Fact of the Week: US Small Businesses Are 47 Percent As Productive as Big Businesses

Source: Olivia White et al., "America's Small Businesses: Time to Think Big " (McKinsey Global Institute, October 2024).

Commentary: In the United States, micro-, small, and medium-sized enterprises (MSME), firms with less than 500 employees, make up 58 percent of the jobs in the economy and account for 39 percent of value added. Yet, these firms lag significantly behind large firms in terms of productivity. According to a report by the McKinsey Global Institute, MSMEs are just 47 percent as productive as large firms. Though these firms are expected to be less productive than large multinational corporations, this productivity gap in the United States is larger than in other advanced economies. MSMEs in other comparable economies, including the UK, Japan, and Germany, are 60 percent as productive as large firms. This gap in productivity in the United States is equivalent to 5.4 percent of GDP.