Defining roles Featured

9:41am EDT July 22, 2002

As I read a study by SBA’s Office of Advocacy entitled “The New American Evolution: The Role and Impact of Small Firms,” I was startled by the repetition of the word “change” in the text.

Perhaps I reacted because of a course my senior staff had attended, “Leadership in a Time of Change,” designed to give them the tools to bring our employees through a period of rapid program changes and into the future unscathed. More likely, it was because I’d recently read the bestseller by Spencer Johnson, M.D., “Who Moved My Cheese?”

While employment has remained virtually unchanged in the European Union recently, it has increased by at least 14 million in the United States, Jere Glover, SBA’s chief counsel for advocacy, writes in regard to the study.

What accounts for this? Differences in competition, entrepreneurship and start-ups are major factors, he says.

Glover adds that “the American economy is not a still photograph — it’s a dynamic organism that changes while you’re looking at it. Looked at from the perspective of process, change and evolution, small firms make at least two indispensable contributions to the American economy:

  • As sources of constant experimentation and innovation, they are an integral part of the renewal process that defines market economies. They have a crucial role as leaders of technological change and productivity growth. In short, they change market structure.

  • By creating opportunities for women, minorities and immigrants, they are an essential mechanism by which millions enter the economic and social mainstream.”

    The study explores Dynamic Theory, asking why firms start up in industries in which existing firms are experiencing losses and losing market share to foreign companies. The study suggests that “new firms [entering] the industry were not simply to increase output by being smaller replicas of large incumbent enterprises, but by serving as agents of change.”

    “Dynamic Theory favors small firms because it shines the light on change. In the new information economy, continued innovation and change is the rule,” the study states. “More than half of the sales of high technology firms comes from products less than 18 months old. Seen through the dynamic lens of evolutionary theory, the economic welfare implications of the recent shift in economic activity away from large firms and toward small enterprises is welfare-enhancing because start-ups introduce change into the economy.”

    On a different level, “Who Moved My Cheese?” explores the maze of today and suggests that one’s view of change and reaction to its implications greatly affect personal outcomes — and those in business.

    SBA’s programs and employees are changing to move in sync with small businesses. We wish our award winners — and all of your small business friends and relatives — well during their Small Business Week 2000.

    Frank D. Ray is the Columbus district director for the U.S. Small Business Administration. He can be reached at 469-7310 or frank.ray@sba.gov.