Small and medium-sized enterprises (MSMEs) form the backbone of the U.S. economy, contributing 58% of jobs and 39% of value added in the business sector. Despite their critical role, U.S. MSMEs face a significant productivity gap compared to large companies. On average, small businesses in the United States are only 47% as productive as their larger counterparts, with notable discrepancies in sectors such as mining, manufacturing, and technology. This productivity gap presents an opportunity for improvement that could lead to a 5.4% increase in U.S. GDP. The experiences of other countries, such as Japan and Germany, highlight the benefits of vertical integration and innovation, which could inspire American MSMEs to enhance their efficiency.
To narrow this productivity gap, MSMEs must leverage key competencies like technology, human capital, and market access by collaborating with larger companies. As demonstrated by sectors like wholesale trade, these partnerships can drive mutual productivity gains. Policymakers, business leaders, and stakeholders are encouraged to foster supportive networks, create enabling conditions, and tailor approaches to meet the specific needs of various industries. Improving MSME productivity is essential for maintaining U.S. economic competitiveness and sustaining the nation’s leadership in global markets.
