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An Analysis of Small Business Patents by Industry and Firm Size by Anthony Breitzman, Ph.D. and Diana Hicks, Ph.D. Haddonfield, NJ 08033 for Under contract no. SBAHQ-07-Q-0010

Release Date: November 2008

This report was developed under a contract with the Small Business Administration, Office of Advocacy, and contains information and analysis that was reviewed and edited by officials of the Office of Advocacy. However, the final conclusions of the report do not necessarily reflect the views of the Office of Advocacy.

Office of Advocacy ww

Small Business Research Summary
Advocacy: the voice of small business in government
No. 335

November 2008

An Analysis of Small Business Patents by Industry and
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Small firms obtain many more patents per employee than do large firms. This result is quantified to show that this is not a small-firm large-firm phenomenon, but is actually a firm size issue at all levels. In particular, even within the small firm domain, companies with fewer than 25 employees will have a higher patentto-employee ratio on average than firms with 50 employees, which will in turn have a higher patent-to-employee ratio than firms with 100 employees, and so on. Small firm patents outperform large firm patents on a number of impact metrics including growth, citation impact, patent originality, and patent generality. These metrics have been used for decades to measure the innovativeness of firms, labs, and agencies. The metrics have been validated and shown to correlate with increases in sales, profits, stock prices, inventor awards, and other positive outcomes. This suggests that the patents of small firms in general are likely to be more technologically important than those of large firms. Although small firms make up only 6.5 percent of all the patents in the database, they patent at

Overall Findings
Small firms are a significant source of innovation and patent activity. Small businesses develop more patents per employee than larger businesses, with the smallest firms, those with fewer than 25

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