Thursday, November 17, 2011

Small versus big business

Back from Belize, I’m still catching up with a stack of journals and magazines (yes, I still do read things on paper…).  One really interesting essay was written by James Surowiecki in the 31 October issue of The New Yorker and noted that one key characteristic of successful national economies was that there were a lot of large employers.  He noted that this is in stark contrast to a widely held political view that by helping small businesses we’ll help our country’s economy.  He pointed out that small businesses are inefficient and are likely to fail whereas big business have buying power and can help more people in both the short and long run.
This got me thinking about  the role of small versus big businesses for driving innovation. What is the role of small business?  At a party the other week I met two entrepreneurs with two very different and very promising businesses that they were trying to get off the ground. I asked one, who did they want to sell their internet-based business too in the best of circumstances.  Thus, when I later read the Surowiecki piece, I resonated to the power of big business. 
Small business are necessary, in a Darwinian sense, to drive innovation.  But the real money is made by the big businesses who have the power to take successful ideas and package them into something bigger. 
How does this help us solve our environmental problems?  I think we need to support research and innovation, but we also have to ensure that we have an infrastructure that can take these great ideas and scale them up.

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