America’s small businesses: Time to think big
Micro-, small, and medium-size enterprises (MSMEs) are the bedrock of the US economy. They employ nearly six in ten workers, produce almost 40 percent of value added nationally, and grow into a meaningful share of very large corporations.
MSMEs in the United States are only half as productive as large companies, compared with 60 percent in other advanced economies. Narrowing the productivity gap, which is equivalent to 5.4 percent of the US GDP, is particularly vital in an era of shifting global production.
MSME performance varies across US states and metro areas. Some of the variation is due to sector mix, but overall, the performance of large and small businesses tends to go hand in hand, as local variations influence the productivity of all businesses, regardless of size.
Interactions between small and large businesses are key to boosting collective productivity. Strengthening networks and collaboration with large companies—in supply chains, industry clusters, and customer–provider interactions—could help US MSMEs gain advantages of scale in technology, human capital, market access, and finance.