Innovation and Small Firms

Innovation and Small Firms

By Zoltan Acs and David B. Audretsch





Utilizing a unique data set, Zoltan Acs and David Audretsch provide a rich empirical analysis of the increased importance of small firms in generating technological innovations and their growing contribution to the U.S. economy. They identify the contributions made by both small and large firms to the innovative process and the manner in which market structure, and the firm-size distribution in particular, responds to technological change. The authors' analysis relies on traditional theories of industrial organization and tests existing hypotheses, many of them previously untested due to data constraints. Innovation and Small Firms brings together two large data bases recently released by the U. S. Small Business Administration - one directly measuring innovative activity for large and small firms, the other providing a detailed census of economic activity for all manufacturing firms and plants across a broad spectrum of industries. Acs and Audretsch describe and evaluate the data bases in the context of the literature on innovation, market structure, and firm size. They present their findings on the presence of small firms, small-firm entry in manufacturing, small-firm growth and flexible technology, and mobility and firm size. They compare static and dynamic measures of small-firm viability and address the relationships between R&D, innovation, and productivity, and analyze the interaction between technological regimes and the role of government in innovation.


$50.00 X ISBN: 9780262011136 220 pp. | 6 in x 9 in


  • The authors work a new mine of data with creativity and care. The result is a vast improvement in our understanding of the role of small business and innovation.

    Richard R. Nelson

    Professor of International Political Economy, Colombia University

  • First Acs and Audretsch established quite convincingly the appropriateness of two data sets, one on small firms' industries, employment and output and the other on thousands of innovations introduced in 1982 by firms of all sizes. Then they shake the earth. Every chapter knocks down many old beliefs and does so with a definitiveness that is uncommon in this line of study.

    Leonard W. Weiss

    Professor of Economics, University of Wisconsin, Madison

  • By showing the crucial contribution of small firms to the innovative process, the authors of this impressive research provide a welcome compliment to earlier works on the subject and deliver an important message to policy-makers: small is not just beautiful, but also a creative force for a dynamic economy.

    Alexis Jacquemin

    Professor of Economics, University de Louvain and European Commision

  • This book taps extraordinarily rich data to shed important new light on the strengths, limitations and implications of small firms' innovative activity.

    F.M. Scherer

    Professor of Business and Government, JFK, School of Government, Harvard University