Kal Bishop

Creativity and Innovation - Large firms versus small firms

There is a pervasive assumption that small firms are more creative and innovative than larger firms. That is, they identify problems and generate ideas (creativity) and idea select, develop and commercialise (innovate) those ideas to a greater degree than larger firms. However, there is a large degree of untruth to this assumption:

There is a pervasive assumption that small firms are more creative and innovative than larger firms. That is, they identify problems and generate ideas (creativity) and idea select, develop and commercialise (innovate) those ideas to a greater degree than larger firms. However, there is a large degree of untruth to this assumption:

a) Small firms suffer from a different set of problems than larger firms. Small firms, for example, tend to lack resources whereas larger firms tend to have more resources but may be less ready for wholesale adaptation in times of radical change. But these limitations do not mean that one is more innovative than the other. The sheer availability of resources means larger firms should be able to innovate along product, process, positioning and paradigm lines more often. 

b) Large firms register more patents than small firms.

c) Relatively little data is available about innovation in small firms.

d) Most research of small firms has been conducted in the technology sector – a very small sample with it’s own idiosyncrasies – the very large investments that some tech firms get skews the data.

e) There is little data analysing whether the innovations produced by small firms has any significance at all.

f) Small firms will inevitably tend to suffer a lack of intellectual cross-pollination and frame breaking and higher degrees of path dependency and parochialism.

g) There is confusion between organisational size and team size. Small teams working with direct access to decision makers in large organisations can be just, if not more (with larger resources), effective than small firms.

These and other topics are covered in depth in the MBA dissertation on Managing Creativity & Innovation, which can be purchased (along with a Creativity and Innovation DIY Audit, Good Idea Generator Software and Power Point Presentation) from http://www.managing-creativity.com/

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Kal Bishop, MBA

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Article Tags: Large Firms, Small Firms, Larger Firms

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