Product Innovations by Young and Small Firms.

摘要

This paper examines the extent to which product innovations stem from small, young firms versus large, established firms by analyzing the patenting behavior of public firms derived from the NBER-Compustat database and assembling a dataset of private and public firms from the Thomas Register of American Manufacturers. The Thomas Register evidence shows that small firms are surprisingly capable at inventing and managing products relative to large firms. Suppose a small firm is defined as one with fewer than 500 employees. In 2002, small firms had an average of 10.01 products, while large firms had an average of 21.44 products; thus, small firms had on average half the number of products per firm compared to large firms. However, a firm with median employment of 1,000 had 0.0214 products per employee, a firm with median employment of 375 had 0.0534 products per employee, and a firm with median employment of 15 had 0.8767 products per employee. Similar findings are obtained for 2007. The NBER-Compustat evidence shows that small firms are more innovative per dollar of R&D than large firms, and the extent to which this occurs is decreasing in firm age; and young firms are more innovative per dollar of R&D than old firms, and the extent to which this occurs is decreasing in firm size. Define a young firm as below the median age and a small firm as below the median employment. Young small firms obtained on average 2.42 times more citations per dollar of R&D stock than young large firms; by contrast, old small firms are 2.05 times more productive at R&D than old large firms. Young small firms obtained on average 2.50 times more citations per dollar of R&D stock than old small firms; by contrast, young large firms are 2.12 times more productive at R&D than old large firms.