Feb. 2, 2007 -- New businesses entering a local economy are more likely to help local competitors in the long term, rather than hurt them, according to a study released Friday by the Small Business Administration's Office of Advocacy.
While new establishments may cut into the profitability of older businesses at first, after three years, their impact tends to be positive, the study found.
"For local businesses, in the short term, new entrants are competitive foes, but in a few short years they learn to cooperate with each other," Chad Moutray, the agency's chief economist, said in a statement. "This certainly has implications for local economic development strategies."
The study examined the impact of new establishments within a 150-mile radius of other businesses in various local economies across the nation.