Difference Between Small Firms And Large Firms

960 Words May 4th, 2015 4 Pages

This paper is concerned with the difference between small firms and large firms with respect to innovation. Innovation can be defined as the implementation of new ideas to the products and processes, a new marketing method and a new organizational method in business practices, workplace organisation and external relations. It is becoming increasingly difficult to ignore the effect of innovation on performance of both small firms and large firms. A recent series of studies, indicated that large firms have the innovative advantage in some certain industries, but small firms are more innovative in some other industries. This paper will examine how small firms differ from large firms with respect to innovation, and look closely at the characteristics and behaviour of SMEs innovation.

Definition and background of SMEs

SMEs means small and midsize enterprise. By the US definition (SBA), SMEs are the firms that is owned and operated independently and is not dominant in its field of operation. In general, it is the enterprise with 500 or fewer employees. There are many figures showed that SMEs have an irreplaceable role in many countries, in the OECD countries, SMEs accounted for 95 percent of the total enterprises, they created 60 percent to 70 percent of total employment and more than 55 percent of GDP. Interestingly, these figures are almost the same between developing countries and developed countries. This shows the importance of SMEs in developed countries is…
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