The Role of Entrepreneurship in in Generating Radical and Incremental Innovations

What is it about?

The generation of innovative ideas is essential to technological progress and economic development. Some of these innovations are radical breakthroughs, which are thought to come mainly from small firms. Other innovations involve incremental improvements which are thought to be the domain of large firms. Contrary to prior scholarship and most popular conceptions, my study finds that small, entrepreneurial firms are superior at both radical and incremental innovation.

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Why is it important?

The discovery that small, entrepreneurial firms are responsible for producing both radical and incremental innovations is tremendously important. Globally, hundreds of billions of dollars is spent on R&D every year by companies and governments. The return on that investment may be questionable. And, it may be wise to think of large firms as excellent producers of low-cost goods and services but perhaps less effective as creators of new goods and services.