As of now small businesses in America are becoming less and less involved in the creation of new technology which has become a growing concern for legislatures and experts alike. According to data from the U.S. Patent and Trademark Office small businesses are making up a smaller percentage of the creation of new tech and while some believe that the current innovation system is holding them back fact is small businesses themselves are becoming a shrinking percentage of the U.S economy.

Some experts are citing some of the current challenges of small businesses in being involved in tech innovation such as the rising cost of patents hindering businesses financially from pursuing patent protection. The U.S. Patent and Trademark Office have restricted the number of patent applications in recent years to small businesses further making it harder for them to patent their inventions and other services. According to the figure below the patents awarded to small entities declined have been gradually declining from 2001 to 2015 from fee payments.


Decline in Patents Granted to Small Entities

One of the biggest effects of this trend is the slow down of patents being awarded towards businesses who now lack the protection from their competitors who now can create imitations of their product/services.  The cost of copy right infringement lawsuits have become more expensive over the years as they are occurring more often making it more cost ineffective for businesses to pursue. Despite this some would argue that the biggest reason for the decline in patents is that small businesses are simply just making up a receding portion of the U.S population. Scott Shane a Professor of Entrepreneurial Studies at Case Western Reserve University believes that “small business’s share of the economy is falling” and cites that U.S private sector payrolls have fallen from 48.6% to 42% between 1998 to 2011. The share of the labor force has also gone done by 6.1% between 1988 to 2013 and so have the share of the private sector GDP by 5% from 1998 to 2011.

If there is anything that is true it is that new technology and growth from small businesses would not be possible under these conditions. “Policy makers should certainly investigate the causes for the decline in small business’s contribution to U.S. inventiveness”says Shane who believes that everything that is happening now is “proportion to what has happened to small business in general.” With this in mind there’s no telling if there will be any changes to this trend in the near future.

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