Summary: There is growing concern that the rate of innovation in industry is declining. This decline is of concern because of the belief that there is a strong relationship between innovation and economic and social well-being. Small businesses are a particular focus of attention in light of this concern because they are believed to be a major source of innovation. An ongoing project was initiated by GAO for the purpose of synthesizing the available literature and other information on the roles of small businesses in innovation, the contributions they make, and the conditions which affect their ability to perform those roles. The information reviewed thus far has indicated that small businesses will play an active role in innovation. This ongoing work will address two main questions: (1) the roles that are most likely to be played by small businesses in innovation in different industries and the contributions that they can be expected to make; and (2) the conditions that influence the likelihood that small businesses will play an active role in innovation.
