Chapter 6: Science & Engineering Indicators 93

Small Business and High Technology

Many of the new technologies and industries seen as critical to the Nation's future economic growth are closely identified with small business. For example, biotechnology and computer software are industries built around new technologies that were largely commercialized by small business. (Click here for footnote 58.) Small business retains certain advantages over large businesses in commercial environments characterized by fast-moving technologies and rapidly changing consumer needs. A keen receptivity to new product ideas found outside their own operations characterizes this efficiency (see Hanson 1991). Small businesses supplement internal product development with new product ideas drawn from dealings with customers, suppliers, government labs, universities, and others to ensure useful innovations. These attributes make small business a key sector to watch as the Nation seeks to stimulate the development, adoption, and diffusion of new technologies. (Click here for footnote 59.)

This section presents information on new company formation in the United States and foreign ownership of new high-tech companies. (Click here for footnote 60.) The discussion focuses on companies active in the following eight technology fields:

These fields encompass many of the technologies considered critical to the country's future economic competitiveness (National Critical Technologies Panel 1993).

Footnote 58:
The role of small business as a commercializer of new technologies is somewhat unique to the United States. See Mowery and Rosenberg (1993).

Footnote 59:
In a 1982 study done for the Small Business Administration comparing innovation between small and large firms, it was found that small firms produced 2.4 times as many innovations per employee as did large firms. See Futures Group (1984) and Hanson, Stein, and Moore (1984).

Footnote 60: Information in this section is derived from the CorpTech database, owned by Corporate Technology Information Services, Inc. The CorpTech database permits an inspection of small business entities by technology field. This database includes many of the new startups and private companies often missed by other databases and is one of the most current sources of information on small newly formed companies active in high-tech fields. The database attempts to be all-inclusive: by CorpTech's own estimate, it includes 99 percent of large companies (over 1,000 employees), 75 percent of medium-sized companies with 250 to 1,000 employees, and 65 percent of companies with less than 250 employees. When prospective companies for inclusion in the database are identified, they are sent questionnaires covering their size; status (private or public, independent, subsidiary, or joint venture); year formed; and product groups in which they are active. The version of the database used here (Rev. 8.2 1993) includes about 35,000 independently managed companies.

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