If you read any popular business media, a great deal of attention is paid to the large, Fortune 500 companies who dominate Wall Street as well as entrepreneurial small firms who receive a great deal of credit for job creation. What about the middle market — a diverse group of businesses that lie somewhere between these two descriptions?
The Ohio State University Fisher College of Business and GE Capital were both curious to know about this segment — its demographics, contribution, operating characteristics, and challenges. So in 2011, these organizations formally collaborated on the creation of the National Center for the Middle Market, the first research center of its kind focused solely on the U.S. middle market.
Focus: midsized companies
The center’s mission is to provide thought-leadership, data, insights and resources to middle market businesses, policymakers, academics and other stakeholders in order to support economic growth and job creation.
Over the past three years, the research findings from the NCMM have been remarkable to say the least. Using a definition for of firms with annual revenues between $10 million to $1 billion, the contribution of this segment is significant. There are approximately 200,000 middle market businesses in the U.S. operating in every state and every industry, most notably services, manufacturing, retail and wholesale.
The segment contributes approximately one-third of the private sector GDP and jobs — in fact, if the middle market were its own country, it would rank as the fifth largest economy in the world.
Another revelation has been the consistent resiliency of these businesses through good times and bad. The average age of a middle market company is 31 years, a hallmark of longevity and stability. As another example, during the recent Great Recession, while large businesses were shedding 3.7 million jobs, the middle market added 2.2 million new jobs over the same period. The center has found these companies to be pillars of their communities — through hiring, contributing to local supply chains, and giving back.
In order to maintain a barometer on middle market performance, the NCMM established the Middle Market Indicator in April 2012. The MMI is a quarterly survey of 1,000 C-suite executives at middle market firms across the country and measures overall performance in terms of revenue and employment growth, confidence in the economy, investment plans and challenges.
The Q2 2014 indicator was released on July 23 and reflected strong performance in the both revenue growth (6.6 percent over the past 12 months) and employment growth (3.2 percent) — outpacing large and small business.
In addition, middle market leaders were bullish about future growth prospects, predicting 5.8 percent revenue growth in the next 12 months and citing increasing confidence in the global, U.S. and local economies.
The NCMM’s activities are not limited to research. Middle market business leaders can benefit from using the center in a variety of ways. The center collaborates with GE Capital to host executive education sessions on the Fisher campus, and has developed strong relationships with business media to share the message about the middle market.
Policymakers can also benefit by further understanding their business constituents. The NCMM provides data on middle market business demographics and insights. Finally, the center engages with students at The Ohio State University and beyond through programs such as middle market courses, career fairs, summits and the Fisher Invitational Case Competition. This year’s competition, which attracted the best and brightest from business schools across the Midwest, featured the Columbus Blue Jackets of the National Hockey League.