Innovation & Competition

Small firms are much more innovative than large ones.

A study by Zoltan Acs and David Audretsch sought to identify which companies came up with he biggest innovations of the 20th century. They found that new or small firms generated half. Their role was particularly important in emerging or new industries. Entrepreneurs and small companies figure out where new technologies can meet customer needs and get to market quickly.

Large firms are generally unable or unwilling to keep up with the fast-paced changes in technology. Small firms have incentives to take on larger, riskier projects than large ones do because they can put it all on the line in order to break into the market and compete with the larger, less dynamic establishments 1.

We need more companies that can innovate and challenge the monopolies that control substantial chunks of American commerce.

1. Josh Lerner  |  Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed–and What to Do About It (pp. 47-49).  

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