Risk and Innovation The Role and Importance of Small, High-Tech Companies in the U.S. Economy (1995) / Chapter Skim
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1. EXECUTIVE SUMMARY
1. EXECUTIVE SUMMARY
Pages 1-7
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From page 1... ...
The findings and conclusions of the study are based on committee members' experiences and on insights cleveloped by comparing and contrasting the role of small technologically innovative companies in the six industries studied: advanced displays and visual systems; implantable and surgical medical devices; software; environmental testing services; network services ant! access devices; and outdoor sporting goods.
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From page 2... ...
New company formation is supported by: relative ease of entry because of relatively low initial capital requirements; a significant number of successes, which serve to encourage entrepreneurs to enter the industry; companies that appear to have substantial value if sold, even though they are not necessarily long-term survivors; availability of venture capital financing; and a public market for the shares of companies at relatively high valuations, compared with other industries, on the basis of revenues or profitability. In both of these industries, there are large, dominant companies, but the technological dynamism and fragmentation of the market create opportunities for small companies.
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From page 3... ...
In medical device innovation, most user-inventors are highly technically trained, the "field testing" of products is often a formal clinical trial in a university hospital, and, historically, venture capital was widely available for mectical device start-ups. Furthermore, medical devices are sold to physicians (and increasingly to health care organizations)
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From page 4... ...
In consumer markets, substantial benefits of linked commercial and technological risk taking accrue directly and immediately to inctividual consumers and to the national economy. These benefits include the rapid exploration of market potentials, the development and refinement of new products and services, certain types of technical innovation, and product diversity.
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From page 5... ...
The demands of successful commercial innovation in different markets differ, leading to varied levels of expenditures on research, development, demonstration, and to variation in the organization of company technical effort. Small companies can have inherent advantages in fragmented, technically dynamic, and rapidly growing markets in which there are low barriers to entry.
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From page 6... ...
A number of national policy matters affect directly the prosperity and performance of small high-tech businesses. it is the committee's judgment that the federal government can help maintain the vigor and contribution of small hightech businesses in the following ways: · Working to ensure that financial market regulation, banking laws, and securities regulatory agencies are sensitive to the particular demands of small high-tech companies; · Monitoring and when possible reducing federal, state, and local regulatory burdens on small high-tech companies; and · Maintaining, especially in light of prospective cutbacks in research and development spending, a rich portfolio of university research as a source of potential new commercial opportunities for start-up companies.
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From page 7... ...
The challenge in program design and implementation is to articulate and adhere to an industryspecific rationale for government support in light of substantial private-sector activity. Finally, in the committee's judgment, many government policy mechanisms to promote economic growth- some types of federal R&D funding, technical assistance programs, local business incubators, university-industry collaborative ventures need to be designed and managed regionally or locally.
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