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Patenting and Innovative Startups: Putting the America Invents Act in a Broader Economic Context

June 26, 2015 Comments off

Patenting and Innovative Startups: Putting the America Invents Act in a Broader Economic Context (PDF)
Source: U.S. Small Business Administration

Patents are at the crux of innovation in the economy. Patents provide a framework by which innovative research can take place and new technologies can be disseminated. In particular, patents provide a clear economic incentive to undertake innovative research that has the potential to substantially grow startups.1 Patents protect researchers and investors with clear determinations of intellectual property rights while also providing a vehicle with which to share newly developed technologies without a fear of losing ownership of intellectual property.2

Given the significance of patents, any changes to the patenting system could potentially have widespread impacts—both positive and negative—to startups, small businesses, and by extension, to the economy as a whole. In recent years, the Leahy-Smith American Invents Act of 2011 (AIA) made significant changes to the U.S. patenting system. While it is too early to tell precisely what those impacts are, the AIA could affect the viability of innovative startups.3

The Leahy-Smith America Invents Act: A Preliminary Examination of Its Impact on Small Businesses

June 17, 2015 Comments off

The Leahy-Smith America Invents Act: A Preliminary Examination of Its Impact on Small Businesses
Source: U.S. Small Business Administration

The Leahy-Smith America Invents Act of 2011 (AIA) may be the largest change in U.S. patent policy in over half a century. Among other things, the AIA shifts the U.S. patenting system from a first-to-invent (FTI) to a first-inventor-to-file (FITF) basis. This eliminates the use of dates of invention in determining who receives a patent. This policy change has the potential to have widespread impacts on how patents are acquired, utilized, and protected.

The intricacies of the AIA and the complex way in which patents contribute to the broader economy mean that this change could yield different economic impacts to businesses of different sizes and industries. While the FITF shift took effect in 2013, only a modicum of post-AIA patenting data is available for analysis because of the length of the patenting process and expected legal challenges. As a result, the positive and negative economic outcomes of the FITF shift are still uncertain.

The magnitude of these outcomes is particularly important to small businesses since some rely on patents to raise capital, and intellectual property is central to some business plans. Given the uncertainty and importance of the economic outcomes resulting from the shift to the FITF system, the AIA included a provision directing the Office of Advocacy to study how this policy shift could affect small businesses. In 2014, the Bella Research Group was awarded a contract to carry out this study. Their report employs a literature review and three quantitative analyses to assess the potential small business impacts of policy changes resulting from the AIA.

CRS — Small Business Administration Microloan Program (March 20, 2015)

May 29, 2015 Comments off

Small Business Administration Microloan Program (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

The Small Business Administration’s (SBA’s) Microloan program provides direct loans to qualified nonprofit intermediary lenders who, in turn, provide “microloans” of up to $50,000 to small business owners, entrepreneurs, and nonprofit child care centers. It also provides marketing, management, and technical assistance to microloan borrowers and potential borrowers. The program was authorized in 1991 as a five-year demonstration project and became operational in 1992. It was made permanent, subject to reauthorization, in 1997.

The SBA’s Microloan program is designed to assist women, low-income, veteran, minority entrepreneurs and small business owners, and other individuals possessing the capability to operate successful business concerns by providing them small-scale loans for working capital or the acquisition of materials, supplies, or equipment. In FY2014, Microloan intermediaries provided 3,919 microloans totaling $55.7 million. The average Microloan was $14,210 and had a 7.54% interest rate.

Job Lock and Employer-Provided Health Insurance: Evidence from the Literature

May 20, 2015 Comments off

Job Lock and Employer-Provided Health Insurance: Evidence from the Literature
Source: AARP Public Policy Institute

This report, written by Dean Baker at the Center for Economic and Policy Research, reviews the research literature on health insurance-related “job lock”—a labor market pattern that occurs when workers are reluctant to leave a job that offers health insurance because they cannot otherwise obtain affordable insurance. Based on the research, the author concludes that the Affordable Care Act’s insurance market reforms should have substantial, positive labor market effects.

The report reviews the research on three types of job lock:

  • Workers remaining in jobs in which they are not satisfied because of the fear of not being able to get health insurance at a new job (or not being able to buy or afford it in the individual market);
  • Workers being reluctant to start a business because they do not want to lose employer-provided health insurance; and
  • Workers staying employed (or employed full time) in order to obtain employer-sponsored insurance, when they would otherwise prefer to retire or work part time.

All three types of job lock are likely to be reduced by the Affordable Care Act, resulting in important gains for workers, families, and the economy.

Demographic Characteristics of Business Owners and Employees: 2013

May 4, 2015 Comments off

Demographic Characteristics of Business Owners and Employees: 2013 (PDF)
Source: U.S. Small Business Administration

Business owner characteristics and the economic and business environment are changing. Small business owners and entrepreneurs make important contributions to business creation and growth in the American economy. Understanding the characteristics of business owners and how they differ from employees is important for measuring the overall economic well-being of the economy including the economic incentives for entrepreneurship. This issue brief examines business owner demographic characteristics in 2013 and compares these characteristics to those of employees in the U.S. economy.

Harnessing Immigrant Small Entrepreneurship for Economic Growth

April 28, 2015 Comments off

Harnessing Immigrant Small Entrepreneurship for Economic Growth (PDF)
Source: Bread for the World Institute

Immigrant-owned small businesses generate $776 billion in business activity and sustain 4.7 million employees—14 percent of all workers employed by U.S. small business owners. While 13 percent of the U.S. population was born outside the United States, 18 percent of small business owners are foreign-born. But there are few specific policies at the national or local levels supporting the potential of immigrant small entrepreneurs to reduce poverty and spur economic growth.

This report identifies challenges for small immigrant entrepreneurs and promising practices to better support them in three case study sites: Miami, Florida; Des Moines, Iowa; and Salt Lake City, Utah.

President Obama’s November 2014 executive action granting deferred deportation and work permits to millions of unauthorized immigrants offers a unique opportunity to expand the power of immigrant small entrepreneurship to boost local economic growth. But to realize this potential, immigrants need better access to finance, culturally relevant business training, and a path to permanent legalization.

Using the Internet to Promote Services Exports by Small- and Medium-Sized Enterprises

April 23, 2015 Comments off

Using the Internet to Promote Services Exports by Small- and Medium-Sized Enterprises (PDF)
Source: Brookings Institution

This paper discusses the importance of services exports for the U.S. economy. In this context, the paper analyzes how export promotion agencies (EPAs) can use the Internet to grow services exports by small- and medium-sized enterprises (SMEs).

The first part of this paper discusses how engaging in international trade benefits services SMEs and the U.S. economy. Part 2 provides an overview of the barriers faced by SME service firms in using the Internet to go global and analyzes the different ways that SMEs use the Internet, from reaching consumers globally, communicating with suppliers, to becoming part of global supply chains. Based on interviews and an online survey with export promotion agencies (EPAs) in the U.S. and select other countries, Part 3 describes how EPAs are engaging service SMEs and assisting them in using the Internet to become international traders. Part 4 draws on the experiences of EPA support for SME services exporters and recommends how to scale up some of these approaches in ways that would have a broader impact on SME services exports.1 The paper concludes with thoughts on future research.

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