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Firms with 'Net presence younger, use more credit

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U.S. companies present on the Internet are much more active in seeking and using trade credit than the typical U.S. business, according to a research study released earlier this year by Dun & Bradstreet.

According to a news release from Dun & Bradstreet, D&B sampled about 218,000 U.S. companies with a presence on the Internet from a base of over 665,000, and compared them with approximately 500,000 randomly selected businesses of similar size from its database of 11 million U.S. businesses.

A company is "Internet-present" if it has a Web site or an Internet-domain name registration.

According to the D&B statistical study, Internet-present companies are younger and larger than the typical U.S. company. Internet-present companies are generally less than 10 years old and half of them have at least 10 employees.

In contrast, companies in the general business universe are typically 14 years old and only 18 percent of them have 10 or more employees.

"The research points to an Internet group that, in addition to being younger, relies much more heavily on the use of trade credit," said Susan Garavaglia, assistant vice president of analytical services at D&B, in the release.

"The group makes use of trade credit twice as frequently as other firms, and the amount of credit used is over three times higher than average. These are young, aggressive companies and they may be using the credit to support more rapid growth or they may just need the funds to survive," Garavaglia added.

In the study D&B matched its U.S. business data against Internet data on nearly 1.3 million .com, .net, .org, .edu, and .gov top-level U.S. domains and found half of the domains, or about 665,000, were non-businesses.

The states with the highest number of Internet sites per capita are the District of Columbia, New Hampshire, Massachusetts, Colorado, California, Vermont, Connecticut, Oregon, Washington and Minnesota. The states with the fewest Internet sites per-capita are South Dakota, Wyoming, Louisiana, Alabama, North Dakota, Kentucky, South Carolina, Arkansas, Mississippi and West Virginia.

"We find that states with high median household income also tend to have high levels of Internet-sites per capita," Garavaglia said. "Of the 10 states with the highest numbers of Internet-sites per capita, nine of them are also in the top half of states on the basis of median household income. In sharp contrast, all 10 states with the lowest numbers of Internet sites per capita are in the bottom half in household income.

"States with higher incomes tend to have higher education levels and high-tech job markets. These are the same kinds of factors that are likely to attract the companies and types of businesses that would be present on the Internet."

The research also found companies with Internet presence cross all industries and geographic regions in the United States. Not surprisingly, the largest penetrations of Internet-present companies are in industries such as information retrieval services, computer programming services, prepackaged software, other computer-related services, communications services, and periodicals publishing and book publishing.

Garavaglia said that the younger companies in these industries probably started off with Internet capabilities and now consider it a business necessity.

"There are few surprises as to what type of companies have embraced Internet technology. They are predominantly businesses that operate in high-tech fields. Their Web sites provide them with a 24-hour international showcase for their products and services," Garavaglia said.

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