News Column

Latent Power in the Middle Market

July/August 2003, HISPANIC BUSINESS Magazine

Jesús Chavarría -- Editor & Publisher

During the heyday of the Industrial Age, management theorists followed a model of top-down organization in which executives made decisions and factory workers carried them out. As the service sector emerged as a force in economic development, the emphasis switched to the bottom-up theory, based on the idea that customers first meet retail-level workers, so it is they who really determine a company's fate.

From my own experience, the real power in most organizations lives in the middle. The middle managers can make or break a company. Their consensus decisions can almost guarantee the success or failure of an initiative. Many of today's popular management books written by corporate titans deal with how to win the loyalty of these mid-level managers.

The same rule applies to the economy as a whole. Between the groundswell of small businesses and the giants of the Fortune 500 stands the middle market, defined in Hispanic Business as companies with revenues between $5 million and $50 million. Collectively, these companies fuel economic growth. When development experts or politicians talk about how "small businesses" have generated most of the jobs in U.S. economy during the last 20 years, they're often talking about middle-market firms.

This issue's coverage of the Hispanic Business Fastest-Growing 100 emphasizes the quest to join the middle market's ranks. Nearly two-thirds (65) of the 100 companies on the directory are members of the middle market, and another 17 qualify as mature corporations with more than $50 million in revenues. On one hand, these companies are small enough to maintain consistent, rapid growth. On the other hand, they are big enough to have a significant impact on their local and regional economies, which is why this segment garners so much attention from researchers and think tanks.

In the Hispanic community, growth of companies to the ranks of the middle market deserves special attention. As Professor Lena Rodriguez suggests (see "Quick Rise to the Middle Market" in this issue), family dynamics can restrain a company's attainment of middle-market status. But so can lack of capital, discrimination, and managerial inexperience all factors among Hispanic entrepreneurs. Through diversity programs, mid-career education, chamber of commerce seminars, community advocacy, and new images in the media, we need to expand the pipeline of companies progressing toward the middle market.

When Hispanic CEOs reach the middle, they raise their eyes from their own business to see larger issues such as exporting and government contracting. Just as in corporations and the overall U.S. economy, the Hispanic middle has the power through consensus decisions to decide its own future.


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