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 / Second Quarter 2001 / Issue 23(originally published by Booz & Company)


Recent Studies

Although 13 percent said they worked an irregular shift because their bosses made them, 6 percent said they worked nights because they couldn’t find another job. Interestingly, 13 percent reported they were on alternative shifts specifically because their employers required it to meet transportation demand, management needs, or pollution control compliance requirements.

For business professionals who have more choices, the BLS found that many maintain traditional 9-to-5 schedules. Nearly all (92 percent) of executives work normal daytime hours, as do more than 90 percent of the clerks, farmers, real estate and insurance salespeople, and construction workers included in the survey. And despite countless stories about late-night hacking marathons, 96 percent of the computer scientists also work normal daytime hours.

Germany Enters the New Economy
Mark Lehrer, “Has Germany Finally Fixed Its High-Tech Problem? The Recent Boom in German Technology-Based Entrepreneurship,” California Management Review, Haas School of Business, University of California (Berkeley), Summer 2000.

Germany enters the 21st century with some substantial competitive advantages: an efficient, well-educated workforce, some of the world’s leading research facilities. But with the notable exception of the software firm SAP, German firms have been reluctant participants in the New Economy.

Mark Lehrer, a management professor at the University of Rhode Island, shows how Germany’s corporate and bureaucratic establishments have slowly come to accept the entrepreneurial, high-tech revolution.

The failure of Germany to create a class of high-tech entrepreneurs is due to both business and the state. Since the 1960s, most German research and development has been conducted not by industry, but by 13 centers funded by the Federal Research Ministry. Yet the author contends these centers failed to produce technology that business could use, and by crowding out private R&D, helped precipitate the collapse not only of the German biotechnology firms, but also of German computing firms, such as Siemens AG.

But German industry shares much of the blame. Few Germans want to be entrepreneurs. Most engineers and scientists would rather stay in a state-funded research institute (with hefty pensions and substantial fringe benefits) than start their own company. Self-employment peaked in Germany in the 1960s, and has dropped ever since; in 1999, only 2.2 percent of Germans were involved in a startup company, compared to 8.5 percent of the U.S. labor force.

Moreover, Germans who do run businesses would prefer to stay small and own a firm entirely, rather than reduce control by having outside investors dilute equity. This Herr im Haus (“master of the house”) mentality, reports German venture capitalist Falk Strascheg, means that German entrepreneurs are mice who will always run tiny enterprises, whereas their American counterparts are gazelles who expect their firms to become large.

After nearly a decade of economic stagnation in the 1990s, there are signs that Germany has become more receptive to entrepreneurs, especially in the past three years. The Neuer Markt, a small-company stock market comparable to Nasdaq, opened in 1997; as of May 2000 its market capitalization was 210 billion euros (about $196 billion). Germany legalized stock options in 1998, and in 1999 liberalized its bankruptcy laws to provide more chances for entrepreneurs to rebound from failure. “The once institutionally ‘tight’ German system is becoming looser,” Professor Lehrer writes, “allowing for a greater diversity of individual and firm strategies.”

Should Banks and Non-Banks Mix?
John Krainer, “The Separation of Banking and Commerce,” Economic Review, Federal Reserve Bank of San Francisco, 2000 annual.

The passage of the United States’ Gramm-Leach-Bliley (GLB) Act in November 1999 removed many of the Depression-era restrictions imposed on banks by the Glass-Steagall Act. But one significant restriction the GLB Act left in place is the prohibition against banks engaging in non-financial commercial activities. Indeed, many of the architects of the GLB “argued purposefully for financial reform only on the condition that banking and commerce not be allowed to mix,” according to the article’s author, Federal Reserve Bank of San Francisco economist John Krainer.

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