Grant McCracken: Are Big Companies Better At Innovation Than Small Ones?

Resolved: that big companies are better at innovation than small ones

PRO

Schumpeter in the Economist reports new research on innovation and the corporation, specifically the work of Michael Mandel of the Progressive Policy Institute

Mandel proposed three explanations for the big corporation as an engine of innovation:

1. The best path to economic growth is the creation of a new product category or operating system. Only big companies, like Apple and Google, can create these. (Plus, small companies may or may not be able to live in the shade of these giant oaks.)

2. Big companies do better in global marketplaces.

3. Only large companies have the scale to address big problems, and many of our our current problems are big problems (education, health care, environment).

Schumpeter adds three more:

4. Big companies have the resources to find and afford the best talent.

5. Big companies are learning to be more porous and more nimble.

6. Big companies now come scaling up out of small ones at a ferocious pace. Some of them remember their origins. They get large without growing out of their smallness.

CON

As Schumpeter notes, conventional wisdom holds that large companies are too slow and clumsy to be creative, that small is beautiful.

Indeed this wisdom is so conventional we tend more to assume than prove it. I wish I could recite all the evidence that supports the CONTRA case.

The only thing I can report is that several people inside the corporate and consulting world have told me how deeply frustrated they are by the corporation’s inability to innovate.

(Continue reading here).