Global fintech and funding innovation ecosystem

Firm Size and Innovation: A Double-Edged Sword

New Things Under the Sun | Matt Clancy | Jun 2, 2023

Unsplash Kaleidico innovation - Firm Size and Innovation: A Double-Edged Sword

Image: Unsplash/Kaleidico

Recent studies highlight that as firms grow in size, their R&D expenditures rise proportionally with sales, but they tend to produce fewer groundbreaking innovations per R&D dollar spent.

  • Large firms, often termed "superfirms", are more focused on incremental innovations, primarily aimed at improving existing products and services.

Read:  To Support Disruptive Technologies, Take Bigness Seriously


  1. For Investors:
    • Opt for a balanced portfolio, including stocks from both small firms, which might produce high-impact innovations, and large firms, which offer stability through incremental innovations.
    • Monitor R&D efficiency; a larger R&D budget doesn’t always translate to groundbreaking innovation.
  2. For Startups:
    • Leverage agility and small size for high-impact innovations, which can be an edge over large competitors.
    • Consider partnerships or alliances with large firms to access resources without compromising the innovative culture.
  3. For Government Policy Makers:
    • Incentivize small and medium enterprises (SMEs) through subsidies, tax reliefs or grants to foster high-impact innovation.
    • Encourage collaboration between large firms and SMEs for a synergetic effect on innovation.
    • Establish frameworks for intellectual property rights that protect smaller players without stifling innovation.

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#InnovationEfficiency, #FirmSize, #RnDExpenditure, #IncrementalInnovation, #Superfirms, #InvestmentStrategy, #GovernmentPolicies, #Startups, #HighImpactInnovation, #Collaboration, #IntellectualProperty

NCFA Jan 2018 resize - Firm Size and Innovation: A Double-Edged SwordThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit:

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