Small Business Practice

As the American economy moves from the industrial age to the information age, dramatic changes have been taking place in the importance of small businesses. While large firms with 500 or more employees continued to downsize and restruction throughout the 1990s, small firms provided the impetus for economic growth.
          Between 1976 and 1990 firms with fever than 500 employees provided over one-half of total employment and 65 percent of net new jobs in the U.S. During the 1990s, small firms provided almost all of the new jobs. For example, data for the 1992-1996 period show that small firms were responsible for creating nearly 12 million new jobs while large firms exhibited a decline in their number of employees.
          Why have small firms been so successful in creating new jobs? A recent white paper by the Small Business Administration suggest two reasons. First, small firms provide a crucial role in technological change and productivity growth. Market economics change rapidly and small firms are able to adjust quickly. Second, small firms provide the mechanism and incentives for millions of individuals to pursue the opportunity for economic success.
          Others may argue that is the entrepreneurial spirit and activity that account for the importance of small firms in the U.S economy. Whatever the reason(s), the ongoing growth of small businesses continue to be an important stimulus to the economy as we enter the 21st century.