A new report from researchers at Harvard, Columbia and Duke suggests that your startup idea doesn’t have to be big and you don’t have to go national to be successful. In fact, most startups are not huge, glamorous giants like Amazon or Uber. Many are small businesses that remain local and do not intend to create new markets.
The study assumes that small businesses such as 3D printing labs and Internet cafes are essential for innovation because, even if they are not the point of origin of new technology, they play an essential role in ensuring that the technology reaches people at local level.
“Businesses like auto repair services, video rental stores, or computer consulting are not innovative in themselves, but both exist because of and are critical to realizing the value of a core technological innovation (motor vehicles, video cassettes , computers)”, the document reads. law.
Harvard University graduate student Innessa Colaiacovo, Columbia Business School professor Jorge Guzman, and Duke University professor Daniel Gross published the research, which offers new evidence showing that small startups may actually have an economic advantage over the Amazons and to the Ubers of the world: they might simply know their local markets better and use them to their advantage.
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“Our canonical video rental store entrepreneur, or auto mechanic, could recognize growing local demand before large competitors, secure unique resources (e.g., prime locations), and establish a market presence,” the study reads.
According to the study, local “Main Street” startups represent an important piece of the entrepreneurial ecosystem, because by selling accessories or offering services, small startups play an important role in allowing innovation to spread throughout the economy.
A small startup might not necessarily make a new phone, for example, but might sell phone cases or offer repair services.
While knowing more about a local market can give them an edge, small businesses face their own challenges. According to statistics from the US Bureau of Labor, about 18% of small businesses close their doors within a year and half within 5 years.
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The researchers used patent data to identify 386 new technologies over the past 100 years and then linked those technologies to business registration records from 47 states to get a better picture of how innovation leads to small businesses.