The Fisher College of Business at The Ohio State University (OSU) and GE Capital have partnered on a foundational, multi-source research initiative on the U.S. Middle Market. They polled more than 2,000 business leaders across the United States on their business, their capabilities and performance, their needs to drive more growth and their overall economic outlook. This comprehensive insight-driven research uses a compilation of highly reputable data sources, including the Bureau of Economic Analysis, the U.S. Census, The CIA World Factbook, Compustat and Dun & Bradstreet, as well as comprehensive primary research led by OSU in partnership with GE Capital.

The Middle Market is, in fact, a key driving force behind the U.S. economy, making critical national and local economic contributions and providing what has proven to be the most sustainable source of jobs and revenues. According to US Census data, the Middle Market represents over a third of American jobs and more than $9 trillion in annual revenue. Further, many of its companies, through their longevity, act as community pillars, providing stable employment and acting as responsible corporate citizens. What makes the middle market hard to understand is that it is not homogenous. Rather, it is a collection of businesses that range in size and structure and that span industries.

There are three multidimensional segments — correlating to revenue — and each segment displays certain operational and other traits. On the low end ($10MM – $50MM in revenue), companies often operate more like small businesses; in the middle ($50MM – $100MM) are well established enterprises with solid growth and consistent business practices; and at the high end ($100MM – $1B) are firms that are already large global companies, or are starting to resemble them according to US Census and OSU-RTI Research survey data.

But revenue alone does not adequately describe this sector; it has an incredible diversity of business structures. The Middle Market comprises publicly traded, privately owned, and family-owned companies, and even partnerships and sole proprietorships. There also are companies that will be the "next big thing" by transitioning through the Middle Market, a case supported by the fact that 27% of all large companies in 2010 were still Middle Market firms in 2005 according to Dun & Bradstreet. Finally, there are emerging growth businesses transitioning from small or start-ups to bigger businesses. And across each segment are community pillars that are anchored to local and regional economies.

The recession seems to have had a lesser impact on the Middle Market than on the large business segment. According to Dun & Bradstreet, Surviving Middle Market companies added more than two million jobs from 2007 – 2010, even as large companies were shedding almost four million. Despite the continuing economic malaise and recessionary fears, Middle Market executives are optimistic about growth. This confidence comes from a strong belief in their ability to compete, innovate, and retool themselves to exploit opportunities. Yet Middle Market executives recognize they are facing critical external headwinds, and need to build and evolve internal capabilities in order to compete in what is likely a more global, more regulated, and more competitive marketplace.

Even in an economic reset, there are a select group of high performers growing at least 10x the rate of GDP growth according to Compustat. Top performers share distinctive management characteristics and priorities compared with other Middle Market firms. They put more emphasis on innovation, have stronger management cultures, and display a sharper customer focus. OSU-RTI research survey data notes they also have sophisticated strategic planning processes in place and road maps for achieving growth targets.

In sum, taking into account all of the Middle Market’s aspects — its huge contribution to the economy, job creation even in tough times, its wide range of businesses and business models, and the challenges it faces — it is a truly amazing sector that deserves more attention, more advocacy, and greater access to capital and global markets. Its complexity makes this a challenging task, but, we believe, a compelling opportunity.

View the full GE Capital 2011 National Middle Market Summit "The Market that Moves America" report.