How Small Businesses Outperform Industry Giants In Green Innovation and Productivity

Studies of small innovation firms show that start-ups and small businesses are more environmentally efficient than major corporations. In a study performed by the U.S. Federal Small Business Administration, small businesses outperform their larger counterparts, exhibiting more conformance with green innovation and productivity in terms of patents per number of employees.

Defining Small Firm Efficiency

Wage payment services define small innovation firms as fewer than 500 employees. Small firms now produce an estimated 27 patents per 100 employees. Larger firms +500 employees, are estimated to produce solely 1.6 patents per 100 employees. The ratio of green patent to employee numbers indices small firm productivity to be 16 times higher than that of major innovation firms.

The fact that small innovative firm productivity reflects a higher percentage of green patents, indicates that global market entry is aligned with registration. The more patents per employee, the greater the productive output of the firm. This claim is not subjective, in that innovation firms are focused on patent registration, and the standard for economic efficiency is per employee.

US Patent Index Indicators

• At present, U.S. based firms are responsible for 43% all U.S. patents in the green technologies segment. Japanese firms ranked second in U.S. patent registration at 32%. No other country holds registration of more than 6% of U.S. patents.

• Small firm portfolios contain a higher percentage of green patent registrations than larger firms. Small firms typically have at least one sustainable or ‘green’ innovation patent registered. Registration in this category for small businesses involved in green sectors is on average 20%, versus large firms at 1.5% of total patents.

• Registered patents falling under the ‘green’ category are cited 2.5 times as frequently for small businesses as they are for large companies.

• Small firms account for an approximate 8% of all U.S. patents, and 14% of green technology patents. Those statistics are higher for smart grid and solar energy technologies 32%, and batteries and small fuel cells, for which small firms account for more than 15% of the total registered U.S. patents on file.

• Green inventors considered to be prolific in funding of pioneer firms generally list five or more green patent registrations, citation index of 1+ for small green technology firms, where stakeholders had once been employed by large firms, government or university labs.

• Lower obsolescence rates are cited by smaller firms, with 80% of all patents registered recently. Patent originality, utility and growth are cited for innovations registered by smaller firms.

Information credit to ADP.com.