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Innovation at Small Firms

Mark Marich

The latest report from the Intuit Future of Small Business series takes a look at how small firms innovate.

The report notes that, while small business owners are natural innovators, few view themselves in this manner. Instead, they refer to “tweaks,” “improvements,” or “experiments.” To put it more technically, they tend to engage in incremental, as opposed to breakthrough, innovation. The report also summarizes some of the key factors that affect and amplify small business innovation. Important amplifiers include information technology, which has drastically market barriers to entry, and also helped business owners gain access to new information and skills. The report concludes that innovation, both market-sustaining and market-changing, will be critical to the future success not only of individual small businesses, but also of the overall US economy.  

Meanwhile, SBA’s Office of Advocacy has released a sponsored report that looks at various measures of small business innovation. The study finds that patenting activity is not a strong indicator of a firm’s value. It also finds that increasing sales are not a strong indicator of innovation, but that increases in firm head count do serve as useful indicators of increased innovation.  

Report: Intuit Future of Small Business report, “Defining Small Business Innovation"

Report: US Small Business Administration Office of Advocacy sponsored report, “Innovation in Small Business:  Indicators of Change and Value,” by C.J. Isom and David R. Jarczyk

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