing (1-9)

10. Mining (10-14)

11. Food arid kindred products (20)

12. Tobacco manufacture (21)

13. Textile mill products (22)

14. Apparel (23)

15. Lumber and wood products (24)

16. Furniture (25)

17. Paper and allied products (26)

18. Petroleum refining and pipiines (29, 46)

19. Leather and leather products (31)

20. Stone, clay, glass, and concrete products (32)

21. Miscellaneous manufacturing (39)

14
III. Miscellaneous aoods-produGlna

22. Construction (15-17)

23. Printing and publishing (27)

24. Rubber and miscellaneous plastics products (30)

25. Primary metals products (33)

26. Fabricated metals (except ordnance) (341-47, 349)

27. Miscellaneous transportation equipment (373-375, 379)

IV. Advanced producer and distributive seirvices

28. Air transportation (45)

29. Transportation services (47)

30. Communication (48)

31. Wholesale trade and electrical goods (506)

32. Wholesale trade, machinery, and equipment (508)

33. Banking support institutions (trust companies) (601,

604-5)

34. Business credit institutions and mortgage bankers (611,

613, 615)

35. Security and commodity brokers (62)

36. Insurance carriers (63)

37. Holding and investment offices (67)

38. Business services (73)

39. Motion picture production (781-82)

40. Colleges and vocational schools (822, 824, 829)

41. Business membership organizations (861-62)

42. Miscellaneous services (89)

V. Residential fconsumer/social/health) services

43. Local passenger transportation (41)

44. Electrical, gas, and sanitation services (49)

45. Retail trade and eating and drinking places (52-59)

46. Commercial and mutual savings banks (602-03)

47. Savings and loans and personal credit institutions (612,

614)

48. Insurance agencies (64)

49. Real estate (65, 66)

50. Hotels and motels (70)

51. Personal services (72)

52. Auto repair services (75)

53. Miscellaneous repair services (76)

54. Motion picture theaters (783)

55. Amusement and recreational services (79)

56. Health services (80)

57. Elementary and secondary schools (821)

58. Libraries and information centers (823)

59. Social services (83)

60. Museums, zoos, etc. (84)

61. Personal membership organizations (863-66, 869)

62. Private households (88)

VI. Miscellaneous service-producing

63. Rail and water transportation (40, 44)

64. Motor freight and warehousing (42)

65. Wholesale trade (501-505, 507, 509, 51)

15
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