Kansas Business Review Abstracts

Vol.20, No.3, Spring 1997

The Kansas Business Environment

by Norman Clifford, Robert Glass, and Charles Krider, Director, Institute for Public Policy and Business Research, University of Kansas.

This research is an assessment of the business environment in Kansas as reported by those who must operate within it: the firms who currently do business in the state. IPPBR surveyed 800 manufacturing and service-oriented firms, whose business was interstate in nature. The survey focused on three basic classifications of state environmental factors a business must work with in order to survive and prosper: the interaction between the state government and business, the basic business tools necessary to operate a business, and the amenities of life that a state can provide to the employees of businesses.

Overall the Kansas business environment was rated positively by firms in the survey. Nevertheless, there were some areas of concern that received widespread attention. In general, firms rated the state and local tax structure as a weakness of the Kansas business environment by a wide margin. The property tax on machinery and equipment, the property tax on commercial and industrial real estate, and the workers' compensation tax appear to be the most problematical for firms. Firms in general, but especially small firms, reported that these taxes had a strong negative effect on their investment and expansion decisions.

Although the state's physical infrastructure, especially highways and telecommunications, were viewed as strengths, air service appears to be another area in which firms feel that the state's business environment may be lacking compared to other states. Firms in mid-sized counties appeared to be the least satisfied with the state's infrastructure, rating not only air services but also highways lower than did firms in either rural or metropolitan counties.

There were some surprises in the findings. Firms did not rate the availability of financing as a problem area; telecommunications and highways were rated well, even in rural areas; housing was not seen to be a big constraint on hiring labor; and firms reported little difficulty in keeping up with technology or exporting products. Thus, one might conclude that the Kansas business environment is relatively good.

The Changing Ethical Climate Within the Telecommunications Industry

by H. Joseph Reitz, Co-Director, International Center for Ethics in Business, University of Kansas.

This study examines the perceptions of contemporary telecommunications managers regarding ethics in the industry: the extent and nature of changes, the causes of those changes, and the consequences of ethical/unethical behavior. The fifty-eight managers who were surveyed for this study represented independent local exchange carriers ranging in size from 4500 access lines to more than 1.6 million lines, located in 35 different states from Alaska to Minnesota to New York, and from Southern California to Texas to North Carolina.

It is clear from the survey that, as predicted, managers in the industry perceive that the ethical climate in the telecommunications industry has changed, and not for the better. Further, managers see a variety of new ethical issues with which they must grapple. They do not provide evidence that their companies are assisting them in this struggle.

Impacts of Highway Bypasses on Kansas Towns

by David Burress, Institute for Public Policy and Business Research, University of Kansas.

This report studies the economic impacts of building a highway bypass around small towns and cities in Kansas. First, in the long term, typical bypasses in Kansas probably do not have significant negative effects on the local economy. As a result of improved transportation, new industries may locate in the county or old industries may be retained or may expand, leading to higher income and population and more retail sales.

Second, in the short term, bypasses typically did not have negative short-term effects on the workforce and tax base in the town as a whole; however, bypasses probably did have transitory negative impacts on selected firms, such as restaurants, bars, motels, and service stations, although not all travel-related firms in a bypassed town were negatively impacted. Third, there is a large amount of background variation in the experience of individual towns and individual firms. Some individual firms may have chosen to go out of business rather than adjust to changed circumstances caused by the bypass. Those firms typically were replaced by other firms. Fourth, the size of this unrelated background variation implies that many factors other than bypasses affect the economy of small towns and of individual firms, and these various factors together are substantially more important than bypasses.

Fifth, bypasses have at least five different effects on the export base; i.e., effects on the sale of goods and services by locals to nonlocal persons passing through. One, they may permanently affect impromptu spending by through traffic. Two, they may permanently encourage growth of basic industry. Three, bypass construction and maintenance expenditures may temporarily add to local sales and employment. Four, disruption and relocation of businesses at the time of construction may temporarily interrupt some business activity. Five, relocation of businesses nearer to the bypass may temporarily increase local demands for construction and real estate services.

The Kansas Workforce: Employer Assessment

by Charles E. Krider, Director, and M. Elizabeth Stella, Institute for Public Policy and Business Research, and Ronald Ash, School of Business, University of Kansas.

In 1989, an IPPBR/Kansas, Inc. study measured employers' assessment of the Kansas workforce's skills, both basic academic skills as well as those other skills needed to survive in the new economy. In 1996, IPPBR and Kansas, Inc. conducted another study, this time to determine, among other things, if workforce skills had improved, if job skills and business needs have increased, and what minimal education requirements businesses required.

That workers' skills do not meet job-skill requirements was the overriding finding of this report. The pace of change, driven by technological advances and changes in how work was organized, continued to outstrip the rate at which workers' skills improved. Educators, employers, and employees have been chasing, and will continue to chase, a moving target. This has serious implications for Kansas and requires a serious, committed response at all levels of private and public activity. These implications are:

The Outlook for Kansas and the Nation: 1997 Update

by Norman Clifford, Institute for Public Policy and Business Research, University of Kansas.

A burst of growth in the first quarter of 1997 will drive the national economy to a strong performance during the year. In spite of a growth rate that is above the long-run potential, no acceleration in the rate of inflation is foreseen.

The Kansas economy posted strong gains in 1996. Kansas jobs are expected to grow 3 percent in 1997, and the growth in the number of Kansans employed should exceed the growth in the labor force by a half of a percentage point.

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