Risk and Innovation The Role and Importance of Small, High-Tech Companies in the U.S. Economy (1995) / Chapter Skim
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APPENDIX: WHAT WE KNOW ABOUT SMALL BUSINESS IN AMERICA
APPENDIX: WHAT WE KNOW ABOUT SMALL BUSINESS IN AMERICA
Pages 77-86
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From page 77... ...
The purpose of this section is not to provide the definitive statement on small business In the United States, but rather to summarize some of what is known about small business and thereby put into context this report's discussion of small high-tech companies. DEFINITIONS What is a small business?
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From page 78... ...
A single franchise, for example, an automobile dealership, owned by an individual would be considered a small business, but multiple franchises with one owner or multiple outlets owned by the parent franchiser would not. Finally, it is important to note that more than half of all businesses have no employees other than the owner, and many owners work only part-time at their businesses.3 Using tax return clata, which capture all reported business activity, will give a much higher estimate of the number of small businesses than using unemployment insurance data, which exclude millions of part-time, hobby businesses (21.3 million and 5.5 million, respectively)
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From page 79... ...
Existing firms, especially small ones, are on average shrinking, but many new firms enter each year to offset that decline. · Small business' share of employment has remained relatively unchanged since 1958-about 35 percent of employment is In firms with fewer than 100 employees, and about 50 percent of employment is in firms with fewer than 500 employees.
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From page 80... ...
Finally, big companies often help small companies bring their products to market, through investing in the companies, providing a distribution system, or assisting In marketing.8 A 1992 study fundec! by the SBA looked at R&D within small firms in four industry groups: office and computing machines, electronic components and accessories, machine tools, and aircraft and parts.9 It found that small firms in those industries with university research relationships earned more per R&D clollar than large firms.
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From page 81... ...
For example, 100 percent of the large firms surveyed for a 1986 SBA study offered health insurance whereas only 55 percent of the firms with fewer than 500 employees offered health insurance. A 1984 Harris survey found that workers' satisfaction with benefits grows with firm size.
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From page 82... ...
However, it is important to note the political clout of trade groups and professional associations representing the interests of individual industries that are composed primarily of small businesses. Of the top 10 contributors to political action committees (PACs)
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From page 83... ...
These include proximity to, and guidance of, an ownerfounder, potential to move up quickly if the firm grows quickly, opportunities for an equity interest, and the opportunity to get involved in more aspects of a company's business. However, using quit rates among workers with the same wages as a gauge of employee satisfaction, it has been found that workers in large firms have a much lower quit rate than their counterparts in small ones.
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From page 84... ...
THE DATA ON SMALL HIGH-TECH COMPANIES The Office of Science and Technology Policy estimates that there are 75,000 small high-tech firms in the United States with approximately 1.75 million to 2 million direct employees engaged in key high-technology areas. SEA studies note that small hightech firms create twice their proportional share of new jobs, that they produce two to four times the number of products and patents per R&D dollar, and generate half of all major technical innovations leading to commercial patented products.l° The National Science Board's 1993 Science and Engineering Indicators notes that, "many of the new technologies and industries seen as critical to the Nation's future economic growth are closely identifiecl with small business." These technology fields include automation, biotechnology, computer hardware, advanced materials, photonics and optics, software, electronic components, and telecommunications.
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From page 85... ...
Note: Data reflect information collected through July 1993. Reprinted from Science & Engineering Indicators 1993 (National Science Board, 1994~.
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