The study, “An Analysis of Small Business Patents by Industry and Firm Size” examines small business patent activity.
It found that small firms showed significant innovation and patent activity. Patents per employee is higher in small businesses than in larger businesses, with the smallest firms, fewer than 25 employees, having the highest number. The patents of small firms were found to be more significant than larger firms. The smaller firms outperformed larger firms in categories such as citation impact, originality and growth. Further, small firms were found to be more specialized in high technology based high growth industries, such as information technology, semiconductors, biotechnology and pharmaceuticals.
1293 firms were reviewd in this study, 504 had 500 or fewer employees, 760 had more than 500 employees, and the size information was not found for 29 firms. Therefore, it can be concluded that 40% (up from 41% in 2004 and 33% in 2003) of the firms with 15+ patents were in the category of small firms.
The patents of small firms were found more superior and technologically significant than that of larger firms. They have outperformed larger firms on a number of impact metrics which have been used measure innovativeness of the firms, agencies or labs. These metrics help in giving many positive outcomes such as increased profits and sales, improved recognition, etc. These metrics include, patent generality and originality, citation impact, growth, etc.
Only 6.5% of the patents registered by small firms belong to database technology. Most of the patents were in the health related technologies such as medical devices, pharmaceutical, biotechnology, etc. and a few in information technology such as telecommunications, computer hardware and software and semi conductors.
It was seen that smaller firms are capable of obtaining more patents than larger firms. But, when seen in detail, it was found that, the difference is not just restricted to large and small firms, even in small firms it was found that, there were differences in the patent activity at each level. That is, companies having 25 or less employees have a higher patent to employee ratio than companies having 50 employees, which have a ratio higher than companies having 100 employees and so on.