Tuesday, June 04, 2013

Product Innovations by Young and Small Firms


This study investigates whether the age of a business is linked to innovation and productivity, specifically whether young firms have an edge on older firms. Previous research on innovation has shown that small businesses are more efficient at innovation than large businesses.


Innovative productivity is closely related to the life cycles of firms: the flow from exuberant startup to mature firm. Large and older firms are expected to have an innovative advantage because of their resources (large labs, equipment, financing, experience, etc.); small and younger firms have a different kind of innovative advantage in the ease with which they may engage in unrestrained brainstorming (with no cost justification needed).

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