The federal government stifled research and development activites of small businesses and consequently added to the nation's economic woes, according to three reports released yesterday by the Small Business Adminstration.
The reports by Commerce Department and SBA task forces conclude that much of the blame lies in the "cumulative impact of a number of federal policies" that tend to prevent innovation by small businesses.
Policies that most adversely affect small business, according to one of the reports, are:
Federal tax, pension fund and security policies that virtually have eliminated all forms of capital from small innovative business ventures.
Government regulations that threat large and small firms alike but in effect discriminate against snall business.
Federal funding for research and development that virtually is withheld from small science and technology oriented firms.
Federal procurement policies that exclude small innovative firms.
Federal policies that poorly protect patent rights of independent inventors and small businesses.
The reports recommend legislation to correct those policies, but Milton D. Stewart, chief counsel for advocacy at SBA, said during a press conference yesterday that the SBA cannot introduce legislation. Proposed legislation written in lay language by the SBA task force is "just for discussion purposes," Stewart said. The report will be sent to President Carter rather than the Hill.
Senate bills including some of the recommendations in the report already have been introduced.
One of the conclusions the three reports agreed on include the need for a gradual build-up to a 10 percent set aside for small business research and development procurement.
More innovation by small business could contribute to stabilizing inflation, strengthening domestic producers' competitive stance with foreign firms and producing jobs, the studies said.
The studies' basic premise is that small business has been a leader in innovation, but because of their inability to get enough capital, partly through prohibitive federal policies, they are unable to take the risks that go along with innovation.
According to a National Science Foundation report cited in one of the studies, since World II, firms with fewer than 1,000 employes were responsible for half of "the most significant new industrial products and processes." Firms with 100 or fewer employes produced 24 percent of such innovations, and costs were less for smaller firms than large firms.
Another study showed there was less new job growth from mature companies such as Bethlehem Steel, General Electric and General Foods than innovative companies such as Polaroid, Xerox and Texas Instruments. The innovative companies also produced three times the level of tax revenues as a percentage of sales than the mature firms, the study said.
The SBA task force's legislative proposal recommends that each federal department or agency target a one percent increase in research and development procurement set-asides for small firms; small business be allowed to retain patent rights on inventions made under federally supported programs, and the government offer tax incentives recognizing the risks of small-scale research and development. CAPTION: Graph, The Market, July 24, The Washington Post